Quarterly Consolidated Financial Results for the First Three Quarters of
Fiscal Year Ending March 31, 2022 (Japanese Accounting Standards)
Name of listed company:
Securities code:

Digital Arts Inc.

Listed on:

January 31, 2022
Tokyo Stock Exchange
1st Section

2326

URL https://www.daj.jp
Representative Director,
Representative: (Title)(Name) Toshio Dogu
President and CEO
General Manager of theContact:(Title)(Name) Isao Konishi
TEL: 03-5220-6045
Administration Department
Scheduled date for submission
Scheduled date to start dividends
February 4, 2022－
of quarterly report:
distribution:
Preparation of supplementary explanatory ： Yes
documents for quarterly results:
Holding of quarterly results briefing:： No(Figures shown are rounded down to the nearest million yen.)

１．Consolidated financial results for the first three quarters of the fiscal year ending March 31, 2022 (April
1, 2021 –December 31, 2021)(Percentage figures represent changes from same periodof previous year.)
Profit attributable toOperating profit
Ordinary profit
owners of parent(1) Consolidated operating results (cumulative totals)
Net sales
Million yen%

Million yen%

First three quarters of year
6,686
40.7
3,024
53.3
ending March 31, 2022
First three quarters of year
4,750
14.7
1,973
19.7
ended March 31, 2021
(Note) Comprehensive First three quarters
2,086million yen (53.0％)
income:of year ending March
31, 2022
Profit per share(basic)First three quarters of year
ending March 31, 2022
First three quarters of year
ended March 31, 2021

Million yen%

Million yen

%

3,027

52.7

2,081

52.7

1,982

20.2

1,363

20.8

First three quartersof year ended March
31, 2021

1,363million yen (21.1％)

Profit per share(diluted)

Yen

Yen

148.34144.89

97.22

94.97

(2) Consolidated financial position
Total assets
Million yen
As of December 31, 2021
18,233As of March 31, 2021
14,856(Reference) Equity capital: As of December 31, 2021

Net assets
Million yen
11,325
10,062
11,297 million yen

Equity ratio

Net assets per share
％

Yen

62.0
804.9967.6
715.79As of March 31, 2021 10,041million yen

2. Dividends
Annual dividends
1Q-end2Q-endYen

3Q-endYen

Year-end
Yen

AnnualYen

Yen

Year ended March 31,
25.00
30.00
55.00
－
－
2021
Year ending March 31,
30.00
－
－
2022
Year ending March 31, 2022
40.00
70.00
(forecast)(Note) Revisions to most recently announced dividend forecast ： Yes
A revision has been made to the year-end dividend forecast announced on May 7, 2021.
For details, please refer to the Notice Concerning Revision of Dividend Forecast (Dividend Increase) announced
today.

3. Forecast of consolidated financial results for the year ending March 31, 2022 (April 1, 2021 – March
31, 2022)(Percentage figures represent changes from same period of previous year.)
Profit attributable toOperating profit
Ordinary profit
Profit per shareowners of parent

Net sales
Million yen%

Million yen%

Full year
9,000 31.9
4,000 34.3
(Note) Revisions to most recently announced results forecasts:

Million yen%

Million yen

%

Yen

4,000
No

33.7

2,770

34.5

197.40* Notes(1) Changes in important subsidiaries during the first threequarters of fiscal year ending March 31, 2021

None

(Changes in specified subsidiaries resulting in changes in scope of consolidation)
New― (Company name) , Excluding―(Company name)(2) Application of special accounting methods to the preparation
Yesof quarterly consolidated financial statements:(Note) For details, please refer to “2. Quarterly Consolidated Financial Statements and Primary Notes (4) Notes toquarterly consolidated financial statements (Application of special accounting methods to the preparation of quarterly
consolidated financial statements)" on page 8 of the attached materials.

(3) Changes in accounting policies, changes of accounting estimates and restatement
1) Changes in accounting policies due to revisions of： Yesaccounting standards, etc.:
2) Changes in accounting policies due to reasons other： Nonethan those stated in 1):
3) Changes in accounting estimates:： None： None4) Restatement:(4) Number of shares outstanding (common stock)
As of December 31,
1) Number of shares issued and2021
outstanding (including treasury shares)
2) Number of treasury shares
3) Average number of shares issued andoutstanding in each period (cumulative
total)

