QAs from earnings release meetings and others

November 7, 2025：2Q25 Financial Results Briefing (Online)

(*)This is a summary of questions and answers took place at the Briefing.
Abbreviations: FY25 stands for a fiscal year ending March 31, 2026, 1H25 stands for the first half of FY25, 2H25 stands for the second half of FY25, 2Q25 stands for the second quarter of FY25, YoY stands for Year over year comparison and SI stands for Systems Integration.

Question: The gross margin for 2Q25 was almost flat YoY. Could you provide an outlook for the medium- to long-term?

Answer: We believe we have entered a phase of medium- to long-term business expansion, driven by the increasing acquisition of large-scale Service Integration projects, such as network renewals. These projects initially generate system construction revenue, one-time revenue, followed by monthly recurring revenues from network services and system operation and maintenance. As a result, we expect a gradual improvement in gross margin. Additionally, for large-scale projects with contract durations of four to five years, we anticipate additional orders during the contract durations, which should contribute to recurring revenue growth. While we are currently experiencing the impact of rising costs, we believe that, in the medium- to long-term, such cost increases will be absorbed into market pricing, including among competitors.

Question: Mobile device purchases increased in 1H25 compared to the same period last year. What is the outlook for 2H25.

Answer: Mobile device purchases rose YoY in 1H25, driven by strong consumer sales during peak seasons and higher demand from MVNE clients. For 2H25, we plan to respond flexibly to market trends and MVNE clients demand.

Question: As network services accumulation is a key strategic initiative for FY25, could you provide an update on the progress made in 1H25 and the outlook for FY25.

Answer: While network services typically accumulate gradually as monthly recurring revenue, network service revenue for 1H25 increased by 10.3% YoY. Monthly recurring revenue, including system operation and maintenance, also grew steadily by 11.3% YoY. We will continue to reinforce these efforts in 2H25.

Question: Please explain the purpose of establishing a joint venture subsidiary with Sony Semiconductor Solutions Corporation (hereinafter “Sony”).

Answer: We established the joint venture with Sony to accelerate the commercialization of smart agriculture business by combining IIJ’s strengths in communication technologies, such as IoT and smart agriculture expertise, with Sony’s advanced sensor technologies.

* Press release (Nov 7, 2025): IIJ and Sony to Agree on the Establishment of a Joint Venture to Promote Smart Agriculture