Consolidated Financial Results for theFirst Half of the Fiscal Year Ending March
31, 2022(From April 1, 2021 to September 30, 2021)
Financial Results Briefing Materials

October 29, 2021

Digital Arts Inc.
(Securities Code: 2326)
Copyright © 2015 Digital Arts Inc.

Contents
 Consolidated Results Highlights
 Non-consolidated Results Highlights
 By Market
 FY03/22 Initiatives
 Revision of Full-Year financial Forecast for the Fiscal
Year Ending March 2022
 Return to Shareholders for Fiscal Year Ending March
31, 2022

2

Copyright © Digital Arts Inc.

Material on Consolidated Financial Results for the First Halfof the Fiscal Year Ending March 31, 2022

Consolidated Results
Highlights

3

Copyright © Digital Arts Inc.

Key Points(1) Contracts and net sales hit record high for first half of the year.

• Contracts amounted to 4,505 million yen (up 20.2% year
on year).
• Consolidated net sales were 4,552 million yen (rising
46.8% year on year).

(2) Operating profit also set first half of the year record.

• Operating profit reached 2,079 million yen (an increase of
58.7% year on year).

4

Copyright © Digital Arts Inc.

Consolidated Results Highlights•

Orders increased in the enterprise sector market,
thanks to an increase in the number of cloudservice users along with the increasingly common
practice of teleworking and growth in new
customers for DAC.

(up +757 million yen or +20.2% year
on year).

•In the public sector market, orders received for iFILTER series projects (public agencies and local
governments) increased.

Net sales amounted to•Orders increased in the enterprise sector market,
thanks to an increase in the number of cloud service
users along with the increasingly common practiceof teleworking and growth in new customers for DAC.

Contracts amounted toContracts

Net sales

4,505 million yen

4,552 million yen(up +1,450 million yen or +46.8% year • In the public sector market, orders received for iFILTER projects (GIGA, public agencies, local
on year).
governments) increased.

Operating profit amounted toOperatingprofit•SG&A expenses increased mainly due to online
events held for partners. The amount of bonuses tobe paid increased.

•

In cost of sales, server expenses increased due togrowth in cloud service users.

2,079 million yen(up +768 million yen or +58.7% year
on year).

5

Copyright © Digital Arts Inc.

Consolidated Results Summary (First Half of theYear)
FY March 2022
Full-Year
Forecast

Progress
Vs Fullyear
Forecast

FY March 2021 1H

FY March 2022 1H

Change YoY

Contracts

3,748

4,505

+20.2%-Net sales

3,101

4,552

+46.8%

8,700

52.3%

875

1,238

+41.4%

2,700

45.9%

2,225

3,314

+48.9%

6,000

55.2%

915

1,234

+34.9%

2,300

53.7%

Operating profit

1,310

2,079

+58.7%

3,700

56.2%

Operating margin

42.3%

45.7%

ー

42.5％

ー

Ordinary profit

1,316

2,080

+58.0%

3,700

56.2%

908

1,433

+57.7%

2,550

56.2%

1,770

2,547

+43.8%-(Million yen)

Cost of goods sold
Gross profit
Selling, general andadministrative
expensesProfit attributable toowners of parent
EBITDA

6

Copyright © Digital Arts Inc.

Trend in Consolidated Contracts
The consolidated contract amount rose 20.2% to 4,505 million yen,a record high for the first half of a fiscal year.
Trend in Contracts(Million yen)

4,505

License sales products/Others•

Cloud service products

3,748+20.2%

4,505 million yen, a record high for the first half of a
fiscal year.
•

66.7％

2,500

The consolidated contract amount rose 20.2% to+26.6%

3,166

Sales of DAC increased in the enterprise sector
market. In the public sector market, contracts

70.3％

for ”license sales products/other” increased thanks toorders received for projects for public agencies andlocal governments.
•

33.3％

1,247

+7.4%

1,339

29.7％

Orders in the enterprise sector market remained
strong thanks to the increasingly common practice of
teleworking. In the public sector market, contracts forcloud service-related products increased owing toorders received for projects for the GIGA School

FY Mar. 2021 1H
2021年3月期
上期

FY Mar. 2022 上期
1H
2022年3月期

Concept.

7

Copyright © Digital Arts Inc.

Trend in Order Backlog
The order backlog grew to 6,387 million yen, reflecting expansion
in the contract share of cloud service products.
Trend in Order Backlog(Million yen)

Sales recorded for the following fiscal year and later
Sales to be recorded in the next two quarters (3Q-4Q)

6,387

•

Cloud service products cause net sales
deferred to the next fiscal year or later (orderbacklog) to go up because the amount of sales
recorded in the short period is small. (SeeSupplement on p.9.)

