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IIJ Announces Nine Months Financial Results for the Fiscal Year Ending March 31, 2014

IIJ Announces Nine Months Financial Results for the Fiscal Year Ending March
31, 2014

TOKYO, Feb. 7, 2014 (GLOBE NEWSWIRE) -- Internet Initiative Japan Inc. ("IIJ")
(Nasdaq:IIJI) (TSE:3774) today announced its consolidated financial results
for the nine months of the fiscal year ending March 31, 2014 (from April 1,
2013 to December 31, 2013, "3Q13").^1


Highlights of 3Q13 Financial Results
                                                     
Revenues                    JPY82,746 million (up 7.9% 
                            YoY)
Operating Income            JPY4,211 million (down     
                            16.5% YoY)
Net Income attributable to  JPY2,924 million (down     
IIJ                         6.0% YoY)
                                                     
Revised Full FY2013 Financial Targets
▪ We revised FY2013 financial targets due to the weaker than expected
recurring revenues which mainly came from certain large customers. The
operating income was impacted accordingly as the costs for recurring revenues
are not directly correlated with revenue trend.
                                                     
                           Previous Target            Revised Target (Feb. 7)
Revenues                   JPY117,000 million         JPY114,000 million
Operating Income           JPY9,400 million           JPY6,000 million
Net Income attributable to JPY6,000 million           JPY4,700 million
IIJ


Overview of 9 months for FY2013 Financial Results and Business Outlook

"We recognize the coming several years to be remarkable period for IIJ to leap
into the next level of business phase. The continuous technological innovation
of network infrastructure, the ongoing development of the widely-used smart
phones and other portable devises, and the evolving IT needs as seen with the
growing concept of big data should promote the further adoption of network and
cloud usages by Japanese enterprises and governmental organization supported
by the returned demand on systems investment along with the Japanese economic
recovery. To grasp these favorable growth opportunities, we're enhancing our
business investments more than ever. This fiscal year, we're increasing the
procurement number of employees and aggressively investing in cloud and
overseas businesses in particular," said Koichi Suzuki, Founder and CEO of
IIJ.

"Along with our business expansion, our operating costs, including
depreciation and amortization, personnel and overseas business-related costs,
have increased largely from the beginning of this fiscal year. On the other
hand, we've suffered from some large customers' recurring revenues slow down
and decrease than estimated this fiscal year. Certain carriers, network
operators and game providers are one of our largest customers, and we had
serious price down pressure for Internet connectivity and WAN services and
partial cancellation of server usage from them due to their individual
business conditions. Costs of our recurring revenues are mainly costs to
operate and maintain network facilities and equipment such as depreciation,
personnel and circuit related costs and these costs are not directly
correlated with individual revenue increase or decrease in general. Thus, the
increasing gap to our initial expectation quarter by quarter in recurring
revenues impacts our income level significantly. We're seeing quite fine
systems construction orders, yet it wouldn't be strong enough to cover their
reduced volume. Considering these situations, we revised our financial target
downward," said Eijiro Katsu, President and COO of IIJ.

^1 Unless otherwise stated, all financial figures discussed in this
announcement are prepared in accordance with U.S. GAAP. All financial figures
are unaudited and consolidated. The translation of Japanese yen into U.S.
dollars is solely for the convenience of readers outside of Japan. The rate
used for the translation was JPY105.25 per US$1.00, which was the noon buying
rate on December 31, 2013.

"We perceive this fiscal year's financial situation as a part of the course
for future growth, although the sales slumps of large customers have not been
expected. Sales activities have been quite fine in accumulating new orders and
polishing the existing deep relationships with our core customers. It is true
that our business transactions with large customers continuously become
significant and our business volatility becomes large along with that. We need
to implement further stronger control and management for large accounts and
also increase such large customers and transactions more to reduce total
business volatility. We believe our cloud strategy to capture blue-chips' core
platform systems should respond this issue to grow our customers into large
accounts in the middle term," continued Katsu.

"We can anticipate continuous growth of network and outsourcing demands,
strong SI orders next year. As for large accounts, network carriers' traffic
should continuously grow and game providers' server usage should grow in
total. We are still in the middle of business investment and we continuously
pursue business expansion strategy. We'll devote ourselves on network services
development and the accumulation of profitable recurring revenue services.
Also, with further investment and cost control, we believe we will get back to
the track to strong income growth in the next fiscal year. Lastly, we'd like
to pursue M&A transactions to support our business scale-up," concluded
Suzuki.

3^rd Quarter FY2013 Financial Results Summary

Operating Results Summary
                                3Q12         3Q13         YoY %
                                                           Change
                                JPY millions JPY millions 
Total Revenues                   76,690      82,746      7.9
Network Services                 48,515      50,301      3.7
Systems Integration (SI)         25,601      29,197      14.0
Equipment Sales                  867         1,178       35.8
ATM Operation Business           1,707       2,070       21.3
Total Costs                      61,165      67,228      9.9
Network Services                 37,972      39,764      4.7
Systems Integration (SI)         20,994      24,826      18.3
Equipment Sales                  749         1,062       41.7
ATM Operation Business           1,450       1,576       8.7
SG&A Expenses and R&D            10,482      11,307      7.9
Operating Income                 5,043       4,211       (16.5)
Income before Income Tax Expense 4,946       4,625       (6.5)
Net Income attributable to IIJ   3,112       2,924       (6.0)
                                                        

Segment Results Summary
                                3Q12         3Q13
                                JPY millions JPY millions
Total Revenues                   76,690      82,746
Network Services and SI Business 75,399      81,029
ATM Operation Business           1,707       2,070
Elimination                      416         353
Operating Income                 5,043       4,211
Network Service and SI Business  4,965       3,899
ATM Operation Business           164         400
Elimination                      86          88

We have omitted segment analysis because most of our revenues are dominated by
Network Services and Systems Integration (SI) Business.

3^rd Quarter FY2013 Results of Operation

Revenues

Total revenues were JPY82,746 million, up 7.9% YoY.

Network Services revenue was JPY50,301 million, up 3.7% YoY.

Revenues for Internet connectivity services for corporate use were JPY12,499
million, up 6.1% YoY. The increase was mainly due to the increasing demands
for broader bandwidth and mobile service. However, the rate of change was
lower than the plan mainly due to the strong price down pressure by certain
large customers.

Revenues for Internet connectivity services for home use were JPY4,397
million, up 7.0% YoY. The revenues grew as we have continued to accumulate
orders for LTE mobile data communication service. Especially, the low-priced
mobile service for SIM-free mobile phones led the revenue to growth and the
number of its contracts was approximately 119,000 as of December 31, 2013.

WAN services revenues were JPY18,786 million, decreased slightly compared to
3Q12. While revenues from the other general customers increased continuously,
the strong price down pressure by certain large customers had an impact on the
decrease of the revenues.

Outsourcing services revenues were JPY14,619 million, up 6.4% YoY. The revenue
growth was mainly due to the increase of revenues in "IIJ GIO Hosting Package
Services" and datacenter-related services.

Network Services Revenues Breakdown
                                        3Q12          3Q13          YoY %
                                                                     Change
                                        JPY millions  JPY millions  
Internet Connectivity Service (Corporate 11,783       12,499       6.1
Use)
IP Service^2                             7,435        7,818        5.2
IIJ FiberAccess/F and IIJ DSL/F          2,397        2,368        (1.2)
IIJ Mobile Service^3                     1,772        2,141        20.8
Others                                   179          172          (3.9)
Internet Connectivity Service (Home Use) 4,111        4,397        7.0
Under IIJ Brand                          969          1,577        62.8
hi-ho                                    2,678        2,297        (14.2)
OEM                                      464          523          12.6
WAN Services                             18,880       18,786       (0.5)
Outsourcing Services                     13,741       14,619       6.4
Total Network Services                   48,515       50,301       3.7
                                                                  
Number of Contracts for Connectivity Services
                                        as of         as of         YoY
                                         Dec. 31, 2012 Dec. 31, 2013 Change
Internet Connectivity Services           105,672      128,635      22,963
(Corporate Use)
IP Service (-99Mbps)                     908          873          (35)
IP Service (100Mbps-999Mbps)             370          434          64
IP Service (1Gbps-)                      186          263          77
IIJ Data Center Connectivity Service     309          293          (16)
IIJ FiberAccess/F and IIJ DSL/F          46,670       53,536       6,866
IIJ Mobile Service^4                     55,883       71,940       16,057
Others                                   1,346        1,296        (50)
Internet Connectivity Services (Home     465,624      596,458      130,834
Use)^
Under IIJ Brand                          89,885       152,191      62,306
hi-ho                                    150,238      157,087      6,849
OEM                                      225,501      287,180      61,679
Total Contracted Bandwidth               1,107.5Gbps  1,501.8Gbps   394.3Gbps

SI revenues were JPY29,197 million, up 14.0% YoY.

