Consolidated Financial Results for theFirst Quarter of the Fiscal Year Ending
March 31, 2022
(From April 1, 2021 to June 30, 2021)
Supplementary Material to Financial Results
July 30, 2021
Digital Arts Inc.
(Securities Code: 2326)
Copyright © 2015 Digital Arts Inc.

Contents

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

2

Copyright © Digital Arts Inc.

Supplementary Material on Consolidated Financial Results for theFirst Quarter of 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 a first quarter.

• Contracts amounted to 1,979 million yen (up 35.3% year
on year).
• Consolidated net sales were 1,919 million yen (rising35.7% year on year).

(2) Operating profit also set a first-quarter record.

• Operating profit reached 731 million yen (an increase of
50.8% year on year).

4

Copyright © Digital Arts Inc.

Consolidated Results Highlights•

Orders received for the i-FILTER series
increased in the public sector market, due tothe GIGA School Concept.

(up 517 million yen or 35.3% year onyear).

•

Orders received increased as DAC gained
new customers.

Net sales amounted to•Sales grew due to the spread of teleworking
among enterprises and orders for the iFILTER series won in connection with the
GIGA School Concept.

•

Sales grew after DAC gained new customers.

•

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

•

SG&A expenses were higher mainly due toan increase in the number of employees andonline events held for partners.

Contracts amounted toContracts

Net sales

1,979 million yen

1,919 million yen(up +505 million yen or 35.7% year onyear).

Operating profit amounted toOperatingprofit

731 million yen(up +246 million yen or +50.8% year onyear).

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Copyright © Digital Arts Inc.

Consolidated Results Summary (Quarter)
FY March 2022
Full-Year
Forecast

Progress
Vs Fullyear
Forecast

FY March 2021 1Q

FY March 2022 1Q

Contracts

1,463

1,979

+35.3%—Net sales

1,413

1,919

+35.7%

8,700

22.1%

Cost of sales

427

613

+43.5%

2,700

22.7%

Gross profit

986

1,305

+32.4%

6,000

21.8%

Selling, general andadministrative
expenses

501

574+14.6%

2,300

25.0%

Operating profit

485

731

+50.8%

3,700

19.8%

34.3%

38.1%

ー

42.5%

Ordinary profit

489

732

+49.8%

3,700

19.8%

Profit attributable toowners of parent

334

506

+51.6%

2,550

19.9%

EBITDA

716

966+34.8%—(Million yen)

Operating margin

Change YoY* Financial Forecast is the consolidated financial forecast announced on May 7, 2021.
* EBITDA = Operating profit + Depreciation + Tax expenses included in operating expenses
6

Copyright © Digital Arts Inc.

Trend in Consolidated Contracts
Cloud service products increased their share of the total contract
amount to 38.8%.
Trend in Contracts

License sales products/Others(Million yen)

1,979

Cloud service products

•

1,463
1,214

61.2%

The cloud shift continued, andthe percentage of contracts
accounted for by cloud service
type products rose from 23.9%

76.1%

1,113

in the same period of theprevious fiscal to 38.8% in the
768
23.9%

38.8%

period under review.

350
FY Mar. 2021 1Q

FY Mar. 2022 1Q

7

Copyright © Digital Arts Inc.

Trend in Order Backlog
The order backlog grew to 6,497 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 three quarters (2Q-4Q)

•

6,497

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.)

4,400
•

Since the contracts for cloud service products
are renewable at fixed prices (whereas the

1,852

renewal price for license sales products is half
the contract price for the first year), this853

recurring revenue business model creates

2,097

a stable profit base.

999
End of 1Q FY March 2021

End of 1Q FY March 2022
8

Copyright © Digital Arts Inc.

Supplement）Method of recording sales by product

Equivalent tomaintenancefeeContracts

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)

Net sales reached a record high for a firstquarter after a strong performance in theenterprise sector and public sector
markets.

