Consolidated Financial Results for the First Three
Quarters of the Fiscal Year Ending March 31, 2022
(From April 1, 2021 to December 31, 2021)

Financial Results Briefing Materials
January 31, 2022

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.

Material on Consolidated Financial Results for the First
Three Quarters of the Fiscal Year Ending March 31, 2022

Consolidated Results
Highlights

3

Copyright © Digital Arts Inc.

Key Points
Business has grown steadily, with the acquisition of projects due tothe rapid spread of teleworking in the enterprise sector market, and
GIGA school projects and local government projects in the public
sector market.

(1) Record high in consolidated net sales for the first three quarters

6,686 million yen (up 40.7% year on year).
(2) Record high in consolidated operating profit for the first three quarters ever

3,024 million yen (up 53.3% year on year).

4

Copyright © Digital Arts Inc.

Consolidated Results Highlights•

Contracts

6,465 million yen

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.

(down △1,096 million yen or △14.5% • Orders increased in the public sector market, withstrong orders from public agencies and local
year on year).

governments, excluding projects related to the GIGA
School Concept.

Net sales

6,686 million yen(up +1,935 million yen or + 40.7%
year on year).

•

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.

•In the public sector market, substantial increase dueto the recording of sales from GIGA School Concept
projects and orders for public agency and local
governments projects.

• In cost of goods, server expenses increased
due to growth in cloud service users

Operatingprofit

3,024 million yen • SG&A expenses increased mainly due to(up + 1,051 million yen or + 53.3%
year on year).

5

online events held for partners and press
advertising. The amount of First-half bonuses
to be paid increased.

Copyright © Digital Arts Inc.

Consolidated Results Summary (First Three
Quarters of the Year)(Million yen)First 3 Quarters
FY March 2021

First 3 Quarters
FY March 2022

Change YoY

FY March 2022
Full-Year
Forecast

Progress
Vs Fullyear
Forecast

Contracts

7,562

6,465

△14.5%-Net sales

4,750

6,686

+40.7%

9,000

74.3%

Cost of goods sold

1,362

1,940

+42.4%

2,700

71.9%

Gross profit

3,388

4,746

+40.1%

6,300

75.3%

Selling, general andadministrative
expenses

1,414

1,721

+21.7%

2,300

74.9%

Operating profit

1,973

3,024

+53.3%

4,000

75.6%

Operating margin

41.5%

45.2%

ー

44.4％

ー

Ordinary profit

1,982

3,027

+52.7%

4,000

75.7%

Profit attributable toowners of parent

1,363

2,081

+52.7%

2,770

75.1%

EBITDA

2,660

3,736

+40.4%-* Financial Forecast is the consolidated financial forecast announced on October 29, 2021.
* EBITDA = Operating profit + Depreciation + Tax expenses included in operating expenses
6

Copyright © Digital Arts Inc.

Trend in Consolidated Contracts
Consolidated contracts increased steadily, excluding the impact of the GIGA School
Concept.

Trend in Contracts(Million yen)

License sales products/Others
Cloud service products

7,562

•

Consolidated contracts totaled 6,465 million
yen, down 14.5% year on year. Steadyprogress continued, excluding the impact ofprojects from the GIGA School Conceptcarried on from the previous year. (For details,
see page 8.)•

The contract term for GIGA School Concept
projects covers several years, and many
contracts are to be renewed in three to five
years. (For details, see page 11.)•For the period under review, GIGA School
Concept projects, in which cloud service
products had constituted a large majority,
decreased and shifted to projects from publicagencies and local governments with license
sales products. Accordingly, the cloud ratio
contracted.

△14.5%

6,465
50.7％

3,830

△51.3%

49.3％

3,731

+23.3%FY Mar.
2021 3QFYFirst
3 Quarters
March 2021

1,864

4,601

28.8％

71.2％

FY Mar.
2022 3QFYFirst
3 Quarters
March 2022
7

Copyright © Digital Arts Inc.

Trend in Consolidated Contracts
Brisk contract amount excluding the impacts of GIGA School Concept projects
Trend in Contracts

Tren
d in
7,562
Cons
olida
3,438
ted ▲70.2%
Contracts＋12.7%

License sales
products/Others

Cloud service
products(Million yen)•Contract amount rose considerably by 32%
or 1,317 million yen year on year from 4,124
million yen to 5,441 million yen in the public
sector market, excluding the impact of GIGA
School Concept projects (3,438 million yen
in previous year and to 1,024 million year in
the year under review).

