Consolidated Financial Results for
the First Quarter of the Fiscal YearEnding March 31, 2021
(From April 1, 2020 to June 30, 2020)
Supplementary Material
Friday, July 31, 2020
Digital Arts Inc.
(Securities Code: 2326)
Copyright © 2015 Digital Arts Inc.

Supplementary Material on Consolidated Financial Results for theFirst Quarter of the Fiscal Year Ending March 31, 2021

Key Points

Copyright © Digital Arts Inc.

Key Points(1) A year-on-year rise of 13.2% in consolidated net sales resulted in record-breaking
first quarter net sales.
 In the enterprise sector market, teleworking rapidly increased as a measure against COVID-19.
Sales of the i-FILTER series that enables administrators to control access to websites
irrespective of location or situation continued to grow.
 Digital Arts Consulting (DAC), a subsidiary offering security consulting services, achieved steadygrowth.
 In the public sector market, the i-FILTER series achieved continued sales expansion as
educational institutions worked to create an environment enabling the use of tablets by schoolaged children to accelerate ICT education.
 Acquisition of orders under the GIGA School Concept began, but this had a minor impact on thequarterly results under review.

(2) Operating profit grew 17.2% after cost of sales rose 141 million yen year on year
while SG&A expenses dropped 47 million yen.
 The rise in cost of sales resulted from a hike in labor expenses following the increase in
consultants at DAC.
 Among the SG&A expenses, advertising expenses dropped given voluntary restraint on holding
outside events in consideration of the COVID-19 pandemic and transportation expenses fell due
to a shift to working from home and online sales activities as measures against COVID-19.

3Copyright © Digital Arts Inc.

Supplementary Material on Consolidated Financial Results for theFirst Quarter of the Fiscal Year Ending March 31, 2021

Consolidated Results
Highlights

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Consolidated Financial Highlights for the First Quarterof the Fiscal Year Ending March 31, 2021

Consolidated
net sales

Operatingprofit

Net Sales:

1,413 million yen (+164 million yen / +13.2% YoY)

The sales growth resulted from steady acquisition of contracts for the i-FILTER series in theenterprise sector market and in the public sector market.
It is also due to DAC's good progress in gaining new projects.

Operating profit:

485 million yen (+71 million yen / +17.2% YoY)

In cost of sales, labor expenses soared after DAC increased consultants.
Among SG&A expenses, advertising expenses and transportation expenses contracted
following the voluntary restraint on holding outside events.

Ordinary profit:

489 million yen (+77 million yen / +18.8% YoY)

Ordinary profit
This increase resulted from a rise in operating profit.

Profit attributableto owners of parentProfit:

334 million yen (+53 million yen / +19.1% YoY)

This growth was due to a surge in ordinary profit.

5Copyright © Digital Arts Inc.

Summary of Consolidated Financial Results for the First Quarterof the Fiscal Year Ending March 31, 2021
Consolidated Results(Million yen)
FY March 2020
1Q

FY March 2021
1Q

Change YoY

FY March 2021
Full-Year ForecastContracts

1,146

1,463

+27.6%Net sales

1,249

1,413

+13.2%

7,500

Gross profit

962986

+2.4%

5,650

Selling, general andadministrative expenses

548501

-8.7%

2,100

Operating profit

413

485

+17.2%

3,550Operating margin

33.1%

34.3%

ー

47.3%

Ordinary profit

411

489

+18.8%

3,550

Profit attributable toowners of parent

280

334

+19.1%

2,450

ROE

3.6%

3.9%

ー―ー¥55.00

Dividend per share――

6ー

Copyright © Digital Arts Inc.

Summary of Non-Consolidated Financial Results for the First Quarterof the Fiscal Year Ending March 31, 2021
Non-Consolidated Results(Million yen)
FY March 2020
1Q

FY March 2021
1Q

Change YoY

Contracts

1,109

1,337

+20.5%Net sales

1,211

1,287

+6.3%

7,000

Gross profit

950

977+2.8%

5,550Selling, general andadministrative expenses

517

455

-12.0%

2,050

Operating profit

433

522

+20.5%

3,500

Operating margin

35.8％

40.5％

ー

50.0%

Ordinary profit

432

526

+21.8%

3,500

Profit297

368+23.9%

2,420

ROE

3.9％

4.2％
7ー

FY March 2021 FullYear ForecastーーCopyright © Digital Arts Inc.