4,852

2,437

•

+197.3%Since the contracts for cloud service products
are renewable at fixed prices (whereas therenewal price for license sales products is half
the contract price for the first year), this

1,632
+90.8%

804
End of 1H FY March 2021

recurring revenue business model creates

1,534

a stable profit base.

End of 1H FY March 2022
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Copyright © Digital Arts Inc.

Supplement）Method of recording sales by product

Equivalent tomaintenance fee

Contracts

Equivalent tolicense fee

Licensesales
products

Contract period (n months)＋1 monthOrderbacklog

・・・•

License fees make up a large
proportion of the contract
amount. This portion isrecorded in a lump sum assales in the month when thecontract is obtained.

•

Amount equivalent tomaintenance fee is recorded
on a pro rata basis over thecontract period.

•

Contract amount is recorded
as sales on a pro rata basis
over the contract period (split
into equal monthly amounts).

•

As the contract amount ofcloud service products rises,
the contract amount that isdeferred (orderbacklog) increases.

Amount equivalent to maintenance fee
is prorated over contract period "n"Net sales

Y months(contract months)

Y+1
month

Y+2
month

・・・

Y+n
monthsY+n+1
monthsContract period (n months)

Contracts

Contract amount is prorated overcontract period "n"Cloud
serviceproducts

Orderbacklog

・・・

Net sales

Y months(contract months)

Y+1
month

Y+2
month

9

・・・

Y+n-1
month

Y+n
monthsCopyright © Digital Arts Inc.

Trend in Consolidated Net Sales(Million yen)

4,552

Net sales reached a record high for firsthalf of the year after a strong
performance in the enterprise sector
and public sector markets.
2,420
1,935
1,328

（120%）

1,351（102%）

1,481（110%）

1,610（125%）

2,468（147%）

2,764

2,764

（112%）（100%）

3,101（112%）（102%）（120%）（109%）FY March 2012 FY March 2013 FY March 2014 FY March 2015 FY March 2016 FY March 2017 FY March 2018 FY March 2019 FY March 2020 FY March 2021 FY March 2022
1H
1H
1H
1H
1H
1H
1H
1H
1H
1H
1H

* Percentage figures represent comparisons with same period of the preceding year.

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Copyright © Digital Arts Inc.

Consolidated Cost of Goods Sold and Selling, Generaland Administrative Expenses(Million yen)

FY March 2021
1H

FY March 2022 1H

Cost of goods sold

875

1,238

+362

Labor

517

760

+242

Depreciation

405

412

+7

84

283

+199

Service expenses increased as a result ofsales expansion of cloud products.

227

328

+101

Outsourcing expenses soared after DAC
obtained more orders.

△359

△547

△188

Transfer to software in progress increased asa result of the increase in development
projects

Selling, general andadministrative expenses

915

1,234

+319

Personnel expenses

490

755

+264

Bonuses to be paid to employees increased
due to sales growth.

Advertising expenses

67

118

+50

Increase due to online events held for partners

356

360

+4

Communication
expenses
Other
Transfer to otheraccounts

Other

11

ChangeYoY

Main Factors for Change

DAC increased consultants
Bonuses to be paid to employees increased
due to sales growth.

Copyright © Digital Arts Inc.

Quarterly Trend in Consolidated Cost of Goods Sold
（単位：百万円）

Labor expenses swelled after DAC increased consultants. ・Bonuses to be paid to employees
increased due to sales growth.
Cloud server expenses grew as a result of sales expansion of cloud service products.
Transfer to other
他勘定振替高accounts
Communication
通信費
expenses

売上原価
Cost of goods sold

その他
Other

減価償却費
Depreciation

労務費
Labor

946

793
723

452
97
17

163

147

289

464

470

94

104

31 229

20

154

188

163

282

443
96
27 194
141

191

236
185

183

250
179

1Q

2Q

3Q

4Q

FY March 2019482
91
29 196
165

286

526

108

93
29

565

548

183

26

195

114
189
32

609

622

108
183
36

119
175

192

198

343

197

212

216

221

1Q

2Q

3Q

4Q

FY March 2020

151
321
158

124

63

208

47

206

204

202

262

254

1Q

2Q

624

613

486

447

427

427

324

349

332

3Q

4Q

1Q

FY March 2021

12

94

177
225

584

377

353

237

198
203

198

138

144
210

839

2Q

FY March 2022

Copyright © Digital Arts Inc.

