Consolidated Financial Results for the
Fiscal Year Ended March 31, 2020
(From April 1, 2019 to March 31, 2020)
Supplementary Material
Friday, May 8, 2020
Digital Arts Inc.
(Securities Code: 2326)
Copyright © 2015 Digital Arts Inc.

Response to COVID-19 Coronavirus Outbreak Since February 2020, we have swiftly introduced the following measures and systems toprovide employees with an environment for continuing to work in good health and without
worries and to maintain business activities.
TimingFeb.

Measure / System

Internal measures

Required temperature checks for all employees on arrival.
Required disinfection of hands and fingers with alcohol when entering or
leaving rooms
Investigation of overseas travel records and prohibition of overseas travel
unless absolutely necessary
Required wearing of face masks when commuting, while in offices, whengoing out, and when meeting customers
Introduction of commuting outside rush hours
Recommendation to take paid leave in response to school closures

External
measures

Mar.

Provided one month’s supply of face masks to every employee

Apr.

All employees ordered to work from home as a rule
Online induction training for new graduate employees
Special paid leave offered to employees in double career households affectedby nursery school closures
Financial support program for our employees to hold online lunch meetingsand parties using our product, Chat@Cloud (up to 10,000 yen per person permonth)

Mar.

Decision to cancel business partner meetings scheduled in May and June
2020

Apr.
Online sales activities using our product, Chat@Cloud
Seminars held online
Introduction of digital catalogs

2

Intended Effect Removing anxiety about
employment security from
employees and maintaining theirmotivation by introducing
measures and systems forhelping them and their family
members lead healthy lives
without worries Keeping the number of infections
among the employees and theirfamily members at zero throughintensive antivirus measures

 Reducing geographicalmovements and increasing
efficiency and the speed of sales
activities after progress insimultaneous online multi-party
connections and in the sharing ofinternal information
Copyright © 2020 Digital Arts Inc.

Supplementary Material on Consolidated Financial Results
for the Fiscal Year Ended March 31, 2020

Key Points

Copyright © 2020 Digital Arts Inc.

Key Points①

Consolidated net sales slightly declined year on year.




②

A drop in reaction to the winning of large-scale projects in the previous fiscal year
With the conclusion of the Windows 7 support period in January 2020, replacement demand for PCs increased
and sales agents’ initiative to focus on PC sales has lasted longer than initially expected.
Details of a project under negotiation were revised due to the GIGA School Concept, and its conclusion is now
expected to be delayed until the following fiscal year or later.

Lineup enhancement, price revision and new plan establishment of
DigitalArts＠Cloud





③

FinalCode@Cloud and Chat@Cloud were added to DigitalArts@Cloud lines. Actualizes a virus-free world thatallows users to not be conscious of security, even in cloud operations.
Prices were revised and new plans for “i-FILTER@Cloud Harmful sites Blocker Edition” and “m-FILTER@Cloud
Misdirected E-mail Prevention Edition” were established due to growing needs for cloud operations in terms ofcorporate security.
Projects to make corporate and public facilities use the cloud were extensively successful following “Cloud First”
endorsed by the government.

Sales of i-FILTER Browser & Cloud increasedIn the enterprise sector market, work style has diversified and there has been growing opportunities to use
terminals provided by companies including tablets or note PCs outside companies.

4

Copyright © 2020 Digital Arts Inc.

Supplementary Material on Consolidated Financial Results
for the Fiscal Year Ended March 31, 2020

Consolidated Results
Highlights

Copyright © 2020 Digital Arts Inc.

Consolidated Financial Highlights for the Fiscal Year Ended
March 31, 2020
Net Sales:
Consolidated
net salesOperatingprofitOrdinary
profitProfit attributable toowners of parent(-301 million yen／ -11.5% YoY)

2,326 million yen(-304 million yen／ -11.6% YoY)

Ordinary profit decreased due to a decrease in operating profit.

Profit:2,328 million yen

Operating profit declined due to a decrease in net sales.

Ordinary profit:

(-199 million yen／-3.4% YoY)

A drop in reaction to the winning of large-scale projects in the previous fiscal year
With the conclusion of the Windows 7 support period in January 2020, replacement
demand for PCs increased and sales agents’ initiative to focus on PC sales has lasted
longer than initially expected.
Details of a project under negotiation were revised due to the GIGA School Concept, andits conclusion is now expected to be delayed until the following fiscal year or later.

