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Business Overview

Q1 Why do you call yourself a total network solution provider"?

We call ourselves a total network solution provider because we provide Internet connectivity services, Outsourcing services, WAN services, and systems integration as a one-stop solution to our enterprise customers.

Q2 Who are IIJ's competitors?

For Internet connectivity services, WAN services and outsourcing services, we often compete with telecommunication carriers such as NTT Communications Corporation and KDDI Corporation. For cloud services, we compete against global players such as Amazon Web Services, Inc. and MICROSOFT CORPORATION who have been aggressively expanding their business in Japan. For our consumer business, especially our mobile services for consumers, in which we offer inexpensive LTE SIM cards through an MVNO scheme, our major competitors are NTT Docomo, KDDI, SoftBank Corp, their affiliated companies, and MVNOs. For systems integration, we often compete and also work together as a team with systems integrators 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 provider.

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 systems. Currently we have approximately 13,000 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 ISPs, CATVs (Cable Television) and providers of online game services. In addition, we offer Internet connectivity service for home use under IIJ brand.

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

IIJ is one of the first ISPs that began providing its Internet connectivity service in Japan. 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.

Q5 Is IIJ's business affected by economic conditions?

Over 80% of our total revenues are recurring revenues which come from Internet connectivity services, WAN 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 consits cost of recurring 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 Please tell me how IIJ survived the tough price competition for Internet connectivity services.

Prices for Internet connectivity service in Japan significantly and continuously dropped during 2000 to 2004 due to heavy price competition. As a result, the prices for Internet connectivity in Japan is said to be one of the lowest the world. IIJ survived the tough competition by focusing more on enterprises demands which require reliable connectivity and other quality of service.

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 IP 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 backbone in Japan. Our engineers are also participating in several scientific and technological researches to further contribute to the development of the Internet related technologies.
It is hard to provide quantitative analysis about our high technological capabilities, we believe the fact we are able to maintain blue-chip clients base since the inception of the company could indicate that they are very satisfied with our quality of service.

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

Internet connectivity services allow users to connect their networks to Internet. The services are provided continuously and revenues are recorded on a monthly recurring basis. For example, we provide

  1. (1)dedicated line connectivity services called IP (Internet Protocol) services of over 1Gbps with less limitations on IP addresses
  2. (2)low price broadband type services such as NTT Flet's
  3. (3) IIJ Mobile services for enterprise customers, provided under MVNO blank scheme
  4. (4) IIJmio, Internet connectivity services for consumers.

Typically, customers would choose high value dedicated connectivity service for headquarters and broadband connectivity for branch offices.
For details, please refer to Internet Access.

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

Wide Area Network (WAN) is a telecommunications or computer network for data communications, with leased circuits or other types of network services, that extends over a large geographical distance.
We provide closed network services as WAN services, using network connectivity such as Ethernet, 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, DNS service, Internet-VPN service, email service, anti-spam mail service, mail archives, DDoS prevention service, router management service, firewall service, etc. We also provide public cloud computing services which revenues are recognized in outsourcing services.

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

The systems integration 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, server setups, network related application setups, security 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 securities system over the Internet. In addition, we provide private cloud computing services which revenue are recognized in systems operation and maintenance. Systems integration includes sales of "SEIL," a next generation router developed by IIJ, third-party vendor network equipment, mobile devices and others to meet the one-stop needs of our customers.

Q13 I'd like to know more about IIJ's cloud computing service "IIJ GIO".

IIJ GIO is the brand name for our cloud computing service. IIJ GIO provides services ranging from "IaaS" (Infrastructure as a service) to "SaaS" (Software as a service). 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. In November 2015, we launched new cloud service platform service "IIJ GIO Infrastructure P2" through which public cloud services and private cloud services can be offered seamlessly. For details about the service, please refer to "IIJ to Launch "IIJ GIO Infrastructure P2"-A Next-generation Cloud Service"
IIJ GIO revenue is recognized in both outsourcing service revenue and systems operation and maintenance revenue.
IIJ's cloud related revenue for FY2020 is JPY26.2 billion (JPY23.6 billion for FY2019).
For details, please refer to IIJ GIO Service.