As of December 31,
2021
First three quartersof year ending
March 31, 2022

14,133,000
98,331

As of March 31,
2021
As of March 31,
2021

14,133,000
104,462First three quarters
14,032,979 of year ended

14,020,719

March 31, 2021

* Quarterly financial statements are not subject to quarterly audits by certified public accountants or audit corporations*Explanation concerning the appropriate use of financial result forecasts and other special notes(Forward looking statements)
Business forecasts and other forward-looking statements in this material contain predictions based on futureassumptions, outlooks and plans as of the date of publication of this material. The Company does not warrant theaccomplishment of the forecasts. Actual results may different significantly from the forecasts due to risks and uncertain
factors associated with the world economy, the state of competition, and fluctuations in foreign exchange rates andinterest rates.
For matters concerning results forecasts, please refer to “1. Qualitative Information on Financial Results for the First
Three Quarters of Fiscal Year Ending March 31, 2022 (3) Explanation about information on future forecasts such as
consolidated results forecasts" on page 4 of the attached materials.

(How to obtain supplementary materials for quarterly results)
The material is available at Digital Arts Inc. corporate website.

○Table of Contents for the Attached Document
1.

Qualitative Information on Financial Results for the First Three Quatresof Fiscal Year Ending March 31, 2021 ··················································································· 2(1) Explanation about business results ························································································ 2(2) Explanation about financial position ······················································································· 4(3) Explanation about information on future forecasts such as consolidated results forecast ··················· 4
2. Quarterly Consolidated Financial Statements and Primary Notes ·················································· 5(1) Quarterly consolidated balance sheet····················································································· 5(2) Quarterly consolidated statement of income and comprehensive income ······································· 6
Quarterly consolidated statement of income
Consolidated first three quarters ·················································································· 6
Quarterly consolidated statement of comprehensive income
Consolidated first three quarters ···················································································· 7(3) Notes to quarterly consolidated financial statements ································································· 9(Notes on the premise of a going concern)············································································· 9(Notes on significant changes in the amount of shareholders' equity) ·········································· 9(Application of special accounting methods to the preparation of quarterly consolidated financial statements)(Change in accounting policy) ···························································································· 9

1. Qualitative Information on Financial Results for the First Three Quarters of Fiscal Year Ending March
31, 2022(1) Explanation about business results
During the first three quarters of the consolidated fiscal year under review (April 1 through December 31, 2021), theJapanese economy showed a sign of recovery with the help of governmental economic stimulation packages andnationwide vaccine rollouts despite prolongation of the COVID-19 impacts. However, the economic outlook in Japanand overseas remain uncertain due in part to the global rise in infections with variants.
In the security industry, in which the Digital Arts Group (the “Group”) operates, the scope of the Internet continued to
expand as social lifestyles were going digital with the use of cloud services and teleworking. The importance of security
solutions grew in response to the risk of information leaks and increasingly sophisticated and diverse cyber attacks,
including targeted attacks against specific enterprises, government agencies and other organizations. At the same time,
demand for security products made in Japan rose under the chaotic world situation. Further, in the enterprise sector
market, working from home became unavoidable, and demand for software products to prepare for working in the homeand performing business processes securely and efficiently increased under the prolonged effects of the pandemic.
Meanwhile, progress was also made in the public sector market, with the strengthening of security measures by local
governments, in addition to the GIGA School Concept, which envisions the development of an environment with one
learning terminal for each school-aged child.
Under these conditions, in the enterprise sector market, the Group took advantage of the fact that more and more
people are working from home and web services and e-mail environments are shifting to the cloud and expanded salesof its i-FILTER@Cloud and m-FILTER@Cloud services, creating a world in which the Internet and emails can be usedwithout hesitation in the cloud environment. In the public sector market, the Company provided a special version of iFILTER that caters to needs arising from the GIGA School Concept. At the same time, it continued to run campaigns,
including the provision of free services that conform to the Guidelines on Education Information Security Policy, in its
ongoing efforts to expand sales from schools. In addition, the Company focused on proposing solutions to support local
government efforts to strengthen security measures, which will be ramped up from the next fiscal year.
Demand in the enterprise and public sector markets has soared for cloud service products due to the effects of the
COVID-19 pandemic. A large part of the amount of the contract for traditional mainstay license sales products isrecorded as sales in a lump at the time of shipment. For cloud service products, recorded sales are apportioned on amonthly basis throughout the service provision period. For that reason, the Company continued to receive strong orders
for cloud service products as in the previous fiscal year. Net sales deferred to the next and subsequent fiscal years
increased from the end of the same period in the previous fiscal year.
As a result, net sales for the first three quarters of the consolidated fiscal year under review amounted to 6,686 million
yen (up 40.7% year on year), operating profit reached 3,024 million yen (up 53.3% year on year), ordinary profit came
to 3,027 million yen (up 52.7% year on year), and profit attributable to owners of parent was 2,081 million yen (up 52.7%
year on year).