Operating profit:

5,641 million yen

1,590 million yen(-370 million yen／ -18.9% YoY)

Profit decreased due to a reaction to suppression effects on tax expenses associatedwith the liquidation of a U.S. subsidiary in the previous fiscal year.
6

Copyright © 2020 Digital Arts Inc.

Summary of Financial Results
for the Fiscal Year Ended March 31, 2020
Consolidated Results(Million yen)
FY March 2019

FY March 2020

Change YoY

FY March 2020
Full-Year Forecast

Net sales

5,841

5,641

-3.4%

5,500

Gross profit

4,781

4,280

-10.5%

4,100

Selling, general andadministrative
expenses

2,152

1,952

-9.3%

2,050

Operating profit

2,629

2,328

-11.5%

2,050

Operating margin

45.0%

41.3%

Ordinary profit

2,630

2,326

-11.6%

2,050

Profit attributable toowners of parent

1,961

1,590

-18.9%

1,430

ROE

28.1%

19.4%

―

―

Dividend per share¥48.00¥50.00―¥50.00

7

―

37.3%

Copyright © 2020 Digital Arts Inc.

Summary of Financial Results
for the Fiscal Year Ended March 31, 2020
Consolidated Results
 Net sales fell from the preceding fiscal year on a full-year basis. However, the coronavirus crisis had aminor impact and net sales were 141 million yen higher than forecasted.
 For the fourth quarter, net sales tumbled year on year as acquisition of a project in the public sector
market is now expected to be delayed to the following or later fiscal year due to the GIGA School Concept.
(Million yen)

Fourth Quarter
FY March 2019

Fourth Quarter
FY March 2020

Change YoY

Full YearFY March 2019

Full YearFY March 2020

Change YoY

Full-Year
Forecast
FY March 2020

Net sales

1,674

1,500

-10.4%

5,841

5,641

-3.4%

5,500

Gross profit

1,424

1,123

-21.1%

4,781

4,280

-10.5%

4,100

Selling, generaland administrative
expenses

469

443

-5.6%

2,152

1,952

-9.3%

2,050

Operating profit

954

679

-28.9%

2,629

2,328

-11.5%

2,050

Operatingmargin

57.0%

45.3%

ー

45.0%

41.3%

ー

37.3%

Ordinary profit

956

677

-29.1%

2,630

2,326

-11.6%

2,050

Profit attributableto owners ofparent542

461-14.9%

1,961

1,590

-18.9%

1,430

8

Copyright © 2020 Digital Arts Inc.

Trend in Consolidated Net Sales
 The long-term upward trend was maintained despite a year-on-year drop
under extraordinary circumstances.
5,841（114%）

5,058（126%）

5,116(Million yen)

5,641
（97%）

（101%）

4,000
3,402
2,707
2,190
（118%）

2,306（117%）

2,906（107%）

3,027（118%）（112%）（104%）（105%）FY Mar. 2010 FY Mar. 2011 FY Mar. 2012 FY Mar. 2013 FY Mar. 2014 FY Mar. 2015 FY Mar. 2016 FY Mar. 2017 FY Mar. 2018 FY Mar. 2019 FY Mar. 2020

* Percentage figures represent comparisons with the preceding year.

9

Copyright © 2020 Digital Arts Inc.

Quarterly Trend in Consolidated Net Sales
 For the first quarter, the figure rose year on year. For subsequent quarters, sales agents were sobusy responding to increased computer demand that they could not focus their efforts on thesales of our products. As a result, the figure dropped.
 The decline for the fourth quarter is due to the impact of the GIGA School Concept.
1,565

1,540

1,503

（102%）（123%）（133%）

1,309
1,158

1,098

（118%）

1,402

（98%）

1,249

1,217

1,500
1,376 （90%）（98%）（103%）（105%）

1,083

1,514

（107%）（130%）（87%）（126%）（135%）

1,674

1,546

(Million yen)

（99%）

916
（114%）

1Q

2Q

3Q

FY March 2017

4Q

1Q

2Q

3Q

4Q

1Q

FY March 2018

2Q

3Q

FY March 2019

4Q

1Q

2Q

3Q

4Q

FY March 2020
Current Fiscal Year

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

10

Copyright © 2020 Digital Arts Inc.