•

In the enterprise sector market, contract
amount grew with excellent sales of iFILTER and m-FILTER for businesses as aresult of online seminars and otherpromotional measures and with newcustomers captured for DAC.

•

Contract amount for i-FILTER and mFILTER jumped hugely following a steadygain of projects from public agencies andlocal governments in the public sector
market.

GIGA School Concept
projects

6,465
1,024

938

832

4,124

3,292

+36.8%First2021年3月期
3 Quarters FY
March
2021
３Q累計

4,503

5,441

2022年3月期
First
3 Quarters FY
March
2022
３Q累計
8

Copyright © Digital Arts Inc.

Trend in Order Backlog
The order backlog grew to 6,190 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 quarters (4Q)

6,190

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. (See4,616

Supplement on p.10.11.)•+31.9%

Since the contracts for cloud service products
are renewable at fixed prices (whereas the5,363

renewal price for license sales products is half

4,067

the contract price for the first year), thisrecurring revenue business model createsa stable profit base.

549+50.6%End of 3Q FY March 2021

827

End of 3Q FY March 2022
9

Copyright © Digital Arts Inc.

Supplement）Method of recording sales by productContract period (n months)＋1 month

Contracts

Equivalent tomaintenance fee
Equivalent tolicense fee

Licensesales
products

Orderbacklog•

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

10

・・・

Y+n-1
month

Y+n
monthsCopyright © Digital Arts Inc.

Supplement) Relationship between contract amountand sales by product
Many projects in the public sector market are multi-year contracts, such as five-year
contracts. License sales products and cloud service products both earn from contract
renewals.
The diagrams on the left show the relationships
between the contract amount and sales in license

Licenseproducts
Licensesales
sales
products

sales products and cloud service products on the

Cloudservice
serviceproducts
Cloud
products
Trend in Contracts

500

assumption of a five-year contract with an amount of
250

250

11

500 million yen.
•

In a multi-year contract for cloud service
products, there is a large gap between the

500

500

500

contract amount and sales. The orderbacklog is high.

Year
X年 X
X年

Year
X+1年
X+4
… Year
…
X+1年
X+4年
X+1
X+4
年

Year
X+5年
X+5年
X+5

Year
Year
X+9年
X+6年
… X+9年
X+6年
X+9
X+6

Year
X+10年
X+10年
X+10

Change in Net Sales•

For license sales products, a high percentage
of sales is recorded at the time of contract

460

conclusion. The amount of contract renewal
210

100
Year X

10 … 10
100
100
Year
X+1

…

Year
X+4

210

is half the amount of the initial contract. Thatmeans a small gap between the contract100

10 … 10
100
100

100

amount and sales and a very limited order

Year
X+5

Year
X+6

Year
X+9

Year
X+10

backlog.

…

11

Copyright © Digital Arts Inc.

Quarterly Trend in Net sales, Operating profit(Million yen)

For the third quarter, net sales and operating profit hit record
highs, reflecting strength in the enterprise sector market and in
the public sector market.
1Q

2Q

3Q

6,686

2,134

4,750
4,166

4,141
1,649

3,551
1,402

1,376

2,632

1,083

1,546

1,309

1,164

1,674

1,514

1,648

638

551

740

683

1,687

1,158

565

1,217

356
Net sales

OperatingprofitFY March 2018

1,249

Net sales

OperatingprofitFY March 2019

1,413

Net sales

OperatingprofitFY March 2020

12

1,973

825

1,348
1,919
731

485

413

295

945

663

242

Net sales

OperatingprofitFY March 2021

3,024

Net sales

OperatingprofitFY March 2022
Copyright © Digital Arts Inc.

Consolidated Cost of Goods Sold and Selling, General and
Administrative Expenses(Million yen)First 3 Quarters
FY March 2021

First 3 Quarters
FY March 2022

ChangeYoY

Main Factors for Change

1,362

1,940

+577

Labor

842

1,090

+248

Depreciation

604

627

+23

Communication
expenses

139

495

+356

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

Other

373

494

+121

Outsourcing expenses soared after DAC
obtained more orders.

Transfer to otheraccounts

△597

△768

△170

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

Selling, general andadministrative expenses

1,414

1,721

+306

Personnel expenses

792

1,032

+240

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

Advertising expenses

111

169

+57

Increase due to online events held for partners
and press advertising.

Other

510

519

+8

Cost of goods sold

13

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
Following the sales hike, full-year bonuses to be paid are expected to reach theupper limit. For the first half, the bonuses paid surged massively while the bonuses
to be paid for the third quarter dropped.
(Million yen)

Cloud server expenses grew as a result of sales expansion of cloud service products.