Quarterly Trend in Consolidated Selling, General and
Administrative Expenses
Personnel expenses rose due to an increase in bonuses to be paid to employees as a result of sales
growth. Advertising expenses increased due to online events held for partners.
(Million yen)

Perspnnel
人件費632

expenses

Advertising
広告宣伝費

Other
その他

expenses

Overseas
海外費用
expenses

660（159%）（111%）

94

568
69

482

（90%）

42

190
200

109

59

574

548

（112%）

469

（87%）
13

164

156

46

57

487

（85%）

（89%）

25

（115%）

12

167

70

46

（98%）

443

195

179

240

228

230

253

190

1Q

2Q

3Q

4Q

1Q

2Q

3Q

（85%）

153

161

44

32

47

246

（105%）

414

（94%）

210

4Q

FY March 2020

272

1Q

191

59

166
59
58
432

301
218

2Q

169

485

（109%）

34

43

237

499

（91%）

473

211

262

FY March 2019

501

3Q

FY March 2021

262

4Q

323

1Q

2Q

FY March 2022

* Percentage figures represent comparisons with same period of the preceding year.

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Copyright © Digital Arts Inc.

Summary of Consolidated Balance Sheet
Capital efficiency was good, with year-on-year improvement in both ROE and ROA.
Although the equity ratio fell due to an increase in advances received, financial healthhas improved further.
(Million yen)

As of end of 1H FYMarch 2021

As of end of FY March2021

As of end of 1H FYMarch 2022

Change fromend of FY
March 2021

Current assets

9,380

12,725

16,326+28.3%(Cash and deposits)

8,257

11,382

14,682+29.0%

Non-current assets

2,056

2,130

2,262

+6.2%

Total assets

11,437

14,856

18,588+25.1%

Current liabilities

2,149

4,743

7,445

+57.0%(Advanced received)

1,328

3,370

5,861

+73.9%

Non-current liabilities

49

50

50

+0.1%

Equity capital

9,220

10,041

11,066+10.2%Net assets

9,238

10,062

11,093+10.2%

Equity ratio

80.6%

67.6%

59.5%

-

ROE

10.2%

22.0%

13.5%

-

ROA

8.2%

16.0%

8.5%

-

14

Copyright © Digital Arts Inc.

Material on Consolidated Financial Results for the First Halfof the Fiscal Year Ending March 31, 2022

Non-consolidated Results
Highlights

15

Copyright © Digital Arts Inc.

Summary of Non-consolidated Results(First Half of the Year)（単位：百万円）(Million yen)

FY March 2021 1H

FY March 2022 1H

Change YoY

FY March 2022
Full-Year
Forecast

Full year
Achievement rate

Contracts

3,405

4,006

+17.7%Net sales

2,797

4,044

+44.6%

7,450

54.2%

605

812

+34.3%

1,700

47.7%

2,191

3,231

+47.5%

5,750

56.1%

866

1,173

＋35.4%

2,150

54.5%

Operating profit

1,324

2,058

+55.4%

3,600

57.1%

Operating margin

47.4％

50.9％

-

Ordinary profit

1,332

2,061

+54.7%

3,600

57.2%

924

1,424

+54.1%

2,450

58.1%

Cost of goods sold
Gross profit
Selling, general andadministrative expenses

Profit-48.3%* Financial Forecast is the non-consolidated financial forecast announced on May 7, 2021.
16

Copyright © Digital Arts Inc.

Material on Consolidated Financial Results for the First Halfof the Fiscal Year Ending March 31, 2022

By Market

17

Copyright © Digital Arts Inc.

Consolidated Contract Amount by Market

4,505(Million yen)(+20.2%)
229

3,748

•
Consumer

contract amount was up 388 million yen, or+4.7%

21.9%, due to an increase in orders

219

received for the i-FILTER and m-FILTER
2,113

1,755

Publicseries and the growth of DAC as a result of+20.4%

the growth of teleworking.

•

1,774

In the enterprise sector market, the+21.9%

2,162

Enterprise

In the public sector market, the contract
amount was up 358 million yen, or 20.4%,
as growth in the i-FILTER series exceeded
forecasts, the result of orders received for
the GIGA School Concept and projects for

FY Mar.2021
1H

FY Mar.2022
1H

public agencies and local governments.

18

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Consolidated Net sales by Market(Million yen)

4,552(+46.8%)229

Consumer •In the enterprise sector market, net sales wereup 438 million yen, or 23.9%, due to an

3,101
219

+4.4%

increase in orders received for the i-FILTER
2,051

Publicand m-FILTER series as a result of an increase+95.5%

in telecommuting and the growth of DAC.

