Internet Initiative Japan (3774): FY2025 Results Summary — Double-Digit Profit Growth on Large-Scale Service Integration

This article is based on publicly available IR materials and is not a recommendation to buy or sell any specific securities.

Internet Initiative Japan Inc. (IIJ), listed on the Prime Market of the Tokyo Stock Exchange, announced consolidated financial results for FY25 (April 1, 2025 to March 31, 2026) under IFRS. Revenue rose to ¥345.4 bn, up 9.0% year on year, operating profit increased 15.7% to ¥34.8 bn, and net profit grew 21.3% to ¥24.2 bn. The annual dividend per share was ¥39.00, up ¥4.00 from the prior year, and ROE was 16.2%. Note: IIJ labels the fiscal year ended March 31, 2026 as “FY25”; this article follows the labels used in the company’s presentation materials.

Consolidated Results (Full-Year Actual)

Gross profit increased 11.4% to ¥76.17 bn, with the gross margin at 22.1% (21.6% in FY24). Recurring revenue reached ¥274.51 bn, up 12.0% year on year, accounting for 79.5% of total revenue. The company states that operating profit was below expectations mainly due to revenue mix, while profit before tax exceeded the forecast due to foreign exchange gain and valuation gain on funds, etc. Operating profit included a one-time gain of ¥1.17 bn from the revision of the retirement benefit plan in 2Q25.

Item (¥ billion)	FY25	FY24	YoY
Revenues	345.40	316.83	+9.0%
Gross profit	76.17	68.40	+11.4%
SG&A etc.	41.33	38.30	+7.9%
Operating profit	34.84	30.10	+15.7%
Profit before tax	35.24	29.18	+20.8%
Net profit	24.19	19.93	+21.3%

Segment Results

Network (NW) services revenue grew 9.9% to ¥178.7 bn, with gross profit of ¥48.4 bn (+7.0% year on year) and a gross margin of 27.1%. Within NW services, mobile services revenue rose 10.3% to ¥55.46 bn and security service revenue rose 13.8% to ¥40.91 bn amid increasingly sophisticated cyberattacks. Systems integration (SI) revenue was driven by systems operation and maintenance (O/M): construction revenue was ¥67.9 bn, down 1.3% (a reactionary decline mainly due to the absence of FY24’s single large project), while O/M revenue grew 16.0% to ¥95.8 bn. SI gross profit rose 20.9% to ¥26.30 bn with the gross margin improving to 16.1%. Orders received in SI were strong: construction orders of ¥84.0 bn (+38.1%) and O/M orders of ¥123.1 bn (+26.9%), with the construction order backlog up 102.1% to ¥31.9 bn.

Category	FY25	FY24	YoY
NW services revenue	¥178.7 bn	¥162.6 bn	+9.9%
Of which, Mobile services	¥55.46 bn	¥50.30 bn	+10.3%
Of which, Security services	¥40.91 bn	¥35.94 bn	+13.8%
SI revenue	¥163.6 bn	¥151.3 bn	+8.2%
Of which, Systems construction	¥67.9 bn	—	-1.3%
Of which, Systems O/M	¥95.8 bn	—	+16.0%
NW service gross margin	27.1%	27.8%	—
SI gross margin	16.1%	14.4%	—

Securing large-scale projects (defined as those exceeding JPY1.0 bn in total contract value) has become the new norm: IIJ won 19 projects totaling ¥62.0 bn in FY25, including two projects each exceeding ¥10.0 bn. Flagship projects included NW system construction and O/M for a government agency (¥16.0 bn, 2Q25) with an additional order of ¥2.5 bn (4Q25), and an overseas GPU platform construction project (¥12.0 bn, 4Q25) through Singapore subsidiary PTC.

FY26 Forecast

For FY26 (April 1, 2026 to March 31, 2027), the final year of the current Mid-term Plan (FY24-26), IIJ forecasts revenue of ¥385.0 bn (+11.5%), operating profit of ¥38.5 bn (+10.5%) and net profit of ¥25.0 bn (+3.4%). By category, the company plans NW service revenue of approximately ¥200.5 bn and SI revenue of approximately ¥181.5 bn. Business plan assumptions include an exchange rate of ¥155/USD, CAPEX of approximately ¥38.0 bn (of which approximately ¥18.0 bn is for the Shiroi data center 3rd site construction), and a net increase of approximately 400 consolidated employees. The company also notes the reversal impact of the one-time gain (¥1.17 bn) from the retirement benefit plan revision in 2Q25, leading to a slight year-on-year decrease in the 1H26 profit outlook.

Item (¥ billion)	FY26 Forecast	YoY	FY25 (Actual)
Revenue	385.0	+11.5%	345.40
Gross profit	85.7	+12.5%	76.17
Operating profit	38.5	+10.5%	34.84
Profit before tax	37.0	+5.0%	35.24
Net profit	25.0	+3.4%	24.19
Dividend per share	¥43.00	+¥4.00	¥39.00

Shareholder Returns

The FY25 annual dividend was ¥39.00 per share (interim ¥19.50, year-end ¥19.50), up ¥4.00 from ¥35.00 in FY24. For FY26, IIJ forecasts an annual dividend of ¥43.00 per share (interim ¥21.50, year-end ¥21.50), with a planned payout ratio of 30.5% and planned ROE of 15.8%. The company’s basic shareholders’ return policy is continuous and stable dividend payment while considering the need to have retained earnings for the enhancement of financial position, mid-to-long term business expansion and future investment.

Fiscal Year	Interim	Year-end	Annual
FY24	¥17.50	¥17.50	¥35.00
FY25	¥19.50	¥19.50	¥39.00
FY26 (Forecast)	¥21.50	¥21.50	¥43.00

Medium-Term Plan / Topics

FY25 was the second year of the current Mid-term Plan (FY24-26). Revenue exceeds the Mid-term targets (the initial FY26 target was ¥380.0 bn versus the current FY26 forecast of ¥385.0 bn), whereas operating profit remains below the company’s expectations (initial FY26 operating margin target of 12% versus a 10.0% forecast); IIJ aims to enhance profitability through economies of scale over the medium-to-long term. Total security business volume (NW service + SI) reached ¥48.37 bn in FY25 (FY24: ¥41.58 bn). On infrastructure, construction of the Shiroi data center’s 3rd site commenced in June 2025 (cumulative CAPEX of approximately ¥27.0 bn expected) and the Matsue data center’s system module buildings began operations in June 2025. In February 2026, IIJ established Sensiphia, a joint venture with Sony Semiconductor Solutions Corporation for a soil moisture sensing business derived from its IoT operations. On AI, IIJ targets about 30% of company-wide work to be replaced by AI by the end of FY2029. Consolidated employees numbered 5,533 as of March 31, 2026, with the turnover rate at a low 4.5% in FY25. Under its Mid-to-long Term Vision, IIJ targets total revenue of around ¥500.0 bn with an operating margin of 12% to 15%.

This article is an analysis based on publicly available information and is not a recommendation to buy or sell any specific securities. Investment decisions are your own responsibility.