Overview of Consolidated Business Results(Million yen)First three quartersof year ended
March 31, 2021

First three quartersof year ending
March 31, 2022

Net sales

4,750

6,686

＋1,935＋40.7

Operating profit

1,973

3,024

＋1,051＋53.3

Ordinary profit

1,982

3,027

＋1,045＋52.7

Profit attributable toowners of parent

1,363

2,081

＋718

＋52.7

Change% Change

The following describes business performance in separate markets.

Enterprise Sector Market
In the enterprise sector market, orders increased for i-FILTER and m-FILTER cloud service products, which are used
to reduce costs and operations management burdens in response to the spread of COVID-19. In addition, net sales for
Digital Arts Consulting Inc., a subsidiary offering security consulting services, increased with a progress achieved in new
customer acquisition in line with greater corporate demand for cybersecurity and digital transformation (DX).
Net sales in this market reached 3,332 million yen, up 18.8% year on year.

Public Sector Market
In the public sector market, the Group has traditionally enjoyed excellent recognition and a large market share as aprovider of Japan-made security solutions. In addition, under the GIGA School Concept, the Group's i-FILTER cloudservice products were adopted by many schools during the previous fiscal year in recognition of its reliability andfunctionality in supporting a safe learning environment at home. That led to a sales hike. Sales of the i-FILTER series
grew as brisk orders were won from public agencies and local governments.
As a consequence, net sales in this market stood at 3,026 million yen, up 86.4% year on year.

Consumer Sector Market
In the consumer sector market, the Group focused on collaborating with mobile network carriers and MVNOs and onsales of i-FILTER for Multiple Devices, which can be used on multiple operating systems using a single serial ID. As aresult, it attained an increase of users.
Net sales in this market amounted to 327 million yen, up 1.4% year on year.

(2) Explanation about financial position(Assets)
Total assets at the end of the third quarter of the first half of the consolidated fiscal year under review increased 3,377
million yen from the end of the previous fiscal year to 18,233 million yen. This was due mainly to an increase of 2,873
million yen in cash and deposits.
(Liabilities)
Total liabilities at the end of the third quarter of the consolidated fiscal year under review rose 2,114 million yen fromthe end of the previous fiscal year to 6,907 million yen. This was due mainly to an increase of 2,273 million yen inadvances received, attributable to an increase in the amount of contracts for which orders were received.
(Net assets)
Net assets at the end of the third quarter of the consolidated fiscal year under review grew 1,263 million yen from theend of the previous fiscal year to 11,325 million yen. This was mainly due to an increase in retained earnings due to therecording of profit attributable to owners of parent, which outweighed a decrease in dividends paid.

(3) Explanation about information on future forecasts such as consolidated results forecasts
Operating results for the first three quarters of the consolidated fiscal year under review remained steady overall, andthere was therefore no change in the forecast of consolidated financial results for the year ending March 31, 2022
announced on October 29, 2021.
The Company has determined the results forecasts based on information available on the day of publication of thesefinancial results for the fiscal year ended March 31, 2022. Actual results may differ from the forecasts due to a variety
of factors. If there are any significant changes, the Company will disclose them appropriately.
The Company has decided to raise the annual dividend forecast for the fiscal year ending March 31, 2022 by ¥5 pershare from the forecast announced on May 7, 2021, to ¥40 per share. As a result, the annual dividend forecast for theyear ending March 31, 2022 has been revised up to ¥70 per share.
For details, please refer to the Notice Concerning Revision of Dividend Forecast (Dividend Increase) announced
today.