Systems construction revenue, a one-time revenue, was JPY11,635 million, up
18.4% YoY, mainly due to the continuous accumulation of orders and the trend
of large scale projects in accordance with the returned demand on systems
investment along with the Japanese economic recovery. Systems operation and
maintenance revenue, a recurring revenue, was JPY17,562 million, up 11.3% YoY.
The increase was mainly due to the increase in revenue of "IIJ GIO Component
Services."

The orders received for SI and equipment sales were JPY36,156 million,
significantly increased by 21.1% YoY. In the breakdown, the orders received
for systems construction and equipment sales were JPY16,236 million, up 33.2%
YoY, and the orders received for systems operation and maintenance were
JPY19,920 million, up 12.7% YoY.

The order backlog for SI and equipment sales as of December 31, 2013 amounted
to JPY25,862 million, up 27.7% YoY. In the breakdown, the order backlog for
systems construction and equipment sales was JPY7,126 million, up 33.6% YoY,
and the order backlog for systems operation and maintenance was JPY18,736
million, up 25.6% YoY.

Equipment sales revenues were JPY1,178 million, up 35.8% YoY.

ATM Operation Business revenues were JPY2,070 million, up 21.3% YoY. The
increase was mainly in accordance with the increase in the numbers of newly
placed ATMs. 785 ATMs were placed as of February 7, 2014.

^2 IP Service revenues include revenues from the Data Center Connectivity
Service.

^3 Revenue from mobile data communication service for home use is included in
Internet Connectivity Service (Home Use).

^4 Contracts of IIJ Mobile Service are of mobile data communication service
for corporate use.

Cost and expense

Total cost of revenues was JPY67,228 million, up 9.9% YoY.

Cost of Network Services revenues was JPY39,764 million, up 4.7% YoY. The
increase was mainly due to the increase in network operation related costs as
well as circuit-related and personnel-related costs. Gross margin was
JPY10,538 million, down 0.1% YoY and gross margin ratio was 20.9%, down 0.8
points YoY due to the strong price down pressure in Internet connectivity and
WAN services from certain large customers.

Cost of SI revenues was JPY24,826 million, up 18.3% YoY. The increase was
mainly due to the increase in purchasing costs along with the increase in
systems construction revenues as well as outsourcing-related and
personnel-related costs. Gross margin was JPY4,371 million, down 5.1% YoY and
gross margin ratio was 15.0% due to the trend of large scale projects.

Cost of Equipment Sales revenues was JPY1,062 million, up 41.7% YoY. Gross
margin was JPY 116 million and gross margin ratio was 9.8%.

Cost of ATM Operation Business revenues was JPY1,576 million, up 8.7% YoY. The
increase was in accordance with the number of newly placed ATMs. Gross margin
was JPY494 million and gross margin ratio was 23.8%.

SG&A and R&D expenses

SG&A and R&D expenses were JPY11,307 million, up 7.9% YoY.

Sales and Marketing expenses were JPY6,346 million, up 5.2% YoY. The increase
was mainly due to the increase in personnel-related expenses along with the
increase in employees, rent expenses, and sales commission expenses related to
Internet connectivity services for home use.

General and Administrative expenses were JPY4,645 million, up 12.0% YoY. The
increase was mainly due to the increase in personnel-related expenses along
with the increase in employees, rent expenses, depreciation, and commission
expenses related to the procurement of employees.

Research and Development expenses were JPY316 million, up 3.9% YoY.

Operating income

Operating income was JPY4,211 million, down 16.5% YoY.

Other income (expenses)

Other income (expenses) was an income of JPY414 million (an expense of JPY97
million for 3Q12), mainly due to foreign currency gains of JPY203 million
(foreign currency losses of JPY13 million for 3Q12) and net gain on other
investments of JPY172 million, and interest expense of JPY194 million.

Income before income tax expense

Income before income tax expense was JPY4,625 million, down 6.5% YoY (JPY4,946
million for 3Q12) as a result of the decrease in operating income.

Net income

Income tax expense was JPY1,841 million (JPY1,954 million for 3Q12).

Equity in net income of equity method investees was JPY191 million (JPY131
million for 3Q12) mainly due to net income of Internet Revolution, Inc. and
Internet Multifeed Co.

As a result of the above, net income was JPY2,975 million, down 4.8% YoY
(JPY3,123 million for 3Q12).

Net income attributable to IIJ

Net income attributable to non-controlling interests was JPY51 million mainly
related to net income of Trust Networks Inc. (JPY11 million for 3Q12).

Net income attributable to IIJ was JPY2,924 million, down 6.0% YoY (JPY3,112
million for 3Q12).

3^rd Quarter FY2013 Financial Condition

Balance Sheets

As of December 31, 2013, the balance of total assets was JPY100,596 million,
increased by JPY18,485 million from the balance as of March 31, 2013
(JPY82,111 million as of March 31, 2013).

As for current assets as of December 31, 2013, as compared to the respective
balances as of March 31, 2013, cash and cash equivalents increased by JPY9,843
million mainly due to the equity finance in the previous quarter, prepaid
expenses increased by JPY1,474 million, inventories increased by JPY1,216
million and accounts receivable decreased by JPY1,998 million. As for
noncurrent assets, as compared to the respective balances as of March 31,
2013, other investments increased by JPY3,656 million mainly due to the
increase in its fair value, property and equipment increased by JPY3,531
million by continuous capital expenditure mainly for network infrastructure
including cloud-related and guarantee deposits increased by JPY672 million
along with our office expansion. As for current liabilities, as compared to
the respective balances as of March 31, 2013, income taxes payable decreased
by 1,493 million and accounts payable decreased by JPY1,303 million.

As for the balances of capital lease obligations, as compared to the
respective balances as of March 31, 2013, capital lease obligations-current
portion increased by JPY144 million to JPY3,649 million and capital lease
obligations-noncurrent decreased by JPY449 million to JPY4,922 million.

As of December 31, 2013, the balance of other investments was JPY7,427
million. The breakdown of other investments were JPY4,477 million in
available-for-sale securities including listed stocks, JPY2,242 million in
nonmarketable equity securities, and JPY708 million in other. There was a
large increase in fair value in one of our stock held for business relation
due to going public in Japan.

As of December 31, 2013, the breakdown of major non-amortized intangible
assets were JPY5,970 million in goodwill and JPY107 million in trademark. The
balance of amortized intangible assets, which was customer relationships, was
JPY4,317 million.

As of December 31, 2013, the balance of total IIJ shareholders' equity was
JPY58,838 million, increased by JPY21,231 million from the balance as of March
31, 2013 due to increase in common-stock and additional paid-in capital as a
result of equity finance and net income in 3Q13. IIJ shareholders' equity
ratio (total IIJ shareholders' equity/total assets) as of December 31, 2013
was 58.5%.

Cash Flows

Cash and cash equivalents as of December 31, 2013 were JPY22,102 million
compared to JPY10,648 million as of December 31, 2012.

Net cash provided by operating activities for 3Q13 was JPY5,732 million
compared to net cash provided by operating activities of JPY5,880 million for
3Q12. In YoY comparison, net income decreased, while depreciation and
amortization, which are non-cash expenses, increased. There were also the
changes in operating assets and liabilities; cash inflow in accounts
receivable increased, while cash outflows in operating liabilities such as
accounts payable, increased.