1,049•
Enterprise
1,832+23.9%

2,271

In the public sector market, net sales were up
1,002 million yen, or 95.5%, as growth of the iFILTER series exceeded forecasts, the resultof orders received for GIGA School Concept
and projects for public agencies and local

FY March 2021
1H

FY March 2022
1H

governments.

19

Copyright © Digital Arts Inc.

Trend in Consolidated Net Sales by Market
Record first half of the year sales were achieved in both the(Million yen)
229 Consumer

enterprise sector and public sector markets thanks to theincrease in teleworking and advances in ICT education inschools.

2,051 Public
219
235
174
170

130
585

140
527

186
536

175

1,096

254

179

922

1,049
1,108

970

754
2,271 Enterprise

609

612

684

758

824

FY Mar 2012
1H

FY Mar 2013
1H

FY Mar 2014
1H

FY Mar 2015
1H

1,010

FY Mar 2016
1H

1,149

FY Mar 2017
1H

20

1,366

1,419

FY Mar 2018
1H

FY Mar 2019
1H

1538

FY Mar 2020
1H

1,832

FY Mar 2021
1H

FY Mar 2022
1H

Copyright © Digital Arts Inc.

Quarterly Trend in Consolidated Net Sales by Market
Net sales for the second quarter reached a record high,(Million yen)bolstered by strong performances in the enterprise sector and

115

Consumerpublic sector markets.
109
113
104
114
90
140

587

383

725

1Q

100
426

515

813

770

2Q

3Q

975

4Q

103

1,313

Public

785
738

115

597

574

451

847

1Q

FY March 2020

985

971

2Q

3Q

FY March 2021

21

1,179

4Q

1,067

1Q

1,204 Enterprise

2Q

FY March 2022

Copyright © Digital Arts Inc.

Material on Consolidated Financial Results for the First Halfof the Fiscal Year Ending March 31, 2022

Enterprise Sector

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Net Sales in Enterprise Sector Market by Producti-FILTER series

m-FILTER series

FinalCode

DAC

2,271

(Million yen)(+23.9%)Other•rising 103 million yen, or 9.2%, in response to

2

1,832
5

301
96
312

growing corporate demand for cybersecurity

505+67.8%△1.6%+43.9%

Sales of the i-FILTER series remained strong,

due to increased teleworking.

94
450

•

Sales of the m-FILTER series were strong (up137 million yen or 43.9%), owing to risingdemand for mail security and PPAP problemsolving.

1,116

+9.2%

1,220
•

DAC made good progress acquiring new clientsand achieved substantial sales growth (up 204
million yen or 67.8%), reflecting growing DX

FY Mar 2021
1H

FY Mar 2021
1H2

needs and demand for security measuresamong enterprises.
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Copyright © Digital Arts Inc.

Net Sales Growth and Expansion of DAC on a Nonconsolidated Basis
Number of consultants

Consulting sales*(Persons)(Million yen)

Solution sales*(Million yen)

69

55

473

55
323

24

End of FY March End of 1H FY March
2021

2022

•
•

DAC actively hired talent,focusing on those fromleading consulting firms
and leading systems
integrators.

*: DAC's non-consolidated net sales•

FY Mar.2021

FY Mar.2022

1H

1H

Consulting sales grew
146% year on year,
reflecting the developmentof new clients.
DAC steadily met DX
demand and demand forcyber security measures.
24•

FY Mar.2021

FY Mar.2022

1H

1H

Sales of solutions
incorporating Digital
Arts products alsosoared, increasing
231% year on year.

Copyright © Digital Arts Inc.

Material on Consolidated Financial Results for the First Halfof the Fiscal Year Ending March 31, 2022

Public Sector

25

Copyright © Digital Arts Inc.

Net Sales of Public Sector Market by Producti-FILTER series

m-FILTER series(Million yen)

FinalCode

Other

2,051

(+95.5%)
1

30

204

Sales of the i-FILTER series grew

+12.0%

1,049

substantially, rising 1,013 million
yen, or 126.5%, thanks to orders for△5.4%

public agency and local government

5

27

215

+126.5%

1,815

projects and GIGA School Concept
projects ongoing since the previous

801

FY Mar.2021
1H

fiscal year.
FY Mar.2022
1H

26

Copyright © Digital Arts Inc.

GIGA School Concept
GIGA School Status*1
Introduction of charged filtering

Share of charged filtering introduced

Not yetintroduced, etc.
Competitors

30%
Charged filtering(Less than 10 companies)

i-FILTER

49%

51%

already introduced70%•

The proportion of Boards of Education
which have adopted paid-for filtering
increased from 59% at the end of theprevious fiscal year to 70%.

