Internet Initiative Japan (3774) Q3 2026 earnings summary

Executive summary

• Revenue for 1Q–3Q25 rose 8.7% year-over-year to ¥249.3 bn, driven by strong recurring revenue, large-scale network and service integration projects, and Japan's digital transformation.

• Operating profit increased 17.9% YoY to ¥24.4 bn, with net profit up 18.0% YoY to ¥16.3 bn, supported by financial income and a one-time gain from retirement benefit plan revision.

• Monthly recurring revenue (MRR) from network services grew 10.0% YoY, with security services up 14.1% and SI operation/maintenance up 15.9%.

• Orders received for systems construction and operation/maintenance increased 28.6% and 20.3% YoY, respectively, with large-scale project wins becoming a new norm.

• Growth was supported by a 12.0% YoY increase in monthly recurring revenues, while one-time systems construction revenue declined 3.5% due to the absence of a prior large project.

Financial highlights

• Gross profit for 1Q–3Q25 was ¥54.2 bn (21.7% margin), up 10.8% YoY; operating profit was ¥24.4 bn, up 17.9%.

• Network services revenue reached ¥132.1 bn, up 10.0% YoY; systems integration revenue was ¥115.0 bn, up 7.4%.

• Recurring revenue accounted for 81.0% of total revenue, up 12.0% YoY; one-time revenue declined 3.5% YoY.

• Security business revenue grew 14.1% YoY; mobile/IoT subscriptions and revenue also showed double-digit growth.

• Free cash flow improved by ¥20.9 bn YoY; cash and equivalents increased by ¥8.1 bn since March 2025.

Outlook and guidance

• FY25 revenue target is ¥340.0 bn (+7.3% YoY), with gross profit of ¥77.0 bn (+12.6% YoY) and operating profit of ¥36.5 bn (+21.2% YoY).

• Dividend per share forecast is ¥39.00 (+11.4%), targeting a 30% payout ratio.

• CAPEX for FY25 planned at approx. ¥30.0 bn, including ¥8.5 bn for Shiroi data center's 3rd site.

• Employee count to increase by about 440, with a 6% average annual salary hike.

• Management expects continued business scale expansion and further growth opportunities in cybersecurity and IT outsourcing.