Trend in Consolidated Net Sales for First Quarter
Net sales for the first quarter hit a record high with a strong
performance in the enterprise sector market and in the public sector
market.

(Million yen)

1,413（113%）

1,158

1,217（105%）

1,249（103%）（126%）

916803682（131%）

521

570

650（114%）673（114%）（119%）（103%）（84%）（116%）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

FY Mar. 2021

１Q

１Q

１Q

１Q

１Q

１Q

１Q

１Q

１Q

１Q

１Q

* Percentage figures represent comparisons with the preceding quarter.

8Copyright © Digital Arts Inc.

Quarterly Trend in Consolidated Net Sales
Quarterly net sales were robust after a strong performance in the enterprise
sector market and in the public sector market.
(Million yen)

1,674

1,565（102%）

1,309
1,158

1Q

1,402（130%）1,514

1,500（98%）

1,376（90%）

3Q

4Q

1,249

1,413（113%）（98%）（103%）（105%）

1,083（126%）（118%）

1,217（87%）（107%）

1,546（99%）

2Q

3Q

FY March 2018

4Q

1Q

2Q

3Q

FY March 2019

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

94Q

1Q

2Q

FY March 2020

1Q
Current
Fiscal Year
Copyright © Digital Arts Inc.

Consolidated Cost of Sales and Selling,
General and Administrative Expenses
Labor expenses constituting part of the cost of sales rose after DAC increased consultants.

Depreciation as part of the cost of sales increased as depreciation of cloud products and other software began
in the second quarter of the preceding fiscal year.

Advertising expenses as part of SG&A expenses contracted due to the decision to cancel the Partner
Conference and other outside events.

Transportation expenses as part of SG&A expenses declines because of working from home and online sales
activities introduced as a measure against COVID-19.
(Million yen)
FY March 2020
1Q

FY March 2021
1Q286

427+141

Labor

116

181+65

DAC increased consultants.

Depreciation

97140+43

Depreciation of cloud products and other software has been
rising since the second quarter of the previous fiscal year.

Transfer to other accounts
Other manufacturing costs

73

105+32

Outsourcing expenses soared after DAC obtained moreorders.

Selling, general andadministrative expenses

548

501-47

Personnel expenses

263

272+8

Advertising expenses

70

32-37

The decline resulted from the decision to cancel the Partner
Conference and other outside events.

215

195-19Transportation expenses fell for reason of working fromhome and online sales activities.

Cost of sales

Other10Change
YoY

Main Factors for Change

Copyright © Digital Arts Inc.

Quarterly Trend in Consolidated Cost of Sales
Labor expenses swelled after DAC increased consultants.
Depreciation increased following the start of depreciation of cloud products andother software in the second quarter of the previous fiscal year.
(Million yen)
Labor

Depreciation

427

Transfer to other accounts and others（149%）

377
343

232

235

（97%）

（92%）

6662

68

306

301

（125%）（114%）

7990（145%）

289

75901021Q

2Q（101%）

93

69

98

236（92%）

76

95
77

131

121

120

3Q

4Q

1Q

FY March 2018922Q

250（83%）

（99%）

3Q

4Q

1187

102

140
129

123

126

137

136

145

2Q

3Q

4Q

7798

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

105（124%）

97

110

FY March 201982（151%）

73

74

66
94

286

282

（125%）

352

116

1Q

FY March 2020

181

1Q
Current
Fiscal Year
Copyright © Digital Arts Inc.

