Internet Initiative Japan Inc. ("IIJ" NASDAQ:IIJI, TSE:3774) today
announced its first three months consolidated financial results for
the fiscal year ending March 31, 2019 (“1Q18” from April 1, 2018 to
June 30, 2018).1
Highlights of Financial Results for
1Q18 |
|
|
|
Revenues |
|
JPY44.7 billion (up 9.1% YoY2) |
Operating Income |
|
JPY1.2 billion (up 4.9% YoY) |
Adjusted Income before Income Tax Expense3 |
|
JPY1.2 billion (up 11.4% YoY) |
Adjusted Net Income attributable to IIJ2 |
|
JPY0.8 billion (up 14.2% YoY) |
|
|
|
Overview of 1Q18 Financial Results and
Business Outlook
“Along with continuous IT demands by Japanese
enterprises, we started FY2018 as planned. 1Q18 total revenue
increased by 9.1%4 year over year as we continued to accumulate
recurring revenue, 86.8% of 1Q18 total revenue. 1Q18 operating
income increased by 4.9% year over year. From the start of this
fiscal year, 1Q revenue growth of network services and systems
integration absorbed an increase in full-MVNO related fixed-type
cost of approximately JPY0.1 billion per month,” said Eijiro Katsu,
COO and President of IIJ.
“By leveraging full-MVNO advantages, we’ve launched
“IIJ Mobile Service/Type I,” data communication services for
enterprise targeting IoT usages, new “Japan Travel SIMs,”5 small
data volume-bundle services targeting IoT usages, prepaid SIMs for
foreign visitors to Japan, and international roaming services so
far. Functions such as “SIM Life Cycle Management,”6 allowing users
to switch the status of SIMs from/to activated and suspended
remotely, can be adopted for IoT usages. Sales activity for new
“Japan Travel SIMs,” has been enhanced by partnering local
retailers in China and other Asian countries; the travelers can
have our SIMs at home and start using them upon arrival in Japan.
We’re also preparing and developing chipSIM and eSIM solutions for
IoT projects; eSIM platform services to be launched in 2019
spring,” continued Katsu.
“Other recurring services, such as Internet
connectivity, security, WAN, and systems operation and maintenance,
continued to accumulate revenues and achieved revenue growth from
1Q. With regards to systems integration, we’ve reorganized systems
engineers unit more effectively to achieve higher productivity rate
by removing boundaries between each groups which were formerly
divided by industry. DeCurret, our equity method investee engaging
in cryptocurrency exchange and settlement platform, is working
rigorously towards being registered with the government,7
developing service systems, building marketing plans as planned.
JOCDN, our equity method investee engaging in CDN services,
continues to see growing traffic from clients such as Japanese
major broadcasting companies and Internet contents holders,” said
Katsu.
“From 1Q18, how we recognize gains/losses of
holding marketable equity securities and funds have changed.
Following the revision of U.S. GAAP, we now have to record
gains/losses due to fluctuations of fair value as “other income
(expenses)” on our consolidated statements of income every quarter.
We disclose income excluding effect of such changes in accounting
policies as “adjusted income before income tax expense” and
”adjusted net income attributable to IIJ” to show our business
profitability,” concluded Katsu.
_______________________________________1 Unless
otherwise stated, all financial figures discussed in this
announcement are prepared in accordance with U.S. GAAP, unaudited
and consolidated.2 YoY is an abbreviation for year over year
change.3 “Adjusted income before income tax expense” and “adjusted
net income attributable to IIJ” exclude gains/losses on marketable
equity securities and funds to which accounting policies were
changed due to revision of U.S. GAAP.4 Annual revenue growth of
9.1% includes unconsolidation impact of hi-ho whose 1Q17 revenue
for consumer services was JPY458 million.5 For detail, please refer
to our press release titled IIJ to Provide 1.5 GB and 3 GB Prepaid
Japan Travel SIMs as a Full MVNO which can be found here:
https://www.iij.ad.jp/en/news/pressrelease/2018/0315.html.6 For
detail, please refer to our press release titled IIJ to Begin
Offering "IIJ Mobile Access Service Type I" as a Full MVNO” which
can be found here:
https://www.iij.ad.jp/en/news/pressrelease/2018/0315-2.html.7 In
Japan, in order to operate cryptocurrency-related business such as
exchange, registration by Japan’s Financial Service Agency is
required.
1Q18 Financial Results Summary
|
Operating Results Summary |
|
1Q17 |
1Q18 |
YoY Change |
|
JPY millions |
JPY millions |
% |
Total revenues |
40,964 |
44,705 |
9.1 |
Network services |
25,686 |
28,663 |
11.6 |
Systems integration (SI) |
13,599 |
13,805 |
1.5 |
Equipment sales |
676 |
1,242 |
83.8 |
ATM operation business |
1,003 |
995 |
(0.8) |
Total costs |
34,434 |
37,922 |
10.1 |
Network services |
21,066 |
23,845 |
13.2 |
Systems integration (SI) |
12,163 |
12,358 |
1.6 |
Equipment sales |
604 |
1,136 |
88.2 |
ATM operation business |
601 |
583 |
(3.0) |
Total gross margin |
6,530 |
6,783 |
3.9 |
Network services |
4,619 |
4,818 |
4.3 |
Systems integration (SI) |
1,436 |
1,447 |
0.7 |
Equipment sales |
72 |
106 |
46.8 |
ATM operation business |
402 |
412 |
2.5 |
SG&A expenses and R&D |
5,406 |
5,603 |
3.6 |
Operating income |
1,124 |
1,180 |
4.9 |
Income before income tax expense |
1,163 |
484 |
(58.3) |
Net income attributable to IIJ |
706 |
250 |
(64.5) |
|
Segment Results Summary |
|
1Q17 |
1Q18 |
|
JPY millions |
JPY millions |
Total revenues |
40,964 |
44,705 |
Network services and SI business |
40,052 |
43,794 |
ATM operation business |
1,003 |
995 |
Elimination |
(91) |
(84) |
Operating income |
1,124 |
1,180 |
Network service and SI business |
804 |
856 |
ATM operation business |
367 |
365 |
Elimination |
(47) |
(41) |
We have omitted segment analysis because most of
our revenues are dominated by network services and systems
integration (SI) business.
1Q18 Revenues and Income
Revenues
Total revenues were JPY44,705 million, up 9.1% YoY
(JPY40,964 million for 1Q17).
Network services revenue was JPY28,663 million, up
11.6% YoY (JPY25,686 million for 1Q17).
Revenues for Internet connectivity services for
enterprise were JPY7,790 million, up 19.4% YoY from JPY6,524
million for 1Q17, mainly due to an increase in mobile-related
services revenues along with an expansion of MVNE business clients’
transactions.
Revenues for Internet connectivity services for
consumers were JPY6,150 million, almost the same level as JPY6,155
million for 1Q17, because the revenue growth mainly of “IIJmio
Mobile Service,” consumer mobile services which offer inexpensive
data communication and voice services with SIMs offset revenue
decrease due to divesture of a former subsidiary, hi-ho.