*1：According to our survey of 1,741 boards of education (September 2021）

27•

i-FILTER's share grew from 46% at the endof the previous fiscal year to 51%.

•

Contracts increased from 4.9 billion yen at
the end of the previous fiscal year to 6.0
billion yen.
Copyright © Digital Arts Inc.

Material on Consolidated Financial Results for the First Halfof the Fiscal Year Ending March 31, 2022

Consumer Sector

28

Copyright © Digital Arts Inc.

Net Sales of Consumer Sector Market by ProductFor mobile terminals,other(Million yen）

For computers229(＋4.4%)

219•

In products for computers, sales ofmultiple-year package products and

104

△6.0%

i-FILTER® for Multi-Device, which

98

can be available on multiple
terminals, remained strong.

•
115+13.8%

130

Sales of products for mobile
terminals remained strong due to acontinuous increase in the numberof young smartphone users.

FY Mar. 2021

FY Mar. 2022

1H

1H

29

Copyright © Digital Arts Inc.

Material on Consolidated Financial Results for the First Halfof the Fiscal Year Ending March 31, 2022

FY03/22 Initiatives

30

Copyright © Digital Arts Inc.

Further Development of Exiting Clients
We will promote cross-utilization of Digital Arts products as asecurity measures to address the issued facing many clients.
Web security

Protection against unknown threats
Realization of "white operation" to prevent
malware infections via the web or emails
Promotion of "v15" and updating ofversions

PPAP (process of sending an encrypted file(with password) attachment in an email andthen sending the password to unzip the file in asecond email) countermeasures
Realization of efficient, more secure filetransfer

Mail Security
Enhancement of features of ＠Cloud

Protection against information leaks

Elimination of need for file passwords

File Security

Proposals for the elimination of e-mailattachments

WEB conferencing

31

Copyright © Digital Arts Inc.

Enhancement of products to acquire new client base

Entry of i-FILTER to Secure Web Gateway (SWG) Market
Entry to SWG
We will enhance product value by strengthening
features to meet the needs of clients not captured
before.

Web security

CASB
Anti-virus

Enhancementof features

Sandbox
DLP

Undisputed quality and recognition in
web security market

Coexistence with adjacent market products
We will acquire a new client base by enhancing
integration features and promoting value to usersof adjacent market products.

UTM

Provision of "white
database"

SIEM

Enhancement oflog output features

Enhancementof integration

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Copyright © Digital Arts Inc.

Enhancement of products to acquire new client baseWe will aim to acquire a wider range of clients by strengthening
features for PAPP measures and measures to enhance the resilienceof municipal information systems, to more reliably meet filesanitization needs.
Integration with file transfer solution

Mail Security

No. 1 Installed E-mail Security
Software*Integration with file sanitization solution*Source: MIC Research Institute Ltd. "Information Security Solutions Market: Status
and Outlook 2020 - Internal Information Leakage Prevention Solutions (https://micr.co.jp/mr/01910/)" Email Filtering/Archive Market: Vendor Share (by shipment)(FY2019) (Published December 2020).

33

Copyright © Digital Arts Inc.

Penetration of "White Operation"
Trend in "v15" User Licenses（Thousand licenses）

10,000
9,089
7,958

4,665
3,604

March 20192019年3月

March
2020
2020年3月

March
2021
2021年3月

September
2021
2021年9月

Aim for 10 million license
contracts by the end of the
fiscal year with thedevelopment of i-FILTER and
m-FILTER functions, anincrease in satisfaction ofexisting customers throughimproved cooperation, and theacquisition of new customers.

March 2022
2022年3月

34

Copyright © Digital Arts Inc.

GIGA School Concept (Second Half) Target
Introduction of filtering by Boards of Education*1
March 2021

September 2021
Approx. 40%
Approx. 33%
Not yetintroduced

Not yet introduced

18％

18％
Free filtering
12％Free filtering
11％

DNS Filtering
10%•

DNS Filtering
12%Charged filtering
already
Introduced
71%

Charged filtering
already
Introduced78%

Aim to receive orders in the second half of the fiscal year by targeting local Boardsof Education, which did not go beyond the free filtering and DNS filtering, in addition
to Boards of Education, which are yet to introduce filtering.

*1：Based on interviews with 651 school boards responsible for more than 3,000 pupils and students (According to our research)

35

Copyright © Digital Arts Inc.

Measures to enhance resilience of municipal information
systems
Procurement for security cloud projects and projects to enhance resilience will becompleted by FY2022.
Procurement for municipalities will be carried out after completion of procurement for
prefectures.