1,919（136%）

1,413
1,158（126%）

1,217

1,249

（105%）（103%）FY Mar. 2019
1Q

FY Mar. 2020
1Q

（113%）

916
803
682（131%）

570

650

673

（114%）（103%）FY Mar. 2014
1Q

FY Mar. 2015
1Q

（114%）（119%）（84%）

FY Mar. 2012
1Q

FY Mar. 2013
1Q

FY Mar. 2016
1Q

FY Mar. 2017
1Q

FY Mar. 2018
1Q

FY Mar. 2021
1Q

FY Mar. 2022
1Q

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

10

Copyright © Digital Arts Inc.

Consolidated Cost of Sales and Selling, General and
Administrative Expenses
FY March 2021
1Q

FY March 2022 1Q

427

613

+186

Labor

262

332

+69

Depreciation

203

204

+1

(Million yen)

Cost of sales

ChangeYoY

Main Factors for Change

DAC increased consultants

144

302

+157

Service expenses increased as a result of sales
expansion of cloud products.
Outsourcing expenses soared after DAC
obtained more orders.

Transfer to otheraccounts

-183

-225

-42

Transfer to software in progress increased as aresult of the increase in development projects.

Selling, general andadministrative expenses

501

574

+73

Personnel expenses

272

323

+50

Personnel expenses rose reflecting theemployment of new graduates.

Advertising expenses

32

59

+26

Increase due to online events held for partners

Other

195

191

-4

Other

11

Copyright © Digital Arts Inc.

Quarterly Trend in Consolidated Cost of Sales(Million yen)Labor expenses swelled after DAC increased consultants.
Cloud server expenses grew as a result of sales expansion of cloud service products.

839（138%）

793（140%）

723（132%）

Other

Transfer to otheraccount

Depreciation

609

Cost of sales

Labor

565

526
452

（110%）

464（112%）

470（105%）

443

（98%）

147

206

203

202

236

125%

191

185

1Q

101%

144%

2Q

179

3Q

FY March 2019

155%

486

286

250

92%

183

83%

4Q

197

613

584

141

282

204

198

198

447

427
289

175

165

163

154

166
183

303

237

198

194
192

201

189

196

123

229

（118%）

210

146
195

183

238

622

（128%）

144
134

122
120

188

163

（113%）（117%）（107%）

124

125

114

482

548

（126%）

225

99%

1Q

343

353

145%

125%

2Q

3Q

FY March 2020

149%

262

4Q

138%

349

324

151%

221

216

212

377

130%

332

254

1Q

2Q

3Q

FY March 2021

4Q

1Q
FY March 2022

* Percentage figures represent comparisons with the same period a year earlier.

12

Copyright © Digital Arts Inc.

Quarterly Trend in Consolidated Selling, General and
Administrative Expenses
Personnel expenses increased as a result of new graduates joining the Company.
Advertising expenses increased due to online events held for partners.
Personnel expenses

Advertising expenses

Other

Overseas expenses(Million yen)

632
（111%）

94

568

548

（112%）

（87%）

69

190

482

13
（89%）

42

25

487
12

473
（98%）

443

501

499

（91%）

（105%）

（94%）

167

（85%）

164

59

156

190
70

46

46

57

161

237

240

228

230

253

1Q

2Q

3Q

4Q

1Q

2Q

246

3Q

FY March 2020

153

166
59

44
58

34

301

272
218

210

4Q

（109%）

191

32

47
43

262

FY March 2019

195

179

485

414

211
200

109

（115%）
（85%）

469

（90%）

574

1Q

2Q

3Q

FY March 2021

323
262

4Q

1Q
FY March2022* Percentage figures represent comparisons with same period of the preceding year.

