Consolidated Financial Results for FY2020
Enterprise Network Services (2)
IIJ's Network Services Business Model
Cost doesn't have to increase at the same pace as the revenue
Revenue
➤ Accumulation of monthly recurring service charge
•
IP services are contracted based on bandwidth base
Very low churn rate. Minimum contract period is 1 year.
•
Contracts are renewed every year, generally speaking.
➤ Enterprise Internet connectivity market in Japan is
already matured (everyone is already using Internet) and
consolidated. Very high market share. Difficult to enter
the market
•
IIJ enjoys stable and high market share among large
enterprises
IIJ's internet connectivity services clients include general
Japanese enterprise as well as network operators such as
consumer ISPs, cable TV operators
Revenue for IP services, our core services, increasing as
Japanese enterprises use more Internet and more
contents are exchanged over Internet.
➤ Continuously developing innovative services by
ourselves to encourage Japanese enterprises to
outsource their network and/or system operation
➤ Outsourcing services continuously and largely increasing
mainly because demands for security services and
remote access services are strong
Cost
Unit: JPY million
Growth
Strategy
economy of scale business
➤ IIJ purchases physical fiber from carriers. IIJ owns
network equipment
•
Circuit related costs, depreciation and amortization costs,
data center leasing costs, personnel costs, outsourcing
costs.
As one of the largest independent ISPs, IIJ has strong
buyer power when purchasing fiber and/or equipment
Profit
➤ Revenue continuously growing. Cost, mostly fixed type
cost. IIJ can achieve enjoy economy of scale with strong
revenue accumulation which leads to profit expansion
IP service revenue growth rate accelerating
Number of
791
769
contracts for
743
greater or equi
to 1Gbps as of
40-end
709
690
9.77
10.14
10.57
(+1.0%)
(+3.8%)
(+4.2%)
10.70
(+1.2%)
12.17
(+13.7%)
3.18
2.44
2.55
2.65
2.71
40
3.14
2.46
2.56
2.71
2.68
30
2.47
2.51
2.63
2.97
2.68
120
10
2.40
2.49
2.58
2.63
2.88
FY16
FY17
FY18
FY19
FY20
⚫ IP service is bandwidth guaranteed dedicated Internet connectivity services for
enterprises. Contracts are based on bandwidth and enterprises use the service for
their core and main Internet connectivity
IP service revenue is 100% recognized in Internet connectivity services (Enterprise)
Internet Initiative Japan Inc.
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