2. Quarterly Consolidated Financial Statements and Primary Notes(1) Quarterly consolidated balance sheet
First three quarters of fiscal 2021
(from April 1, 2020
to December 31, 2020)(Million yen)First three quarters of fiscal 2022
(from April 1, 2021
to December 31, 2021)

11,382
1,268

14,255
1,601

0
3

0
2

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - tradeFinished goods
Supplies
Other

70

97

12,725

15,959233

217

Software
Other

1,274
128

1,290
233

Total intangible assets

1,403

1,524

Investments and other assets

493

532

Total current assets
Non-current assets
Property, plant and equipment
Intangible assets

Total non-current assets
Total assets

2,130

2,274

14,856

18,233

32
688

40
474

194
3,370

65
5,644

Liabilities
Current liabilities
Accounts payable - trade
Income taxes payable
Provision for bonuses
Advances received
Other
Total current liabilities
Non-current liabilities
Asset retirement obligations

456

633

4,743

6,857

48

48

Other

1

1

Total non-current liabilities

50

50

4,793

6,907

713
963

713
958

Total liabilities
Net assets
Shareholders' equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders' equity
Accumulated other comprehensive
incomeForeign currency translation
adjustment
Total accumulated othercomprehensive income
Share acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets

8,699

9,939

△342

△322

10,034

11,288

7

9

7

9

8

12

12

15

10,062

11,325

14,856

18,233

(2) Quarterly consolidated statement of income and comprehensive income
Quarterly consolidated statement of income
Consolidated first three quarters

Net sales
Cost of sales(Million yen)First three quarters of fiscal 2021 First three quarters of fiscal 2022
(from April 1, 2020
(from April 1, 2021
to December 31, 2020)
to December 31, 2021)
4,750
6,686
1,362
1,940

Gross profit

3,388

4,746

Selling, general and administrative expenses

1,414

1,721

Operating profit

1,973

3,024

Interest income
Gain on forfeiture of unclaimed dividends

0
1

0
1

Foreign exchange gains
Subsidy income

2
3

Miscellaneous income

1

Non-operating income

Total non-operating income

1
－
0

8

3

1,982

3,027

9

1

3

－

12

1

Loss on liquidation of subsidiaries
Loss on retirement of non-current assets

2
0

－
－

Total extraordinary losses

2

－

1,992

3,029

627

944

1,365

2,084

2

3

1,363

2,081

Ordinary profit
Extraordinary income
Gain on reversal of share acquisitionrightsGain on sales of non-current assets
Total extraordinary income
Extraordinary losses

Profit before income taxes
Income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

Quarterly consolidated statement of comprehensive income
Consolidated first three quarters

ProfitOther comprehensive income
Foreign currency translation adjustment(Million yen)First three quarters of fiscal 2021 First three quarters of fiscal 2022
(from April 1, 2020
(from April 1, 2021
to December 31, 2020)
to December 31, 2021)
1,365
2,084
△1

1

△1

1

Comprehensive income

1,363

2,086

Comprehensive income attributable toComprehensive income attributable toowners of parent
Comprehensive income attributable tonon-controlling interests

1,361

2,083

2

3

Total other comprehensive income

(3) Notes to quarterly consolidated financial statements(Notes on the premise of a going concern)
There are no applicable matters.
(Notes on significant changes in the amount of shareholders’ equity)
There are no applicable matters.
(Application of special accounting methods to the preparation of quarterly consolidated financial statements)
Calculation of tax expenses
With respect to the calculation of tax expenses, reasonable estimations are performed on an effective tax rateestablished after applying tax accounting to profit before income taxes for the consolidated fiscal year, which
includes the first three quarters of the consolidated fiscal year under review, and such tax expenses are calculated
by multiplying this estimated effective tax rate by profit before income taxes.
(Change in accounting policy)(Application of Accounting Standard for Revenue Recognition, etc.)
The Company has applied “Accounting Standard for Revenue Recognition” (ASBJ Statement No.29 issued on
March 31, 2020; hereinafter, “Accounting Standard for Revenue Recognition”), etc. from the beginning of the first
three months of the consolidated fiscal year under review and recognizes revenue in the amount expected to bereceived in exchange for promised goods or services when the control of those goods or services is transferred tocustomers.
As a result, sales rebates, which were previously recorded as selling, general and administrative expenses, arenow deducted from sales. The application of the Accounting Standard for Revenue Recognition, etc. is subject to thetransitional treatment provided for in the proviso of Paragraph 84 of the Accounting Standard for Revenue Recognition.
The cumulative effect of the retrospective application, assuming the new accounting policy had been applied toperiods prior to the beginning of the first three months of the consolidated fiscal year under review was added to or
subtracted from the beginning balance of retained earnings of the first three months of the consolidated fiscal year
under review. However, this did not have any impact on such beginning balance.
As a result of application of the Accounting Standard for Revenue Recognition, etc., net sales and selling, generaland administrative expenses for the first three quarters of the consolidated fiscal year under review both decreased,causing gross profit to fall. However, the impact was insignificant and operating profit, ordinary profit and profit before
income taxes were not affected.