Net cash used in investing activities for 3Q13 was JPY8,480 million compared
to net cash used in investing activities of JPY4,704 million for 3Q12, mainly
due to payments for purchase of property and equipment of JPY7,228 million
(JPY4,410 million for 3Q12), payments for purchase of other investments of
JPY1,128 million (JPY407 million for 3Q12) and payments for guarantee deposits
of JPY681 million (JPY87 million for 3Q12).

Net cash provided by financing activities for 3Q13 was JPY12,408 million
compared to net cash used in financing activities of JPY4,057 million for
3Q12, mainly due to proceeds from issuance of common stock of JPY17,271
million, principal payments under capital leases of JPY2,942 million (JPY2,741
million for 3Q12), net repayments of borrowings of JPY1,010 million (JPY610
million for 3Q12), JPY911 million in total for FY2012 year-end dividends and
FY2013 interim dividends payments (JPY709 million for 3Q12).

FY2013 Financial Targets (revised on February 7, 2014)

We revised the target of consolidated financial results for the fiscal year
ending March 31, 2014 announced on May 15, 2013. The table below shown is the
summary of the revision.

Revision for the Consolidated Financial Targets for FY2013
                                    Income      Net Income     Basic Net
            Total       Operating   before      attributable   Income
           Revenues    Income      Income Tax  to             attributable to
                                    Expense     IIJ            IIJ
                                    (Benefit)                  per Share
           JPY         JPY         JPY         JPY millions   JPY
            millions    millions    millions
Previous    117,000    9,400      9,000      6,000         135.42
Target
Revised     114,000    6,000      6,500      4,700         106.08
Target

Please refer to page 25 and 26 of this press release for more details.

Reconciliation of Non-GAAP Financial Measures

The following table summarizes the reconciliation of adjusted EBITDA to net
income attributable to IIJ in our consolidated statements of income that are
prepared in accordance with U.S. GAAP.

Adjusted EBITDA
                                                    3Q12         3Q13
                                                    JPY millions JPY millions
Adjusted EBITDA                                      10,586      10,715
Depreciation and Amortization^5                      5,543       6,504
Operating Income                                     5,043       4,211
Other Income (Expense)                               (97)        414
Income Tax Expense                                   1,954       1,841
Equity in Net Income of Equity Method Investees      131         191
Net Income                                           3,123       2,975
Less: Net Income attributable to Noncontrolling      (11)        (51)
Interests
Net Income attributable to IIJ                       3,112       2,924

CAPEX
                                                    3Q12         3Q13
                                                    JPY millions JPY millions
CAPEX, including Capital Leases                      8,452       9,863
Acquisition of Assets by Entering into Capital       4,042       2,635
Leases
Purchase of Property and Equipment                   4,410       7,228

^5 Depreciation and amortization includes impairment loss on other intangible
assets. (See IIJ's consolidated financial statements for details).

Presentation

Presentation materials will be posted on our web site
(http://www.iij.ad.jp/en/ir/) on February 7, 2014.

About Internet Initiative Japan Inc.

Founded in 1992, Internet Initiative Japan Inc. is one of Japan's leading
Internet-access and comprehensive network solutions providers. IIJ and its
group companies provide total network solutions that mainly cater to high-end
corporate customers. IIJ's services include high-quality systems integration,
security services, Internet access, and cloud computing. Moreover, IIJ has
built one of the largest Internet backbone networks in Japan that is connected
to the United States and the United Kingdom. IIJ listed on NASDAQ in 1999 and
on the First Section of the Tokyo Stock Exchange in 2006. For more information
about IIJ, visit the IIJ Web site at http://www.iij.ad.jp/en/.

Statements made in this press release regarding IIJ's or managements'
intentions, beliefs, expectations, or predictions for the future are
forward-looking statements that are based on IIJ's and managements' current
expectations, assumptions, estimates and projections about its business and
the industry. These forward-looking statements, such as statements regarding
revenues, operating and net profitability are subject to various risks,
uncertainties and other factors that could cause IIJ's actual results to
differ materially from those contained in any forward-looking statement. These
risks, uncertainties and other factors include but not limited to: a decrease
of corporate spending or capital expenditure due to depression in the Japanese
economy and/or corporate earnings decreased, an inability to achieve
anticipated results and cause negative impact on profitability, a possibility
that less of reliability for our services and loss of business chances due to
interrupt or suspend of our services, an excess increase in network rerated
cost and outsourcing cost, personnel cost etc, a possibility to lose business
opportunity due to our inadequate resources in personnel and others, an
increase in competition and strong pricing pressure, the recording of an
impairment loss as a results of an impairment test on the non-amortized
intangible assets such as goodwill, a decline in value and trending value of
our holding securities. Please refer to IIJ's filings on Form 20-F of its
annual report and other filings with the United States Securities and Exchange
Commission ("SEC") for other risks.

Internet Initiative Japan Inc.
Quarterly Consolidated Balance Sheets (Unaudited)
(As of March 31, 2013 and December 31, 2013)

                             As of March 31,   As of December 31, 2013
                              2013
                             Thousands of      Thousands of    Thousands of
                              JPY               U.S. Dollars    JPY
ASSETS                                                        
CURRENT ASSETS:                                               
Cash and cash equivalents     12,258,872        209,999         22,102,350
Accounts receivable, net of
allowance for
doubtful accounts of JPY
93,934 thousand and           18,764,703        159,304         16,766,820
JPY 55,215 thousand at March
31, 2013
and December 31, 2013,
respectively
Inventories                   1,301,684         23,919          2,517,444
Prepaid expenses              2,492,164         37,685          3,966,324
Deferred tax assets —current  1,046,828         8,527           897,481
Other current assets, net of
allowance for
doubtful accounts of JPY
10,732 thousand and           1,576,718         18,511          1,948,278
JPY 720 thousand at March
31, 2013 and
December 31, 2013,
respectively
Total current assets          37,440,969        457,945         48,198,697
INVESTMENTS IN EQUITY METHOD  1,681,723         17,795          1,872,927
INVESTEES
OTHER INVESTMENTS             3,771,262         70,568          7,427,324
PROPERTY AND EQUIPMENT, net
of accumulated
depreciation and
amortization of JPY
29,516,394                    23,025,755        252,321         26,556,765
thousand and JPY 33,715,595
thousand at March
31, 2013 and December 31,
2013, respectively
GOODWILL                      5,969,951         56,722          5,969,951
OTHER INTANGIBLE ASSETS —Net  4,791,431         42,332          4,455,457
GUARANTEE DEPOSITS            2,051,449         25,874          2,723,190
DEFERRED TAX ASSETS           163,773           350             36,850
—Noncurrent
NET INVESTMENT IN SALES-TYPE
LEASES—                      898,040           7,511           790,568
Noncurrent
Prepaid expenses —Noncurrent  2,201,108         23,012          2,422,007
OTHER ASSETS, net of
allowance for doubtful
accounts of JPY 71,727
thousand and JPY 62,600       115,805           1,351           142,188
thousand at March 31, 2013
and December 31, 2013,
respectively
TOTAL                         82,111,266        955,781         100,595,924


                             As of March 31,   As of December 31, 2013
                              2013
                             Thousands of      Thousands of    Thousands of
                              JPY               U.S. Dollars    JPY
LIABILITIES AND SHAREHOLDERS'                                 
EQUITY
CURRENT LIABILITIES:                                          
Short-term borrowings         9,400,000         89,311          9,400,000
Long-term borrowings —current 1,010,000         9,311           980,000
portion
Capital lease obligations     3,505,471         34,673          3,649,275
—current portion
Accounts payable —trade       10,973,120        95,193          10,019,098
Accounts payable —other       949,264           5,706           600,544
Income taxes payable          1,669,849         1,677           176,502
Accrued expenses              2,266,427         20,480          2,155,517
Deferred income —current      1,806,074         16,045          1,688,703
Other current liabilities     803,902           11,685          1,229,878
Total current liabilities     32,384,107        284,081         29,899,517
LONG-TERM BORROWINGS          980,000           -              -
CAPITAL LEASE OBLIGATIONS     5,370,365         46,762          4,921,708
—Noncurrent
ACCRUED RETIREMENT AND
PENSION COSTS                 2,112,085         21,707          2,284,623
—Noncurrent
DEFERRED TAX LIABILITIES      412,132           13,465          1,417,180
—Noncurrent
DEFERRED INCOME —Noncurrent   2,562,208         24,728          2,602,593
OTHER NONCURRENT LIABILITIES  656,191           5,262           553,853
Total Liabilities             44,477,088        396,005         41,679,474
COMMITMENTS AND CONTINGENCIES                                 
                                                             