Revenues for WAN services were JPY7,727 million, up
10.9% YoY compared to JPY6,970 million for 1Q17, mainly due to the
revenue growth along with order accumulation.
Revenues for Outsourcing services were JPY6,996
million, up 15.9% YoY from JPY6,037 million for 1Q17, mainly due to
an increase in security-related services revenues.
|
Network Services Revenues Breakdown
(*) |
|
1Q17 |
1Q18 |
YoYChange |
JPY millions |
JPY millions |
% |
Total network services |
25,686 |
28,663 |
11.6 |
|
Internet connectivity services
(enterprise) |
6,524 |
7,790 |
19.4 |
|
|
IP services (including data center connectivity
services) |
2,490 |
2,539 |
2.0 |
|
|
IIJ Mobile services |
3,225 |
4,468 |
38.5 |
|
|
|
IIJ Mobile MVNO Platform Service |
2,359 |
3,383 |
43.4 |
|
|
Others |
809 |
783 |
(3.2) |
|
Internet connectivity services
(consumer) |
6,155 |
6,150 |
(0.1) |
|
|
IIJ |
5,697 |
6,150 |
8.0 |
|
|
|
IIJmio Mobile Service |
5,013 |
5,463 |
9.0 |
|
|
hi-ho |
458 |
- |
(100.0) |
|
WAN services |
6,970 |
7,727 |
10.9 |
|
Outsourcing services |
6,037 |
6,996 |
15.9 |
(*) From 1Q18, “IIJ FiberAccess/F and IIJ
DSL/F” which was formerly classified under “Internet connectivity
services (enterprise)” is now added to “Others.”
Below is a table reflecting the above mentioned
changes to FY2017 revenue of Internet connectivity services
(enterprise).
|
For the Three Months Ended |
|
June 30, 2017 |
September 30, 2017 |
December 31, 2017 |
March 31, 2018 |
(JPY millions) |
Internet connectivity services
(enterprise) |
6,524 |
6,742 |
7,152 |
7,526 |
|
IP service (including data center connectivity
services) |
2,490 |
2,506 |
2,557 |
2,552 |
IIJ Mobile Services |
3,225 |
3,424 |
3,787 |
4,183 |
|
IIJ Mobile MVNO Platform Service |
2,359 |
2,560 |
2,822 |
3,125 |
Others |
809 |
812 |
808 |
791 |
|
Number of Contracts and Subscription for
Connectivity Services*1,*2 |
|
As of June 30, 2017 |
As of June 30, 2018 |
YoY Change |
Internet connectivity services
(enterprise) |
1,005,410 |
1,483,735 |
478,325 |
|
IP service (greater than or equal to 1Gbps,
including data center connectivity) |
690 |
721 |
31 |
|
IP service (less than 1Gbps) |
1,240 |
1,295 |
55 |
|
IIJ Mobile Services |
931,049 |
1,407,806 |
476,757 |
|
|
IIJ Mobile MVNO Platform Service |
639,659 |
887,026 |
247,367 |
|
Others |
72,431 |
73,913 |
1,482 |
Internet connectivity services
(consumer) |
1,418,426 |
1,387,825 |
(30,601) |
|
IIJ |
1,287,671 |
1,387,825 |
100,154 |
|
|
IIJmio Mobile Service |
965,692 |
1,035,728 |
70,036 |
|
hi-ho |
130,755 |
- |
(130,755) |
Total contracted bandwidth
(Gbps)*3 |
2,882.6 |
3,373.0 |
490.4 |
*1) Numbers in the table above show number of
contracts except for “IIJ Mobile Services (enterprise),” “IIJ” and
“hi-ho” which show number of subscriptions.*2) From 1Q18, following
changes are made to the breakdown of “Internet connectivity
services (enterprise).”
- “Data center connectivity services” is added to “IP services
(1Gbps-)” and labeled it as “IP services (greater than or equal to
1Gbps, including data center connectivity services).”
- “IP services (100Mbps-999Mbps)” and “IP services (-99Mbps)” are
now combined and labeled as “IP services (less than 1Gbps).”
- “IIJ FiberAccess/F and IIJ DSL/F” is added to “Others.”
*3) Total contracted bandwidth is calculated by
multiplying number of contracts under “Internet connectivity
services (enterprise), excluding mobile services” and the
contracted bandwidths of the services respectively.
Below is a table reflecting the above mentioned
changes to FY2017 contracts and subscriptions for Internet
connectivity services (enterprise).
|
FY2017 |
As of June 30, 2017 |
As of September 30, 2017 |
As of December 31, 2017 |
As of March 31, 2018 |
Internet connectivity services
(enterprise) |
1,005,410 |
1,095,677 |
1,246,898 |
1,414,782 |
|
IP services (greater than or equal to 1Gbps,
including data center connectivity services) |
690 |
698 |
704 |
709 |
|
IP services (less than 1Gbps) |
1,240 |
1,254 |
1,270 |
1,272 |
|
IIJ Mobile services |
931,049 |
1,021,327 |
1,173,563 |
1,339,586 |
|
|
IIJ Mobile MVNO Platform services |
639,659 |
682,512 |
744,332 |
824,731 |
|
Others |
72,431 |
72,398 |
71,361 |
73,215 |
SI revenues were JPY13,805 million, up 1.5% YoY
(JPY13,599 million for 1Q17).
Systems construction revenue, a one-time revenue,
was JPY3,646 million, down 17.9% YoY (JPY4,440 million for 1Q17).
Systems operation and maintenance revenue, a recurring revenue, was
JPY10,159 million, up 10.9% YoY (JPY9,159 million for 1Q17), mainly
due to continued accumulation of systems operation orders as well
as an increase in private cloud services’ revenues.
Orders received for SI and equipment sales totaled
JPY18,949 million, up 11.5% YoY (JPY16,990 million for 1Q17);
orders received for systems construction and equipment sales were
JPY7,550 million, up 13.3% YoY (JPY6,664 million for 1Q17) and
orders received for systems operation and maintenance were
JPY11,399 million, up 10.4% YoY (JPY10,326 million for 1Q17).
Order backlog for SI and equipment sales as of June
30, 2018 amounted to JPY50,491 million, up 14.2% YoY (JPY44,216
million as of June 30, 2017); order backlog for systems
construction and equipment sales was JPY9,653 million, up 10.6% YoY
(JPY8,727 million as of June 30, 2017) and order backlog for
systems operation and maintenance was JPY40,838 million, up 15.1%
YoY (JPY35,489 million as of June 30, 2017).
Equipment sales revenues were JPY1,242 million, up
83.8% YoY (JPY676 million for 1Q17) mainly due to the fluctuation
in sales of equipment and mobile devices.
ATM operation business revenues were JPY995
million, down 0.8% YoY (JPY1,003 million for 1Q17). As of June 30,
2018, 1,107 ATMs have been placed.