Schedule for public-sector projects
TargetGovernment

Security
cloud (SC)* Government
cloud also needs
to be considered.

Enhancementof resilience ofmunicipalities* Government
cloud also needs
to be considered.

FY
2016

FY
2017

FY
2018

FY
2019

Centralministries andagencies

FY
2020

FY
2021

Introdu
ction
of
ISMAP

Budgeting, bidding, and procurement foreach projectPrefectu
resMunicip
alities

Revision ofprocurement
guidelines

Revision ofprocurement
guidelines
Budget: 16,440 million yen

FY
2023

FY
2024

FY
2025

Transfer budget:
2,930 million yen

Budget: 7,180 million yen
Prefectu
res

FY
2022

Budgeting
Bidding/procureBudgeting for
eachmunicipality

Budgeting
Bidding/procurePrepared using information from the Ministry of Internal Affairs and Communications (MIC) as a reference. https://www.soumu.go.jp/main_content/000729600.pdf

36

Copyright © Digital Arts Inc.

Measures to enhance resilience of municipal
information systems
Based on the December 2020 revisions to the procurement guidelines, we must enhance
efficiency and convenience, while maintaining information security, to meet the needs of thetimes including the digitization of government processes and increased teleworking.
Overview of Solutions for Municipal Information Systems

Outline of countermeasures
Review of "three layers of protection"(α model protection and above)

Remote access security(protection against malware, etc.)

Measures for shift away from PPAP
(process of sending an encrypted file (withpassword) attachment in an email and thensending the password to unzip the file in asecond email)File encryption

All solutions shown in the outline of countermeasures are

possible using combinations of Digital Arts products.
37

Copyright © Digital Arts Inc.

Enhancement of products to acquire new client baseWe will elevate Desk@Cloud from a tool used internally to a web
conferencing system that is equal to a video distribution platform in terms ofvideo performance and far superior in terms of security.
Enhancement of communication withexternal users

WEB conferencing

Release of webinar features
 To enable large-scale web
conferences to be held
Automatic file encryption (integration
with FC)

A secure communications
platform created by a security
expertMeeting needs for confidential online
meetings
Enhanced authentication of users
participating in meetings
Utilization of multi-factor authentication
technology

38

Copyright © Digital Arts Inc.

Acceleration of Synergies within the GroupWe will expand the enterprise sector market by proposing DA products to DAC's consulting clients.
By combining the strengths of Digital Arts and DAC, we will offer one-stop shop solutions covering
everything from "detection" to "recovery."Consulting services
Clients in the enterprise
sector market
Large“White operation" clients

MediumExpansion ofenterprise
sectormarketProposal of DA products as
security measures to leading
medium-sized enterprises,
who are the main consulting
clients

Small

Stepping-up of
security measures

Follow-up services
Provision of charged services dealing witheverything from the detection of website
tampering to recovery and prevention.

Website tampering
Incident detection
enterprise (D Alertfeature）
Everything fromdetection torecovery dealt withwithin the Group

39

Investigation

ActionRecoveryPrevention

Copyright © Digital Arts Inc.

Operation of DAC Service
Expand the scope of value provided and the level of profit through DAC
service, ensure continuous contact with E/U as the Group, and use it for
product sales growth.

Security education service•

Educational content and workshops
to help raise employees literacy•

Service starts at 500,000 yen•

Able to address individual themes inline with customer and industry
needs

Paid D Alert service•

The incident response service
originated from “detection with D Alert”•

Investigations, initial response, andidentification of causes involving
terminals and devices for which Lic, a
DA product, is used are provided free ofcharge.

Quickstartfor i-FILTER@Cloud

Measuresother than
products

Sale

Operation andmaintenance
Building andsetting•Service for installing security at alevel of recommended settings in aform appropriate for customer
environments•

Service starts at 200,000 yen•

Released to corporate customers
on September 1•

In the third quarter, support the
GIGA School version and theversion with a feature to control
harmful information.

: Started providing: Scheduled for release in 3rd quarter

40

Copyright © Digital Arts Inc.

Material on Consolidated Financial Results for the First Halfof the Fiscal Year Ending March 31, 2022

REVISION OF FULL-YEAR
FINANCIAL FORECAST FOR THE
FISCAL YEAR ENDING MARCH 2022

41

Copyright © Digital Arts Inc.