13

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, strong financial health wasmaintained.
(Million yen)

As of end of 1Q FYMarch 2021

As of end of FY March2021

As of end of 1Q FYMarch 2022

Change fromend of FY
March 2021

Current assets

8,671

12,725

14,344+12.7%(Cash and deposits)

7,609

11,382

13,133+15.4%

Non-current assets

2,097

2,130

2,132

+0.1%

Total assets

10,76914,856

16,476+10.9%

Current liabilities

2,067

4,743

6,269

+32.2%(Advanced received)

1,310

3,370

5,236

+55.3%

Non-current liabilities

49

50

50

+0.0%

Equity capital

8,635

10,041

10,137+1.0%

Net assets

8,652

10,062

10,157+0.9%

Equity ratio

80.2%

67.6%

61.5%

—

ROE

3.9%

22.0%

5.0%

—

ROA

3.1%

16.0%

3.2%

—

14

Copyright © Digital Arts Inc.

Supplementary Material on Consolidated Financial Results for theFirst Quarter of the Fiscal Year Ending March 31, 2022

Non-consolidated Results
Highlights

15

Copyright © Digital Arts Inc.

Summary of Non-consolidated Results (Quarterly)(Million yen)

FY March 2022
Full-Year
Forecast

Progress
Vs Fullyear
Forecast

FY March 2021 1Q

FY March 2022 1Q

Contracts

1,337

1,715

+28.3%Net sales

1,287

1,655

+28.5%

7,450

22.2%

Cost of sales

310

385

+24.1%

1,700

22.7%

Gross profit

977

1,269

+29.9%

5,750

22.1%

Selling, general andadministrative expenses

455

539

+18.4%

2,150

25.1%

Operating profit

522

730

+39.9%

3,600

20.3%

40.5%

44.1%

—

48.3%

Ordinary profit

526

733

+39.3%

3,600

20.4%

Profit368

506+37.4%

2,450

20.7%

Operating margin

Change YoY—* Financial Forecast is the non-consolidated financial forecast announced on May 7, 2021.
16

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Supplementary Material on Consolidated Financial Results for theFirst Quarter of the Fiscal Year Ending March 31, 2022

By Market

17

Copyright © Digital Arts Inc.

Consolidated Contract Amount by Market(Million yen)

1,979(+35.3%)
114

1,463

Consumer

-1.1%

•
865

115

In the enterprise sector market, the contract
amount was up 188 million yen or 23.3% due

Publicto orders received for i-FILTER and m-FILTER+61.6%

series and the growth of DAC.

535•

In the public sector market, net sales leapt
329 million yen (up 61.6%), with orders for+23.3%

the i-FILTER series exceeding expectations

Enterprise

1,000

as the government furthered the GIGA

811

School Concept.

FY Mar. 2021
1Q

FY Mar. 2022
1Q

18

Copyright © Digital Arts Inc.

Consolidated Net sales by Market
1,919(Million yen)(+35.7%)

432

1,413

Consumer

445
-1.1%

•

2,408

In the enterprise sector market, net sales were up 219
million yen or 25.9% due to orders received for i-

PublicFILTER series and the growth of DAC.

1,911
+63.5%•In the public sector market, net sales were up 286
million yen or 63.5% due to orders received for the iFILTER series as the government furthered the GIGA
School Concept.

3,984
3,284

FY March 2020
1Q

Enterprise+25.9%FY March 2021
1Q

19

Copyright © Digital Arts Inc.

Trend in Consolidated Net Sales by Market
Record first-quarter sales were achieved in both the(Million yen)enterprise sector and public sector markets thanks to
the increase in teleworking and advances in ICT

113

Consumer

738

Publiceducation in schools.
115

92

89

424

120

140
451

408

383

89
69

101
73

332

170

216

85

296
256

1,067

207

Enterprise

847

281

326

331

380

FY Mar. 2012
1Q

FY Mar. 2013
1Q

FY Mar. 2014
1Q

FY Mar. 2015
1Q

456

FY Mar. 2016
1Q

530

FY Mar. 2017
1Q

20

640

688

725

FY Mar. 2018
1Q

FY Mar. 2019
1Q

FY Mar. 2020
1Q

FY Mar. 2021
1Q

FY Mar. 2022
1Q

Copyright © Digital Arts Inc.

