Digital Arts Inc.
（Securities Code: 2326）

Financial Results forFiscal Year Ended March 2016
(April 1, 2015 through March 31, 2016)

Supplemental Material
May 11, 2016
Copyright © 2015 Digital Arts Inc.

Financial Results FY2015

KEY FINANCIAL POINTS

2

Copyright © 2016 Digital Arts Inc.

FY2015 Key Financial Points① Increasingly sophisticated targeted attacks•People rediscovered the importance of proxies and taking appropriate
measures against unwanted data disclosure•Sales expanded by meeting demands to deal with diverse and complex risks
and providing immediate measures against targeted attacks through alliancewith external solutions② High interest in information security due toongoing data leakage incidents and the need tocomply with new regulations•How can we keep sensitive material and client information secure?

•FinalCode Ver５: chosen for its shared folder control and auto-encryption
features (400% YoY based on order volume)③ FinalCode, Inc. secures first overseas orderSound accomplishment in global branding•

14 deals (5 local businesses, 9 Japanese-affiliated companies)•Significant achievements in marketing effort
3Copyright © 2016 Digital Arts Inc.

Financial Results FY2015

CONSOLIDATED RESULTSHIGHLIGHT

4Copyright © 2016 Digital Arts Inc.

FY2015 Highlights

Consolidated
Net Sales

OperatingIncomeOrdinary
IncomeNet Income

Attributable toOwners of Parent+¥597 million/ +17.6％）（vs. forecast +¥50 million/ +1.3％）（YoY¥4,000 million

Substantial increase in revenue: i-FILTER grew 17.6%
FinalCode demonstrated strong domestic sales+¥141 million/ +16.4％）（vs. forecast+¥6 million/ +0.6％）（YoY¥1,006 million

Increased turnover absorbed strategic upfront investment for US
subsidiary and overseas operations leading to growth in operating income+¥84 million/ +9.2％）（vs. forecast －¥8 million/ －0.9％）（YoY¥994 million

Upward trend in revenues, however fell slightly short due to exchange
rate fluctuations (FY14 exchange gain ¥41M, FY15 exchange loss ¥20M)+¥14 million/ +2.8％）（vs. forecast －31 million/ －5.5％）（YoY¥545 million

Primary business was strong, however fell slightly short due to tax andother expense related to the upfront investment of US subsidiary
5Copyright © 2016 Digital Arts Inc.

FY2015 Summary

Consolidated Results for FY2015 Ended March 2016
（million yen）

FY14 ended
March 2015

FY15 ended
March 2016

YoY Growth

FY15 Forecast※

Net Sales

3,402

4,000+17.6%

3,950

Gross Profit

2,428

3,074

+26.6%

3,050

Selling, General and
Administration
Expense

1,562

2,067

+32.3%

2,050

Operating Income

865

1,006

+16.4%

1,000

Ordinary
Income

910

994

+9.2%

1,003

Net Income
Attributable to Ownersof Parent

531

545

+2.8%

577

ROE

13.3%

12.4%

――Dividend

14 yen15 yen――per Share※ Based on FY15 forecast announced on October 29, 2015

6Copyright © 2016 Digital Arts Inc.

FY2015 Summary

Non-consolidated Results for FY2015 Ended March 2016
（million yen）

FY14 ended
March 2015

FY15 ended
March 2016

YoY Growth

FY15 Forecast※

Net Sales

3,395

4,018

+18.3%

3,915

Gross Profit

2,479

3,123

+26.0%

3,093

Selling, General and
Administration
Expense

1,565

1,788

+14.3%

1,696

Operating Income

913

1,335

+46.1%

1,397

Ordinary
Income926

1,328+43.5%

1,399

Net Income

573

840

+46.4%

924

14.0%

18.0%

ROE
Dividendper Share――――――※ Based on FY15 forecast announced on October 29, 2015

7Copyright © 2016 Digital Arts Inc.

Sales Volume（million yen）

4,000

Delivered record high sales!