Revision of Consolidated and Non-consolidated Financial
Forecasts for Fiscal Year Ending March 31, 2022

Reasons for Differences between Forecasts and Results for theFirst Half of Fiscal Year Ending March 31, 2022, and Revision of
Full-year Financial Forecasts
Consolidated and non-consolidated results for the first half of the fiscal year
under review
Orders primarily for products related to cloud services in the enterprise sector
market increased with the increase in teleworking. In the public sector market,
too, orders for public agency and local government projects increased. In
addition, some orders for public agency projects in the public sector market
expected to be received in the third quarter of the fiscal year under review
were moved forward to the second quarter. As a result, net sales exceeded
the forecast previously announced. Consequently, operating profit, ordinary
profit, and profit attributable to owners of parent also exceeded the forecasts
announced last time.
Consolidation and non-consolidated full-year financial forecasts
The forecasts previously announced have been revised on the assumptionthat orders for public agency and local government projects in the public
sector market will remain strong in and after the third quarter as planned.
42

Copyright © Digital Arts Inc.

Comparison of Consolidated Financial Forecasts for
Fiscal Year Ending March 31, 2022
Before Revisionof FY2022
Forecasts

After Revision of
FY2022
Forecasts

Net sales

8,700

9,000

＋300

＋3.4 %

Cost of goods
sold

2,700

2,700

ー

ー

Gross profit

6,000

6,300

＋300

＋5.0 %

Gross profit
margin

69.0％

70.0％

ー

ー

Selling, generalandadministrative
expenses

2,300

2,300

ー

ー

Operating profit

3,700

4,000

＋300

＋8.1 %

Operating margin

42.5％

44.4％

ー

ー

Ordinary profit

3,700

4,000

＋300

＋8.1 %

Profit attributableto owners ofparent

2,550

2,770

＋220

＋8.6 %(Million yen)

43

Change% Change

Copyright © Digital Arts Inc.

Comparison of Non-consolidated Financial Forecasts
for Fiscal Year Ending March 31, 2022
Before Revisionof FY2022
Forecasts

After Revision of
FY2022
Forecasts

Net sales

7,450

7,850

＋400

＋5.4 %

Cost of goods
sold

1,700

1,800

＋100

＋5.9 %

Gross profit

5,750

6,050

＋300

＋5.2 %

Gross profit
margin

77.2％

77.1％

ー

ー

Selling, generalandadministrative
expenses

2,150

2,150

ー

ー

Operating profit

3,600

3,900

＋300

＋8.3 %

Operating margin

48.3％

49.7％

ー

ー

Ordinary profit

3,600

3,900

＋300

＋8.3 %

Profit

2,450

2,690

＋240

＋9.8 %(Million yen)

44

Change% Change

Copyright © Digital Arts Inc.

Comparison between Results for Previous Fiscal Year andForecasts for Fiscal Year Ending March 31, 2022 (Consolidated)
FY March 2021
Full-Year
Results

After Revisionof FY2022
Forecasts

Net sales

6,825

9,000

＋2,175＋31.9 %

Cost of goods
sold

1,946

2,700

＋754

＋38.7 %

Gross profit

4,878

6,300

＋1,422＋29.2 %

Gross profit
margin

71.5％

70.0％

ー

Selling, generalandadministrative
expenses

1,900

2,300

＋400

＋21.0 %

Operating profit

2,977

4,000

＋1,023＋34.3 %

Operating margin

43.8％

44.4％

ー

Ordinary profit

2,991

4,000

＋1,009＋33.7 %

Profit attributableto owners ofparent

2,059

2,770

＋711

＋34.5 %

(Million yen)

45

Change% Changeーー

Copyright © Digital Arts Inc.

Comparison between Results for Previous Fiscal Year and Forecasts
for Fiscal Year Ending March 31, 2022 (Non-consolidated)
FY March 2021
Full-Year
Results

After Revisionof FY2022
Forecasts

Net sales

6,074

7,850

＋1,776＋29.2 %

Cost of goods
sold

1,273

1,800

＋527

＋41.4 %

Gross profit

4,801

6,050

＋1,249＋26.0 %

Gross profit
margin

79.0％

77.1％

ー

Selling, generalandadministrative
expenses

1,854

2,150

＋296

＋26.0 %

Operating profit

2,947

3,900

＋953

＋32.3 %

Operating margin

48.5％

49.7％

ー

Ordinary profit

2,964

3,900

＋936

＋31.6 %

Profit

2,044

2,690

＋646

＋31.6 %

(Million yen)

46

Change% Changeーー

Copyright © Digital Arts Inc.

Status of Consolidated Net Sales(Million yen）

We have revised the contract amountfor the fiscal year under review

7,354

upward, raising it 400 million yen to400

7,354 million yen, due to orders for
public agency and local government
projects in the public sector market
6,954

are expected to remain strong fromthe third quarter of the fiscal year
under review.

