Internet Initiative Japan (3774) AI Stock Analysis

• Market Cap: ¥449.31B
• Dividend Yield: 1.31%
• Average Volume (3M): 505.33K
• Price to Earnings (P/E): 19.6
• Beta (1Y): 0.36
• Revenue Growth: 12.48%
• EPS Growth: 18.38%
• Country: JP
• Employees: 5,206
• Sector: Communication Services
• Sector Strength: 97
• Industry: Telecommunications Services
• EPS (TTM): 35.29
• Shares Outstanding: 183,448,850
• 10 Day Avg. Volume: 473,140
• 30 Day Avg. Volume: 505,333
• PEG Ratio: 29.64
• Price to Book (P/B): 3.27
• Price to Sales (P/S): 1.45
• P/FCF Ratio: 27.66
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 71 Outperform
• Price Target: ¥2,755.00 ▲(10.51% Upside)

Internet Initiative Japan's strong financial performance is the most significant factor, supported by consistent revenue growth and a solid balance sheet. Technical analysis indicates a stable upward trend, while valuation metrics suggest the stock is fairly valued. The lack of earnings call data and corporate events does not impact the score.

Positive Factors

Recurring revenue model

A revenue base weighted to subscriptions, usage and long-term contracts creates predictable cash flows and higher retention potential. This supports durable visibility for planning, enables upselling of cloud/security bundles and smooths revenue through business cycles.

Diversified enterprise services

A broad portfolio across connectivity, cloud, security and MVNO services reduces single-market dependency and supports cross-selling. Structural demand for cloud and managed security among enterprises/public sector underpins sustainable revenue expansion and resilience to segment shocks.

Conservative balance sheet

Low leverage and a strong equity ratio provide financial flexibility for capex, network expansion and M&A without stressing solvency. A healthy ROE shows efficient capital use, supporting long-term investment capacity and risk absorption during sector cycles.

Negative Factors

Declining free cash flow growth

A persistent decline in free cash flow growth can erode the company’s ability to self-fund data center/network investments, sustain dividends or pursue acquisitions. If this trend continues it may force tougher capital allocation choices and weaken financial optionality.

TTM revenue growth slowdown

A modest TTM increase suggests growth momentum has slowed versus historical rates. Slower top-line expansion can pressure future operating leverage and margin improvement unless offset by successful cross-sell, higher-value services, or expansion into new customer segments.

Modest shareholder income

A low dividend yield implies limited cash return to shareholders. Coupled with weakening free cash flow growth, the company may have constrained capacity to raise payouts or fund buybacks, which can matter to income-focused investors over the medium term.

Internet Initiative Japan Business Overview & Revenue Model

Company Description

Internet Initiative Japan Inc. provides Internet connectivity, WAN, outsourcing, systems integration, and network-related equipment sales services in Japan. It operates through two segments, Network Services and Systems Integration Business, and ATM Operation Business. The company offers mobile communication and remote access/telework services; WAN/network services, including SDN, multi-cloud network, closed connection, internet VPN, SEIL, remote access, wireless LAN, and GIGA-school; leased line and broadband services; IIJ DNS platform, and domain name registration and maintenance services; IIJ access ID management, dial-up access, and IIJ IPv6 fiber access services; and security solutions for IIJ managed firewall, DDoS protection, and managed IPS/IDS services. It also provides cloud solutions, such as HaaS/IaaS, cloud storage, monitoring/operation, virtual desktop, Paas/Saas, IoT/M2M, ID management and authentication, network, global, mobile, license, and specialized solutions, as well as IIJ cloud exchange and IIJ cloud integration solutions; network, mail, and web security, endpoint, security assessment/consulting, web and mail hosting, online storage, content delivery/CDN/CMS, and system integration; IoT services and solutions in the field of industrial, agriculture, energy, and IoT-oriented mobile communication; industry-specific solution; content delivery; and global/privacy products. In addition, the company offers IT outsourcing, IIJ consulting, cognitive factory, IIJ private cloud, network solutions, IIJ security audit, IIJ malware analysis, IIJ content management, cloud integration solution for Microsoft and AWS, Microsoft 365 transition support solution, data center service, and data center construction engineering solutions, as well as DX edge services. The company was incorporated in 1992 and is headquartered in Tokyo, Japan.