Quarterly Trend in Consolidated Selling, General and
Administrative Expenses
Advertising expenses contracted due to voluntary restraint of the Partner Conferenceand other outside events.
Transportation expenses decreased for reason of working from home and online sales
activities introduced as a measure against COVID-19.
(Million yen)

Personnel expenses

Advertising expenses

OtherOverseas expenses

632（111%）

569

（99%）

53

509

（92%）

69

533

526

（107%）

（88%）

67

60

89

548

69

201

482

（90%）

42190

182
163

94

568（112%）

200

194
109

59

469

（87%）
13（85%）

（89%）

25

164

156

46

57

487

473

12（98%）

167

179

46

195
190
32

47

46

40

40

243

229

224

230

237

240

228

230

253

262

246

1Q

2Q
3Q
FY March 2018

4Q

1Q2Q

3Q

4Q

1Q

2Q

3Q

FY March 2019443（94%）21170501（91%）

43

FY March 2020

210

4Q

272

1Q
Current
Fiscal Year

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

12Copyright © Digital Arts Inc.

Summary of Consolidated Financial Results for the First Quarterof the Fiscal Year Ending March 31, 2021
Consolidated Balance Sheet The equity ratio stood at 80.2% to show that strong financial health was maintained.
 With high figures in ROE and ROA, capital efficiency was high.

(Million yen)

As of end of 1Q FYMarch 2020

As of end of 1Q FYMarch 2021

% Change

As of end of FY
March 2020

Current assets

7,582

8,671

+14.4%

8,733(Cash and deposits)

6,430

7,609

+18.3%

7,651

Non-current assets

2,148

2,097

-2.4%

2,118

Total assets

9,730

10,769+10.7%

10,852Current liabilities

2,016

2,067

+2.6%

2,125

Non-currentliabilities

4649

+6.1%

46

Equity capital

7,630

8,635

+13.2%

8,652

Net assets

7,667

8,652

+12.8%

8,680

Equity ratio

78.4％

80.2％

―

79.7%

ROE

3.6％

3.9％

―

19.4％

ROA

2.9％

3.1％

―15.4％

13Copyright © Digital Arts Inc.

Supplementary Material on Consolidated Financial Results for theFirst Quarter of the Fiscal Year Ending March 31, 2021

By Market

Copyright © Digital Arts Inc.

Summary of Consolidated Net Sales by Market
 In the enterprise sector market, net sales rose 16.7%, following brisk performance of the iFILTER series and DAC's growth.
 In the public sector market, net sales hiked 17.8%, with good sales of the i-FILTER series
following educational institutions' efforts to promote ICT education.
 In the consumer sector market, net sales decreased 18.1% due to a reduction in prices forcarriers in the second quarter of the previous fiscal year, despite a rise in the introduction offiltering among young people.

Consolidated
net sales

Net Sales: 1,413 million yen(+164 million yen / +13.2% YoY)Enterprise
SectorNet Sales:

847 million yen(+121 million yen / +16.7% YoY)

Public Sector

Net Sales:

451 million yen(+68 million yen / +17.8% YoY)

Consumer
SectorNet Sales:

115 million yen(-25 million yen / -18.1% YoY)

15Copyright © Digital Arts Inc.

Trend in Consolidated Net Sales for First Quarter by Market
Buoyant net sales in the enterprise sector market and in the public
sector market resulted in record-breaking first quarter net sales.
(Million yen)Enterprise Sector

Public Sector

1,413

Consumer Sector（113%）

1,158（126%）

92

1,217

（105%）

120

803

682

（131%）

521

69（116%）

70570

（83%）

73
332

190

170

650

（114%）

101
216

673

（103%）

85（119%）

89

89

424

140

408

383

688

725

296

256

207

380

115

451

916

（114%）

1,249（103%）

456

530

640

847

326

331

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

FY Mar. 2021

1Q

1Q

1Q

1Q

1Q

1Q

1Q

1Q

1Q

1Q

260

281

FY Mar. 2011
1Q

* Percentage figures represent comparisons with the preceding quarter.

16

Copyright © Digital Arts Inc.