Cost and expense
Total cost of revenues was JPY37,922 million, up
10.1% YoY (JPY34,434 million for 1Q17).
Cost of network services revenue was JPY23,845
million, up 13.2% YoY (JPY21,066 million for 1Q17). There were an
increase in outsourcing-related costs along with our mobile-related
revenue increase as well as full-MVNO related fixed-type costs
along with the service launch, an increase in circuit-related costs
along with our WAN services revenue increase, and an increase in
network operation-related costs. Gross margin was JPY4,818 million,
up 4.3% YoY (JPY4,619 million for 1Q17) and gross margin ratio was
16.8% (18.0% for 1Q17).
Cost of SI revenues was JPY12,358 million, up 1.6%
YoY (JPY12,163 million for 1Q17). There were an increase in network
operation-related costs and decreases in outsourcing-related costs
and purchasing costs along with decrease in our systems
construction revenue. Gross margin was JPY1,447 million, up 0.7%
YoY (JPY1,436 million for 1Q17) and gross margin ratio was 10.5%
(10.6% for 1Q17).
Cost of equipment sales revenues was JPY1,136 million, up 88.2%
YoY (JPY604 million for 1Q17). Gross margin was JPY106 million
(JPY72 million for 1Q17) and gross margin ratio was 8.5% (10.6% for
1Q17).
Cost of ATM operation business revenues was JPY583 million, down
3.0% YoY (JPY601 million for 1Q17). Gross margin was JPY412 million
(JPY402 million for 1Q17) and gross margin ratio was 41.4% (40.1%
for 1Q17).
SG&A and R&D expenses
SG&A and R&D expenses in total were
JPY5,603 million, up 3.6% YoY (JPY5,406 million for 1Q17).
Sales and marketing expenses were JPY3,242 million,
up 3.0% YoY (JPY3,149 million for 1Q17) mainly due to increases in
personnel-related expenses and outsourcing expenses.
General and administrative expenses were JPY2,242
million, up 5.3% YoY (JPY2,130 million for 1Q17) mainly due to
increases in personnel-related expenses.
Research and development expenses were JPY119
million, down 6.9% YoY (JPY127 million for 1Q17).
Operating income
Operating income was JPY1,180 million, up 4.9% YoY
(JPY1,124 million for 1Q17).
Other income (expenses)
Other income (expenses) was a loss of JPY696
million (an income of JPY39 million for 1Q17), mainly because of
realized and unrealized loss on other investments of JPY747
million, to which accounting policies were changed under the
revised U.S. GAAP effective from April 1, 2018, compared to
realized gain of JPY58 million for 1Q17, miscellaneous income of
JPY81 million (expenses of JPY15 million for 1Q17), dividend income
of JPY52 million (JPY72 million for 1Q17), and interest expense of
JPY97 million (JPY89 million for 1Q17).
Income before income tax
expense
Income before income tax expense was JPY484
million, down 58.3% YoY (JPY1,163 million for 1Q17). When excludes
realized and unrealized loss on other investments of JPY747
million, to which accounting policies were changed under the
revised U.S. GAAP effective from April 1, 2018, compared to
realized gain of JPY58 million for 1Q17, adjusted income before
income tax expense was JPY1,231 million, up 11.4% YoY (JPY1,105
million for 1Q17).
Net income
Income tax expense was JPY163 million (JPY451
million for 1Q17).
Equity in net loss of equity method investees was
JPY30 million (an income of JPY36 million for 1Q17) mainly due to
equity in net loss of JPY62 million in DeCurret Inc.
As a result of the above, net income was JPY291
million, down 61.1% YoY (JPY748 million for 1Q17).
When excludes net of tax amount of realized and
unrealized loss on other investments of JPY512 million, to which
accounting policies were changed under the revised U.S. GAAP
effective from April 1, 2018, compared to net of tax amount of
realized gain of JPY39 million for 1Q17, adjusted net income was
JPY803 million, up 13.2% YoY (JPY709 million for 1Q17).
Net income attributable to IIJ
Net income attributable to non-controlling
interests was JPY41 million (JPY42 million for 1Q17) mainly related
to net income of Trust Networks Inc.
Net income attributable to IIJ was JPY250 million,
down 64.5% YoY (JPY706 million for 1Q17). When excludes net of tax
amount of realized and unrealized loss on other investments of
JPY512 million, to which accounting policies were changed under the
revised U.S. GAAP effective from April 1, 2018, compared to net of
tax amount of realized gain of JPY39 million for 1Q17, adjusted net
income attributable to IIJ was JPY762 million, up 14.2% YoY (JPY667
million for 1Q17).
Regarding the change in accounting methods on other
investments
Following the revision of U.S. GAAP, from 1Q18,
gains/losses on other investments due to fluctuations of fair value
of holding marketable equity securities and funds are recorded as
“realized and unrealized gain (loss) on other investments, net” in
“other income (expenses)” on our consolidated statements of income
(“P/L”).
For 1Q18, we recorded JPY747 million of “realized
and unrealized loss on other investments, net,” of which unrealized
loss on our holding marketable equity securities was JPY863
million.
Fair value of
holding marketable equity securities as of March 31, 2018 |
JPY9,175 million |
Fair value of holding marketable equity securities as of June 30,
2018 |
JPY8,312 million |
Difference:
1Q18 unrealized loss on P/L |
JPY863
million |
|
|
Acquisition
cost of holding available-for-sale equity securities |
JPY1,650 million |
Fair value of holding marketable equity securities as of June 30,
2018 |
JPY8,312 million |
Difference:
Unrealized gain included in "other investments" on B/S as of June
30, 2018 |
JPY6,662 million |
|
|
Please see below for detailed explanation on revision of U.S.
GAAP related to holding marketable equity securities.
- As of March 31, 2018, we had unrealized gains on holding
marketable equity securities of JPY7,525 million. The net of tax
amount of the unrealized gains, JPY5,079 million, was recorded as
“accumulated other comprehensive income” on our consolidated
balance sheet (“B/S”) as of March 31, 2018. Until the last fiscal
year, unrealized gains/losses of holding marketable equity
securities had been recorded as the fluctuation of “accumulated
other comprehensive income” on B/S without being recognized as
profit on P/L.
- On B/S at the beginning of this fiscal year, the net of tax
amount of the unrealized gains of JPY5,079 million as of March 31,
2018 was reclassified to “retained earnings.” The gains were never
recognized as profit on P/L.
- After the above mentioned reclassification, gains/losses due to
fluctuations of stock prices are recognized as “realized and
unrealized gain (loss) on other investments, net” in “other income
(expenses)” in every quarter.
For 1Q18, we recorded JPY747 million of “realized and unrealized
loss on other investments, net” of which realized and unrealized
gains on funds that were available to be measured at fair value was
JPY116 million.
Please see below for detailed explanation on revision of U.S.
GAAP related to funds that are available to be measured at fair
value.
- As of March 31, 2018, value of such funds was recorded as
assets in “other investments” under cost method. Its unrealized
gain of JPY963 million was not recognized.
