Internet Initiative Japan (3774) Q2 2027 earnings summary

Executive summary

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

• Strong SI demand, including GPU infrastructure projects, drove revenue growth; SI backlog reached ¥214.0bn, up 61.0% YoY.

Financial highlights

• Cost of revenue rose 34.7% to ¥170.80bn; gross profit increased 12.5% to ¥39.50bn.

• Profit before tax rose 5.9% to ¥16.05bn; basic EPS was ¥60.74 versus ¥56.64 in 1H25.

• Operating profit grew 7.4% despite the absence of the ¥1.17bn retirement-benefit-plan revision gain recorded in 2Q25.

• Comprehensive income rose 42.1% to ¥15.4bn, mainly reflecting a ¥4.7bn fair-value increase in investment securities.

Outlook and guidance

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

• FY26 gross margin is expected to edge down with service mix and hardware-heavy SI construction projects.

• FY27 revenue is expected to remain high on the 1H26-end SI backlog; a ¥20.5bn GPU construction and O&M project is expected to recognize most construction revenue in FY27.

• Enterprise network service price revisions are planned from the start of FY27.

• Long-term plan targets revenue above ¥500bn in FY29, with an operating margin of 12%–15%.