Note: This document is a translation from the original in the Japanese language and is for reference purposes only. In the event of any discrepancy
between this translated document and the Japanese original, the original shall prevail. The Company assumes no liability for the following:This translation or for direct, indirect or any other forms of damages arising from the translation

Quarterly Consolidated Financial Results for the First Three Quarters of Fiscal
Year Ending March 31, 2024 (Japanese Accounting Standards)

January 31, 2024

Name of listed company: Digital Arts Inc.
Securities code:

Listed on:

Tokyo Stock Exchange
Prime Market2326

URL https://www.daj.jp
Representative Director,Representative: (Title)(Name) Toshio Dogu
President and CEOGeneral ManagerFumihikoContact:(Title)(Name)(TEL) +81-3-5220-1670
Investor Relations Office
Tanizaki
Scheduled date for submission
Scheduled date to start
February 6, 2024
of quarterly report:
dividends 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, 2024 (April1, 2023 –December 31, 2023)(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
Nine months ended

December 31, 2023
December 31, 2022
(Note) Comprehensive income:Million yen%

Million yen%

8,322
8.7
3,122
(3.3)
7,658
14.5
3,228
6.7
Nine months ended December 31, 2023:
Nine months ended December 31, 2022:

Profit per share(basic)Nine months ended%

Million yen

3,132(3.4)
3,241
7.0
¥ 2,166 million¥ 2,240 million%

2,1622,235((3.3%))(7.4%)(3.3)
7.4

Profit per share(diluted)
Yen

December 31, 2023
December 31, 2022

Million yen

Yen

155.38159.25152.80156.10(2) Consolidated financial position
Total assets

Net assets

Million yen
As of December 31, 2023
19,717
As of March 31, 2023
21,149(Reference) Equity capital: As of December 31, 2023:
As of March 31, 2023:¥¥

Equity ratio

Million yen
13,803
14,173
13,768 million
14,141 million

Net assets per share
Yen％

69.8
66.9

1,001.13
1,007.27

2. Dividends
Annual dividends
1Q-end2Q-endYen

3Q-endYen

Year ended March 31, 2023
35.00－
Year ending March 31, 2024
40.00－
Year ending March 31, 2024
(forecast)(Note) Revisions to most recently announced dividend forecast ： No

Year-end
Yen－－

Yen

Annual
Yen

40.00

75.00

40.00

80.00

3. Forecast of consolidated financial results for the year ending March 31, 2024 (April 1, 2023 – March31, 2024)

Net salesMillion yen%

(Percentage figures represent changes from same period of previous year.)
Profit attributable toOperating profit
Ordinary profit
Profit per shareowners of parent
Million yen%

Million yen%

Full year
11,500 10.2
5,150 16.7
5,150(Note) Revisions to most recently announced results forecasts: No

Million yen

16.3

3,550%

15.9

Yen

252.86* Notes(1) Changes in important subsidiaries during the first three quarters of fiscal
year ending March 31, 2024:： 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 of quarterly： Yes
consolidated financial statements(Note) For details, please refer to “2. Quarterly Consolidated Financial Statements and Primary Notes (3) 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 accounting
standards, etc.:
2) Changes in accounting policies due to reasons other than thosestated in 1):
3) Changes in accounting estimates:
4) Restatement:

None
None
None

(4) Number of shares outstanding (common stock
1) Number of shares issued and outstanding As of December
31, 2023(including treasury shares)
2) Number of treasury shares

None

As of December
31, 2023

14,133,000
379,630First three quarters

3) Average number of shares issued andof year ending
outstanding in each period (cumulative total)