Quarterly Trend in Consolidated Net Sales by Market
Buoyant net sales in the enterprise sector market and in the public
sector market resulted in a high level of quarterly net sales.
(Million yen)Enterprise Sector

Public Sector

1,546

1,565（102%）

1,158（126%）（118%）

103

1,309

115

（87%）

1,217

86（105%）

1,083（99%）

92
497
424

1,674

Consumer Sector

484

120

92

1,402

1Q

2Q

FY March 2018

（98%）

1,376（90%）

114（98%）

100

1,249

141（103%）

536

140
699

4Q

1,500

426

688

715

1Q

2Q

3Q

FY March 2019

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

17451

515

998
731（113%）

115

90
587

1,413

383

408

665

3Q

139（130%）

977
640

1,514

546

324

726

（107%）

725

4Q

1Q

975

813

770

2Q

3Q

FY March 2020

4Q

847

1Q
Current
Fiscal Year
Copyright © Digital Arts Inc.

Supplementary Material on Consolidated Financial Results for theFirst Quarter of the Fiscal Year Ending March 31, 2021

Enterprise Sector

Copyright © Digital Arts Inc.

Summary of Net Sales in Enterprise Sector Market
 The increase in teleworking continued to boost sales of the i-FILTER
series since it enables administrators to control access to websites
irrespective of location.
 DAC's security consulting services expanded steadily.

SeriesSeries112.5% of the year-ago figure.
104.9% of the year-ago figure.
71.6% of the year-ago figure.
344.2% of the year-ago figure.
19Copyright © Digital Arts Inc.

Supplementary Material on Consolidated Financial Results for theFirst Quarter of the Fiscal Year Ending March 31, 2021

Public Sector

Copyright © Digital Arts Inc.

Summary of Net Sales in Public Sector Market
 The i-FILTER series managed to achieve sales expansion amid the ongoingwork to provide school-aged children access to tablets to accelerate ICT
education.
 Acquisition of orders under the GIGA School Concept began, but this had aminor impact on the quarterly results under review.
 Sales of m-FILTER soared following the acquisition of a new large project inthe educational sector.

115.8% of the year-ago figure.
Series

141.9% of the year-ago figure.
Series

75.5% of the year-ago figure.
21

Copyright © Digital Arts Inc.

Supplementary Material on Consolidated Financial Results for theFirst Quarter of the Fiscal Year Ending March 31, 2021

Consumer Sector

Copyright © Digital Arts Inc.

Summary of Net Sales in Consumer Sector Market

 Net sales declined due to the reduction in prices for carriers in thesecond quarter of the previous fiscal year in connection with theiroffering of services to end users free of charge. Meanwhile, filtering isincreasingly used after legislation on use of the Internet by young
people was toughened in response to the increase in minors usingsmartphones.
 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

72.3% of the year-ago figure.

For computers

96.2% of the year-ago figure.

23

Copyright © Digital Arts Inc.

Supplementary Material on Consolidated Financial Results for theFirst Quarter of the Fiscal Year Ending March 31, 2021

Full-Year Financial Forecastfor the Fiscal Year Ending
March 31, 2021

Copyright © Digital Arts Inc.

Full-Year Financial Forecast for the Fiscal YearEnding March 31, 2021
Consolidated Financial Forecast We will aim to attain growth in cloud services in the enterprise sector market
and to secure orders associated with the GIGA School Concept in the public
sector market with a view to achieving a high rate of 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 toowners of parent

1,590

2,450＋54.0 %Dividend per share¥50.00¥55.00―25Copyright © Digital Arts Inc.

Full-Year Financial Forecast for the Fiscal YearEnding March 31, 2021
Non-Consolidated Financial Forecast(Million yen)

Results for
FY March 2020

Plan forFY March 2021

% ChangeNet 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 %Profit1,613

2,420+50.0 %26Copyright © Digital Arts Inc.

Notes on Descriptions

Among the descriptions of plans, strategies and financial forecasts in this presentation material,
those that are not historical facts are forward-looking statements. They reflect judgments madeby 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 otherfactors, 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.

•デジタルアーツ, DIGITAL ARTS, i-FILTER, info board, ARS, Active Rating System, ACTIVE RATING, ZBRAIN, D-SPA, SP-Cache, NETFILTER, White Web, m-FILTER, m-FILTER MailFilter, m-FILTER Archive, m-FILTER Anti-Spam, m-FILTER File Scan, Mail Detox, FinalCode, iFILTER, 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.

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

27

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