Quarterly Trend in Consolidated Net Sales by Market
Net sales for the first quarter reached a record high, bolstered(Million yen)by strong performances in the enterprise sector and public
109

sector markets.
104
114

103

113

Consumer

738

Public

1,067

Enterprise

785

100
115

90

597

574

426

140
587

451

515
383

1,179
975
725

1Q

813

770

2Q

3Q

985

971

2Q

3Q

847

4Q

1Q

FY March 2021

FY March 2020

21

4Q

1Q

FY March 2022

Copyright © Digital Arts Inc.

Supplementary Material on Consolidated Financial Results for theFirst Quarter of the Fiscal Year Ending March 31, 2022

Enterprise Sector

22

Copyright © Digital Arts Inc.

Net Sales in Enterprise Sector Market by Producti-FILTER series

m-FILTER series

FinalCode

DAC

Other

(Million yen)

1,067(+25.9%)•

1

Sales of i-FILTER@Cloud were strong (rising 48
million yen or 9.4%), reflecting growing cybersecurity demand among enterprises due to

847
1

263

increased teleworking.

+111.8%

46

124
48

-4.5%

152

+22.5%•

Sales of m-FILTER series were strong (up 34 million
yen or 22.5%), owing to rising demand for mail187

security and PPAP problem-solving.
•

DAC made good progress acquiring new clientsand achieved substantial sales growth (up 138
million yen or 111.8%), reflecting growing DX needs

520

+9.4%

569

and demand for security measures among
enterprises.

FY Mar. 2021
1Q

FY Mar. 2022
1Q

23

Copyright © Digital Arts Inc.

Net Sales Growth and Expansion of DAC on a Nonconsolidated Basis

Number of consultants(Persons)

Consulting sales*(Million yen)

Solution sales*(Million yen)

68

54

222

55
133

12

End of FY March
2021•

FY Mar. 2021
1Q

End of 1Q FY March
2022

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

*: DAC's non-consolidated net sales

FY Mar. 2022
1Q•

Consulting sales grew
166% year on year,
reflecting the developmentof new clients.

•

DAC steadily met DX
demand and demand forcyber security measures.
24

FY Mar. 2021
1Q•

FY Mar. 2022
1Q

Sales of solutions
incorporating Digital Arts
products also soared,
increasing 434% year on
year.

Copyright © Digital Arts Inc.

Supplementary Material on Consolidated Financial Results for theFirst Quarter of the Fiscal Year Ending March 31, 2022

Public Sector

25

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Net Sales of Public Sector Market by Producti-FILTER series

m-FILTER series(Million yen)

FinalCode

Other

738
(+63.5%)1

1476+13.1%

451

•

-5.9%

Sales of i-FILTER series grew 288
million yen (up 80.8%) due to orders

13

80

for i-FILTER series received in
646

connection with the promotion of ICT
education in line with the GIGA School+80.8%

357

Concept which has been ongoingsince the previous fiscal year.

FY Mar. 2021
1Q

FY Mar. 2022
1Q

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

34%(Less than 10 companies）

49%

i-FILTER
51%

Charged filtering
already introduced

67%

•

•

The proportion of Boards of Education whichhave adopted paid-for filtering increased from
59% at the end of the previous fiscal year toi-FILTER's share grew from 46% at theend of the previous fiscal year to 51%.

•

67%.

Contracts increased from 5.3 billion yen
at the end of the previous fiscal year to

5.8 billion yen.

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

27

Copyright © Digital Arts Inc.

Acquisition of ISO 27017
DigitalArts@Cloud received ISO certification as a cloud service which meetsthe ISO criteria.
FY2019FY2020

FY2021ISMAP = Aiming for registration as asystem (cloud service) that satisfies

Acquisitionof ISO27017
certification

Action forregistration
as an
ISMAP

the Japanese government's security
requirements

Acquisitionof ISO27001
certification
Acquisition of ISO27017, which canalso be described as the baseline for
an ISMAP, was completed.