March 31, 2024

As of March 31,2023
As of March 31,2023

14,133,000
93,833First three quarters
13,919,043

of year ended

14,039,217

March 31, 2023

* 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, 2024 (3) Explanation about information on future forecasts such asconsolidated 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 Quarters of Fiscal Year Ending
March 31, 2024 ................................................................................................................... 2(1) Explanation about business results....................................................................................... 2(2) Explanation about financial position .................................................................................... 4(3) Explanation about information on future forecasts such as consolidated results forecasts.. 42. 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 incomeConsolidated first three quarters ............................................................................... 7(3) Notes to quarterly consolidated financial statements(Notes on the premise of a going concern) ....................................................................... 8(Notes on significant changes in the amount of shareholders' equity) .............................. 8(Application of special accounting methods to the preparation of quarterly consolidatedfinancial statements) .......................................................................................................... 811. Qualitative Information on Financial Results for the First Three Quarters of Fiscal Year Ending March31, 2024
(1) Explanation about business results
During the first three quarters of the consolidated fiscal year under review (April 1 through December 31, 2023),
Japan saw signs of a recovery in consumer spending and capital investment, partly reflecting the normalization of socialand economic activities following the downgrade of the legal classification of COVID-19 to Class 5 in spring last year.
As a result, the Japanese economy achieved a moderate recovery. Despite that, the future outlook remained uncertain
given growing tensions in the Middle East, the weakening of the yen and surging resource and material prices, as wellas the prolonged conflict in Ukraine.
In the security industry, in which the Digital Arts Group (the “Group”) operates, demand for security products expanded,
mainly reflecting the intensification of damaging incidents caused by cyberattacks, such as ransomware and phishingscams, coupled with new demand for security measures associated with changes in the flow of operations andworkstyles as a result of the advance of digital transformation (DX). Apart from demand from large-sized enterprises
and public organizations, demand for the introduction of security measures grew among small- and medium-sizedenterprises, which, by comparison, were unprepared to invest in such measures due to budgetary and human source
constraints, reflecting growing awareness of security risks in supply chains.
In this situation, in response to growing demand for diverse security measures among companies and organizations
irrespective of their size, the Company focused on promoting its original next-generation secure web gateway (SWG)
through continuous enhancement of the functionality of the i-FILTER, m-FILTER and FinalCode, which are its mainstay
products, and incorporation of the CASB functionality (functionality to visualize and control the use of cloud services) in
the i-FILTER＠Cloud, among other means. In addition, the AI Chat Filter is provided as a standard feature of i-FILTER
and i-FILTER@Cloud from August 2023 onwards. This highly-received feature is aimed at allowing users to use
generative AI, which attracts attention for the autonomous creation of text and other content, something that was difficult
to do with conventional AI, more securely by controlling it and visualizing how it is used.
Furthermore, the Group released the StartIn, an IDaaS product that realizes safe and secure cloud service
authentication and ID management, in September 2023, and the f-FILTER, a DLP and file transfer service that prevents
the external leakage of important information through the secure transfer of files, in November 2023, to address demandfor comprehensive security. These are part of solutions for "creating new value and increasing demand," as stated in
the management vision of the Group's Medium-Term Management Plan.
Meanwhile, the cost of sales and selling, general and administrative expenses surpassed the year-ago level, chiefly
reflecting positive investment in an unprecedented number of newly added features and new product releases, andrises in labor and personnel expenses, among other expenses, due to business expansion by Digital Arts ConsultingInc.
As a result, net sales for the first three quarters of the consolidated fiscal year under review amounted to 8,322 millionyen (up 8.7% year on year), operating profit reached 3,122 million yen (down 3.3% year on year), ordinary profit came
to 3,132million yen (down 3.4% year on year), and profit attributable to owners of parent was 2,162 million yen (down3.3% year on year).
Overview of Consolidated Business Results(Million yen)First three quartersof year ended
March 31, 2023

First three quartersof year ending
March 31, 2024

Net sales

7,658

8,322＋663＋8.7

Operating profit

3,228

3,122(105)(3.3)

Ordinary profit

3,241

3,132(108)(3.4)

Profit attributable toowners of parent

2,235

2,162(72)

(3.3)

2

Change% Change

The following describes business performance in separate markets.
Enterprise Sector Market
In the enterprise sector market, the Group offered the new CASB functionality, in addition to the i-FILTER and the AntiVirus & Sandbox, an optional product, to meet demand for the transition from the castle and moat security model and aswitch from other companies' products. As a result of these activities, steady progress was made in winning new projects.
The Group steadily won projects for the m-FILTER as well, reflecting high marks given to comprehensive needs satisfying
security functions, such as a function to deal with targeted attacks including those using ransomware, measures against
PPAP (sending a password-protected Zip file by e-mail and sending the password by a separate e-mail) and measures
to increase security in emailing in the cloud environment.
In addition, the number of new projects won by Digital Arts Consulting Inc., a subsidiary of the Company that offers
security consulting services, increased sharply due to the winning of ISMAP acquisition-related projects and the provisionof services that offer comprehensive support, including security assessment and support for the implementation ofsecurity measures, following an increase in the number of its project consulting staff.
As a consequence, net sales in this market reached 4,586 million yen, up 19.2% year on year.
Public Sector Market
In the public sector market, the Group steadily won new projects by focusing on proposing solutions that are in linewith guidelines for security improvements for local governments. It also offered a GIGA School version of the i-FILTER,
which is equipped with original functions suitable for applications at the frontlines of education, to education boards andschools that had not adopted filtering in the GIGA School Concept. Nonetheless, the Group was affected by areactionary decline in the number of large-scale projects from the level it won in the previous fiscal year, as well as thecompletion of the first round of the project for enhancing cloud security at prefectural offices.
As a consequence, net sales in this market stood at 3,421 million yen, down 1.7% year on year.