（118%）

3,402

1,852

1,700（109%）

FY 7

FY 8（123%）

2,190

FY 9

FY 10

2,707（107%）（104%）

FY 11

FY 12

FY 13（117%）

2,306（105%）

3,027

2,906（112%）（118%）

1,387（100%）

FY 6

FY 14

FY 15

※ Percentages indicate YoY net sales

8Copyright © 2016 Digital Arts Inc.

Net Sales (by Quarter)

Exceeded period-over-period resultsin every quarter（million yen）

1,253
（116%）

1,131（121%）

1,077（119%）

931

937

902

（114%）（113%）（97%）

831（121%）

570（111%）（111%）（103%）（103%）（114%）（113%）（119%）

715673

643

650

623

811

803

（106%）

781

（84%）

1Q

2Q

3Q

4Q

1Q

FY12 ended March 2013

2Q

3Q

4Q

1Q

FY13 ended March 2014

2Q

3Q

4Q

FY14 ended March 2015

※ Percentages indicate YoY net sales

9

1Q

2Q

3Q

4Q

FY15 ended March 2016
Current FY

Copyright © 2016 Digital Arts Inc.

COS and SG&A
 Depreciation burden and cost of sales declined SG&A increased mainly due to overseas operations (notably FinalCode, Inc.)
gaining momentum（million yen）
FY14 ended
March 2015

Cost of Sales
Labor

FY15 ended
March 2016

YoY Growth974

926

(48)

384

373(10)Key Factors

Depreciation associatedwith past large-scale R&D
has been fully depreciatedby preceding period

Depreciation

357

288(68)Transfer to other accounts
Misc production cost

232

263

+31

1,562

2,067+504

Labor805

1,115+309

Includes overseas
labor (+191M)

Publicity

158

271

+113

Includes overseas
publicity (+61M)

Others599

680+81

Includes overseas
misc expenses(+43M )

Selling, General andAdministrativeExpenses

10Copyright © 2016 Digital Arts Inc.

Cost of Sales (by Quarter)
No significant changes in the breakdown of cost of sales
Labor

Depreciation（million yen）

283

Other Accounts & Misc

（123%）

264（93%）

226

178

177（127%） （127%）4343183（108%）

43

194

201

219（118%）（120%）

228（113%）238（105%）

224（102%）

72

64
44

54

56

52

59

48
54

60

67

70

79

82

85

67

45

90

88

90

89

96

94

93

94

93

93

96

101

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

FY13 ended March 2014

FY14 ended March 2015

※ Percentages indicate YoY cost of sales

1177647880

56

FY12 ended March 2013

222（99%）

10949

45

211

227（96%）（93%）（113%）（98%）

48（128%）

229

70

7267

86

87

90

1Q

2Q

3Q

109

4Q

FY15 ended March 2016
Current FY

Copyright © 2016 Digital Arts Inc.

Selling, General and Administrative Expenses(by Quarter)

Increased due to up-front investment in overseas operations
Labor

Publicity

Others

（148%）（125%）

431

333

357（81%）

146
115

48

365

355（109%）（99%）（103%）

61408（111%）（113%）

149
123343（96%）

356123396（108%）

363

4086

214

181

169

166

152

1Q

2Q

3Q

4Q

FY12 ended March 2013

1Q

31394

488（123%）73（111%）61161

130172149

37273234194

188

182

189

197

205

212

219

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

FY14 ended March 2015

※ Percentages indicate YoY cost of sales

12（133%）

72
164

80

FY13 ended March 2014

92151

133

39482（106%）（100%）

158
130

116（95%）

58

67
68

586

Overseas

510

389（million yen）

148
56
39

208

221

2Q

3Q

273

4Q

FY15 ended March 2016
Current FY

Copyright © 2016 Digital Arts Inc.

Financial Results FY2015

BY MARKET SEGMENT

13Copyright © 2016 Digital Arts Inc.