- On B/S at the beginning of this fiscal year, “other
investments” was increased by JPY963 million and “retained
earnings” was increased by JPY660 million which is the net of tax
amount of the above mentioned unrealized gain. The gain was never
recognized as profit of P/L.
- From 1Q18, fluctuation of fair values of such funds are
recognized as “realized and unrealized gain (loss) on other
investments, net” in “other income (expenses)” in every
quarter.
1Q18 Balance Sheets
Balance sheets
As of June 30, 2018, the balance of total assets
was JPY154,169 million, increased by JPY720 million from the
balance as of March 31, 2018 of JPY153,449 million.
As of June 30, 2018, the balance of current assets
was JPY68,172 million, increased by JPY987 million from the balance
as of March 31, 2018 of JPY67,185 million. The major breakdown of
current assets was: a decrease in accounts receivables by JPY3,689
million to JPY28,142 million, an increase in prepaid expenses by
JPY2,995 million to JPY11,438 million, an increase in cash and cash
equivalents by JPY1,723 million to JPY23,126 million. As of June
30, 2018, the balance of noncurrent assets was JPY85,997 million,
decreased by JPY267 million from the balance as of March 31, 2018
of JPY86,264 million. The major breakdown of noncurrent assets was:
property and equipment of JPY45,693 million, decreased by JPY721
million from the balance as of March 31, 2018 and prepaid
expenses-noncurrent of JPY8,501 million, increased by JPY535
million. Other investments increased by JPY963 million, which was
the amount of unrealized gains on funds as of March 31, 2018 that
recognized due to revision of U.S. GAAP, decreased in marketable
equity securities by JPY863 million due to fluctuation of stock
prices for 1Q18, increased in funds by JPY116 million due to
fluctuation of fair value for 1Q18 and increased by JPY100 million
by acquisition of nonmarketable equity security. As a result, other
investments as of June 30, 2018 amounted to JPY11,691 million, up
JPY317 million from the balance as of March 31, 2018. As of June
30, 2018, the major breakdown of non-amortized intangible assets
was JPY6,082 million in goodwill. The balance of amortized
intangible assets, which was customer relationships, was JPY2,582
million, decreased by JPY89 million from the balance as of March
31, 2018 of JPY2,671 million.
As of June 30, 2018, the balance of current
liabilities was JPY42,474 million, increased by JPY329 million from
the balance as of March 31, 2018 of JPY42,145 million. The major
breakdown of current liabilities was: a decrease of income taxes
payable by JPY1,535 million to JPY393 million, a decrease in
accounts payable (trade and other) by JPY921 million to JPY15,478
million, and an increase in capital lease obligations-current
portion by JPY174 million to JPY5,829 million. As of June 30, 2018,
the balance of noncurrent liabilities was JPY37,154 million,
decreased by JPY161 million from the balance as of March 31, 2018
of JPY37,315 million. The major breakdown of noncurrent liabilities
was: a decrease in long-term borrowings due to by JPY750 million,
which was the amount transferred to current liabilities, to
JPY14,750 million and a decrease in capital lease
obligations-noncurrent by JPY7 million to JPY10,914 million.
As of June 30, 2018, the major breakdown of IIJ
shareholders’ equity was as follows. Accumulated other
comprehensive income (loss) was a loss of JPY142 million as it
decreased by JPY5,217 million (an income of JPY5,075 million as of
March 31, 2018) mainly because of reclassification to retained
earnings by JPY5,079 million by revision of U.S. GAAP related to
marketable equity securities; retained earnings was JPY14,167
million, increased by JPY5,763 million from March 31, 2018, mainly
due to an increase by net income attributable to IIJ of JPY250
million, a decrease by dividend paid of JPY608 million and an
increase by JPY6,121 million due to revision of U.S. GAAP related
to revenue recognition and other investments. As a result, the
balance of total IIJ shareholders’ equity as of June 30, 2018 was
JPY73,830 million, increased by JPY560 million from the balance as
of March 31, 2018 of JPY73,270 million and IIJ shareholders’ equity
ratio (total IIJ shareholders’ equity divided by total assets) as
of June 30, 2018 was 47.9%.
1Q18 Cash Flows
Cash flows
Cash and cash equivalents as of June 30, 2018 were
JPY23,126 million (JPY20,508 million as of June 30, 2017).
Net cash provided by operating activities for 1Q18
was JPY6,340 million (net cash provided by operating activities of
JPY3,237 million for 1Q17). There were net income of JPY291 million
and depreciation and amortization of JPY3,297 million. Regarding
changes in operating assets and liabilities, it was net cash in of
JPY2,094 million (net cash out of JPY690 million for 1Q17) mainly
due to a decrease in accounts receivable by collection, an increase
in prepaid expenses (including prepaid expense-noncurrent) in
relation to upfront payment for software licenses, maintenance cost
for service facilities and seasonal bonus payments to our
employees, and a decrease in income taxes payable by payment.
Net cash used in investing activities for 1Q18 was
JPY2,228 million (net cash used in investing activities of JPY2,572
million for 1Q17), mainly due to payments for purchase of property
and equipment of JPY2,588 million (JPY3,839 million for 1Q17) and
proceeds from sales of property and equipment, which include sales
and leaseback transactions, of JPY349 million (JPY1,276 million for
1Q17).
Net cash used in financing activities for 1Q18 was
JPY2,360 million (net cash used in financing activities of JPY2,098
million for 1Q17), mainly due to principal payments under capital
leases of JPY1,527 million (JPY1,335 million for 1Q17) and FY2017
year-end dividends payments of JPY608 million (JPY608 million for
1Q17).
FY2018 Financial Targets
Due to seasonal factors, our financial results tend
to be small in first quarter and large in fourth quarter every
fiscal year. 1Q18 financial results were almost as we planned;
therefore, our financial targets for the fiscal year ending March
31, 2019 (FY2018) announced on May 15, 2018 remain unchanged.
FY2018 Reconciliation of Non-GAAP Financial
Measures
The following table summarizes the
reconciliation of adjusted EBITDA to net income attributable to IIJ
in our consolidated statements of income that are prepared in
accordance with U.S. GAAP.
|
Adjusted EBITDA |
|
1Q17 |
1Q18 |
|
JPY millions |
JPY millions |
Adjusted EBITDA |
4,103 |
4,477 |
Depreciation and Amortization |
(2,979) |
(3,297) |
Operating Income |
1,124 |
1,180 |
Other Income (expenses) |
39 |
(696) |
Income Tax Expense |
451 |
163 |
Equity in Net Income (loss) of Equity Method
Investees |
36 |
(30) |
Net income |
748 |
291 |
Less: Net income attributable to noncontrolling
interests |
(42) |
(41) |
Net Income attributable to IIJ |
706 |
250 |
|
CAPEX |
|
1Q17 |
1Q18 |
|
JPY millions |
JPY millions |
CAPEX, including capital leases |
5,340 |
4,181 |
Acquisition of Assets by Entering into Capital
Leases |
2,268 |
1,696 |
Purchase of Property and Equipment |
3,072 |
2,485 |
Presentation
Presentation materials will be posted on our web
site (https://www.iij.ad.jp/en/ir/) on August 8, 2018.