How the Company Makes Money

IIJ generates revenue primarily through its diverse range of services, which includes internet access services, cloud services, and system integration. Key revenue streams consist of the sale of broadband internet services to businesses and consumers, as well as the provision of managed services and cloud computing solutions. IIJ also earns revenue from its data center operations and security services. Significant partnerships with major technology firms and enterprises enhance its service offerings and contribute to its earnings, along with ongoing demand for reliable internet and IT solutions in Japan's growing digital economy.

Internet Initiative Japan Financial Statement Overview

Summary

Internet Initiative Japan exhibits strong financial health with consistent revenue growth and profitability. The balance sheet is solid, with low leverage and strong equity. While cash flow generation is generally positive, the recent decline in free cash flow growth warrants attention.

Income Statement

Internet Initiative Japan demonstrates strong revenue growth with a 3.14% increase in TTM, supported by a solid gross profit margin of 22.06%. The net profit margin is stable at 6.34%, indicating consistent profitability. EBIT and EBITDA margins are healthy at 9.90% and 19.75%, respectively, showcasing effective cost management and operational efficiency.

Balance Sheet

The company maintains a conservative debt-to-equity ratio of 0.23, reflecting prudent financial leverage. Return on equity is robust at 14.78%, indicating efficient use of shareholder funds. The equity ratio stands at 45.06%, suggesting a strong capital structure with a significant portion of assets financed by equity.

Cash Flow

Operating cash flow to net income ratio is moderate at 1.84, indicating adequate cash generation relative to net income. However, free cash flow growth is negative at -12.81%, which could be a concern if it persists. The free cash flow to net income ratio is healthy at 0.57, suggesting good cash conversion.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	331.72B	316.83B	276.08B	252.71B	226.34B	213.00B
Gross Profit	72.86B	68.40B	63.87B	57.91B	51.63B	40.28B
EBITDA	67.03B	62.06B	58.88B	55.84B	55.50B	43.00B
Net Income	22.49B	19.93B	19.83B	18.85B	15.67B	9.71B
Balance Sheet
Total Assets	329.26B	312.44B	273.71B	246.19B	231.81B	220.78B
Cash, Cash Equivalents and Short-Term Investments	41.11B	32.53B	45.47B	42.47B	47.39B	42.47B
Total Debt	35.59B	33.62B	30.18B	20.43B	21.87B	25.56B
Total Liabilities	179.54B	170.35B	146.68B	126.89B	127.18B	129.81B
Stockholders Equity	148.38B	140.68B	125.75B	118.12B	103.53B	89.96B
Cash Flow
Free Cash Flow	21.18B	16.62B	21.84B	21.27B	32.05B	29.54B
Operating Cash Flow	41.38B	28.53B	40.78B	38.53B	43.57B	40.54B
Investing Cash Flow	-20.81B	-21.75B	-17.93B	-18.39B	-11.84B	-13.22B
Financing Cash Flow	-17.24B	-19.67B	-20.80B	-25.73B	-27.30B	-23.62B

Internet Initiative Japan Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 2493.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3774, the sentiment is Negative. The current price of 2493 is below the 20-day moving average (MA) of 2640.50, below the 50-day MA of 2753.22, and below the 200-day MA of 2737.74, indicating a bearish trend. The MACD of -65.94 indicates Positive momentum. The RSI at 24.41 is Positive, neither overbought nor oversold. The STOCH value of 11.95 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:3774.

Internet Initiative Japan Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3834	80 Outperform	¥19.85B	12.55	―	3.53%	5.03%	-9.55%
9433	76 Outperform	¥9.86T	14.43	13.75%	2.85%	3.34%	20.36%
9424	74 Outperform	¥23.69B	22.52	―	―	30.15%	31.28%
3774	71 Outperform	¥449.31B	19.62	15.67%	1.31%	12.48%	18.38%
3776	66 Neutral	¥10.94B	25.95	―	1.01%	17.19%	-43.91%
9449	66 Neutral	¥401.64B	23.64	17.97%	1.36%	4.75%	17.02%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%