Cost of Sales and Selling, General and Administrative Expenses
 As part of the cost of sales, labor costs increased after a rise in consultants at domestic subsidiaries.
 An increase in software depreciation resulting from the end of the new development of cloud
products.
 With regard to SG&A expenses, profitability improved after the Group’s reorganization following therevision to the overseas strategy in the previous fiscal year.
(Million yen)
Fourth Quarter
FY March 2019

Fourth Quarter
FY March 2020

Change YoY

Full YearFY March 2019

Full YearFY March 2020

Change YoY

250

377

+127

1,059

1,361

+302

Labor

98

145

+46

421

536

+114

Depreciation

77

129

+52

343

476

+133

Transfer to other accounts
Other manufacturing costs

74

102

+28

294

348

+54

469

443

-26

2,152

1,952

-200

Personnel expenses

243

210

-33

1,034

984

-49

Advertising expenses

57

43

-14

290

207

-83

Other

168

190

+21

828

760

-67

Cost of sales

Selling, general andadministrative expenses

11

Copyright © 2020 Digital Arts Inc.

Quarterly Trend in Cost of Sales
 Labor cost soared after an increase in consultants at domestic subsidiaries.
 Software depreciation increased with the end of the new development of cloud products.
(Million yen)

377

Labor

343

Depreciation
Transfer to other accounts and others

306
240

256

244

（113%）（110%）（114%）

65

72

71

72

（100%）

65

68

69

103

112

106

1Q

2Q

3Q

FY March 2017

232

235

（97%）

（92%）

66

62

68

4Q

79

301

（125%）

236

90

75

69

98

102

1Q

2Q

（101%）

93

90

（92%）

76

121

120

3Q

4Q

1Q

FY March 2018

250
（83%）

2Q

102

82

87

123

126

137

136

145

2Q

3Q

4Q

73
129

97

95

92

（99%）

74

77

77

131

286

282

289

66
94

78

121

（145%） （124%）（125%） （114%）

265

352

（151%）

110

98

3Q

4Q

FY March 2019

116

1Q

FY March 2020
Current Fiscal Year

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

12

Copyright © 2020 Digital Arts Inc.

Quarterly Trend in Selling, General and Administrative Expenses
 Domestic expenses stayed almost flat while overseas expenses contracted significantly after theGroup’s reorganization following the revision to the overseas strategy in the previous fiscal year.
(Million yen)

Personnel expenses

576（113%）

71

Advertising expenses

596

556

（102%）（114%）

68

498

88

83

176

569

（99%）

53

（103%）

59

163
56

51

257

243

1Q

2Q

3Q

FY March 2017

（92%）

285

4Q

533

94

526

（107%） （88%）

67

568
69

482

（90%）

42

190
201

548

（112%）

60

182

154

241

509
69

166

632

Overseas expenses（111%）

49
180

Other

200

194
109

89

59

469

（87%）
13

（89%）

25

164

156

46

57

487
（85%）
12

473

（98%）

（94%）

211
167

70

46

179

40

40

243

229

224

230

237

240

228

230

253

262

246

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

FY March 2019

190

47

46

FY March 2018

443

43

210

4Q

FY March 2020
Current Fiscal Year

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

13

Copyright © 2020 Digital Arts Inc.

Summary of Financial Results
for the Fiscal Year Ended March 31, 2020
Consolidated Balance Sheet The equity ratio of 79.7% shows that strong financial health was maintained.
 With high figures in ROE and ROA, capital efficiency was high.
As of end of FY
March 2020

(Million yen)

As of end of FY March 2019

As of end of 3Q FY March 2020

ActualActual% Change% Change

8,733

7,729

+13.0%

7,973

+9.5%

7,651

6,169

+24.0%

6,874+11.3%

2,118

2,129

-0.5%

2,113

+0.3%

10,852

9,859+10.1%

10,086

+7.6%

2,125

2,010

+5.7%

1,830

+16.1%

46

46

+0.9%

46

+0.2%

Equity capital

8,652

7,761

+11.5%

8,181

+5.8%

Equity ratio

79.7%

78.7%

Share acquisition rights

18

23-23.5%

18-0.9%

Non-controlling interests

918-45.7%

9

+5.7%

ROE

19.4%

28.1%

―

14.1%

―

ROA

15.4%

22.1%

―

11.3%

―

Current assets
Cash and deposits

Non-current assets
Total assets
Current liabilities
Non-current liabilities

14

―

81.1%

―

Copyright © 2020 Digital Arts Inc.

