Internet Infrastructure FY2026 Full Year: IIJ grows, GMO wins on margins

Both companies posted higher sales and profit, reflecting resilient demand. Their results alone, however, are not enough to draw conclusions about the entire industry.

• Corporate digital transformation and network upgrades are providing a tailwind. IIJ’s revenue rose 9.0% year on year, outpacing GMO’s 3.3% increase. Corporate efforts to renew communications and IT infrastructure supported IIJ’s growth.
• Recurring monthly revenue is another focus. IIJ’s monthly recurring revenue from subscription services increased 12.0% year on year, faster than its 9.0% overall sales growth. Recurring income is helping drive expansion.
• Higher-value services lifted earnings. Operating profit rose 19.5% at GMO and 15.7% at IIJ, outpacing sales growth at both companies.
• AI infrastructure demand is opening new opportunities. IIJ won a large GPU project overseas, as demand for AI-related facilities expands alongside traditional networking and systems integration.

GMO led in its ability to generate profit. Operating profit came to ¥59.1 billion, topping IIJ’s ¥34.8 billion. GMO’s year-on-year increase of 19.5% also exceeded IIJ’s 15.7%.

GMO’s operating margin was 20.7%, well above IIJ’s 10.1%. IIJ had the larger revenue base, at ¥345.4 billion compared with GMO’s ¥285.3 billion, but GMO was more efficient at turning sales into profit.

IIJ led on growth. Revenue rose 9.0% year on year, ahead of GMO’s 3.3% increase. Net income growth was also stronger at IIJ, at 21.3%, versus 12.8% at GMO.

IIJ’s relative weakness was its lower profit margin. But it still delivered growth in both sales and profit, and did not have a poor performance. The takeaway this period: IIJ led on growth, while GMO led on profitability.

IIJ captured demand for corporate networks and systems integration. Monthly recurring revenue from network services and operations and maintenance rose 12.0% year on year, outpacing the 9.0% increase in overall sales.

Its systems integration order backlog more than doubled year on year, making it an important forward indicator for sales. The large overseas GPU project is another move to tap AI demand. Operating profit also included a one-time gain of ¥1.17 billion from a change to the employee retirement benefit plan.

GMO expanded profit through its internet infrastructure and financial businesses. Operating profit rose 19.5% year on year, ahead of IIJ’s 15.7% increase. Its annual dividend increased to ¥52.0 from ¥41.8 in the previous year.

GMO adopted IFRS for the first time this period, so comparisons with prior years require attention to accounting changes. The companies also have different fiscal year-ends: March for IIJ and December for GMO.

Even as demand grows, investment burdens and competition can erode profits. Key risks include:

• Capital spending and power costs. Expanding networks and AI-focused GPU capacity can drive up equipment and electricity costs. A slower payoff on investment could weigh on margins.
• Hiring and labor costs. Companies are competing for specialists in areas such as security and cloud computing. Persistent hiring difficulties and wage increases could raise operating costs.
• Cyberattacks and data leaks. Disruptions to communications or IT infrastructure can affect customers’ businesses. Stronger defenses create demand, but also require spending.
• Price competition and the growing presence of major cloud providers. Prices for general-purpose services are easy to compare. Without a clear edge in operations or security, providers risk margin pressure.
• Volatility in financial businesses and new investments. Finance is a major profit driver for GMO, but it is exposed to market conditions and regulation. Balancing it with the stable earnings of infrastructure businesses is key.

The industry needs expertise not only in network operations but also in digital transformation, security and AI infrastructure. IIJ’s 12.0% growth in recurring revenue suggests demand continues after services are installed, through ongoing operations and upgrades.

GMO, with a 20.7% operating margin, and IIJ, with 9.0% revenue growth, have different strengths. Job seekers should consider whether they want to support stable operations or work on new services and large-scale projects, and look closely at each company’s business lines and technology areas.