946

Transfer to other
他勘定振替高accounts

売上原価
Cost of goods sold

その他
Other

Communication
通信費
expenses

減価償却費
Depreciation

労務費
Labor

839
793
723
144

482

548

526

29 196

29

286

114

108
183

26

195

32

189

36

183

197

212

216

221

1Q

2Q

3Q

4Q

FY March 2020

175

210

94

166
321

225

158

124
208

47

206

214

204

202

486

447

262

254

1Q

2Q

14

427

324

349

332

3Q

4Q

1Q

FY March 2021

701

624

613

584
427

220

213

63

198

377

353

343

138
237

198

198

622
119

203
192

165

609
108

93
91

565

177

151

921

330

2Q

3Q

FY March 2022

Copyright © Digital Arts Inc.

Quarterly Trend in Consolidated Selling, General and
Administrative Expenses
Following the sales hike, full-year bonuses to be paid are expected to reach the upper limit. For the first
half, the bonuses paid surged massively while the bonuses to be paid for the third quarter dropped.
Advertising expenses increased due to online events held for partners and ads placed on newspapers.
(Million yen)
Personnel
人件費
expenses

Advertising
広告宣伝費
expenses

その他
Other

Overseas
海外費用
expenses

660

574

548
13

487
12

473

501

167

414
195

179
190

70

46

161

262

246

1Q

2Q

3Q

FY March 2020

210

4Q

272

1Q

59
159

166
59

44

51

58
34

43

253

153

32

47

487

485
191

443

211

499

169

432
301

218

2Q

3Q

FY March 2021

15

262

4Q

323

1Q

277

2Q

3Q

FY March 2022

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 health has
improved further.
Change(Million yen)

As of end of 3Q FYMarch 2021

As of end of FY
March 2021

As of end of 3Q FYMarch 2022

from end of
FY March
2021

Current assets

9,810

12,725

15,959+25.4%(Cash and deposits)

8,597

11,382

14,255+25.2%

Non-current assets

2,095

2,130

2,274

+6.8%

Total assets

11,906

14,856

18,233+22.7%

Current liabilities

2,498

4,743

6,857

+44.6%(Advanced received)

1,609

3,370

5,644

+67.4%

Non-current liabilities

49

50

50

+0.1%

Equity capital

9,336

10,041

11,297+12.5%Net assets

9,358

10,062

11,325+12.6%

Equity ratio

78.4%

67.6%

62.0%

-

ROE

15.2%

22.0%

19.5%

-

ROA

12.0%

16.0%

12.6%

-

16

Copyright © Digital Arts Inc.

Material on Consolidated Financial Results for the First
Three Quarters of the Fiscal Year Ending March 31, 2022

Non-consolidated Results
Highlights

17

Copyright © Digital Arts Inc.

Summary of Non-consolidated Results(First Three Quarters)(Million yen)First 3 Quarters
FY March 2021

First 3 Quarters
FY March 2022

Change YoY

FY March 2022
Full-Year
Forecast

Full year
Achievement rate

Contracts

7,005

5,706

△18.5%-Net sales

4,219

5,928

+40.5%

7,850

75.5%

918

1,312

+42.9%

1,800

72.9%

Gross profit

3,301

4,615

+39.8%

6,050

76.3%

Selling, general andadministrative expenses

1,366

1,635

＋19.6%

2,150

76.1%

Operating profit

1,934

2,980

+54.1%

3,900

76.4%

Operating margin

45.8％

50.3％

49.7%

-

Ordinary profit

1,946

2,986

+53.4%

3,900

76.6%

Profit

1,348

2,063

+53.0%

2,690

76.7%

Cost of goods sold-

* Financial Forecast is the non- consolidated financial forecast announced on October 29, 2021.
18

Copyright © Digital Arts Inc.

Material on Consolidated Financial Results for the First
Three Quarters of the Fiscal Year Ending March 31, 2022

By Market

19

Copyright © Digital Arts Inc.

Consolidated Contract Amount by Market(Million yen)

7,562

•

321

6,465

contract amount was up 449 million yen,

+4.4% (△14.5%)
335

In the enterprise sector market, theor 16.2%, given an increase in orders

Consumerreceived for the i-FILTER and m-FILTER
series and the expansion of DAC as a

4,472
△34.9%

2,913

result of the growth of teleworking.