Summary of Financial Results
for the Fiscal Year Ended March 31, 2020
Consolidated Cash Flows and Financial Health After enhanced management efficiency and management emphasizing financial health, cash flows forthe fiscal year under review grew to 2,000 million yen. Cash and cash equivalents increased to 7,600
million yen.
 While operating expenses of approximately 3,300 million yen were incurred annually, the amount oforders for renewals (with a renewal rate of 90%) reached around 3,000 million yen in the year. Stable
management can be maintained even if a prolonged coronavirus impact pushes the amount of neworders received to a low level.
(Million yen)
FY March 2019

FY March 2020

ChangeFactors for Change

3,091

2,686

-405

Cash flows from investing
activities

-908

111

+1,019Cash flows from financing
activities

-429

-709

-279

-2

-5

-3

Change

1,751

2,082

+331

At beginning of period

3,826

5,569

+1,742

-8

-

+8

5,569

7,651

+2,082

Cash and cash equivalents

Cash flows from operating
activities

Effect of exchange rate change

Change resulting from change inthe scope of consolidation
At end of period

15

Decrease in sales
Transfer from a term deposit to asettlement deposit andgovernment bond redemption
Purchase of treasury shares

Copyright © 2020 Digital Arts Inc.

Supplementary Material on Consolidated Financial Results
for the Fiscal Year Ended March 31, 2020

By Market

Copyright © 2020 Digital Arts Inc.

Summary of Net Sales by Market

 In the enterprise sector market, net sales surged 4.8% due to strong sales of i-FILTER Browser & Cloudand growth of domestic subsidiaries.
 In the public sector market, net sales decreased 12.8% due to a decline in reaction to winning of large
projects in the previous fiscal year.
 In the consumer sector market, net sales decreased 13.6% due to a reduction in offer price to carriers
despite the progress of filtering installation for minors.

Consolidated
net sales

Net Sales: 5,641 million yen(-199 million yen／-3.4% YoY)Enterprise
SectorNet Sales: 3,284 million yen(+151 million yen／+4.8% YoY)

Public Sector

Net Sales: 1,911 million yen(-280 million yen／-12.8% YoY)

Consumer
SectorNet Sales:

445 million yen
17(-70 million yen／-13.6% YoY)

Copyright © 2020 Digital Arts Inc.

Trend in Net Sales by MarketNet sales in the enterprise sector market increased due to strong sales of thei-FILTER series and growth of domestic subsidiaries.
Net sales in the public sector market decreased due to the decrease inreaction to the winning of large projects in the previous fiscal year.
5,841（114%）Net sales in the consumer sector market decreased due to a reduction inoffer price to carriers
5,116
516
5,058

Enterprise Sector

Public Sector

Consumer Sector（126%）（101%）

359

375(Million yen)

5,641
（97%）

445

4,000
（118%）

3,402
2,707
2,190
（118%）

290
886

1,013

FY Mar. 2010

2,306
（105%）

260（117%）

280
997

2,906
（107%）

318

3,027（104%）

342（112%）2,125

FY Mar. 2011

1,911

3,133

3,284

1,732

362
1,418

361
1,140

1,152

1,028

840

1,205

2,191

1,429

1,436

FY Mar. 2012

FY Mar. 2013

1,637

FY Mar. 2014

1,899

FY Mar. 2015

2,240

FY Mar. 2016

2,573

FY Mar. 2017

3,009

FY Mar. 2018

FY Mar. 2019

FY Mar. 2020

* Percentage figures represent comparisons with the preceding year.

18

Copyright © 2020 Digital Arts Inc.

Quarterly Trend in Net Sales by Market(Million yen)Enterprise Sector

Public Sector

1,565

1,540

1,503

105

84

（87%）

1,098

（135%）

916（114%）

799

89

80

1,158

602

（126%）

86

497
424

427

115

1,217

1,083

484

（99%）

92

（118%）

103

1,309（107%）

1,546（102%）（123%）（133%）

1,674

Consumer Sector

92（130%）

141（105%）

120

1,402

536

1,500

（98%）

1,249

114

699

1,376

（98%）

（90%）

100

90

（103%）

140
546

587

426
515

383

408

324

1,514

139

296

833
530

1Q

619

590

2Q

3Q

FY March 2017

640

4Q

998

977

1Q

726

2Q

665

3Q

4Q

688

731

715

1Q

2Q

3Q

FY March 2018

FY March 2019

725

4Q

1Q

975

813

770

2Q

3Q

4Q

FY March 2020
Current Fiscal Year

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

19

Copyright © 2020 Digital Arts Inc.