Summary: Sales by Market

 +17.6% growth in consolidated sales Accelerated growth in Business/Enterprise Segment +17.9% andGovernment & Education Segment +24.4%
Consumer segment held firm despite steep decline in domestic PC shipments

Consolidated
Net Sales

Net sales: ¥4,000 million +¥597 million / +17.6％ YoYEnterprise

Net sales: ¥2,240 million +¥340 million / +17.9％ YoY

PublicNet sales: ¥1,418 million +¥277 million / +24.4％ YoYConsumer

Net sales:¥ 342 million14-￥20 million /- 5.6％ YoY

Copyright © 2016 Digital Arts Inc.

Net Sales by Market Segment
Growth rate exceeded previous periods as a result of heightened concerns
by Business/Enterprise and Government & Education Segments seeking
effective measures against targeted cyber attacks and unwanted disclosureof sensitive information（million yen）

4,000（118%）

3,402

Enterprise

PublicConsumer

2,906
2,707
2,190
1,700
1,387（100%）

183（123%）229
689

1,852（109%）（118%）

290

257886（117%）

2,306

280（105%）

260
997

FY 6782

FY 7318（104%）（112%）

362
1,418

361
1,140

1,152

1,028

840

671630573（107%）

3,027

923

1,013

FY 8

FY 9

342

1,205

FY 10

1,429

1,436

FY 11

FY 12

1,637

FY 13

1,899

FY 14

2,240

FY 15

※ Percentage indicates YoY net sales

15

Copyright © 2016 Digital Arts Inc.

Quarterly Sales by Market Segment
Robust growth in Business/Enterprise andGovernment ＆ Education Segments in each quarter year-on-year
Enterprise

PublicConsumer

781（121%）

570

66

73

356

650

623（111%）（84%）（106%）（114%）

383

83

101643（103%）

31990

673

27885

7940280715（119%）

31389

326

357

1Q

2Q

331

297

3Q

4Q

FY12 ended March 2013

1Q

426

2Q

3803493Q

4Q

1Q

FY13 ended March 2014
1649878

259

216

444

756409

2Q

3Q

457

4Q

FY14 ended March 2015

※ Percentage indicates YoY net sales（113%）

256

207

529

403

89

665
454

811

803

（111%）（103%）

214

216

241

170

85

94

93（121%）97（113%）

（97%）

831

（116%）

1,131（119%）

937

902

94

1,253

1,077

931

（136%）（million yen）

1Q

552

2Q

473

3Q

4Q

FY15 ended March 2016
Current FY

Copyright © 2016 Digital Arts Inc.

Financial Results FY2015

ENTERPRISE SEGMENT

17Copyright © 2016 Digital Arts Inc.

Business/Enterprise Mainstay i-FILTER and m-FILTER and strategic product FinalCode demonstrated
robust performance
 i-FILTER and m-FILTER alliance with third-party solutions offered effective
provisions to combat multi-faceted and advanced risks, and led to acquiring
major new deals FinalCode was widely installed by companies rushing to enhance security in lightof frequent incidents with leaks of important information+ 13.8 ％+ 15.0 ％+ 39.6 ％+ 257.0 ％18Copyright © 2016 Digital Arts Inc.

Financial Results FY2015

PUBLIC SEGMENT

19Copyright © 2016 Digital Arts Inc.

Government & Education
 Flagship product i-FILTER demonstrated solid performance while FinalCode sales
continued to expand
 i-FILTER alliance with third-party solutions led to acquiring major new deals
seeking advanced security measures
 i-FILTER Browser & Cloud (mobile device edition) was widely installed as a resultof a new trend of ICT education utilizing tablet devices in the classrooms+ 22.9 ％+ ５.８ ％
+ 42.8 ％13.5 folds
20

Copyright © 2016 Digital Arts Inc.

Financial Results FY2015

CONSUMER SEGMENT

21

Copyright © 2016 Digital Arts Inc.

Consumer Sector
 i-FILTER sales decreased mainly due to a substantial drop in domestic PC sales
 i-FILTER® for Multi Device (one serial ID to cover multiple OS) demonstrated
strong performance
 i-FILTER for New Nintendo 3DS™, Nintendo’s handheld game player launched in
the preceding consolidated fiscal year, continued to accumulate strong figures

PC(28.1 ％)Game Console/TV＋ 29.3 ％Mobile Device＋ 41.6 ％22Copyright © 2016 Digital Arts Inc.