Public•In the public sector market, the contract
amount was down 1,559 million yen, or
34.9%, due to the impacts of GIGA

2,768

+16.2%

3,217

Enterprise

School Concept projects (3,438 million
yen in previous year and 1,024 million
yen in current year) despite more orders
received from public agencies and local

First
3 Quarters
FY
Mar.2021
3Q
FY March 2021

governments than expected.

First
3 Quarters
FY
Mar.2022
3Q
FY March 2022

20

Copyright © Digital Arts Inc.

Consolidated Net sales by Market(Million yen)

6,686(+40.7%)327•

sales were up 528 million yen, orConsumer

18.8%, due to an increase in orders

+1.4%

4,750
323

In the enterprise sector market, net

received for the i-FILTER and m-FILTER
3,026

Publicseries as a result of an increase in+86.4%

telecommuting and the growth of DAC.

1,623

•

In the public sector market, net sales
were up 1,403 million yen, or 86.4%,

Enterprise+18.8%

2,804

orders received from public agencies
and local governments exceeded the3,332

forecast level, in addition to posted
sales of GIGA School Concept projects
that lasted from the previous fiscal year.

FY
Mar.2021
3Q
First
3 Quarters
FY March 2021

FY Mar.2022
First
3 Quarters
FY March
3Q 2022
21

Copyright © Digital Arts Inc.

Trend in Consolidated Net Sales by Market
Record sales for three quarters were achieved in both the enterprise
sector and public sector markets thanks to the increase in teleworking
and advances in ICT education in schools.

(Million yen)
6,686

327 Consumer

4,750

3,518

3,551

254

271

2,747

1,888

1,975

206

223

758

769

923

982

2,124

266
750

1,108

2,325

265

248

1,523

1,247

4,166

4,141

377

345

1,655

1486

1,014

1,483

1,740

2,031

3,026 Public

1,623

826

1,233

323

2,134

2309

2,804

3,332

EnterpriseFY 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 FY Mar 2021 FY Mar 2022
3Q
3Q
3Q
3Q
3Q
3Q
3Q
3Q
3Q
3Q
3Q

22

Copyright © Digital Arts Inc.

Quarterly Trend in Consolidated Net Sales by Market
Net sales for the three quarters reached a record high, bolstered by strong
performances in the enterprise sector and public sector markets.
2,633(Million yen)

115
2,313
2,133

2,074

109
1,687
1,514

1,249

Consumer 140
PublicEnterprise

114

1,500
1,376

100

90
587

1,413

115

426

104

113

1,649

103

98

1,919

1,313

785

974
738

597

574

451

515

383

725

1Q

813

770

2Q

3Q

FY March 2020

975

4Q

847

1Q

985

971

2Q

3Q

FY March 2021
23

1,179

4Q

1,067

1Q

1,204

2Q

1,060

3Q

FY March 2022

4Q
(Plan)

Copyright © Digital Arts Inc.

Material on Consolidated Financial Results for the First
Three Quarters of the Fiscal Year Ending March 31, 2022

Enterprise Sector

24

Copyright © Digital Arts Inc.

Net Sales in Enterprise Sector Market by Producti-FILTER series

m-FILTER series

FinalCode

DAC

3,332

(Million yen)

Other

Sales of the i-FILTER series remained•(+18.8%)strong, rising 123 million yen, or 7.4%, in

2

2,804
6

526
143
461

response to growing corporate demand for755+43.4%△0.4%

cybersecurity due to increased
teleworking.

142
642

Sales of the m-FILTER series were strong•(up 180 million yen or 39.2%), owing to+39.2%

rising demand for mail security and PPAP
problem-solving.
DAC made good progress acquiring new

•
1,665

+7.4%

clients and achieved substantial sales

1,789

growth (up 228 million yen or 43.4%),
reflecting growing DX needs and demand
for security measures among enterprises.

First
3 Quarters
FY Mar.
2021
FY March
3Q 2021First
3 Quarters
FY Mar.2022
FY March
3Q 2022
25

Copyright © Digital Arts Inc.

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

Consulting sales*(Persons)(Million yen)

(Million yen)

68
549

DAC actively hired talent,focusing on those fromleading consulting firms
and leading systems
integrators.
*: DAC's non-consolidated net sales

43

FY Mar. 2021
3Q

End of 3Q FY March
2022

•
•

62

730

55

End of FY March
2021

Solution sales*•

FY Mar. 2022
3Q

Consulting sales grew
133% year on year,
reflecting the developmentof new clients.
DAC steadily met DX
demand and demand forcyber security measures.
26

FY Mar. 2021
3Q•

FY Mar. 2022
3Q

Sales of solutions
incorporating Digital
Arts products alsosoared, increasing
142% year on year.

