Results of 3Q February. Internet Initiative Japan Inc.

Transcription

1 Results of 3Q February Internet Initiative Japan Inc. The statements within this may contain forward-looking statements that involve risk and uncertainties. These statements may differ materially from actual future events or results. Readers are referred to the documents filed by Internet Initiative Japan Inc. with the SEC, specifically the most recent reports on Forms 20-F or 6-K, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements. Important risks and factors that could cause our actual results to be materially different from our expectations include, without limitation: that we may not continue to increase subscribers to our connectivity services,particularly subscribers at higher bandwidths, that our large capital investment in Crosswave Communications Inc. may not yield the expected returns in the future or at all, that we may not generate significant revenues from our systems integration services or our valueadded services, including our co-location services, and that leased line costs may not decrease as rapidly as expected or at all. 1

2 Highlights in the 3Q Results Steady Growth in Total Revenues JPY9.9 billion, grew by 35.7% from 3Q00 and by 4.3% from 2Q01. Continuous Decrease in International Backbone Cost Decreased by 62.4% from 3Q00 and by 14.0% from 1Q01. Steady Improvement in Operating Performance 2 Gross margin increased to 14.7%, from 6.7% in 3Q00 and from 14.1% in 2Q01. Operating income continued to improve to JPY151 million EBITDA continued to improve to JPY904 million Expecting Further growth in 4Q01 Top line to be JPY billion, grow by % from 4Q00. Operating income to be JPY150 million - JPY300 million, EBITDA to be JPY900 million - JPY1,050 million Expecting 20% growth for Full fiscal 2001 Top line to be JPY38.3 billion - JPY38.8 billion Operating income to be JPY18 million - JPY168 million EBITDA to be JPY2,893 million to JPY3,043 million

3 Revenues Breakdown (Quarter Basis) (JPY Millions) 4Q Guidance Revenues 10.5B - 11B Value-Added Others Operating Income 150M - 300M EBITDA 900M - 1,050M SI Connectivity 3

4 IIJ Consolidated Revenues (JPY in millions) Expecting full fiscal 2001 to be JPY38.3B-38.8B CAGR 75% for 7 years 8,533 12,323 14,769 25,302 31,876 4Q 9,200 3Q 7,322 2Q 8,108 4Q 10,500 11,000 3Q 9,934 2Q 9,528 1,099 4,058 1Q 7,246 1Q 8,332 3/1995 3/1996 3/1997 3/1998 3/1999 3/ /2001 3/2002E

5 Backbone Costs (1) (JPY Millions) Decreased by 39.5% from 1Q00 Procurement price down by favorable Market Environment International Decreased by 51.4% from 2Q00 Domestic Decreased by 62.4% from 3Q00 5

6 Backbone Costs (2) Domestic & International BB Costs Unit Price for International BB (JPY million) (JPY Thousands) (Mbps) Cost per 1Mbps Expecting FY2001 to be less than FY2000 Backbone Bandwidth

7 Gross Margin Gross Margin Gross Margin By Segment () () 3Q:14.7% SI Connectivity + VAS 7

8 Operating Income/Loss Quarterly Yearly (JPY millions) (JPY millions) 2001E 18M-168M 4Q01E 150M - 300M 8

9 Quarterly Yearly (JPY Millions) 4Q01E 900M -1,050M (JPY Millions) 2001E 2,893M-3,043M 9

10 Internet Connectivity - Capturing Strong demand for Higher Bandwidths - IP Dedicated Access Service IP Service (*) ARPU (Contracts) 3,200 2,800 2,400 Contracted Bandwidth Number of Contracts 7.7Gbps (Gbps) (JPY Thousands) (*) Dedicated Access Service excluding IIJT1Standard/IIJ Economy Bandwidth per Contract (Mbps) 2,000 1,600 1, Revenue per 1Mbps Revenue per Contract 0 1Q98 3Q 1Q99 3Q 1Q00 3Q 1Q01 3Q 10

11 Internet Data Center Services DC Revenues and Contracts (JPY in Millions) Revenues Number of Contracts (Contract) Acquired large IDC contracts Some migrations from conventional connectivity services to data center connectivity services Expecting 4Q to further grow 11

12 Systems Integration Services SI Revenues and Gross Margin Ratio (JPY in Millions) Gross Margin Ratio (%) The highest SI revenues in IIJ history Acquired large SI projects SI Revenues Retained the 15% level in gross margin Expecting 4Q to further grow 12

13 Awarded as the Best Provider 2001 (1) 13 Awarded as the Best Provider IIJ Hitachi (netspace) NTT PC (InfoSphere) Jens (AT&T WorldNet) Japan Telecom (ODN) NTT Communications (OCN) Fujitsu (FENICS) PSInet KDDI (DION) Nifty (@nifty) NEC (Biglobe) 11 Backbones IIJ NTT (Source: Nikkei Communications December 2001) Dedicated Access Service Consulting VAS Server Access Point Operation (Source: Nikkei Communications December 2001) Total Ranking Price Stability Throughput Security Support

14 Awarded as the Best Provider 2001 (2) Dialup Access Service (Source: Nikkei Communications December 2001) Hosting / Housing Services (Source: Nikkei Communications December 2001) Consulting Server Operation Total Ranking Price Stability Access Point Consulting Backbones Extensibility Total Ranking Price Throughput Support VAS Throughput Space Stability IIJ KDDI 14 Backbones Security Support Backup Security Operation IIJ NTT

15 Closed IP Network Access to the platform will be for free of chargebroadcasting model) Internet DC cache DC cache DC cache DC cache DC cache DC cache IP CATV IP CATV IP CATV IP CATV 15

16 Change on End User Side Current IIJ CDN Access Access IIJ CDN User Access ISP ISP Internet Protocol Internet Protocol Internet Content Internet Protocol IIJ CDN Content ISP Internet Protocol Internet 16

17 Distribution Outsourcing Vendors * Distribution Vendors * Corporate Information Content Holders Settlement User Management Content Management Systems Management and Operation Data Center CDN Network (Cash-controlled Network) 17