Supplementary Material on Consolidated Financial Results
for the Fiscal Year Ended March 31, 2020

Enterprise Sector

Copyright © 2020 Digital Arts Inc.

Enterprise Sector

 Sales of i-FILTER Browser & Cloud, which enables administrators to control access to
websites irrespective of location, continued to expand, reflecting a rise in the number ofpeople who use company-provided tablets, notebooks or other devices on their assignmentson the go against the backdrop of diversifying workstyles.
 Sales of m-FILTER declined due to a decrease in reaction to the winning of large projects inthe previous fiscal year.

SeriesSeries

104.9% of the year-ago figure.

91.0% of the year-ago figure.

97.5% of the year-ago figure.
21

Copyright © 2020 Digital Arts Inc.

Supplementary Material on Consolidated Financial Results
for the Fiscal Year Ended March 31, 2020

Public Sector

Copyright © 2020 Digital Arts Inc.

Public Sector
 Overall sales decreased due to the decrease of orders for projects with large monetary
value that contributed to sales in the previous fiscal year.
 Details of a project under negotiation were revised due to the GIGA School Concept, and its
conclusion is now expected to be delayed until the following fiscal year or later.
 Because of the progress of ICT, changes are taking place in the field of education, andefforts are underway to establish an environment in which one or a small number ofstudents can use one tablet. Reflecting this, sales expanded for i-FILTER Browser & Cloud.

SeriesSeries

88.2% of the year-ago figure.

82.6% of the year-ago figure.

101.0% of the year-ago figure.
23

Copyright © 2020 Digital Arts Inc.

Supplementary Material on Consolidated Financial Results
for the Fiscal Year Ended March 31, 2020

Consumer Sector

Copyright © 2020 Digital Arts Inc.

Consumer Sector

 The number of minors who use smartphones increased and stricter laws on
Internet usage by young people were enacted. As a result, filtering use
increased. Meanwhile, net sales decreased due to the reduction of offer price tocarriers associated with free services to end users by carriers.
 Sales of multiple-year package products and i-FILTER for Multi-Device, which
can be available on multiple terminals, were sluggish.

For mobile terminals
Other

82.6% of the year-ago figure.

For computers

91.9% of the year-ago figure.

25

Copyright © 2020 Digital Arts Inc.

Supplementary Material on Consolidated Financial Results
for the Fiscal Year Ended March 31, 2020

Full-Year Financial Forecast
for the Fiscal Year Ending
March 31, 2021

Copyright © 2020 Digital Arts Inc.

Full-Year Financial Forecast for the Fiscal YearEnding March 31, 2021
Consolidated Financial Forecast For FY March 2021
 We will endeavor to attain organic growth in the enterprise sector market and to win
orders for GIGA School projects in the public sector market as we aim for substantial
growth.
(Million yen)

Results for
FY March 2020

Plan forFY March 2021

% Change

Net sales

5,641

7,500

+32.9 %

Gross profit

4,280

5,650

+32.0 %

Selling, general andadministrative expenses

1,952

2,100

+7.6 %

Operating profit

2,328

3,550

+52.5 %

Ordinary profit

2,326

3,550

+52.6 %

Profit attributable to owners ofparent

1,590

2,450

+54.0 %

Dividend per share¥50.00¥55.0027―
Copyright © 2020 Digital Arts Inc.

Full-Year Financial Forecast for the Fiscal YearEnding March 31, 2021
Full-Year Consolidated Net Sales Forecast by Market

Consolidated

Net Sales: 7,500 million yen(+1,858 million yen／+32.9% YoY)Enterprise
SectorNet Sales: 3,800 million yen(+515 million yen／+15.7% YoY)

Public Sector

Net Sales: 3,200 million yen(+1,288 million yen／+67.4% YoY )Consumer
SectorNet Sales:

500 million yen(+54 million yen／+12.2% YoY

net sales

28)

Copyright © 2020 Digital Arts Inc.