Presentation material is also available in these file
archives:
http://resource.globenewswire.com/Resource/Download/76ee9b65-e7e1-48d1-b2b0-25e437c5bfc5
About Internet Initiative Japan
Inc.
Founded in 1992, IIJ is one of Japan's leading
Internet-access and comprehensive network solutions providers. IIJ
and its group companies provide total network solutions that mainly
cater to high-end corporate customers. IIJ's services include
high-quality Internet connectivity services, mobile services,
security services, cloud computing services, and systems
integration. Moreover, IIJ operates one of the largest Internet
backbone networks in Japan that is connected to the United States,
the United Kingdom and Asia. IIJ listed on the U.S. NASDAQ Stock
Market in 1999 and on the First Section of the Tokyo Stock Exchange
in 2006.
For inquiries, contact:
IIJ Investor Relations Tel: +81-3-5205-6500 E-mail:
ir@iij.ad.jp URL: https://www.iij.ad.jp/en/ir
Statements made in this press release regarding
IIJ’s or management’s intentions, beliefs, expectations, or
predictions for the future are forward-looking statements that are
based on IIJ’s and managements’ current expectations, assumptions,
estimates and projections about its business and the industry.
These forward-looking statements, such as statements regarding
revenues and operating and net profitability, are subject to
various risks, uncertainties and other factors that could cause
IIJ’s actual results to differ materially from those contained in
any forward-looking statement. These risks, uncertainties and other
factors include: IIJ’s ability to maintain and increase revenues
from higher-margin services such as outsourcing services; the
possibility that revenues from connectivity services may decline
substantially as a result of competition and other factors; the
ability to compete in a rapidly evolving and competitive
marketplace; the impact on IIJ's profits of fluctuations in costs
such as backbone costs and subcontractor costs; the impact on IIJ's
profits of fluctuations in the price of available-for-sale equity
securities; fluctuations of equity in net income (loss) of equity
method investees; the impact of technological changes in its
industry; IIJ’s ability to raise additional capital to cover its
indebtedness; the possibility that NTT, IIJ’s largest shareholder,
may decide to exercise substantial influence over IIJ; and other
risks referred to from time to time in IIJ’s filings on Form 20-F
of its annual report and other filings with the United States
Securities and Exchange Commission.
|
|
Internet Initiative Japan Inc. |
|
Consolidated Balance Sheets
(Unaudited) |
|
(As of March 31, 2018 and June 30,
2018) |
|
|
|
|
|
|
As of March 31, 2018 |
As of June 30, 2018 |
|
|
Thousands of JPY |
Thousands of JPY |
|
ASSETS |
|
|
|
CURRENT ASSETS: |
|
|
|
Cash and cash equivalents |
21,402,892 |
|
23,126,189 |
|
|
Accounts receivable, net of allowance for doubtful accounts of JPY
123,453 thousand and JPY 117,995 thousand at March 31, 2018 and
June 30, 2018, respectively |
31,830,882 |
|
28,141,746 |
|
|
Inventories |
1,714,547 |
|
2,512,305 |
|
|
Prepaid expenses—current |
8,442,981 |
|
11,438,075 |
|
|
Other current assets, net of allowance for doubtful accounts of JPY
720 thousand at March 31, 2018 and June 30, 2018, respectively |
3,793,449 |
|
2,953,231 |
|
|
Total current assets |
67,184,751 |
|
68,171,546 |
|
|
INVESTMENTS IN EQUITY METHOD INVESTEES |
5,246,313 |
|
5,128,858 |
|
|
OTHER INVESTMENTS |
11,374,442 |
|
11,690,982 |
|
|
PROPERTY AND EQUIPMENT, net of accumulated depreciation and
amortization of JPY 55,470,955 thousand and JPY 57,210,582
thousand at March 31, 2018 and June 30, 2018, respectively |
46,414,250 |
|
45,693,269 |
|
|
GOODWILL |
6,082,472 |
|
6,082,472 |
|
|
OTHER INTANGIBLE ASSETS—Net |
2,704,668 |
|
2,615,679 |
|
|
GUARANTEE DEPOSITS |
3,422,443 |
|
3,384,433 |
|
|
DEFERRED TAX ASSETS—Noncurrent |
183,808 |
|
147,401 |
|
|
NET INVESTMENT IN SALES-TYPE LEASES—Noncurrent |
1,545,293 |
|
1,401,535 |
|
|
Prepaid expenses—Noncurrent |
7,965,889 |
|
8,500,700 |
|
|
OTHER ASSETS, net of allowance for doubtful accounts of JPY 60,929
thousand and JPY 61,773 thousand at March 31, 2018 and June 30,
2018, respectively |
1,324,490 |
|
1,351,984 |
|
|
TOTAL |
153,448,819 |
|
154,168,859 |
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2018 |
As of June 30, 2018 |
|
|
Thousands of JPY |
Thousands of JPY |
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
CURRENT LIABILITIES: |
|
|
|
Short-term borrowings |
9,250,000 |
|
9,250,000 |
|
|
Long-term borrowings—current portion |
- |
|
750,000 |
|
|
Capital lease obligations—current portion |
5,655,875 |
|
5,829,444 |
|
|
Accounts payable—trade |
14,950,920 |
|
15,103,607 |
|
|
Accounts payable—other |
1,448,423 |
|
374,393 |
|
|
Income taxes payable |
1,928,037 |
|
393,011 |
|
|
Accrued expenses |
3,111,385 |
|
3,100,955 |
|
|
Deferred income—current |
4,237,676 |
|
5,214,481 |
|
|
Other current liabilities |
1,562,717 |
|
2,457,948 |
|
|
Total current liabilities |
42,145,033 |
|
42,473,839 |
|
|
LONG-TERM BORROWINGS |
15,500,000 |
|
14,750,000 |
|
|
CAPITAL LEASE OBLIGATIONS—Noncurrent |
10,920,726 |
|
10,913,974 |
|
|
ACCRUED RETIREMENT AND PENSION COSTS—Noncurrent |
3,724,634 |
|
3,769,482 |
|
|
DEFERRED TAX LIABILITIES—Noncurrent |
688,787 |
|
865,697 |
|
|
DEFERRED INCOME—Noncurrent |
3,952,279 |
|
4,236,080 |
|
|
OTHER NONCURRENT LIABILITIES |
2,528,803 |
|
2,619,188 |
|
|
Total Liabilities |
