Internet Initiative Japan (3774) Q1 2027 earnings summary

Executive summary

• 1Q26 revenue rose 27.1% YoY to ¥97.60 bn, driven by strong domestic, overseas, and large-scale enterprise projects, with profit metrics on track and continued solid demand across business lines.

• Operating profit increased 9.2% YoY to ¥6.59 bn, and net profit grew 16.4% YoY to ¥4.40 bn, reflecting robust performance in network services and systems integration.

• Large-scale project wins and expansion in recurring revenue streams underpin growth, while investments in AI, security, and data center infrastructure support long-term strategy.

• Strong growth in systems integration (SI) revenues, especially from one-time hardware and construction projects.

• The company is advancing integrated security services and expects continued growth from digital transformation and AI adoption.

Financial highlights

• Revenue: ¥97.60 bn (+27.1% YoY); Operating profit: ¥6.59 bn (+9.2% YoY); Net profit: ¥4.40 bn (+16.4% YoY).

• Network services revenue grew 8.4% YoY to ¥46.1 bn; SI revenue surged 51.2% YoY to ¥50.7 bn.

• Gross profit: ¥17.97 bn (+7.7% YoY), gross margin 18.4%.

• Recurring revenue accounted for 74.4% of total, up 12.8% YoY; one-time SI construction revenue surged due to two large projects.

• Earnings per share (EPS) rose to ¥24.79 basic and ¥24.70 diluted, up from ¥21.35 and ¥21.24, respectively.

Outlook and guidance

• FY26 revenue forecast unchanged at ¥385.0 bn (+11.5% YoY), with operating profit of ¥38.5 bn and net profit of ¥25.0 bn.

• Interim revenue target for September 2026 is ¥180.0 bn.

• Gross margin expected to remain stable; recurring revenue and large-scale SI projects to drive growth.

• CAPEX plan for FY26 is approx. ¥38.0 bn, with major investments in data center expansion.

• Dividend forecast: ¥43.00 per share, payout ratio 30.5%.