28

Copyright © Digital Arts Inc.

Supplementary Material on Consolidated Financial Results for theFirst Quarter of the Fiscal Year Ending March 31, 2022

Consumer Sector

29

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

For computers

113

115

(-1.1%)

54

+4.2%

56

•

In products for computers, sales ofmultiple-year package products
and i-FILTER® for Multi-Device,
which can be available on multiple

60

-5.9%

terminals, were solid, and the57

number of licenses increased.

FY Mar. 2021
1Q

FY Mar. 2022
1Q

30

Copyright © Digital Arts Inc.

Supplementary Material on Consolidated Financial Results for theFirst Quarter of the Fiscal Year Ending March 31, 2022

Full-year Financial Forecast
for the Fiscal Year Ending
March 31, 2022

31

Copyright © Digital Arts Inc.

Full-Year Financial Forecast for the Fiscal Year Ending
March 31, 2022 (Consolidated)(Million yen)

FY March 2021 FullYear Results

Forecast for FY
March 2022

% Change

Net sales

6,825

8,700

+27.5 %

Cost of sales

1,946

2,700

+38.7 %

Gross profit

4,878

6,000

+23.0%

Selling, generaland administrative
expenses

1,900

2,300

+21.0%

Operating profit

2,977

3,700

＋24.3%

Ordinary profit

2,991

3,700

+23.7%

Profit attributableto owners of parent

2,059

2,550

＋23.8%

32

Copyright © Digital Arts Inc.

Full-Year Financial Forecast for the Fiscal Year Ending
March 31, 2022 (Non-consolidated)(Million yen)

FY March 2021 FullYear Results

Forecast for FY
March 2022

% Change

Net sales

6,074

7,450

+22.6%

Cost of sales

1,273

1,700

+33.5%

Gross profit

4,801

5,750

+19.8%

Selling, generaland administrative
expenses

1,854

2,150

+15.6%

Operating profit

2,947

3,600

＋22.2%

Ordinary profit

2,964

3,600

+21.5%

Profit

2,044

2,450

＋19.8%

33

Copyright © Digital Arts Inc.

Status of Consolidated Net Sales(Million yen)•

Net sales carried over will increase due to theimpact of the amount of contracts acquired in
the public sector market the previous fiscal year
in connection with the GIGA School Concept.

•

New contracts of DAJ are expected to amount to6,954 million yen due to expansion of sales tothe enterprise sector market and orders received
for the public sector market in connection with
the GIGA School Concept.

•

As in the previous fiscal year, DAC will increase
the number of consultants and is expected tocontinue growing through the acquisition of newclients.

*1: Sales recorded from the order backlog of contracts acquired in previous fiscal years*2: Sales deferred to subsequent fiscal years (order backlog)

*2
*3
*1

*3: DAJ＝Digital Arts Inc.

*4

*4: DAC＝Digital Arts Consulting Inc.

34

Copyright © Digital Arts Inc.

Status of Consolidated Net Sales
8,700(+27.5%)(Million yen)

450

Consumer•

We will further develop existing clients by promoting thecross-utilization of Digital Arts products as security+4.1%

measures for enterprises and acquire new clients by

6,825

strengthening products.

Public
432

3,400

•

+41.2%

We will expand orders received by proposing Digital Arts
products to DAC's clients.

2,408

•

Part of the amount of contracts acquired the previous fiscal
year in the public sector market in connection with the GIGA
School Concept will be deferred and recognized as sales in
FY March 2022.

Enterprise+21.7%

4,850

3,984

•

We will expand our market share in the latter half of the
GIGA School Concept and win orders by meeting needs forenhancement of the resilience of municipal information
systems.

Results for FY March 2021

Forecast for FY March 2022

35

Copyright © Digital Arts Inc.

Consolidated Cost of Sales and Selling, General and
Administrative Expenses

Results for FY
March 2021

Forecast for FY
March 2022

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.