79,460,262 |
|
79,628,260 |
|
|
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY: |
|
|
|
Common-stock—authorized, 75,520,000 shares; issued and outstanding,
46,713,800 and 46,721,400 shares at March 31, 2018 and June 30,
2018, respectively |
25,511,804 |
|
25,518,712 |
|
|
Additional paid-in capital |
36,175,937 |
|
36,183,282 |
|
|
Retained earnings |
8,404,228 |
|
14,167,105 |
|
|
Accumulated other comprehensive income (loss) |
5,074,872 |
|
(142,227 |
) |
|
Treasury stock—1,650,909 shares held by the company at March 31,
2018 and June 30, 2018, respectively |
(1,896,784 |
) |
(1,896,784 |
) |
|
Total Internet Initiative Japan Inc. shareholders' equity |
73,270,057 |
|
73,830,088 |
|
|
NONCONTROLLING INTERESTS |
718,500 |
|
710,511 |
|
|
Total equity |
73,988,557 |
|
74,540,599 |
|
|
TOTAL |
153,448,819 |
|
154,168,859 |
|
|
|
|
|
|
|
|
|
|
|
|
Internet Initiative Japan Inc. |
|
Quarterly Consolidated Statements of Income
and Quarterly Consolidated Statements of
Comprehensive Income (Unaudited) |
|
(For the three months ended June 30, 2017 and
June 30, 2018) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended |
|
Three
Months Ended |
|
|
|
June 30, 2017 |
|
June
30, 2018 |
|
|
|
Thousands of JPY |
|
Thousands of JPY |
|
|
REVENUES: |
|
|
|
|
|
Network services: |
|
|
|
|
|
Internet connectivity services (enterprise) |
6,523,846 |
|
7,789,923 |
|
|
Internet connectivity services (consumer) |
6,154,713 |
|
6,150,296 |
|
|
WAN services |
6,969,904 |
|
7,727,271 |
|
|
Outsourcing services |
6,037,221 |
|
6,995,640 |
|
|
Total |
25,685,684 |
|
28,663,130 |
|
|
Systems integration: |
|
|
|
|
|
Systems construction |
4,439,994 |
|
3,645,465 |
|
|
Systems operation and maintenance |
9,159,313 |
|
10,158,978 |
|
|
Total |
13,599,307 |
|
13,804,443 |
|
|
Equipment sales |
675,922 |
|
1,242,145 |
|
|
ATM operation business |
1,002,992 |
|
995,200 |
|
|
Total revenues |
40,963,905 |
|
44,704,918 |
|
|
COSTS AND EXPENSES: |
|
|
|
|
|
Cost of network services |
21,066,296 |
|
23,845,155 |
|
|
Cost of systems integration |
12,162,837 |
|
12,357,771 |
|
|
Cost of equipment sales |
603,976 |
|
1,136,494 |
|
|
Cost of ATM operation business |
600,642 |
|
582,905 |
|
|
Total costs |
34,433,751 |
|
37,922,325 |
|
|
Sales and marketing |
3,148,710 |
|
3,242,335 |
|
|
General and administrative |
2,129,782 |
|
2,241,937 |
|
|
Research and development |
127,271 |
|
118,454 |
|
|
Total costs and expenses |
39,839,514 |
|
43,525,051 |
|
|
OPERATING INCOME |
1,124,391 |
|
1,179,867 |
|
|
OTHER INCOME (EXPENSES): |
|
|
|
|
|
Dividend income |
72,272 |
|
52,049 |
|
|
Interest income |
7,978 |
|
6,210 |
|
|
Interest expense |
(88,932 |
) |
(97,185 |
) |
|
Foreign exchange gain, net |
5,087 |
|
9,238 |
|
|
Realized and unrealized loss on other investments, net |
- |
|
(746,703 |
) |
|
Other —net |
41,811 |
|
80,989 |
|
|
Other income (expenses) —net |
38,216 |
|
(695,402 |
) |
|
INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE AND EQUITY IN
NET INCOME OF EQUITY METHOD INVESTEES |
1,162,607 |
|
484,465 |
|
|
INCOME TAX EXPENSE |
450,641 |
|
162,909 |
|
|
EQUITY IN NET INCOME (LOSS) OF EQUITY METHOD INVESTEES |
35,859 |
|
(30,613 |
) |
|
NET INCOME |
747,825 |
|
290,943 |
|
|
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS |
(41,781 |
) |
(40,561 |
) |
|
NET INCOME ATTRIBUTABLE TO INTERNET INITIATIVE JAPAN INC. |
706,044 |
|
250,382 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Three Months Ended |
|
|
|
June 30, 2017 |
|
June 30, 2018 |
|
|
NET INCOME PER SHARE |
|
|
|
|
|
BASIC WEIGHTED-AVERAGE NUMBER OF SHARES (shares) |
45,062,838 |
|
45,070,407 |
|
|
DILUTED WEIGHTED-AVERAGE NUMBER OF SHARES (shares) |
45,202,227 |
|
45,233,951 |
|
|
BASIC WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) |
90,125,676 |
|
90,140,814 |
|
|
DILUTED WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS
(ADSs) |
90,404,454 |
|
90,467,902 |
|
|
BASIC NET INCOME PER SHARE (JPY) |
15.67 |
|
5.56 |
|
|
DILUTED NET INCOME PER SHARE (JPY) |
15.62 |
|
5.54 |
|
|
BASIC NET INCOME PER ADS EQUIVALENT (JPY) |
7.83 |
|
2.78 |
|
|
DILUTED NET INCOME PER ADS EQUIVALENT (JPY) |
7.81 |
|
2.77 |
|
|
|
|
|
|
|
|
|
|
Quarterly Consolidated Statements of Comprehensive
Income (Unaudited) |
|
|
|
|
|
Three Months Ended |
|
Three Months Ended |
|
|
|
June 30, 2017 |
|
June 30, 2018 |
|
|
|
Thousands of JPY |
|
Thousands of JPY |
|
|
NET INCOME |
747,825 |
|
290,943 |
|
|
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX: |
|
|
|
|
|
Foreign currency translation adjustments |
(75,709 |
) |
(132,833 |
) |
|
Unrealized holding gain on securities |
609,373 |
|
(4,483 |
) |
|
Defined benefit pension plans |
878 |
|
(422 |
) |
|
TOTAL COMPREHENSIVE INCOME |
1,282,367 |
|
153,205 |
|
|
LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING
INTERESTS |
(41,781 |
) |
(40,561 |
) |
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO INTERNET INITIATIVE JAPAN
INC. |
1,240,586 |
|
112,644 |
|
|
|
|
|
|
|
|
|
|
|
|
Internet Initiative Japan Inc. |
|
Quarterly Consolidated Statements of Cash Flows
(Unaudited) |
|
(For the three months ended June 30, 2017 and
June 30, 2018) |
|
|
|
|
|
|
Three Months Ended |
Three Months Ended |
|
|
June 30, 2017 |
June 30, 2018 |
|
|
Thousands of JPY |
Thousands of JPY |
|
OPERATING ACTIVITIES: |
|
|
|
Net income |
747,825 |
|
290,943 |
|
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
2,979,342 |
|
3,296,705 |
|
|
Provision for retirement and pension costs, less payments |
62,303 |
|
44,233 |
|