SHAREHOLDERS' EQUITY:                                         
Common-stock
—authorized, 75,520,000
shares;                       16,833,847        242,252         25,497,022
issued and outstanding,
41,295,600 shares at
March 31, 2013
—authorized, 75,520,000
shares;
issued and outstanding,                                      
46,697,800 shares at
December 31, 2013
Additional paid-in capital    27,300,325        341,544         35,947,501
Accumulated deficit           (6,399,088)       (41,669)        (4,385,715)
Accumulated other             263,770           20,630          2,171,324
comprehensive income
Treasury stock —758,800
shares and 758,813 shares
held by the company at March (392,079)         (3,726)         (392,122)
31, 2013 and
December 31, 2013,
respectively
Total Internet Initiative
Japan Inc. shareholders'      37,606,775        559,031         58,838,010
equity
NONCONTROLLING INTERESTS      27,403            745             78,440
Total equity                  37,634,178        559,776         58,916,450
TOTAL                         82,111,266        955,781         100,595,924

(Note) The U.S. dollar amounts have been translated from yen, for convenience
only, at the rate of JPY 105.25 per 1U.S. dollar which was
the noon buying rate in New York City for cable transfers in foreign
currencies as of December 31, 2013.
                                                             

Internet Initiative Japan Inc.
Quarterly Consolidated Statements of Income and
Quarterly Consolidated Statements of Other Comprehensive Income (Unaudited)
(For the nine months ended December 31, 2012 and December 31, 2013)

Quarterly Consolidated Statements of Income
                              Nine Months Ended   Nine Months Ended
                               December 31, 2012   December 31, 2013
                              Thousands of        Thousands of  Thousands of
                               JPY                 U.S. Dollars  JPY
REVENUES:                                                      
Network services:                                              
Internet connectivity services 11,783,029          118,760       12,499,526
(corporate use)
Internet connectivity services 4,110,638           41,775        4,396,796
(home use)
WAN services                   18,879,758          178,489       18,785,947
Outsourcing services           13,741,605          138,900       14,619,196
Total                          48,515,030          477,924       50,301,465
Systems integration:                                           
Systems construction           9,824,179           110,547       11,635,117
Systems operation and          15,776,992          166,856       17,561,594
maintenance
Total                          25,601,171          277,403       29,196,711
Equipment sales                867,303             11,192        1,177,989
ATM operation business         1,706,586           19,670        2,070,278
Total revenues                 76,690,090          786,189       82,746,443
COST AND EXPENSES:                                             
Cost of network services       37,971,665          377,803       39,763,829
Cost of systems integration    20,993,632          235,878       24,826,140
Cost of equipment sales        749,397             10,091        1,062,057
Cost of ATM operation business 1,450,459           14,980        1,576,636
Total cost                     61,165,153          638,752       67,228,662
Sales and marketing            6,030,817           60,292        6,345,713
General and administrative     4,147,197           44,138        4,645,519
Research and development       304,060             3,000         315,800
Total cost and expenses        71,647,227          746,182       78,535,694
OPERATING INCOME               5,042,863           40,007        4,210,749
OTHER INCOME (EXPENSE):                                        
Dividend income                44,513              459           48,259
Interest income                19,889              177           18,670
Interest expense               (217,897)           (1,844)       (194,108)
Foreign exchange gains         (12,705)            1,925         202,598
(losses)
Net gain on sales of other     13,565              1,023         107,655
investments
Net gain on other investments  --                  1,638         172,423
Losses on write-down of other  (19,788)            --            --
investments
Other —net                     75,526              562           59,186
Other income (expense) —net    (96,897)            3,940         414,683
INCOME FROM OPERATIONS BEFORE
INCOME
TAX EXPENSE AND EQUITY IN NET 4,945,966           43,947        4,625,432
INCOME
OF EQUITY METHOD INVESTEES
INCOME TAX EXPENSE            1,954,168           17,498        1,841,690
EQUITY IN NET INCOME OF EQUITY
METHOD                         131,688             1,817         191,204
INVESTEES
NET INCOME                     3,123,486           28,266        2,974,946
LESS: NET INCOME ATTRIBUTABLE
TO                             (11,201)            (484)         (50,876)
NONCONTROLLING INTERESTS
NET INCOME ATTRIBUTABLE TO
INTERNET                       3,112,285           27,782        2,924,070
INITIATIVE JAPAN INC.

                              Nine Months Ended   Nine Months Ended
                               December 31, 2012   December 31, 2013
NET INCOME PER SHARE                                           
BASIC WEIGHTED-AVERAGE NUMBER
OF                             40,536,800                       43,772,437
SHARES (shares)
DILUTED WEIGHTED-AVERAGE
NUMBER                         40,569,000                       43,825,204
OF SHARES (shares)
BASIC WEIGHTED-AVERAGE NUMBER
OF                             81,073,600                       87,544,874
ADS EQUIVALENTS (ADSs)
DILUTED WEIGHTED-AVERAGE
NUMBER                         81,138,000                       87,650,408
OF ADS EQUIVALENTS (ADSs)
BASIC NET INCOME PER SHARE     76.78               0.63          66.80
(JPY / U.S. Dollars / JPY)
DILUTED NET INCOME PER SHARE   76.72               0.63          66.72
(JPY / U.S. Dollars / JPY)
BASIC NET INCOME PER ADS
EQUIVALENT(JPY / U.S.        38.39               0.32          33.40
Dollars / JPY)
DILUTED NET INCOME PER ADS
EQUIVALENT(JPY / U.S.        38.36               0.32          33.36
Dollars / JPY)


(Note) The U.S. dollar amounts have been translated from yen, for convenience
only, at the rate of JPY 105.25 per 1U.S. dollar which was
the noon buying rate in New York City for cable transfers in foreign
currencies as of December 31, 2013.

Quarterly Consolidated Statements of Other Comprehensive Income
                              Nine Months Ended   Nine Months Ended
                               December 31, 2012   December 31, 2013
                              Thousands of        Thousands of  Thousands of
                               JPY                 U.S. Dollars  JPY
NET INCOME                     3,123,486           28,266        2,974,946
Comprehensive income (loss):                                   
Foreign currency translation   (14,446)            2,652         279,107
adjustments
Unrealized holding gain (loss) 89,799              15,472        1,628,430
on securities
Defined benefit pension plans  178                 1             178
Total comprehensive income    3,199,017           46,391        4,882,661
Less: Comprehensive income
attributable to                (11,201)            (485)         (51,037)
 noncontrolling interests
Comprehensive income
attributable to Internet      3,187,816           45,906        4,831,624
Initiative Japan Inc.


