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 15,000 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.

* Client distribution is based on IIJ's FY23 results and prepared by IIJ

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.

• Business briefing on enterprise internet connectivity services

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. Furthermore, in October 2021, we launched next-generation IaaS "IIJ GIO Infrastructure P2 Gen.2" which make it easier to migrate to cloud from on-premise systems.
IIJ GIO revenue is recognized in both outsourcing service revenue and systems operation and maintenance revenue.
IIJ's cloud related revenue for FY2023 is JPY33.4 billion (JPY32.4 billion for FY2022).
For details, please refer to IIJ GIO Service.

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

From January 2008, we started offering corporate data communication services as a NTT Docomo’s Mobile Virtual Network Operator (MVNO). We wanted to offer wireless solutions to corporate customers as we are a total network solution provider. We have been accumulating various enterprise mobile projects such as digital signage, connecting vending machine and other M2M usages.

• Business briefing on enterprise mobile

In March 2018, we became the first Full-MVNO (data communication) in Japan. Unlike conventional MVNOs, Full-MVNOs directly operate subscriber management functions which allows for more flexible network as well as contract operation and enables various SIM shapes such as eSIM, chip SIM, and soft SIM that are highly compatible with IoT. We shall continue to develop and provide new services by leveraging our strengths as a Full-MVNO. We also aim to accumulate advanced IoT projects such as factory IoT.

• Case study: factory IoT for Toyota Motor Hokkaido

As for consumer mobile, we started offering the services in February 2012 as the usage of smartphones and mobile devices became popular among consumers in Japan. We provide "IIJ Mobile MVNO Platform Service" as an MVNE (Mobile Virtual Network Enabler) that supports the entry and operation of other MVNOs. By considering the changing competitive landscape and MVNO consumers' demands, we launched new consumer mobile plan in April 2021 called "IIJmio Mobile Service GigaPlans".

• IIJmio

Our mobile business growth strategy is to gather various mobile traffic such as enterprise and consumer to improve the mobile infrastructure facility to achieve higher utilization which ultimately leads to improvement in our mobile services profitability. Taking advantage of our position as a Full-MVNO and having various enterprise network service elements such as security, cloud and systems integration, we aim to capture the increasing demand for IoT projects in order to achieve further business growth.

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

On May 10, 2024, we disclosed “IIJ Group Mid-term Plan (FY2024-FY2026)”and Mid-to-Long Term Vision. For details, please refer to this page .

Q16 I'd like to know about DeCurret Holdings, Inc., which is IIJ's equity method investee.

DeCurret Holdings, Inc. ("DeCurret Holdings") was established as a holding company through a share transfer of DeCurret Inc. ("DeCurret") on December 27, 2021, and it is an equity method investee of IIJ.

DeCurret Holdings operates a digital currency business through its subsidiary, DeCurret DCP Inc. ("DeCurret DCP"), that has taken over the digital currency business from DeCurret to launch digital currency settlement platform services in Japan. DeCurret DCP sees a great growth opportunity in digital currency settlement platform business as conventional financial infrastructures are expected to change dramatically in Japan where cash is still a predominantly major payment method, and it aims to build a leading position of digital currency settlement platform by leveraging IIJ's Internet-related technological capabilities, including security, network and cloud computing, and collaborating with major Japanese companies, including shareholders. In order to realize issuing a digital currency in the private sector, DeCurret DCP is studying practical use cases of digital currency with the participants of the Digital Currency Forum in which a range of companies from banking, retail, transportation and information and communications industries, and relevant ministries and agencies have participated.

On February 1, 2022, DeCurret Holdings transferred all shares of its crypto asset exchange business subsidiary, DeCurret to WhaleFin Holdings Japan K.K., a Japanese subsidiary of Amber Group, a global provider of crypto asset financial services.

Company information can be found here.

Q17 I'd like to know about JOCDN Inc., which is IIJ's equity method investee.

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.