Q14 I'd like to know more about IIJ's mobile services and its growth strategy.

In January 2008, we became the first Mobile Virtual Network Operator (MVNO) to use NTT Docomo's 3G FOMA network to offer corporate data communication services. We wanted to offer wireless solutions to corporate customers as we are a total network solution provider. These days, we see increasing interests in M2M and IoT related usage from them. For example, we offer mobile connectivity to connect security cameras so that the recorded data are transferred to a monitoring office and such. We believe the demands for IoT should significantly grow for the middle-to-long term and we are excited about such growing demands as we already have necessary elements to build IoT systems such as security services, cloud services and SI function.

In March 2018, we became the first Full-MVNO (data communication) in Japan. Since then, we have been continuously developing and providing new functions such as eSIM (ChipSIM) and SoftSIM to meet enterprise IoT demands.

As for consumer mobile, we started offering the services in February 2012 as the usage of smartphones and mobile devices became popular among them. Our main service is low data volume for low price, mainly targetting so-called "light-users" who have WiFi at home and/or office. By considering the changing competitive landscape and consumers' demands, we launched new consumer mobile plan from April 2021 "IIJmio Mobile Service GigaPlans". Since we offer our mobile services both to enterprise and consumer from the same MVNO service infrastructure, our consumers can enjoy highly reliable connectivity. We also differentiate from peers by various sales channel (sales partners and MVNE) as well as unique services by leveraging our full-MVNO facilities.

As a conclusion, IIJ's mobile business growth strategy is to gather various mobile traffic such as enterprise, IoT, and consumer to improve the mobile infrastructure facility to achieve higher utilization which ultimately leads to improvement in our mobile services profitability.

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

On May 12, 2021, we disclosed our new mid-term plan for the three years from FY2021 to FY2023. For details, please refer to this page . Please note that we updated operating margin target for FY2023 from over 9% to over 10% on November 5, 2021 which is when we announced upward revision for FY2021 financial targets.

Q16 I'd like to know about DeCurret Inc.

In January 2018, IIJ established DeCurret Inc. ("DeCurret") as an equity method investee to launch digital currency settelement platform services with major Japanese companies.
By leveraging IIJ's existing ASP FX (foreign exchange) trading system, which has been used by major Japanese financial institutions, DeCurret develops highly reliable and scalable cryptocurrency exchange system and services, incorporating Anti-Money Laundering (AML) and Know Your Customer (KYC) and other necessary and critical security requirements.
DeCurret sees a great growth opportunity in digital currency settlement platform business as conventional financial infrastructure needs to be changed dramatically, especially in Japan where cash is still a predominantly major payment method. DeCurret is very excited about working together with so many outstanding Japanese companies to create a new standard for digital currency settlement platform which is thought to be a new social infrastructure.
DeCurret is serving as the secretariat of the Digital Currency Forum, a forum to study the practicality of digital currency in Japan, with the participation of more than 60 companies from a wide range of fields including banking, retail, transportation, and information and communications, as well as experts and relevant ministries and agencies as observers.
DeCurret's company information can be found here.

Q17 I'd like to know about JOCDN Inc.

In December 2016, IIJ established JOCDN Inc. (JOCDN) with Nippon Television Network Corporation as an equity method investee to provide a content delivery platform specialized for video distribution within Japan. 15 other major boardcasing companies, WOWOW, and NHK (Japan's only public broadcasting company) also became JOCDN's shareholders.
JOCDN provides high-quality and cost efficient video distribution services to broadcasters and video companies who are to face increase in CDN traffic along with 4k penetarion and other rich contents.

For investor inquiries, please contact:

Investor Relations Office
ir@iij.ad.jp
(9 am to 5:30 pm, except Saturday, Sunday, national holidays, new year holidays and other company holidays)


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