(Note) The U.S. dollar amounts have been translated from yen, for convenience
only, at the rate of JPY 105.25 per 1U.S. dollar which was
the noon buying rate in New York City for cable transfers in foreign
currencies as of December 31, 2013.
                                                              

                                                             
Internet Initiative Japan Inc.
Quarterly Consolidated Statements of Cash Flows (Unaudited)
(For the nine months ended December 31, 2012 and December 31, 2013)

                             Nine Months Ended  Nine Months Ended
                              December 31, 2012  December 31, 2013
                             Thousands of       Thousands of   Thousands of
                              JPY                U.S. Dollars   JPY
OPERATING ACTIVITIES:                                         
Net income                    3,123,486          28,266         2,974,946
Adjustments to reconcile net income to net cash                 
provided by operating activities:
Depreciation and amortization 5,543,517          61,798         6,504,202
Provision for retirement and
pension costs,                165,262            1,642          172,815
less payments
Reversal of allowance for     (142)              (435)          (45,808)
doubtful accounts
Loss on disposal of property  4,593              109            11,443
and equipment
Net gain on sales of other    (13,565)           (1,023)        (107,655)
investments
Net gain on other investments --                 (1,638)        (172,423)
Impairment of other           19,788             --             --
investments
Foreign exchange gains, net   (17,284)           (1,477)        (155,394)
Equity in net income of       (131,688)          (1,817)        (191,204)
equity method investees
Deferred income tax expense   151,975            3,711          390,591
Others                        13,153             509            53,567
Changes in operating assets and liabilities net of effects      
from acquisition of a company:
Decrease in accounts          435,371            19,739         2,077,501
receivable
Decrease in net investment in 239,867            1,021          107,472
sales-type lease — noncurrent
Increase in inventories       (981,707)          (11,534)       (1,213,943)
Increase in prepaid expenses  (1,392,119)        (13,890)       (1,461,899)
Increase in other current and (578,545)          (5,064)        (532,984)
noncurrent assets
Increase (decrease) in        59,748             (9,378)        (987,036)
accounts payable
Decrease in income taxes      (1,820,268)        (14,189)       (1,493,410)
payable
Increase (decrease) in        776,649            (80)           (8,392)
deferred income-noncurrent
Increase (decrease) in
accrued expenses and         281,706            (1,809)        (190,343)
other current and noncurrent
liabilities
Net cash provided by          5,879,797          54,461         5,732,046
operating activities
INVESTING ACTIVITIES:                                         
Purchase of property and      (4,410,119)        (68,671)       (7,227,651)
equipment
Proceeds from sales of        472,706            2,247          236,499
property and equipment
Purchase of                   (41,250)           (936)          (98,494)
available-for-sale securities
Purchase of other investments (407,002)          (10,716)       (1,127,831)
Investment in an equity       (100,000)          --             --
method investee
Proceeds from sales of        --                 3,723          391,814
available-for-sale securities
Proceeds from sales of other  92,634             190            20,000
investments
Payments of guarantee         (86,954)           (6,474)        (681,378)
deposits
Refund of guarantee deposits  15,363             74             7,818
Payments for refundable       (554)              (44)           (4,697)
insurance policies
Refund from insurance         --                 152            16,026
policies
Acquisition of a newly
controlled company,           (229,058)          --             --
net of cash acquired
Other                         (9,618)            (116)          (12,209)
Net cash used in investing    (4,703,852)        (80,571)       (8,480,103)
activities


                             Nine Months Ended  Nine Months Ended
                              December 31, 2012  December 31, 2013
                             Thousands of       Thousands of   Thousands of
                              JPY                U.S. Dollars   JPY
FINANCING ACTIVITIES:                                         
Proceeds from issuance of
short-term borrowings         71,000             2,375          250,000
with initial maturities over
three months
Repayments of short-term
borrowings with initial       (1,081,000)        (11,971)       (1,260,000)
maturities over three months
and long-term borrowings
Principal payments under      (2,740,622)        (27,953)       (2,942,006)
capital leases
Net increase in short-term
borrowings with               400,000            --             --
initial maturities less than
three months
Proceeds from issuance of
stock to minority             2,570              --             --
shareholders
Dividends paid                (709,394)          (8,653)        (910,697)
Proceeds from issuance of
common stock, net of issuance --                 164,097        17,271,204
cost
Other                         --                 (0)            (41)
Net cash provided by (used    (4,057,446)        117,895        12,408,460
in) financing activities
                                                             
EFFECT OF EXCHANGE RATE
CHANGES ON                    (7,027)            1,740          183,075
CASH AND CASH EQUIVALENTS
                                                             
NET INCREASE (DECREASE) IN
CASH AND CASH                (2,888,528)        93,525         9,843,478
EQUIVALENTS
CASH AND CASH EQUIVALENTS,
BEGINNING OF                  13,536,824         116,474        12,258,872
THE PERIOD
CASH AND CASH EQUIVALENTS,
END OF                        10,648,296         209,999        22,102,350
THE PERIOD

ADDITIONAL CASH FLOW INFORMATION:                              
Interest paid                 218,322            1,847          194,375
Income taxes paid             3,484,499          25,660         2,700,675
                                                             
NONCASH INVESTING AND FINANCING ACTIVITIES:                    
Acquisition of assets by      4,041,871          25,040         2,635,473
entering into capital leases
Facilities purchase           367,018            5,706          600,544
liabilities
Asset retirement obligation   --                 1,684          177,223
Acquisition of a company:                                     
Assets acquired              404,139            --             --
Liabilities assumed          104,321            --             --
Noncontrolling interests     118                --             --
Cash paid                    (299,700)          --             --
Cash acquired               70,642             --             --
Acquisition of a newly
controlled company,           229,058            --             --
net of cash acquired

                                                             
(Note) The U.S. dollar amounts have been translated from yen, for convenience
only, at the rate of JPY 105.25 per 1U.S. dollar which was the noon buying
rate in New York City for cable transfers in foreign currencies as of December
31, 2013.

                                                    
Going Concern Assumption (Unaudited)
Nothing to be reported.

Material Changes In Shareholders' Equity(Unaudited)
IIJ issued new shares by way of public offering with payment due July 18,
2013 and by way of third-party allotment in connection with secondary
offering of shares by way of over-allotment with payment due August 5,
2013. As a result, common stock and additional paid-in capital increased
by JPY8,662 million and JPY8,610 million, respectively.

Segment Information (Unaudited)
Business Segments:
Revenues:
                               Nine Months Ended     Nine Months Ended
                                December 31, 2012     December 31, 2013
                               Thousands of JPY      Thousands of JPY
Network service and systems     75,399,477            81,028,754
integration business
Customers                       74,983,504            80,676,165
Intersegment                    415,973               352,589
ATM operation business          1,706,586             2,070,278
Customers                       1,706,586             2,070,278
Intersegment                    --                    --
Elimination                     415,973               352,589
Consolidated total              76,690,090            82,746,443
Segment profit or loss:                                                     
                               Nine Months Ended     Nine Months Ended
                                December 31, 2012     December 31, 2013
                               Thousands of JPY      Thousands of JPY
Network service and systems     4,964,544             3,899,222
integration business
ATM operation business          163,845               399,972
Elimination                     85,526                88,445
Consolidated operating income   5,042,863             4,210,749
                                                    
Geographic information is not presented due to immateriality of revenue
attributable to international operations.

Subsequent Events (Unaudited)
Nothing to be reported.

3^rd Quarter FY2013 Consolidated Financial Results (3 months)

The following tables are highlight data of 3^rd Quarter FY2013 consolidated
financial results (unaudited, from October 1, 2013 to December 31, 2013).

Operating Results Summary
                                3Q12         3Q13         YoY %
                                                           Change
                                JPY millions JPY millions 
Total Revenues:                  25,581       28,349       10.8
Network Services                 16,256       16,691       2.7
Systems Integration (SI)         8,475        10,524       24.2
Equipment Sales                  225          422          87.4
ATM Operation Business           625          712          14.0
Cost of Revenues:                20,204       23,262       15.1
Network Services                 12,589       13,299       5.6
Systems Integration (SI)         6,904        9,061        31.2
Equipment Sales                  198          381          92.2
ATM Operation Business           513          521          1.6
SG&A Expenses and R&D            3,597        3,885        8.0
Operating Income                 1,780        1,202        (32.5)
Income before Income Tax Expense 1,770        1,278        (27.8)
Net Income attributable to IIJ   1,105        719          (34.9)


Network Services Revenues Breakdown
                                             3Q12         3Q13         YoY %
                                                                        Change
                                             JPY millions JPY millions 
Internet Connectivity Service (Corporate Use) 3,967        4,141        4.4
IP Service                                    2,500        2,550        2.0
IIJ FiberAccess/F and IIJ DSL/F               791          793          0.2
IIJ Mobile Service                            616          740          20.2
Others                                        60           58           (2.5)
Internet Connectivity Service (Home Use)      1,343        1,541        14.8
Under IIJ Brand                               348          596          71.7
hi-ho                                         837          766          (8.6)
OEM                                           158          179          13.5
WAN Services                                  6,302        6,168        (2.1)
Outsourcing Services                          4,644        4,841        4.2
Network Services Revenues                     16,256       16,691       2.7

Reconciliation of Non-GAAP Financial Measures (3^rd Quarter FY2013 (3 months))

The following table summarizes the reconciliation of adjusted EBITDA to net
income in our consolidated statements of income that are prepared in
accordance with U.S. GAAP.

