Internet Initiative Japan (3774) Q2 2026 earnings summary

Executive summary

• Achieved strong growth in 1H25 with revenue of ¥161.91 bn (+10.1% YoY), operating profit of ¥15.39 bn (+30.6% YoY), and net profit of ¥10.03 bn (+34.2% YoY).

• Growth driven by robust demand for network and systems integration services, especially large-scale and multi-year projects.

• Secured eight new large-scale projects from 2Q25 onward, totaling ¥28.0 bn in contract value, a 1.5-fold increase from the previous year.

• Enhanced service offerings and launched new solutions in security, IoT, and cloud, supporting recurring revenue growth.

• Progress in new business areas includes digital currency platform adoption by JAPAN POST BANK and a joint venture with Sony for smart agriculture.

Financial highlights

• Recurring revenue reached ¥132.1 bn (+11.3% YoY), accounting for 81.6% of total revenue.

• Network services revenue grew 10.3% YoY to ¥87.0 bn; systems integration revenue rose 10.1% to ¥73.3 bn.

• Gross profit rose to ¥35.13 bn (+14.5% YoY), with SI gross profit up 29.7% YoY and NW services gross profit up 9.0% YoY.

• Operating margin improved to 10.7% in 1H25 from 8.0% in 1H24.

• Cash and cash equivalents increased by ¥4.76 bn to ¥37.30 bn as of Sep. 30, 2025.

Outlook and guidance

• FY25 revenue target set at ¥340.0 bn (+7.3% YoY), with operating profit target of ¥36.5 bn (+21.2% YoY) and net profit target of ¥23.0 bn (+15.4% YoY).

• Dividend per share forecasted at ¥39.00 (+4.00 YoY), maintaining a payout ratio of 30%.

• Management expects the fourth quarter to deliver the largest revenue and profit contributions.

• Continued focus on large-scale service integration projects and expansion of recurring revenue base.

• CAPEX plan for FY25 is approximately ¥30.0 bn, including investment in Shiroi data center's 3rd site.