|
Provision for allowance for doubtful accounts |
23,661 |
|
19,049 |
|
|
Loss (gain) on sales of property and equipment |
(13,869 |
) |
3,680 |
|
|
Loss on disposal of property and equipment |
21,639 |
|
12,376 |
|
|
Realized and unrealized loss on other investments, net |
- |
|
746,703 |
|
|
Foreign exchange gain, net |
(2,589 |
) |
(21,807 |
) |
|
Equity in net loss of equity method investees, less dividends
received |
15,332 |
|
98,355 |
|
|
Deferred income tax expense (benefit) |
108,916 |
|
(261,428 |
) |
|
Other |
(15,109 |
) |
17,869 |
|
|
Changes in operating assets and liabilities: |
|
|
|
Decrease in accounts receivable |
3,288,086 |
|
3,643,583 |
|
|
Decrease in net investment in sales-type lease — noncurrent |
201,788 |
|
143,758 |
|
|
Increase in inventories |
(320,774 |
) |
(801,821 |
) |
|
Increase in prepaid expenses |
(2,113,231 |
) |
(2,896,102 |
) |
|
Decrease (increase) in other current and noncurrent assets |
(447,177 |
) |
702,434 |
|
|
Increase (decrease) in accounts payable |
(1,718,921 |
) |
87,112 |
|
|
Decrease in income taxes payable |
(757,485 |
) |
(1,534,724 |
) |
|
Decrease in accrued expenses |
(39,674 |
) |
(6,792 |
) |
|
Increase in deferred income—current |
714,717 |
|
1,114,476 |
|
|
Increase (decrease) in deferred income—noncurrent |
(175,856 |
) |
495,316 |
|
|
Increase in other current and noncurrent liabilities |
678,461 |
|
1,146,449 |
|
|
Net cash provided by operating activities |
3,237,385 |
|
6,340,367 |
|
|
INVESTING ACTIVITIES: |
|
|
|
Purchase of property and equipment |
(3,839,315 |
) |
(2,588,168 |
) |
|
Proceeds from sales of property and equipment |
1,275,766 |
|
349,051 |
|
|
Purchase of other investments |
(27,656 |
) |
- |
|
|
Investment in equity method investees |
(43,000 |
) |
- |
|
|
Proceeds from sales of other investments |
33,199 |
|
- |
|
|
Payments of guarantee deposits |
(12,559 |
) |
(3,656 |
) |
|
Refund of guarantee deposits |
10,077 |
|
38,940 |
|
|
Payments for refundable insurance policies |
(14,091 |
) |
(14,091 |
) |
|
Proceeds from subsidies |
48,976 |
|
- |
|
|
Other |
(3,000 |
) |
(9,698 |
) |
|
Net cash used in investing activities |
(2,571,603 |
) |
(2,227,622 |
) |
|
|
Three Months Ended |
Three Months Ended |
|
|
June 30, 2017 |
June 30, 2018 |
|
|
Thousands of JPY |
Thousands of JPY |
|
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Proceeds from short-term borrowings with initial maturities over
three months |
2,500,000 |
|
- |
|
|
|
|
|
|
|
|
Net decrease in short-term borrowings with initial maturities less
than three months |
(2,500,000 |
) |
- |
|
|
|
|
|
|
|
|
Principal payments under capital leases |
(1,334,954 |
) |
(1,527,155 |
) |
|
|
|
|
|
|
|
Payments of long-term accounts payable |
(108,135 |
) |
(176,154 |
) |
|
|
|
|
|
|
|
Dividends paid |
(608,317 |
) |
(608,349 |
) |
|
Other |
(46,797 |
) |
(48,556 |
) |
|
Net cash used in financing activities |
(2,098,203 |
) |
(2,360,214 |
) |
|
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS |
(17,945 |
) |
(29,234 |
) |
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
(1,450,366 |
) |
1,723,297 |
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD |
21,958,591 |
|
21,402,892 |
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, END OF THE PERIOD |
20,508,225 |
|
23,126,189 |
|
|
|
|
|
|
ADDITIONAL CASH FLOW INFORMATION: |
|
|
|
Interest paid |
87,211 |
|
95,902 |
|
|
Income taxes paid |
1,027,984 |
|
1,939,354 |
|
|
|
|
|
|
NONCASH INVESTING AND FINANCING ACTIVITIES: |
|
|
|
Acquisition of assets by entering into capital leases |
2,268,329 |
|
1,695,850 |
|
|
Facilities purchase liabilities |
952,611 |
|
374,393 |
|
|
Asset retirement obligation |
- |
|
24,385 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Going Concern Assumption (Unaudited) |
|
|
|
|
Nothing to
be reported. |
|
|
|
|
|
|
|
|
Material Changes In Shareholders'
Equity
(Unaudited) |
|
|
|
Nothing to be reported. |
|
|
|
|
|
|
|
|
Segment Information (Unaudited) |
|
|
|
|
Business Segments: |
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
Three Months Ended |
Three Months Ended |
|
|
|
|
|
|
June 30, 2017 |
June 30, 2018 |
|
|
|
|
|
|
Thousands of JPY |
Thousands of JPY |
|
|
|
Network service and systems integration business |
40,051,731 |
|
43,793,861 |
|
|
|
|
|
Customers |
39,960,913 |
|
43,709,718 |
|
|
|
|
|
Intersegment |
90,818 |
|
84,143 |
|
|
|
|
ATM operation business |
1,002,992 |
|
995,200 |
|
|
|
|
|
Customers |
|
1,002,992 |
|
995,200 |
|
|
|
|
|
Intersegment |
- |
|
- |
|
|
|
|
Elimination |
(90,818 |
) |
(84,143 |
) |
|
|
|
Consolidated total |
40,963,905 |
|
44,704,918 |
|
|
|
|
Segment profit or loss: |
|
|
|
|
|
|
Three Months Ended |
Three Months Ended |
|
|
|
|
|
|
June 30, 2017 |
June 30, 2018 |
|
|
|
|
|
|
Thousands of JPY |
Thousands of JPY |
|
|
|
Network service and systems integration business |
804,025 |
|
856,362 |
|
|
|
|
ATM operation business |
366,832 |
|
365,340 |
|
|
|
|
Elimination |
(46,466 |
) |
(41,835 |
) |
|
|
|
Consolidated operating income |
1,124,391 |
|
1,179,867 |
|
|
|
|
|
|
|
|
|
|
|
|
Geographic information is not presented due to immateriality of
revenue attributable to international operations. |
|
|
|
|
|
|
|
|
Subsequent Events (Unaudited) |
|
|
|
|
Nothing to
be reported. |
|
|
|
|
|
|
|
|
|
|
|
Note: The following information is provided to
disclose Internet Initiative Japan Inc. ("IIJ") financial results
(unaudited) for the three months ended June 30, 2018 (“1Q18”) in
the form defined by the Tokyo Stock Exchange.