3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 a consequence, net sales in this market amounted to 313 million yen, down 4.4% year on year.

(2) Explanation about financial position(Assets)
Total assets at the end of the third quarter of the consolidated fiscal year under review decreased 1,432 million yen
from the end of the previous fiscal year to 19,717 million yen. This was due mainly to an decreased of 1,057 million yen
in cash and deposits and an decreased of 263 million yen in notes and accounts receivable - trade.
(Liabilities)
Total liabilities at the end of the third quarter of the consolidated fiscal year under review decreased 1,061 million yen
from the end of the previous consolidated fiscal year to 5,914 million yen. This was due mainly to a decrease of 403
million yen in advances received and a decrease of 537 million yen in income taxes payable.
(Net assets)
Net assets at the end of the third quarter of the consolidated fiscal year under review decreased 370 million yen fromthe end of the previous fiscal year to 13,803 million yen. This was mainly due to the payment of cash dividends and thepurchase of treasury stock, which exceeded the increase in retained earnings resulting from the recording of net income
attributable to owners of the parent.

(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, 2024
announced on May 9, 2023.
The Company has determined the results forecasts based on information available on the day of these financial
results for the first three quarters of the year ending March 31, 2024. Actual results may be different from the forecasts
due to a variety of factors. If there are any significant changes, the Company will disclose them appropriately.

42. Quarterly Consolidated Financial Statements and Primary Notes(1) Quarterly consolidated balance sheet(Million yen)First three quarters of fiscal2024(As of December 31, 2023)

Fiscal 2023
(As of March 31, 2023)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - tradeFinished goods
Supplies
Other
Total current assets

17,018
1,574
19330915,961
1,311
02
145

18,925

17,422

Non-current assets
Property, plant and equipment
Intangible assets
Software
Other209

211

1,264243

1,333
249

Total intangible assets

1,508

1,583

Investments and other assets

506

499

Total non-current assets

2,223

2,294

21,14919,717

Liabilities
Current liabilities
Accounts payable - trade
Income taxes payable
Provision for bonuses
Advances received
Other

238
839
156
5,187
502

115
301
120
4,784
540

Total current liabilities

6,924

5,862

Non-current liabilities
Asset retirement obligations
Other

48
148
2

Total non-current liabilities

50

51

6,975

5,914

713
953
12,768
(308)

713
956
13,814(1,730)14,127

13,753

14

15

14

15

11
20

11
22

14,17313,803

21,14919,717

Total assets

Total liabilities
Net assets
Shareholders' equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders' equity
Accumulated other comprehensive income
Foreign currency translation adjustment
Total accumulated other comprehensive
incomeShare acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets5(2) Quarterly consolidated statement of income and comprehensive income
Quarterly consolidated statement of income
Consolidated first three quarters

Net sales
Cost of sales
Gross profit

First three quarters of fiscal2023(from April 1, 2022
to December 31, 2022)
7,658
2,651

(Million yen)First three quarters of fiscal2024(from April 1, 2023
to December 31, 2023)
8,322
3,306

5,006

5,015

1,778

1,892

3,228

3,1220
1
910
1
62

12

11－1

Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Gain on forfeiture of unclaimed dividends
Foreign exchange gains
Miscellaneous income
Total non-operating income
Non-operating expenses
Miscellaneous loss
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on reversal of share acquisition rights
Gain on sales of non-current assets
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Total extraordinary losses
Profit before income taxes
Income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

6－

1

3,241

3,1320－

040

400

0

0

3,242

3,137

1,003

972

2,238

2,165

22

2,235

2,162

Quarterly consolidated statement of comprehensive income
Consolidated first three quarters

ProfitOther comprehensive income
Foreign currency translation adjustment

First three quarters of fiscal2023(from April 1, 2022
to December 31, 2022)
2,238(Million yen)First three quarters of fiscal2024(from April 1, 2023
to December 31, 2023)
2,165

2

1

2

1

Comprehensive income

Total other comprehensive income

2,240

2,166

Comprehensive income attributable toComprehensive income attributable to owners ofparent
Comprehensive income attributable to noncontrolling interests

2,238

2,164

2

2

7

(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 calculatedby multiplying this estimated effective tax rate by profit before income taxes.

8