Key player in network infrastructure for AI

Research evidence excerpt

Key player in network infrastructure for AI

Macquarie Equity Research Internet Initiative Japan

Key Risks to Investment Thesis Company Description

• Weaker-than-expected demand growth in network services. IIJ offers network as well as system integration and operation

• Weaker-than-expected order bookings in system services. Network services include high-end enterprise

integration and system operation. IP network connectivity, mobile virtual network operator

• Higher-than-expected cost increases in human resources. (MVNO) services under iijmio brand, mobile virtual network

enabler (MVNE) services, WAN, network outsourcing, etc.

• A less-than-expected drop in interconnection fees in 5G System integration and operating services encompass system

network. platform solutions and operations including data centre/cloud

and security.

Figure 1 - Network services segment Figure 2 - Forward P/E band

300,000 Connectitvity - Enterprise Connectivity - Consumer 30.0% 5,000 30x

WAN Outsourcing 25x

Gross margin(%, RHS) 4,000 20x

200,000 20.0% 3,000 15x

2,000 10x

100,000 10.0% 1,000

(Y) 0 0.0% Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 Jul-23 Jan-24 Jul-24 Jan-25 Jul-25 Jan-26 Jul-26

(Y mn) FY3/26A FY3/27E FY3/28E FY3/29E FY3/30E FY3/31E

Source: Company data, Macquarie Research, July 2026 Source: FactSet, Macquarie Research, July 2026

Internet Initiative Japan (3774 JP) JPY/(bn) unless otherwise noted

Income Statement Mar FY 2026A 2027E 2028E 2029E Q4/26A Q1/27E Balance Sheet 2026A 2027E 2028E 2029E

Revenue 345.4 383.1 417.5 452.3 96.1 85.6 Cash 38.4 49.8 80.5 108.2

Cost of Goods Sold 269.2 297.3 320.7 347.8 74.1 67.5 Receivables 62.1 68.9 75.0 81.3

Gross Profit 76.2 85.7 96.8 104.5 22.0 18.1 Inventories 7.1 7.9 8.5 9.2

EBITDA 67.5 73.3 81.4 81.7 18.7 16.3 Investments 28.0 30.0 32.0 34.0