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  6. 2Q FY22 Financial Results Briefing (Online)

QAs from earnings release meetings and others

November 7, 2022:2Q FY22 Financial Results Briefing (Online)

(*) This is a summary of questions and answers took place at the Briefing.

Question: Please explain why FY22 financial targets were remain unchanged while 1H22 financial results exceeded your disclosed 1H22 financial targets.
Answer: FY22 financial targets remain unchanged because we are currently accumulating orders toward 4Q in which revenue and profit, especially systems integration portion, tend to contribute to the full year earnings the largest in general and the finalization of FY21 NTT Docomo's mobile data interconnectivity unit charge is scheduled at the end of December 2022.
Question: You disclose that you expect revenue contribution in the latter half of FY22 from the mid-to-large size projects acquired in 4Q21 and 1Q22 with multiple-year-confirmed contracts. Approximately JPY0.5 billion in 3Q22, approximately JPY0.7 billion in 4Q22. Could you comment on how much you expect in 1Q23 from those projects?
Answer: We expect a slight increase in 1Q23 from approximately JPY0.7 billion in 4Q22. Please note that approximately JPY0.5 billion in 3Q22 and approximately JPY0.7 billion in 4Q22 are based on our current estimates and there is a possibility of partially recognizing some lump-sum revenues according to accounting procedure.
Question: What are the features, demand situation, and outlook for earnings' contribution regarding your new SASE (*) services "IIJ Secure Access Service" developed in-house?
Answer: IIJ Secure Access Service is for enterprise clients who are considering using SASE services within Japan. The pricing is less expensive compared to foreign SASE services such as Prisma Access. While we have already received orders, we expect this service is to gradually contribute to our earnings as we accumulate orders over one to two years, like our other services.

(*)SASE (Secure Access Service Edge): a concept to shift controls of network and security on the route to Cloud services to enable secure access from any points, instead of the conventional centralized management through headquarters or data centers

Question: Please tell us about what kind of large scale integrated projects you acquired in 2Q22.
Answer: As disclosed in page 7 of 2Q22 presentation material, we have acquired large scale projects such as cloud-based information platform renewal for a central government agency, network system platform renewal for a prominent company, and several SASE with multi-year fixed contracts. Among these projects, there are projects with a single year contract, yet we expect the projects are to renew annually and new network services are to be added.
Question: Please explain why the acquisition of your consumer mobile, IIJmio, paced up. (Previous quarter end comparison: 2Q22 +53 thousand, 1Q22 +36 thousand, 4Q21 +17 thousand)
Answer: Under the eased competitive landscape due, for example, to competitors' change in pricing, we have achieved stronger customer acquisition by enhancing the offering of mobile devices with attractive prices and those procurement for marketing purposes.
Question: Please explain why your system integration is trending strongly.
Answer: As we see strong demand for network-related integration from all industries, our opportunities to provide in-house developed various network services together with integration function are increasing. Enterprise systems are shifting toward the network-based ones which allow us to see favorable order situation going forward.

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