Copyright © Digital Arts Inc.

Material on Consolidated Financial Results for the First
Three Quarters of the Fiscal Year Ending March 31, 2022

Public Sector

27

Copyright © Digital Arts Inc.

Net Sales of Public Sector Market by Producti-FILTER series

m-FILTER series

FinalCode

Other

3,026

(Million yen)(+86.4%)
5

48

352

Sales of the i-FILTER series grew
substantially, rising 1,335 million yen, or+15.7%

104%, thanks to orders for public agency

1,623
0

+18.5%and local government projects and GIGA

41

297

1,284

First
3 Quarters
FY Mar.2021
3Q
FY March 2021

School Concept projects ongoing since2,619

the previous fiscal year.

+104.0%First
3 Quarters
FY Mar.2022
FY March
3Q 2022

28

Copyright © Digital Arts Inc.

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

Share of charged filtering introduced

Not yetintroduced, etc.
Competitors

29%(Less than 10 companies)

Charged filtering

49%

i-FILTER
51%

already introduced

71%•

The proportion of Boards of Education
which have adopted paid-for filtering
increased from 59% at the end of theprevious fiscal year to 71%.

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

29•

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

•

Contracts increased from 5.3 billion yen
at the end of the previous fiscal year to
6.3 billion yen.
Copyright © Digital Arts Inc.

Material on Consolidated Financial Results for the First
Three Quarters of the Fiscal Year Ending March 31, 2022

Consumer Sector

30

Copyright © Digital Arts Inc.

Net Sales of Consumer Sector Market by Product(Million yen）

For mobile terminals,otherFor computers

327

323

(＋1.4%)•

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

155

△5.8%

i-FILTER® for Multi-Device, which146

can be available on multiple
terminals, remained strong.

•
167

+8.4%

181

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

FY Mar.
2021 3QFirst
3 Quarters
FY March 2021

FY3Mar.
2022
First
Quarters
FY March
3Q 202231

Copyright © Digital Arts Inc.

Material on Consolidated Financial Results for the First
Three Quarters of the Fiscal Year Ending March 31, 2022

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

32

Copyright © Digital Arts Inc.

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

FY March 2022
Full-Year
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)

33

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

FY March 2022
Full-Year
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, general andadministrative
expenses

1,854

2,150

＋296

＋26.0 %

Operating profit

2,947

3,900

＋953

＋32.3 %

Operating margin

48.5％

49.7％

Ordinary profit

2,964

3,900

＋936

＋31.6 %

Profit

2,044

2,690

＋646

＋31.6 %

(Million yen)

34

Changeー% Changeーー

Copyright © Digital Arts Inc.

Status of Consolidated Net Sales(Million yen）•

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

•

New contracts of DAJ are expected toamount to 7,354 million yen due toexpansion of sales to the enterprise sector
market and orders received for the public

7,354

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 to continue growing through theacquisition of new clients.

*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.
35

Copyright © Digital Arts Inc.

Status of Consolidated Net Sales
9,000(Million yen）

• We will further develop existing clients bypromoting the cross-utilization of Digital Arts
products as security measures forenterprises and acquire new clients bystrengthening products.

(+31.9%)450

Consumer

+4.1%

6,825

•

Public3,700

432

We will gain new customers for DAC toachieve growth.

•+53.7%Part of the amount of contracts acquired theprevious fiscal year in the public sector

2,408

market in connection with the GIGA School
Concept will be deferred and recognized as
sales in FY March 2022.
Enterprise

•
3,984

+21.7%

4,850

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

Results for FY March 2021

Forecast for FY March 2022

36

Copyright © Digital Arts Inc.

Consolidated Cost of Sales and Selling, General and
Administrative Expenses(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.

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

Other

677

770

37

Main Factors for Change

Copyright © Digital Arts Inc.

Material on Consolidated Financial Results for the First
Three Quarters of the Fiscal Year Ending March 31, 2022

FY03/22 Initiatives

38

Copyright © Digital Arts Inc.

FY03/22 Initiatives
We will enhance products and functions to meetcustomers' needs for security measures in more
extensive areas to expand sales of existing products.

Protection against unknown threats

Web security

Realization of “white operation” to prevent
malware infections via the web or emails

Promotion of "v15" andupdating of versions

Mail Security

Enhancement of features of ＠
Cloud

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 filetransferProtection against
information leaks

Elimination of need for filepasswords

File Security

39

Copyright © Digital Arts Inc.

