Internet Initiative Japan (3774) Q3 2025 earnings summary

Executive summary

• Achieved strong revenue growth of 14.0% YoY to ¥229.3 bn for 1Q–3Q24, driven by large-scale service integration projects and robust demand in enterprise networks.

• Operating profit rose 2.1% YoY to ¥20.7 bn, with net profit up 6.2% YoY to ¥13.8 bn, despite VMware license-related cost headwinds.

• Secured major long-term projects, including a new shared banking system platform for regional banks (approx. ¥11.0 bn, 8 years).

• Leadership transition announced, with Yasuhiko Taniwaki to become president in April 2025, focusing on cybersecurity and innovation.

• Monthly recurring revenues are accelerating, supported by cross-selling and new service launches.

Financial highlights

• Total revenues for 1Q–3Q24: ¥229.3 bn (+14.0% YoY); operating profit: ¥20.7 bn (+2.1% YoY); net profit: ¥13.8 bn (+6.2% YoY).

• Recurring revenue: ¥180.4 bn (+9.1% YoY); one-time revenue: ¥46.7 bn (+39.3% YoY).

• Gross profit: ¥48.9 bn (+6.5% YoY); gross margin: 21.3%.

• Adjusted EBITDA for 1Q–3Q24: ¥33.5 bn (+5.0% YoY).

• Basic earnings per share increased to ¥77.93 from ¥73.10 YoY.

Outlook and guidance

• FY24 revenue target revised to ¥312.0 bn (+13.0% YoY), with operating profit target of ¥32.0 bn (+10.2% YoY) and net profit target of ¥20.6 bn (+3.9% YoY).

• Dividend forecast for FY24: ¥35.00 per share, payout ratio 30.1%.

• Expect continued growth in recurring revenues and further margin improvement as price revisions and cost pass-throughs take effect.

• Full-year results are expected to be heavily influenced by fourth quarter performance due to seasonality.