Adjusted EBITDA
                                                    3Q12         3Q13
                                                    JPY millions JPY millions
Adjusted EBITDA                                      3,684        3,468
Depreciation and Amortization                        1,904        2,266
Operating Income                                     1,780        1,202
Other Income (Expense)                               (10)         76
Income Tax Expense                                   703          599
Equity in Net Income of Equity Method Investees      49           64
Net income                                           1,115        743
Less: Net income attributable to noncontrolling      (10)         (24)
interests
Net Income attributable to IIJ                       1,105        719

The following table summarizes the reconciliation of capital expenditures to
the purchase of property and equipment in our consolidated statements of cash
flows that are prepared and presented in accordance with U.S. GAAP.

CAPEX
                                                    3Q12         3Q13
                                                    JPY millions JPY millions
CAPEX, including capital leases                      2,549        5,216
Acquisition of Assets by Entering into Capital       924          772
Leases
Purchase of Property and Equipment                   1,625        4,444


Internet Initiative Japan Inc.
Quarterly Consolidated Statements of Income (Unaudited)
(For the three months ended December 31, 2012 and December 31, 2013)

                            Three Months Ended  Three Months Ended
                             December 31, 2012   December 31, 2013
                            Thousands of        Thousands of   Thousands of
                             JPY                 U.S. Dollars   JPY
REVENUES:                                                     
Network services:                                             
Internet connectivity        3,967,404           39,348         4,141,412
services (corporate use)
Internet connectivity        1,342,487           14,641         1,541,006
services (home use)
WAN services                 6,302,542           58,600         6,167,599
Outsourcing services         4,643,995           45,995         4,840,919
Total                        16,256,428          158,584        16,690,936
Systems integration:                                          
Systems Construction         3,130,593           42,602         4,483,875
Systems Operation and        5,343,964           57,386         6,039,819
Maintenance
Total                        8,474,557           99,988         10,523,694
Equipment sales              225,523             4,016          422,680
ATM operation business       624,581             6,766          712,174
Total revenues               25,581,089          269,354        28,349,484
COST AND EXPENSES:                                            
Cost of network services     12,589,051          126,361        13,299,490
Cost of systems integration  6,904,274           86,090         9,060,955
Cost of equipment sales      198,152             3,619          380,895
Cost of ATM operation        512,418             4,947          520,692
business
Total cost                   20,203,895          221,017        23,262,032
Sales and marketing          2,099,141           20,743         2,183,154
General and administrative   1,402,120           15,281         1,608,318
Research and development     95,777              895            94,210
Total cost and expenses      23,800,933          257,936        27,147,714
OPERATING INCOME             1,780,156           11,418         1,201,770
OTHER INCOME (EXPENSE):                                       
Dividend income              9,751               119            12,499
Interest income              5,066               56             5,869
Interest expense             (72,734)            (586)          (61,641)
Foreign exchange gains       37,292              601            63,313
(losses)
Net gain on sales of other   -                  236            24,803
investments
Other—net                    10,137              297            31,221
Other income (expense) — net (10,488)            723            76,064
                                                             
INCOME FROM OPERATIONS
BEFORE INCOME
TAX EXPENSE AND EQUITY IN   1,769,668           12,141         1,277,834
NET INCOME
IN EQUITY METHOD INVESTEES
                                                             
INCOME TAX EXPENSE          702,996             5,687          598,517
EQUITY IN NET INCOME OF
EQUITY                       48,600              607            63,846
METHOD INVESTEES
NET INCOME                   1,115,272           7,061          743,163
LESS: NET INCOME
ATTRIBUTABLE TO              (10,143)            (228)          (23,964)
NONCONTROLLING INTERESTS
NET INCOME ATTRIBUTABLE TO
INTERNET INITIATIVE JAPAN   1,105,129           6,833          719,199
INC.

                                                             

                            Three Months Ended  Three Months Ended
                             December 31, 2012   December 31, 2013
NET INCOME PER SHARE                                          
BASIC WEIGHTED-AVERAGE
NUMBER OF                    40,536,800                        45,938,987
SHARES (shares)
DILUTED WEIGHTED-AVERAGE
NUMBER                       40,577,200                        45,995,002
OF SHARES (shares)
BASIC WEIGHTED-AVERAGE
NUMBER OF                    81,073,600                        91,877,974
ADS EQUIVALENTS (ADSs)
DILUTED WEIGHTED-AVERAGE
NUMBER                       81,154,400                        91,990,004
OF ADS EQUIVALENTS (ADSs)
BASIC NET INCOME PER SHARE   27.26               0.15           15.66
(JPY / U.S. Dollars / JPY)
DILUTED NET INCOME PER SHARE 27.24               0.15           15.64
(JPY / U.S. Dollars / JPY)
BASIC NET INCOME PER ADS
EQUIVALENT (JPY / U.S.      13.63               0.07           7.83
Dollars / JPY)
DILUTED NET INCOME PER ADS
EQUIVALENT (JPY / U.S.      13.62               0.07           7.82
Dollars / JPY)


(Note) The U.S. dollar amounts have been translated from yen, for convenience
only, at the rate of JPY 105.25 per 1U.S. dollar which was the noon buying
rate in New York City for cable transfers in foreign currencies as of December
31, 2013.

                                                             
Internet Initiative Japan Inc.
Quarterly Consolidated Statements of Cash Flows (Unaudited)
(For the three months ended December 31, 2012 and December 31, 2013)

                             Three Months Ended Three Months Ended
                              December 31, 2012  December 31, 2013
                             Thousands of       Thousands of   Thousands of
                              JPY                U.S. Dollars   JPY
OPERATING ACTIVITIES:                                         
Net income                    1,115,272          7,061          743,163
Adjustments to reconcile net
income to net cash                                            
provided by operating
activities:
Depreciation and amortization 1,904,175          21,527         2,265,726
Provision for retirement and
pension                       58,532             524            55,092
costs, less payments
Provision for (reversal of)
allowance for doubtful       (228)              13             1,392
accounts
Loss on disposal of property  2,278              74             7,827
and equipment
Net gain on sales of other    --                 (236)          (24,803)
investments
Foreign exchange gains, net   (53,502)           (640)          (67,370)
Equity in net income of
equity method                 (48,600)           (607)          (63,846)
investees
Deferred income tax expense   27,645             2,100          221,007
Others                        12,186             500            52,633
Changes in operating assets
and liabilities net of
effects                                                       
from acquisition of a
company:
Decrease (increase) in        257,960            (557)          (58,605)
accounts receivable
Decrease in net investment in
sales-type                    98,612             404            42,497
lease―noncurrent
Increase in inventories       (199,318)          (4,326)        (455,298)
Increase in prepaid expenses  (442,220)          (5,024)        (528,822)
Increase in other current and (626,725)          (6,509)        (685,056)
noncurrent assets
Increase (decrease) in        (241,843)          4,995          525,733
accounts payable
Decrease in income taxes      (499,552)          (6,648)        (699,762)
payable
Increase in deferred income―  500,559            3,498          368,209
noncurrent
Increase in accrued expenses,
other                         44,303             3,199          336,714
current and noncurrent
liabilities
Net cash provided by          1,909,534          19,348         2,036,431
operating activities
INVESTING ACTIVITIES:                                         
Purchase of property and      (1,624,929)        (42,220)       (4,443,660)
equipment
Proceeds from sales of        97,701             1,078          113,413
property and equipment
Purchase of                   (21,644)           (614)          (64,592)
available-for-sale securities
Purchase of other investments (33,093)           (429)          (45,191)
Proceeds from sales of        --                 1,638          172,452
available-for-sale securities
Proceeds from sales of other  3,517              152            16,000
investments
Payments of guarantee         (64,481)           (181)          (19,095)
deposits
Refund of guarantee deposits  2,966              7              706
Payments for refundable       (186)              (45)           (4,697)
insurance policies
Other                         (9,678)            (28)           (2,959)
Net cash used in investing    (1,649,827)        (40,642)       (4,277,623)
activities

