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Business Model

Combined Provision of In-House Developed Network Services and System Integration

IIJ was founded with the vision of spreading Internet a new means of communication in Japan, and began providing Japan's first commercial Internet connectivity service. IIJ established a dominant market position in the Japanese ISP market in the mid-1990s; however, price competition intensified as the number of new entrants increased with the spread of Internet. In such an environment, IIJ Group focused on large-scale enterprises and government agencies that use Internet for their businesses and also developed high value-added network services based on the accumulation of Internet-related technologies in the fields of Internet connectivity, security, Cloud, and mobile services, and provided these services on a monthly basis with its advanced operation capability. Thus, IIJ Group strategically transformed its business model. IIJ Group responds to the diverse network and system demands of enterprises and government agencies by providing a combination of these services and systems integration.

Cross-Selling of In-House Developed Services to Customer Base

The Internet backbone network, which is one of IIJ Group’s strengths, has not experienced any serious failures in about thirty years since its inception, and many of its customers have continued to use its network services over the years. IIJ Group aims to further expand the scale of transactions with them by providing a combination of reliable and high-value-added network services to these customers who have fostered a sense of trust in IIJ Group.

The provision of Internet-related services to customers operating large-scale internal systems has traditionally centered on Internet connectivity and gateway-type services outside of their internal systems. In recent years, large-scale enterprises and government agencies have evolved their systems to ones that combine Internet technologies such as Cloud and remote access based on zero-trust concept with advanced security features. As such, IIJ Group expects demands for its network services and systems integration to increase.

Value Creation Process

Purpose

As the company name "Internet Initiative Japan Inc." suggests, we are committed to the ongoing pursuit of initiatives in the field of Internet technology, which is one of those technological innovations that might occur once in a century, and contributing to the development of the networked society by providing groundbreaking services and platforms that propose new uses for the network.

External Environment

  • Rapid digitalization of social and corporate activities, faster networks and computing (data processing)
  • Migration to new systems based on high-speed networks and Cloud utilization
  • Growing demand for robust Internet infrastructure
  • Increasing needs for security and privacy protection
  • Expectations for companies to solve social issues

Sources of Competitiveness

Strengths

  • One of Japan's largest Internet backbone networks and reliable Internet operations capability
  • High-value-Added service development and sophisticated operation capabilities
  • Approximately 14,000 customer base, primarily large-scale enterprises and government agencies

(As of Mar. 31, 2023)

  • Human Capital: Employees 4,451 of which, engineers 3,149 (Approximately 70% of all employees)
  • Subsidiaries: Japan: 5, Overseas: 11
  • Data centers: 16 of which, IIJ's own data centers: 2
  • Sales partners: over 300
  • Total equity attributable to owners of the parent: ¥ 118.1 billion
  • Ratio of owners' equity to total assets : 48.0％

Efforts in technology and service development/quality to expand competitiveness

Initiatives to 5G SA, SASE, multi-cloud operation technology, information analysis platform for security threat, infrastructure virtualization/automation technology, and service quality enhancement

Enhancement of the company's operational foundation for long-term business growth
Approach to sustainability

Material issues

  • Lead network infrastructure advancement with technological innovations and contribute to solving various social issues
  • Provide safe and robust Internet services that support social infrastructure
  • Provide an arena for people with diverse talents and values, where they can exercise their skills and actively and boldly take on challenges

Creation of Economic Value

FY2022
  • Revenues ¥252.7 billion （+11.7％ YoY）of which, Monthly Recurring Revenue 82％
  • Operating Profit ¥ 27.2 billion（+15.6% YoY）, Operating Profit Margin 10.8％
  • Profit attributable to owners of the parent ¥ 18.8 billion（+20.2% YoY）

Creation of Social Value

Environment

Reduction of GHG emissions through the use of renewable energy and the improvement of energy conservation at the own data centers

Society
  • Solving various social issues by providing network services relating to government, medical and nursing care, agriculture, and education
  • Contribution to the technological development and spread of Internet （ISOC, FIRST, ITU-T）
  • Support for compliance with privacy protection regulations worldwide (acquired ISO, ISMAP)
Diversity

(As of April 2023)

  • Female ratio in recruitment 27%
  • Ratio of female managers 6.3%（+0.6％ YoY）

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