Other

751

1,170

+55.7%

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

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 rose reflecting theemployment of new graduates.

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.

(Million yen)

Cost of sales
Labor

Advertisingexpenses
Other

677

770

36

ChangeYoY

Main Factors for Change

Copyright © Digital Arts Inc.

Status of Consolidated Cost of Sales
Labor costs are expected to rise because DAC will increase the number of consultants.
Higher cloud server expenses under "Other" are forecast as a result of sales expansion of cloud
products.
(Million yen)37

Copyright © Digital Arts Inc.

Status of Consolidated SG&A Expenses
Higher personnel expenses are forecast as a result of an increase in staff.
(Million yen)38

Copyright © Digital Arts Inc.

Supplementary Material on Consolidated Financial Results for theFirst Quarter of the Fiscal Year Ending March 31, 2022

FY03/22 Initiatives

39

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

40

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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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://mic-r.co.jp/mr/01910/)" Email
Filtering/Archive Market: Vendor Share (by shipment) (FY2019) (Published December 2020).

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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 with externalusers

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

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Copyright © Digital Arts Inc.

GIGA School Concept（Latter Half)

Target in Latter Half of GIGA
School Concept *1
Filteringmeasures yet
to be taken• Around 40% of the total number of18%

school boards is the potential target in thesecond half.

Free filtering used

11%•

Filtering measures already taken
71%

As leader in the GIGA School Program
market*2, we aim to expand our market share on
the basis of the far greater value we provide

Schools using DNS
filtering（approx. 10%）(product value, convenience and cost).
•

We will appear at outside seminars to stress theneed for filtering and the superiority of our
products.

*1: Based on interviews with 651 school boards responsible for more than 3,000 pupils and students (According to our research in March 2021)*2: According to our research in March 2021

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Copyright © Digital Arts Inc.

Measures to enhance resilience of municipal
information systems
FY2022 will be the main battleground for dealing with security cloud
projects and projects to enhance resilience but some projects are
expected to be put out to tender during FY2021.
Public Project Roadmap
Item

TargetGovernment

Centralministries andagencies

FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

FY2023

FY2024FY2025

Action to address each project
ISMAP
Introductionof ISMAP

Budgeting
Bidding/Renewal
2.1 billion
yen transition budget

Security cloudPrefectures

7.1 billion
yen

Extension

Renewal

Budgeting
Revision of
procurement
guidelines

Bidding/Renewal
Budget TBD

Enhancementof resilience

Prefectures
Municipalities

16.4 billion
yen

45

Extension

Renewal

Budgeting

Bidding/RenewalCopyright © 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 ofcountermeasures
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.
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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
marketLarge“White operation" clients
MediumExpansionof enterprise
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 Group47

Investigation

ActionRecoveryPrevention

Copyright © Digital Arts Inc.

Supplementary Material on Consolidated Financial Results for theFirst Quarter of the Fiscal Year Ending March 31, 2022

Return to Shareholders for
Fiscal Year Ending March 31,
2022

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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 our earnings to ourshareholders.
Target payout ratio for fiscal year ending March 31, 2022: 35.8% (of consolidated 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
FY March 2022
(forecast)Year-end

AnnualConsolidated
payout ratio

25.00

30.00

55.00

37.4%

30.00

35.00

65.00

35.8%

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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, info board, Active Rating System, D-SPA, NET FILTER, SP-Cache, White Web, ZBRAIN,
Credential Protection, m-FILTER, m-FILTER MailFilter, m-FILTER Archive, m-FILTER Anti-Spam, m-FILTER File Scan, Mail Detox, mFILTER EdgeMTA, EdgeMTA, FinalCode, i-フィルター, DigitalArts@Cloud, Desk@Cloud, Desk, D-Alert, D-Content, 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.

50

Copyright © Digital Arts Inc.

-For internet convenience, safety and security -Copyright © 2015 Digital Arts Inc.