Internet Initiative Japan (3774) Investor presentation summary

Strategic direction

• Shifting toward integrated network, security, cloud and operations offerings, building recurring revenue as large network renewal projects transition into ongoing services.

• Targeting consolidated revenue above ¥500.0bn in FY29; plans to enable ~30% of company-wide operations with AI by FY29.

• Preparing price revisions for many enterprise network services from the start of FY27; developing next-generation integrated security services for launch in 4Q26.

• Competitive strengths include a large domestic internet backbone, over 2,000 network engineers, ~16,000 clients and ~80% recurring revenue.

1H26 performance and FY26 outlook

• 1H26 revenue was ¥210.30bn, +29.9% YoY; operating profit ¥16.53bn, +7.4%; net profit ¥10.77bn, +7.4%.

• FY26 forecast raised to revenue of ¥428.0bn (+23.9% YoY), operating profit of ¥39.0bn (+12.0%) and net profit of ¥25.5bn (+5.4%).

• 1H26 gross profit rose 12.5% YoY to ¥39.50bn; gross margin was 18.8%, reflecting revenue mix and hardware-heavy SI construction.

• FY26 dividend forecast is ¥43.00 per share, up ¥4.00 YoY; forecast payout ratio is 29.9%.

Network and SI trends

• 1H26 network services excluding mobile revenue was ¥64.11bn, +6.6% YoY; security services revenue reached ¥22.01bn, +11.8%.

• Mobile services revenue grew 9.4% YoY to ¥29.43bn; subscriptions totaled 6.75m, up 0.76m YoY.

• 1H26 SI construction revenue increased 114.4% YoY to ¥60.67bn; operation and maintenance revenue grew 21.1% to ¥54.54bn.

• 1H26 SI orders received were ¥115.2bn, +57.1% YoY, and order backlog was ¥153.3bn, +41.1% YoY.

• A GPU infrastructure construction and operations project worth ¥20.5bn over five years is expected to recognize most construction revenue in FY27.