Full-Year Financial Forecast for the Fiscal YearEnding March 31, 2021
Non-Consolidated Financial Forecast for the Fiscal Year Ending March 31, 2021

(Million yen)

Results for
FY March 2020

Plan forFY March 2021

% Change

Net sales

5,336

7,000

+31.2 %

Gross profit

4,238

5,550

+30.9 %

Selling, general andadministrative expenses

1,881

2,050

+9.0 %

Operating profit

2,357

3,500

+48.5 %

Ordinary profit

2,359

3,500

+48.4 %

Profit

1,613

2,420

+50.0 %

29

Copyright © 2020 Digital Arts Inc.

Cost of Sales and Selling, General and Administrative
Expenses for the Fiscal Year Ending March 31, 2021
 Cost of sales is projected to rise 35.9% to 1,850 million yen, in anticipation of growth in labor costs
after increases in engineers and consultants and soaring expenses for cloud servers following an
increase in the sales of cloud products at domestic subsidiaries.
 SG&A expenses are expected to increase by 7.5% to 2,100 million yen.
(Million yen)

Results for
FY March 2020

Plan forFY March 2021

% Change

Change YoY

1,361

1,850

+35.9%

+488

Labor

536

720

+34.4%+184

Depreciation

476

534

+12.1%+57

Transfer to other accounts
Other manufacturing costs

348

595

+70.7%

+246

1,952

2,100

+7.5%

+147

Personnel expenses

984

1,069

+8.6%

+84

Advertising expenses

207

203

-2.0%

-4

Other

760

827

+8.9%

+67

Cost of sales

Selling, general andadministrative expenses

30

Copyright © 2020 Digital Arts Inc.

Return to Shareholders for Fiscal YearEnding March 31, 2021

■Dividends
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, 2021: 31.5%(of consolidated net profit)
Annual dividends of surplus forecasted for fiscal year ending March 31,
2021: 55.00 yen per share

Dividend (in yen) per share
InterimYear-end

Total

Consolidated
payout ratio

FY March 2020

25.00

25.00

50.00

44.0%

FY March 2021 (forecast)

25.00

30.00

55.00

31.5%

31

Copyright © 2020 Digital Arts Inc.

Supplementary Material on Consolidated Financial Results
for the Fiscal Year Ended March 31, 2020

FY03/21 Initiatives

Copyright © 2020 Digital Arts Inc.

Initiatives in the Fiscal Year Ending March 31, 2021

Enterprise Sector

Copyright © 2020 Digital Arts Inc.

Initiatives in the Fiscal Year Ending March 31, 2021
Enterprise SectorThe Company commenced remote working as a measure against COVID-19 coronavirus infection. At the beginning,
we had concerns about the risk of decline in operational efficiency. However, online seminars meant freedom fromgeographical constraints and led to an increase in customers. In addition, we have established digital sales approaches,such as online sales activities using Chat@Cloud and efficient sales approaches using electronic catalogs.
For the fiscal year ending March 31, 2021, net sales are forecasted at 3,800 million yen, in comparison with the actual
net sales of 3,200 million yen for the fiscal year ended March 31, 2020.

External
environment

Sophistication of targeted
attacks
New varieties of malware(Emotet)Website falsification

Due to the COVID-19 coronavirus
pandemic, teleworking rapidly
became widespread and the shift ofsecurity products to the cloud
speed up.

Due to the COVID-19 coronavirus
pandemic, teleworking rapidly became
widespread and demand mounted foronline tools for business activities
without lowering operational efficiency.

Actions

Enhance the brand image ofthe use of a whitelist
The use of a whitelist alreadyhas an ample track record.
Make its utility widely known.

Expand sales of DigitalArts@Cloud
Provide a secure and reassuring
environment based on the use of awhitelist with i-FILTER and m-FILTER
on cloud platforms.

Carry out full-scale promotion of Chat@Cloudas a business tool supporting online
conferencing with video chat as well as textchat.

Expand sales of Chat@Cloud

Reorganize the sales team and establish effective and efficient sales methods
Reorganize the sales team into several teams dedicated to individual sales agents to build closer ties with sales agents.
Carry out efficient sales activities using Chat@Cloud.
Conduct effective sales activities using electronic catalogs.
Actively organize online seminars to efficiently advertise product value.

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Copyright © 2020 Digital Arts Inc.

Initiatives in the Fiscal Year Ending March 31, 2021

Public Sector

Copyright © 2020 Digital Arts Inc.