Consolidated Financial Results for the
Three Months ended June 30, 2018 [Under accounting principles
generally accepted in the United States ("U.S. GAAP")]
August 8, 2018
Company name: Internet Initiative Japan
Inc.Exchange listed: Tokyo Stock Exchange First SectionStock code
number: 3774URL: https://www.iij.ad.jp/Representative: Eijiro
Katsu, President and Representative DirectorContact: Akihisa Watai,
Managing Director and CFOTEL: (03) 5205-6500Scheduled date for
filing of quarterly report (Shihanki-houkokusho) to Japan’s
regulatory organization: August 14, 2018Scheduled date for dividend
payment: -Supplemental material on annual results: YesPresentation
on quarterly report: Yes (for institutional investors and
analysts)
(Amounts of less than JPY one million are
rounded)
1. Consolidated Financial Results for the
Three Months Ended June 30, 2018 (April 1, 2018 to June 30,
2018)
(1)
Consolidated Results of Operations |
(% shown is YoY change) |
|
Total revenues |
Operating income |
Income before income tax expense*3 |
Net income attributable to IIJ*3 |
|
JPY
millions |
% |
JPY millions |
% |
JPY
millions |
% |
JPY
millions |
% |
Three months ended June 30, 2018 |
44,705 |
9.1 |
1,180 |
4.9 |
484 |
(58.3) |
250 |
(64.5) |
Three months ended June 30, 2017 |
40,964 |
13.2 |
1,124 |
34.4 |
1,163 |
17.0 |
706 |
33.4 |
(Note1) |
|
Total
comprehensive income attributable to IIJ |
|
|
For the three
months ended June 30, 2018: JPY113 million (down 90.9% YoY) |
|
|
For the three
months ended June 30, 2017: JPY1,241 million (up 189.8% YoY) |
(Note2) |
|
Income before
income tax expense represents income from operations before income
tax expense and equity in net income in equity method investees,
respectively, in IIJ's consolidated financial statements. |
(Note3) |
|
Following the
revision of U.S. GAAP, from 1Q18, accounting policies related to
gains/losses on holding marketable equity securities and funds were
changed. When excludes gains/losses on marketable equity securities
and funds to which accounting policies were changed, our 1Q18
income before income tax expense was JPY1,231 million (up 11.4%)
and net income attributable to IIJ was JPY762 million (up
14.2%). |
|
|
|
|
Basic net incomeattributable to IIJ pershare* |
Diluted net income attributable to IIJ pershare* |
|
JPY |
JPY |
Three months ended June 30, 2018 |
5.56 |
5.54 |
Three months ended June 30, 2017 |
15.67 |
15.62 |
(Note) |
|
Following the
revision of U.S. GAAP, from 1Q18, accounting policies related to
gains/losses on holding marketable equity securities and funds were
changed. When excludes gains/losses on marketable equity securities
and funds to which accounting policies were changed, our 1Q18 basic
net income attributable to IIJ per share was JPY16.90 and diluted
net income attributable to IIJ per share was JPY16.84. |
(2)
Consolidated Financial Position |
|
Total assets |
Total equity |
Total IIJ shareholders'equity |
Total IIJ shareholders'equity to total assets |
|
JPY millions |
JPY millions |
JPY millions |
% |
As of June 30, 2018 |
154,169 |
74,541 |
73,830 |
47.9 |
As of March 31, 2018 |
153,449 |
73,989 |
73,270 |
47.7 |
|
|
|
|
|
2. Dividends
|
Dividend per Shares |
1Q-end |
2Q-end |
3Q-end |
Year-end |
Total |
|
JPY |
JPY |
JPY |
JPY |
JPY |
Fiscal Year Ended March 31, 2018 |
- |
13.50 |
- |
13.50 |
27.00 |
Fiscal Year Ending March 31, 2019 |
- |
|
|
|
|
Fiscal Year Ending March 31, 2019 (forecast) |
|
13.50 |
- |
13.50 |
27.00 |
(Note) Change from the latest released dividend
forecasts: No.
3. Target of Consolidated Financial Results
for the Fiscal Year Ending March 31, 2019 (April 1, 2018 through
March 31, 2019)
|
(% shown is YoY change) |
|
Total Revenues |
Operating Income |
|
JPY
millions |
% |
JPY
millions |
% |
Interim Period Ending September 30, 2018 |
90,000 |
8.4 |
2,500 |
8.0 |
Fiscal Year Ending March 31, 2019 |
190,000 |
7.9 |
7,000 |
3.5 |
(Note1) |
|
Changes from the
latest forecasts released: No |
(Note2) |
|
For details,
please refer to “FY2018 Financial Targets” written on page 9 of
this earnings release. |
* Notes |
(1) |
Changes in significant subsidiaries for the three months ended June
30, 2018 |
|
(Changes in significant subsidiaries for the three months ended
June 30, 2018 which resulted in changes in scope of consolidation):
None |
(2) |
Application of simplified or exceptional accounting for quarterly
consolidated financial statements: None |
|
|
(3) |
Changes in significant accounting and reporting policies for the
consolidated financial statements |
|
1) |
Changes due to the revision of accounting standards: Yes |
|
In May 2014, the Financial Accounting Standards Board (“FASB”)
issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from
Contracts with Customers (Topic 606).” IIJ adopted this ASU in the
first quarter beginning April 1, 2018, using the “modified
retrospective method” and recognized in beginning retained earnings
an adjustment for the cumulative effect of the change. The adoption
of this ASU resulted in the increase in beginning retained earnings
of JPY381,678 thousand. The adoption of this ASU did not have a
material impact on IIJ’s consolidated financial position or
consolidated results of operations. |
|
|
|
In January 2016, the FASB issued ASU 2016-01, "Financial
Instruments - Overall (Subtopic 825-10): Recognition and
Measurement of Financial Assets and Financial Liabilities," which
amends the guidance in U.S. GAAP on the classification and
measurement of financial instruments. Changes to the guidance
primarily affected the accounting for equity investments, financial
liabilities under the fair value option, and the presentation and
disclosure requirements for financial instruments. This ASU
requires equity investments (except those that are in consolidated
subsidiaries or in equity method investees) to be measured
principally at fair value and with changes in fair value recognized
in net income. IIJ adopted this ASU in the first quarter beginning
April 1, 2018 and recognized in beginning retained earnings an
adjustment for the cumulative effect of the change. The adoption of
this ASU resulted in the increase in beginning retained earnings of
JPY5,739,166 thousand, net of tax amount of unrealized gains on
holding investments. |
|
|
|
2) |
Others: No |
|
|
(4) |
Number of shares outstanding (shares of common stock) |
|
1) |
The number of shares outstanding (inclusive of treasury
stock): |
|
As of June
30, 2018: |
46,721,400
shares |
|
As of March
31, 2018: |
46,713,800
shares |
|
2) |
The number of treasury stock: |
|
As of June
30, 2018: |
1,650,909
shares |
|
As of March
31, 2018: |
1,650,909
shares |
|
3) |
The weighted average number of shares outstanding: |
|
For the
three months ended June 30, 2018: |
45,070,407
shares |
|
For the
three months ended June 30, 2017: |
45,062,838
shares |
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