ENVALITH
株式会社インターネットイニシアティブ logo

Internet Initiative Japan Inc.

3774・Prime Market・Information & Communication

Official website
株式会社インターネットイニシアティブ logo
Internet Initiative Japan Inc.3774

Business

Internet Initiative Japan Inc. (IIJ) was established in December 1992 as Japan's first commercial ISP, and since then, as "IIJ of technology," has developed a Network Services and Systems Integration (SI) Business targeting corporations and government agencies as its primary customers. The company provides an integrated offering of internet connectivity, outsourcing, WAN services, cloud computing, security, and mobile (MVNO/full MVNO) services, and has a corporate customer base of approximately 16,000 companies. It comprises 18 consolidated subsidiaries and 6 equity-method affiliates, and operates 12 local subsidiaries across the US, Europe, and Asia. The company also engages in the ATM Operations Business through Trust Networks Inc. The Network Services and Systems Integration Business accounts for over 99% of net sales.

Business Model

IIJ's revenue structure consists of two pillars: Network Services (net sales of ¥178,738 million) and Systems Integration (¥163,639 million). In SI projects, the company adopts a recurring-revenue model in which projects transition from design and construction to monthly operation and maintenance contracts. In FY2026 (ending March 2026), Systems Integration (Operation and Maintenance) sales reached ¥95,768 million, up 16.0% year on year. Overall monthly recurring revenue also grew, up 12.0% year on year, forming a stable earnings base. The ATM Operations Business provides supplementary recurring revenue through ATM usage fee income.

Company Strengths

As of the end of FY2026 (ending March 2026), the number of corporate customers, including government agencies, was approximately 16,000. The acquisition of large multi-year systems integration projects with a total contract value of ¥1 billion or more has become a regular occurrence, expanding to 19 projects with a total acquisition value of approximately ¥62.0 billion in FY2026 (ending March 2026) (compared to 15 projects and approximately ¥45.0 billion in the previous fiscal year). The order backlog reached ¥158,910 million, up 37.7% from the end of the previous fiscal year, providing high visibility into future revenue.

The company launched Japan's first full MVNO service in 2018 and owns a proprietary SIM platform. The number of lines provided directly for corporate IoT and other applications reached 3,573,098 at the end of FY2026 (ending March 2026) (an increase of 397,077 lines from the end of the previous fiscal year), while the MVNO Platform Service also expanded to 1,365,657 lines. The full MVNO infrastructure is a proprietary asset that is difficult for competitors to replicate in a short period, serving as a differentiating factor in capturing IoT demand.

Outsourcing Services revenue reached ¥67,622 million in FY2026 (ending March 2026), up 14.3% year on year, recording the highest growth rate among all Network Services categories. This growth was driven by security-related services, with high-value-added offerings backed by accumulated technical expertise—such as the operation of a security operations center around the clock, 365 days a year, and the provision of SASE—encouraging continued usage by customers.

ENVALITH's Perspective

The slowdown in profit growth that had been a concern in FY2025 (ended March 2025) — with a 14.8% increase in revenue against only a 3.7% increase in operating profit — was clearly resolved in FY2026 (ending March 2026), with revenue up 9.0%, operating profit up 15.7%, and profit attributable to owners of the parent up 21.3%. The main driver was the improvement in SI gross profit margin from 14.4% to 16.1% (reflecting the completion of price pass-through following the previous period's VMware product price hikes), which can be regarded as a structural improvement.

The SI order backlog expanded sharply, up 37.7% from the previous fiscal year-end (with system construction orders up 102.1%), and this is expected to accelerate the shift toward recurring (stock-type) revenue going forward. On the other hand, data center investment increased substantially (acquisition of property, plant and equipment of ¥20,379 million, versus ¥11,904 million in the previous period), and for FY2027 (ending March 2027), an additional approximately ¥18.0 billion in capital expenditure is planned, including construction of the third Shirai Data Center building. The impact on free cash flow and trends in capital efficiency should be closely monitored.

The company's forecast for FY2027 (ending March 2027) calls for revenue of ¥385,000 million (+11.5%) and operating profit of ¥38,500 million (+10.5%), continuing the trend of revenue and profit growth. However, profit before tax is forecast at ¥37,000 million (+5.0%) and profit attributable to owners of the parent at ¥25,000 million (+3.4%), indicating a slowdown in growth rates. This is attributable to the continuation of equity-method investment losses (related to Digital Garage's DeCurret Holdings) and a return to the normal effective tax rate. External factors such as U.S. trade policy and fluctuations in financial and capital markets may also affect business performance.

Growth Strategy

Aiming for revenue of ¥385,000 million in FY2027 (ending March 2027) through accumulation of monthly recurring revenue, acquisition of large-scale SI projects, and data center capacity expansion

Multi-year large-scale projects with total contract value of ¥1 billion or more are becoming a regular occurrence. In FY2026 (ending March 2026), 19 such projects worth approximately ¥62.0 billion were acquired (compared with 15 projects worth approximately ¥45.0 billion in the previous period). An overseas GPU construction project (approximately ¥12.0 billion) was also secured. Against a backdrop of SI order backlog of ¥158,910 million, the company aims to continue expanding systems operation and maintenance revenue (up 16.0% year on year).

Mid- to long-term facility capacity is being secured through the start of operations at the new Matsue Data Center building and the commencement of construction on the Shiroi Data Center Phase 3 building. In FY2027 (ending March 2027), in addition to recurring expenditures, approximately ¥18.0 billion in additional capital investment is planned, including construction of the Shiroi DC Phase 3 building, to respond to increasing internet traffic and expanding cloud demand.

Outsourcing Services revenue is being expanded through the introduction of new services such as cybersecurity support (¥67,622 million in FY2026 (ending March 2026), up 14.3% year on year). The company continues to strengthen its response to growing subscriber numbers for corporate IoT mobile services (3,573,098 subscriptions) and demand for AI utilization.

The company established Sensifia Inc., a sensor business joint venture with Sony Semiconductor Solutions Corporation, for soil moisture measurement for smart agriculture. DeCurret DCP, Inc.'s tokenized deposit and interbank settlement enhancement project was selected as a supported case under the Financial Services Agency's FinTech proof-of-concept program. The company aims to diversify its mid- to long-term revenue sources.

Last updated: July 19, 2026