Initiatives in the Fiscal Year Ending March 31, 2021
Public Sector
 The GIGA School Concept envisions the integrated development of an environment with one learning terminalfor each school-aged child and with a high-speed, high-capacity communication network. We will continue toexpand our market share from the current level of 60%.
 Sales are projected at 3,200 million yen for the fiscal year ending March 31, 2021, while actual sales for the
fiscal year ended March 31, 2020 reached 1,900 million yen.
External environment

Acceleration of the GIGA School Concept
In addition to the supplementary budget proposal worth 231.8 billion yen approved by the Cabinet in December
2019 for the GIGA School Concept, another supplementary budget proposal with a total amount of 229.2 billion yen
was approved by the Cabinet in April 2020 to accelerate the Concept. It is urgent to swiftly provide each schoolaged child with one terminal to quickly construct an environment that ensures children’s learning through the use of
ICT, even in a state of emergency.
=> To realize an environment with one terminal per person, a policy for supplying approximately 7.5 million tablets toschool-aged children has been presented. Accordingly, a demand for new web filtering software worth around 19.0
billion yen, estimated from subscription fees for five years based on our unit sales price, is anticipated.

Actions

GIGA School Concept support campaign

Reorganize thesales teamRun a campaign offering an extensive array of the i-FILTER
series products at special prices and providing services
matched with the standard specifications that conform to the
Guidelines on Education Information Security Policy free ofcharge.

-> Aiming to retain and expand our current market
share of around 60% among the 1,741 boards ofeducation across the country.
The financial forecast takes into account negative
impacts of the COVID-19 coronavirus pandemic on
supply, distribution, installation and other actions
related to tablets.
36

Reorganize the sales
team into several teams
dedicated to individual
sales agents to build
closer ties with sales
agents.

Digital sales activities
Carry out efficient sales
activities using Chat@Cloud.
Conduct effective sales
activities using electronic
catalogs.
Actively organize online
seminars to efficiently
advertise product value.

Copyright © 2020 Digital Arts Inc.

Initiatives in the Fiscal Year Ending March 31, 2021

Consumer Sector

Copyright © 2020 Digital Arts Inc.

Initiatives in the Fiscal Year Ending March 31, 2021
Consumer Sector
 Due to school closures amid the COVID-19 coronavirus pandemic, an increasing number of schoolaged children do online home learning. The number of online terminals in households with thesechildren is trending upward.
 Sales for the fiscal year ending March 31, 2021 are forecasted at 500 million yen, in comparison
with sales of 400 million yen for the fiscal year ended March 31, 2020.

External environment

Due to school closures amid
the COVID-19 coronavirus
pandemic, online homelearning is practiced at anincreasing number ofhouseholds.

Actions

Continue activities to raise awareness by providing visiting workshops on information literacy andlectures for parents, guardians, education professionals and young people.
Offer educational materials free of charge that help users acquire correct knowledge about dangers
on the Internet and how to use filtering.

In response to an increase incases of young people involved incrimes due to social media,
legislation tightened around theobligation to introduce filtering
products on smartphones.

38

Following the rise of lowpriced smartphones, thenumber of smartphones
owned by young people
increased.

Copyright © 2020 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 toconsiderable 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
the nearest million yen.

•

Active Directory, Azure, Excel, Exchange Online, Exchange Server, Internet Explorer, Microsoft, Microsoft Edge, Office 365, Outlook,
PowerPoint, Windows, Windows Server, and Word are registered trademarks or trademarks of Microsoft Corporation in the United States
and/or other countries. Android, Gmail, Google Chrome, and G Suite are registered trademarks or trademarks of Google LLC. iOS is the nameof an operating system of Apple Inc. IOS is a trademark or registered trademark of Cisco Systems, Inc. Mac and Safari are trademarks ofApple Inc., registered in the United States and other countries. デジタルアーツ, DIGITAL ARTS, i-FILTER, info board, ARS, Active Rating
System, ACTIVE RATING, ZBRAIN, D-SPA, SP-Cache, NET FILTER, White Web, m-FILTER, m-FILTER MailFilter, m-FILTER Archive, mFILTER Anti-Spam, m-FILTER File Scan, Mail Detox, FinalCode, DigitalArts@Cloud, Chat@Cloud, D-Alert, D-Content, and logos and icons
related to Digital Arts Inc. and its products are trademarks or registered trademarks of Digital Arts Inc.

•

Other company, product and service names and logos included in this document are trademarks or registered trademarks of their respective
companies.

39

Copyright © 2020 Digital Arts Inc.

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