Protection against unknown threats
We will accelerate the spread of White Operation in the enterprise
sector and public sector markets.
We will boost sales of solutions for protection against unknown threats
with no reported cases of malware infection and damage.

Excerpts from our successful examples of introduction

40

Copyright © Digital Arts Inc.

Penetration of "White Operation"
Trend in i-FILTER v10 and m-FILTER v5 licenses
usedRealizing safe office IT environments
protected through "White Operation"（Thousand licenses）

9,506

10,0007,958

We will accelerate the spread ofWhite Operation by continuously
4,665

enhancing products and functions

3,604

with the aim of increasing the numberof licenses to 10 million by the end of
this fiscal year.

March 2019

March 2020

March 2021

December 2021

March 2022

41

Copyright © Digital Arts Inc.

Overview of DigitalArt's gateway security solutions
DigitalArt's gateway security solutions based on product linkage
Overview of security solutions
Web, Cloud Service and E-mailInternetenvironment

SWG

Web filtering (White Operation)

SWG

SWG

Download filter

Mail Gateway

SWG

Credential protection

DLP

Use of FinalCode

CASB

Web service control

SIEM

Linkage with SIEM products

Addition of AV/sandbox functions
Addition of AV/sandbox functions

Enhancing
this fiscal year
Enhancing
this fiscal year

Computers inside and outside the company
Other devices

42

Copyright © Digital Arts Inc.

Acceleration of GIGA School Concept
Introduction of filtering by Boards of Education*1
March 2021

December 2021

40%

33%
Not yetintroduced
未導入

Not yetintroduced
未導入

10%

18%

無償ﾌｨﾙﾀﾘﾝｸﾞFreefiltering11%

無償ﾌｨﾙﾀﾘﾝｸﾞFreefiltering
11%

DNS
Filtering
10%

DNS Filtering
12%

有償ﾌｨﾙﾀﾘﾝｸﾞ
Payfiltering
introduced
導入済み

有償ﾌｨﾙﾀﾘﾝｸﾞ
Payfiltering
introduced
導入済み

71%

79％

•

We will target local Boards of Education that have yet to introduce any filtering or thosewhich have introduced free filtering and DNS filtering in an effort to win orders.

•

We will step up sales activities for winning projects for providing devices for teachers andHigh School GIGA School projects for which revised budgets and temporary subsidies areprovided.

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

43

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.

FY2016FY2017FY2018FY2019Centralministries andagencies

FY2020

FY2021Introdu
ction
of
ISMAP

Budgeting, bidding, and procurement foreach projectPrefectu
resMunicip
alities

Revision ofprocurement
guidelines

Revision ofprocurement
guidelines
Budget: 16,440 million yen

FY2023

FY2024FY2025

Transfer budget:
2,930 million yen

Budget: 7,180 million yen
Prefectu
res

FY2022

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

44

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.
45

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

Investigation

ActionRecoveryPrevention*1 D-Alert has issued 869 reports for the current fiscal year. It notifies customers on a real-time basis to urge
them to take security measures.
46

Copyright © Digital Arts Inc.

Acceleration of Synergies within the Group
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

•
•

Measuresother than
products

QuickStart
for i-FILTER@Cloud
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.

Sale

Operation andmaintenance
Paid D Alert service
Building and
The incident response service
setting
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.

•: Started providing: Scheduled for release in 4th quarter

47

Copyright © Digital Arts Inc.

Material on Consolidated Financial Results for the First
Three Quarters of the Fiscal Year Ending March 31, 2022

Return to Shareholders for Fiscal
Year Ending March 31, 2022

48

Copyright © Digital Arts Inc.

Return to Shareholders for Fiscal Year Ending March
31, 2022
We expected to pay a year-end dividend of 35 yen per share, but in overall
consideration of the performance trends and financial position for the current fiscal
year, we have divided to increase it by five yen per share, to 40 yen per share.
That means an annual dividend forecast for the fiscal year ending March 31, 2022 of
70 yen per share, up 15 yen per share from the preceding fiscal year.

Dividend (in yen) per share
2Q-endYear ended March
31, 2021
Year ending March
31, 2022

Year-end

25.00

AnnualConsolidated
payout ratio

30.00

55.00

37.4％

40.00

70.00

35.5％

30.00

FY March 2022
(forecast)49

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、mFILTER 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.

50

Copyright © Digital Arts Inc.

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