Net sales
carried over
*3
DAJ*1
*3*1

New contracts
during this fiscal
year DAJNet sales
DAC*4*4

Deferred
Consolidated
contract
financial forecast
amount DAJ *2 for FY March 2022
*2

47

*１: Sales recorded from the order backlog of contracts
acquired in previous fiscal years*２：Sales deferred to subsequent fiscal years (order backlog)*３：DAJ＝Digital Arts Inc.
*４：DAC＝Digital Arts Consulting Inc.
Copyright © Digital Arts Inc.

Status of Consolidated Net Sales
9,000

8,700

(Million yen）(+31.9%)(+27.5%)450

450

Consumerenterprise sector market is unchanged+4.1%

from the initial forecast of 4,850 million

6,825
432

The forecast for net sales in the

3,400

+8.8%

yen, given the assumption that orders

3,700

will be in line with plans based on an

Public+53.7%

increase in teleworking.

2,408

The forecast for net sales in the publicEnterprise
3,984+21.7%

4,850

4,850

sector market is raised by 300 million
yen from the initial forecast to total
3,700 million yen, given the assumptionof growth in orders for public agency
and local government projects.

Results for
2021年3月期
FY March
2021実績

Before2022年3月期
Revision of
FY2022
業績予想修正前Forecasts

After
2022年3月期
Revision of
FY2022
業績予想修正後Forecasts

48

Copyright © Digital Arts Inc.

Consolidated Cost of Sales and Selling, General and
Administrative Expenses
Expenses will not be revised from the previous forecast.
(Million yen）

Results for FY
March 2021

Forecast for FY
March 2022

ChangeYoY

Cost of goods sold

1,946

2,700

+38.7%

1,192

1,480

+24.1%

DAC increased consultants

Depreciation

810

850

+4.8%

Depreciation of software for cloud products will
start.

Communication
expenses

240

600+150.0％

Cloud server expenses will rise as a result ofsales expansion of cloud products.

Other

511

570

11.5%

Transfer to otheraccounts

△808

△800

△1.0%

Selling, general andadministrative
expenses

1,900

2,300

+21.0%

Personnel expenses

1,055

1,330

+26.1%

Personnel expenses will rise, reflecting theemployment of new graduates.

Advertising expenses

168

200

+19.0%

Advertising in newspapers and other media will
increase.

+13.6%

Assuming that the effects of COVID-19 willlessen, travel expenses will increase.
Server expenses will increase as a result ofcloud products trials.

Labor

Other

677

770
49

Main Factors for Change

Copyright © Digital Arts Inc.

Material on Consolidated Financial Results for the First Halfof the Fiscal Year Ending March 31, 2022

Return to Shareholders for Fiscal
Year Ending March 31, 2022

50

Copyright © Digital Arts Inc.

Return to Shareholders for Fiscal Year Ending March
31, 2022
We are planning to pay dividends as follows to return a portion of ourearnings to our shareholders.
Target payout ratio for fiscal year ending March 31, 2022: 32.9% (ofconsolidated net profit)
Annual dividends of surplus forecasted for fiscal year ending March 31, 2022:
65.00 yen per share
We expect to increase the annual dividend by 10.00 yen per share.
Dividend (in yen) per share
2Q-endFY March 2021

25.00

FY March 2022

30.00

Year-end

FY March 2022
(forecast)
51

AnnualConsolidated
payout ratio

30.00

55.00

37.4％

35.00

65.00

32.9％

Copyright © Digital Arts Inc.

Notes on Descriptions
Among the descriptions of plans, strategies and financial forecasts in thispresentation material, those that are not historical facts are forward-looking
statements.
They reflect judgments made by the management of Digital Arts Inc. on the basis of
information currently available to it. They may be subject to considerable change
depending on changes in the environment and other factors, and the Company does
not in any way guarantee the achievement of the projections.
Digital Arts Inc. will disclose any significant changes that occur in the future as
appropriate.
With some exceptions, the basic figures in this presentation are rounded down to thenearest million yen.
•

デジタルアーツ、DIGITAL ARTS、i-FILTER、D-SPA、White Web、m-FILTER、m-FILTER MailFilter、m-FILTER Archive、m-FILTER
Anti-Spam、FinalCode、i-フィルター、DigitalArts@Cloud、Desk@Cloud、Desk, and other logos and icons related to Digital Arts Inc.
and its products are trademarks or registered trademarks of Digital Arts Inc.

•

Apart from this, the names of companies and products stated herein are trademarks or registered trademarks of their respective
companies.

52

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