Financial Results FY2015

OVERSEAS MARKET23

Copyright © 2016 Digital Arts Inc.

Overseas Market
 Sales performance for FY15 ended March 2016
 Acquired 14 deals (5 local businesses, 9 Japanese-affiliated companies)

 Significant marketing achievement
 Sound accomplishment in global marketing, including winning awards
given to successful global security vendors

46位

24

Copyright © 2016 Digital Arts Inc.

Financial Results FY2015

FY2016 OUTLOOK

25

Copyright © 2016 Digital Arts Inc.

FY2016 Outlook
Consolidated Results Forecast for FY16 Ending March 2017

 Domestic market environment in FY15 is anticipated to continue into FY16 Overseas operations is projected with a conservative outlook although
performances are expected to accumulate steadily
 Profit is expected to accelerate as overseas investments will stay within a slightincrease（million yen）

FY15 ended March 2016
Actual

FY16 ending March 2017
Forecast

Net sales

4,000

4,600

15.0 %

Gross Profit

3,074

3,652

18.8 %

Selling, General and
Administration Expense

2,067

2,252

9.0 %

Operating Income

1,006

1,400

39.1 %

Ordinary Income

994

1,400

40.8 %Net Income

545

870

59.5 %

15 yen20 yenAttributable to Owners of Parent

Dividends per Share

26

Growth Rate―Copyright © 2016 Digital Arts Inc.

FY2016 Outlook
Non-Consolidated Results Forecast for FY2016 Ending March 2017

 Favorable domestic market environment in FY15 is likely to continue into FY16（million yen）

FY15 ended March 2016
Actual

FY16 ending March 2017
ForecastNet Sales

4,018

4,598

14.4 %

Gross Profit

3,123

3,555

13.8 %

Selling, General and
Administration Expense

1,788

1,843

3.0 %

Operating Income

1,335

1,712

28.3 %

Ordinary Income

1,328

1,712

28.9 %

840

1,182

40.7 %Net Income27

Growth Rate

Copyright © 2016 Digital Arts Inc.

FY2016 Return to Shareholder■Dividend Distribution
Digital Arts plans to return profit to its shareholders as follows:
Projected dividend payout ratio for FY2016 is set at32.0% of consolidated net income of the current period
The amount of annual dividends for FY2016 ending March 2017 isestimated at 20.00 yen per share

Dividends per share (in yen)Interim

FY15 ended March 2016
FY16 ended March 2017(forecast)Fiscal year-end

AnnualConsolidated
Payout Ratio

7.00

8.00

15.00

38.2％

10.00

10.00

20.00

32.0％28

Copyright © 2016 Digital Arts Inc.

Forward Looking Statements

All statements herein, other than historical facts, contain forward-looking statements and are basedon DA’s current plans, strategies and financial forecasts. These forward-looking statements are
based upon management’s current assumptions and beliefs in light of the information currently
available to it, however environmental changes and other important factors could cause actual
results to differ materially from those expressed in our forward-looking statements. All statements
herein are not intended to express DA’s commitment to fulfill any forward-looking statements.
Updated information, if applicable, will be disclosed in a timely manner.
All numerical indications in this statement, unless noted, are rounded to the nearest million yen.

・ DIGITAL ARTS, ZBRAIN, /i-FILTER/i-FILTER EndPoint Controller, m-FILTER/m-FILTER MailFilter/m-FILTER Archive/m-FILTER AntiSpam/m-FILTER File Scan, and D-SPA are registered trademarks of Digital Arts Inc.
・ FinalCode is a registered trademark of Digital Arts Group.
・ Other corporate and product names are trademarks or registered trademarks of those companies.

29Copyright © 2016 Digital Arts Inc.

‐Contributing to a more convenient, comfortable and safe internet‐Copyright © 2015 Digital Arts Inc.