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Business Overview

Q1 Why do you call yourself the "Total Network Solution Provider"?

We call ourselves the "Total Network Solution Providerblank" because we provide Internet connectivity services, WANblank services, outsourcing services and systems integrationblank as a one-stop solution to our customers.

Q2 Who are IIJ's competitors?

For Internet connectivity services, WANblank services and outsourcing services, we often compete with telecommunication carriers such as NTT Communications Corporation and KDDI Corporation. For systems integrationblank, we often compete and also work together as a team with systems integratorsblank such as NEC Corporation, Fujitsu Limited and NTT DATA Corporation. IIJ will further enhance its Internet technological skills and develop services that meet customer needs to differentiate ourselves from other competitors to strengthen our position as a total network solution providerblank.

Q3 I'd like to know more about IIJ's customers.

We believe our expertise lies in the ability to provide highly valued total network solution services underlined by Internet related technology. Our customer targets are those which use their network for mission critical systemsblank. Currently we have over 8,500 client base mostly large corporate and governmental organizations. Among our customers using Internet connectivity services, there are those who provide consumer use services such as ISPsblank, CATVs (Cable Television) and providers of online game services. In addition, we offer Internet connectivity service for home use under "hi-ho" brand and IIJ brand.

Q4 Is IIJ dependent on certain customer or certain industry for its revenue?

IIJ is one of the first ISPsblank that began providing its Internet connectivity service in Japan. Over the years, we have accumulated over 8,500 client base covering almost every industry in Japan. The revenue of our largest customer is no greater than 3% of the total revenue. Our strategy is to increase each customers' network usage further more by offering outsourcing and cloud services that meet the increasing demands of Japanese corporates and governmental organizations.
For penetration rate in each industry, please refer to IIJ's Strengthsblank.

Q5 Is IIJ's business affected by economic conditions?

For the fiscal year ended March 31 2016, approximately 80% of our revenues were recurring revenues which come from Internet connectivity services, WANblank services, outsourcing services and systems operation and maintenance. These recurring revenues should increase along with the accumulation of services order. Systems construction revenues and equipment sales which are one-time revenues are volatile to economic conditions.

Q6 What consists costs of stock revenues

Costs of stock revenue do not increase or decrease largely in relation to revenue as they are consisted mainly of costs necessary to operate our large network infrastructure, such as circuit-related, depreciation related to network and servers, data center-related and personnel and outsourcing-related costs. Thus, in principal, if stock revenue growth is strong, gross margin improvement will be strong and on the contrary, if stock revenue decreases, the drop in gross margin will be large.

Q7 Are prices for Internet connectivity services still dropping?

Internet connectivity service prices in Japan were continuously dropping strongly from year 2000 to 2004 due to heavy price competition. As a result, the Japanese Internet connectivity is one of the low price services in the world. Although there are still price competitions, we recognize that mergers of several major ISPsblank had eased the strong pressure on prices as the number of competitors in the market has decreased, in general.

Q8 What exactly do you mean by high technological skills?

IIJ was established in 1992 by a group of highly motivated and skilled top level IPblank engineers in Japan. Even today, Japan's top level Internet engineers are working for us, developing Internet related prototype services and serving as leaders of the Japanese Internet market and operating one of the largest in-house developed backboneblank in Japan. Our engineers are also participating in several scientific and technological researches such as IPv6blankand SDNblank researches to further contribute to the development of the Internet related technologies.

Q9 I'd like to know more about IIJ's Internet connectivity services.

Internet connectivity services allow customers to connect their networks to the Internet. For example, we provide dedicated line connectivity services of over 1Gbpsblank with less limitations on IP addressesblank, low price broadbandblank type services such as NTT Flet'sblank, IIJ Mobile services provided under MVNOblankscheme such as IIJmio and hi-ho. Typically, customers would choose high value dedicated connectivity service for headquarters and broadband connectivity for branch offices.
For details, please refer to Internet Accessblank.

Q10 I'd like to know more about IIJ's WAN services.

We provide closed network services as WANblank services, using network connectivity such as Ethernetblank, dedicated line and others. Our WAN services are offered by both IIJ and IIJ Global Solutions Inc.

Q11 I'd like to know more about IIJ's outsourcing services.

We provide outsourcing services that would add value to the Internet connectivity services such as web hosting, DNSblank service, Internet-VPNblank service, email service, anti-spamblank mail service, mail archives, DDoSblank prevention service, routerblank management service, firewall service, etc. Also, we provide our cloud computingblank service as "IIJ GIO / Hosting Package."

Q12 I'd like to know more about IIJ's systems integration.

The systems integrationblank that we provide is mainly related to network integration. We are very strong in constructing corporate network system construction over the Internet. We provide consultation, network design, network configurations, serverblank setups, network related application setups, securityblank system setups, network operation and maintenances. We are also very strong in web related systems construction such as on-line shopping. Also, we are also one of the earliest companies to construct an on-line securitiesblank system over the Internet. In addition, we provide our cloud computingblank service as "IIJ GIO / Component."

Q13 What is equipment sales?

We provide sales of "SEILblank," a next generation routerblank developed by IIJ, third-party vendor network equipment, iPad and others. We provide equipment sales to meet the one-stop needs of our customers.

Q14 I'd like to know more about IIJ's cloud computing service "IIJ GIO".

IIJ GIO is the brand name for our cloud computingblank service. IIJ GIO provides services ranging from "IaaS" (Infrastructure as a service)blank to "SaaS" (Software as a service)blank. Over the past decade we have been actively developing technology and have been providing services in cloud computing related fields. IIJ GIO draw on this accumulated expertise to provide services that enable our customers to enjoy the full benefits of cloud computing.
IIJ GIO revenue is recognized in both outsourcing service revenue and systems operation and maintenance revenue.
As of March 31, 2016, IIJ GIO was adopted by approximately 1,430 corporate clients and IIJ's cloud related revenue for the fiscal year ended March 31, 2016 was JPY14.1 billion.
For details, please refer to IIJ GIO Serviceblank.

Q15 I'd like to know about IIJ's plan for mid-to-long term growth.

We disclosed our middle term plan for the period from the fiscal year ending March 31, 2017 to the fiscal year ending March 31, 2021 in our earnings results for the fiscal year ended March 31, 2016, which was filed as Form 6-K on May 31, 2016. For details, please refer to this page.blank

For investor inquiries, please contact:

Investor Relations Office
Phone: +81-3-5205-6500
(9 am to 5:30 pm, except Saturday, Sunday, national holidays, new year holidays and other company holidays)

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