                                               

                             Three Months Ended Three Months Ended
                              December 31, 2012  December 31, 2013
                             Thousands of       Thousands of   Thousands of
                              JPY                U.S. Dollars   JPY
FINANCING ACTIVITIES:                                         
Proceeds from issuance of
short-term borrowings         50,000             475            50,000
with initial maturities over
three months
Repayments of short-term
borrowings with initial       (71,000)           (475)          (50,000)
maturities over three months
and long-term borrowings
Principal payments under      (927,968)          (9,212)        (969,549)
capital leases
Proceeds from issuance of
subsidiary stock to           2,570              --             --
 minority shareholders
Dividends paid                (354,697)          (4,801)        (505,329)
Net cash used in financing    (1,301,095)        (14,013)       (1,474,878)
activities
                                                             
EFFECT OF EXCHANGE RATE
CHANGES ON                    19,234             350            36,790
CASH AND CASH EQUIVALENTS
                                                             
NET DECREASE IN CASH AND CASH (1,022,154)        (34,957)       (3,679,280)
EQUIVALENTS
CASH AND CASH EQUIVALENTS,
BEGINNING OF                  11,670,450         244,956        25,781,630
THE PERIOD
CASH AND CASH EQUIVALENTS,
END OF                        10,648,296         209,999        22,102,350
THE PERIOD


(Note) The U.S. dollar amounts have been translated from yen, for convenience
only, at the rate of JPY 105.25 per 1U.S. dollar which wasthe noon buying
rate in New York City for cable transfers in foreign currencies as of December
31, 2013.

Note: The following information is provided to disclose Internet Initiative
Japan Inc. ("IIJ") financial results (unaudited) for the nine months ended
December 31, 2013 in the form defined by the Tokyo Stock Exchange.

Consolidated Financial Results for the Nine Months Ended December 31, 2013
[Under accounting principles generally accepted in the United States ("U.S.
GAAP")]
February 7, 2014
Company name: Internet Initiative      Exchange listed: First Section, Tokyo
Japan Inc.                            Stock Exchange
Stock code number: 3774                URL: http://www.iij.ad.jp/
Representative: Eijiro Katsu,          
President and Representative Director
Contact: Akihisa Watai, Managing       TEL: (03) 5259-6500
Director and CFO
Filing of quarterly report (Shihanki-houkokusho) to the regulatory           
organization in Japan: Scheduled on February 14, 2014
Payment of dividend: -                Supplemental material on quarterly
                                       results: Yes
Presentation on quarterly results: Yes (for institutional investors and      
analysts)
(Amounts of less than JPY one million are rounded)                           

                                                              
1. Consolidated Financial Results for the Nine Months Ended    
December 31, 2013
(April 1, 2013 to December 31, 2013)                           
(1) Consolidated Results of Operations                        (% shown is YoY
                                                               change)
                                                Income before  Net Income
               Total Revenues Operating Income Income         attributable
                                                Tax Expense    to IIJ
               JPY        %   JPY       %      JPY      %     JPY       %
                millions       millions         millions       millions
Nine Months
Ended           82,746     7.9 4,211     (16.5) 4,625    (6.5) 2,924     (6.0)
December 31,
2013
Nine Months
Ended           76,690     8.4 5,043     26.1   4,946    30.8  3,112     30.2
December 31,
2012

(Note1) Total comprehensive income attributable to IIJ

  Nine Months Ended December 31, 2013: JPY4,832 million (up 51.6%
  YoY)

  Nine Months Ended December 31, 2012: JPY3,188 million (up 33.9% YoY)

(Note2) Income before income tax expense represents income from operations
before income tax expense and equity in net income of equity method investees
in IIJ's consolidated financial statements.

                                                                           
                        Basic Net Income          Diluted Net Income
                       attributable              attributable
                        to IIJ per Share          to IIJ per Share
                       JPY                       JPY
Nine Months Ended       66.80                     66.72
December 31, 2013
Nine Months Ended       76.78                     76.72
December 31, 2012

(Note) IIJ conducted a 1:200 stock split on common stock with an effective
date of October 1, 2012. Accordingly, basic net income attributable to IIJ per
share and diluted net income attributable to IIJ per share have been adjusted
as if the stock split were conducted on April 1, 2012, at the beginning of the
fiscal year ended March 31, 2013.

(2) Consolidated Financial Position                                      
             Total    Total    Total IIJ      Total IIJ Shareholders'
            Assets   Equity   Shareholders'  Equity
                               Equity         to Total Assets
            JPY      JPY      JPY millions   %
             millions millions
As of
December 31, 100,596  58,916   58,838         58.5
2013
As of March  82,111   37,634   37,607         45.8
31, 2013

                                                                    
2. Dividends                                                         
                 Dividends per Share
                 1Q-end   2Q-end     3Q-end   Year-end   Total
                 JPY      JPY        JPY      JPY        
Fiscal Year Ended --       1,750.00   --       10.00      1,760.00
March 31, 2013
Fiscal Year
Ending            --       11.00      --                 
March 31, 2014
Fiscal Year
Ending                                      11.00      22.00
March 31, 2014
(forecast)
(Note1) Changes in the latest forecasts released: None                   
(Note2) IIJ conducted a 1:200 stock split on common stock with an
effective date of October 1, 2012. 2Q-end dividend (interim
dividend) for the fiscal year ended March 31, 2013 does not take the
stock split into consideration. The dividends for 2Q-end and the         
total dividend for the fiscal year ended March 31, 2013 would have
been JPY8.75 and JPY18.75 respectively if the stock split were
conducted on April 1, 2012, at the beginning of the fiscal year
ended March 31, 2013.



3. Target of Consolidated Financial Results for the Fiscal Year Ending March 31,
2014
(April 1, 2013 through March 31, 2014)                              (% shown is
                                                                    YoY change)
                                    Income before                   Basic Net
       Total        Operating       Income Tax      Net Income      Income
      Revenues     Income          Expense         attributable to attributable
                                    (Benefit)       IIJ             to IIJ
                                                                    per Share
      JPY      %   JPY      %      JPY      %      JPY      %      JPY
       millions     millions        millions        millions
Fiscal
Year
Ending 114,000  7.3 6,000    (22.6) 6,500    (16.2) 4,700    (11.3) 106.08
March
31,
2014
(Note1) Changes in the latest forecasts released: Yes
(Note2) IIJ issued 4,700,000 shares of common stock by way of public offering on
July 18, 2013. IIJ also issued 700,000 shares of common stock by way of
third-party allotment in connection with secondary offering of shares by way of
over-allotment on August 5, 2013. Basic Net Income attributable to IIJ per Share
in the above "3. Target of Consolidated Financial Results for the Fiscal Year
Ending March 31, 2014" was calculated to reflect the increases in the number of
shares outstanding.

* Notes

(1) Changes in significant subsidiaries for the nine months ended December 31,
2013

(Changes in significant subsidiaries for the nine months ended December 31,
2013 which resulted in changes in scope of consolidation): None

(2) Application of simplified or exceptional accounting: None

(3) Changes in significant accounting and reporting policies for the quarterly
consolidated financial statements

  1) Changes due to the revision of accounting standards: None

  2) Others: None

(4) Number of shares outstanding (shares of common stock)

  1) The number of shares outstanding (inclusive of treasury stock):

  As of December 31, 2013: 46,697,800 shares

  As of March 31, 2013: 41,295,600 shares

  2) The number of treasury stock:

  As of December 31, 2013: 758,813 shares

  As of March 31, 2013: 758,800 shares

  3) The weighted average number of shares outstanding:

  For the nine months ended December 31, 2013: 43,772,437 shares

  For the nine months ended December 31, 2012: 40,536,800 shares

  (Note) IIJ conducted a 1:200 stock split on common stock with an effective
  date of October 1, 2012. The number of shares outstanding (shares of common
  stock) in the above have been adjusted as if the stock split were conducted
  on April 1, 2012, at the beginning of the fiscal year ended March 31, 2013.

[English Translation]

                                                              February 7, 2014
                     Company address: 1-105 Kanda Jimbo-cho, Chiyoda-ku, Tokyo
                                  Company name: Internet Initiative Japan Inc.
   Company representative: Eijiro Katsu, President and Representative Director
       (Stock Code Number: 3774 The First Section of the Tokyo Stock Exchange)
                             Contact: Akihisa Watai, Managing Director and CFO
                                                             TEL: 03-5259-6500

 IIJ Revises its Full-Year Financial Target for the Fiscal Year ending March
                                   31, 2014

TOKYO-- February 7, 2014 - Internet Initiative Japan Inc. ("IIJ")
(Nasdaq:IIJI) (TSE1:3774) announced today that given the current business
situation, IIJ has revised its financial targets for the fiscal year ending
March 31, 2014 ("FY2013") from the targets announced on May 15, 2013, when
released the consolidated full year financial results for the fiscal year
ended March 31, 2013.

1. Revision for the Consolidated Financial Targets for full FY2013

Full FY2013 (From April 1, 2013 to March 31, 2014)
                                                    Net Income   Basic Net
               Total    Operating  Income before    attributable Income
              Revenues Income     Income Tax       to           attributable
                                   Expense(Benefit) IIJ          to
                                                                 IIJ per Share
              JPY      JPY        JPY millions     JPY millions JPY
               millions millions
Previous       117,000  9,400      9,000            6,000        135.42
Target (A)
New Target (B) 114,000  6,000      6,500            4,700        106.08
Change (B-A)   (3,000)  (3,400)    (2,500)          (1,300)      --
Change (%)     (2.6%)   (36.2%)    (27.8%)          (21.7%)      --
<Reference>    106,248  7,753      7,757            5,301        130.76
FY2012 Actual

(Note) IIJ conducted a 1:200 stock split on common stock with an effective
date of October 1, 2012. Accordingly, basic net income per share for the
fiscal year ended March 31, 2013 ("FY2012") has been adjusted as if the stock
split were conducted on April 1, 2012, at the beginning of FY2012.

The year-end dividend target remains unchanged from JPY11.00 announced on May
15, 2013.

2. Reason for Revision

We believe that the business growth opportunities for IIJ group should be
greater than ever for the middle term, considering the current overall market
situation. The continuous technological innovation of network infrastructure,
the ongoing development of the widely-used smart phones and other portable
devises, and the evolving IT needs as seen with the growing concept of big
data should promote the further adoption of network and cloud usages by
Japanese enterprises and governmental organization supported by the returned
demand on systems investment along with the Japanese economic recovery.
Realizing the coming few years would be a critical period for IIJ business
growth, we have been quite aggressive in business investment from the
beginning of this fiscal year. Such business investment includes the enhanced
procurement of employees, the continued expansion of network infrastructure,
the continued service development, and the reinforcement of new business
investment such as overseas business.

The operating costs and expenses for the nine months in FY2013 (from April 1,
2013 to December 31, 2013, "3Q13") increased significantly by JPY6,888
million, up 9.6% compared with the same period of the previous fiscal year
("YoY") mainly due to the above described business investment. The table below
shows the breakdown of year over year difference in revenue, cost and SG&A and
R&D expenses. The increase in the costs of systems integration revenues is
principally purchasing costs, outsourcing-related and personnel-related costs
in accordance with its revenue increase. The increase in the costs of network
services revenues and SG&A and R&D expenses was mainly related to the business
expansion operation including the increased number of employees, the expansion
of network infrastructure including cloud-related, and the reinforcement of
overseas business. The breakdown by items is as follows: the total
personnel-related costs increased by JPY1,281 million, up 11.1% YoY, the
outsourcing-related costs increased by JPY1,882 million, up 12.7%, the
rent-related costs increased by JPY362 million, up 22.2% YoY, the depreciation
and amortization increased by JPY814 million, up 14.8% YoY, and the purchasing
costs increased by JPY1,339 million, up 24.1% YoY.

                                                                                      
            Nine Months for the Fiscal Year   Nine Months for the Fiscal Year
           Ended                             Ending
            March 31, 2013                    March 31, 2014
           Revenues         Costs and        Revenues         Costs and           
                             Expenses                          Expenses
            YoY              YoY              YoY              YoY
           Change    YoY    Change    YoY    Change    YoY    Change    YoY
            (JPY      Change (JPY      Change (JPY      Change (JPY      Change
            millions)        millions)        millions)        millions)
Network     1,273     2.7%   385       1.0%   1,786     3.7%   1,792     4.7%
Services
Systems     3,893     17.9%  3,727     21.6%  3,596     14.0%  3,833     18.3%
Integration
Equipment   (11)      (1.3%) (37)      (4.7%) 311       35.8%  313       41.7%
Sales
ATM
Operation   784       85.0%  437       43.2%  364       21.3%  126       8.7%
Business
SG&A and
R&D         --        --     382       3.8%   --        --     825       7.9%
Expenses
Total       5,938     8.4%   4,893   7.3%   6,056     7.9%   6,888     9.6%

On the other hand, the total revenues for 3Q13 fell short of the initial plan.
The gap was primarily due to the recurring revenues which consist of network
services revenues (Internet connectivity services, outsourcing services, and
WAN services) and operation and maintenance revenues of systems integration
revenues. One of the most critical factors affecting the gap of recurring
revenues was the slowing down and/or decrease of revenue from certain large
customers of carriers, network operators and game providers who led FY2012
revenue growth. Because of these large customers' individual business
conditions, the strong price down pressure in Internet connectivity and WAN
services and the reduced server usage in cloud services and systems operation
and maintenance have been taken place. Those gaps in the recurring revenue
have been increasing quarter by quarter and it is estimated to become even
greater in the fourth quarter. The recurring revenues from these certain large
customers are estimated to be approximately JPY2.0 billion short of the
initial target. While the systems construction revenues are expected to be
strong based on the favorable order situation, the accumulation of the
recurring revenues from the other general customers has not been as strong as
the initial plan due to factors such as the postponement of new services
launch. Because of all these relevant reasons, we revised FY2013 total
revenues target from JPY117.0 billion to JPY114.0 billion, down 2.6% compared
with the target.

The operating income for 3Q13 decreased by 16.5% YoY. The decrease in profit
has been widening - the operating income for the first half of FY2013
decreased by 7.8% YoY. The developing decrease in profit is primarily because
the recurring revenue has not been accumulating as planned. Also, the above
described business expansion strategies have been resulted in the increase in
the cost and expenses. The costs of the recurring revenues are mainly costs to
operate and maintain the network facilities and equipment such as circuit
costs, depreciation, personnel-related and outsourcing-related costs, and
these costs are not directly correlated with individual revenue increase or
decrease. Thus, the fluctuations in the recurring revenues tend to have a
significant impact on operating income in general. The widening of the
operating income gap is estimated to continue in the fourth quarter. In
regards to the favorable order situation of systems construction, its gross
margin ratio is to be lower than the plan as the trend of large scale projects
is observed. Considering these relevant factors, we revised FY2013 operating
income target from JPY9.4 billion to JPY6.0 billion, down 36.2% compared with
the previous target.

The targets for income before income tax expense and net income attributable
to IIJ have also been revised in accordance with the above described revisions
respectively.

(*) The above targets for FY2013 consolidated financial results are based on
information available at the time of the announcement and the actual results
may differ from the targets due to various factors.

CONTACT: For inquiries, contact:
         IIJ Investor Relations
         Tel: +81-3-5259-6500 E-mail: ir@iij.ad.jp
         URL: http://www.iij.ad.jp/en/ir

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