Fiscal Year Ending March 31, 2019 First Half

Results Briefing
Digital Media Professionals Inc.
November 20, 2018

The views and forecasts that appear in these materials represent determinations made by the Company at the time the materials
were created. The accuracy of the information therein is not guaranteed.
Copyright (C) Digital Media Professionals Inc. All Rights Reserved.
Please be aware of the possibility that actual performance and results may differ considerably due to a variety of factors.

11

Explanation of Results, Fiscal YearEnding March 31, 2019 First Half

2

Fiscal Year Ending March 2019,
Full-Year Business Forecast

3

Proposition for Future Growth

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2

1Explanation of Results, Fiscal YearEnding March 31, 2019 First Half

2

Fiscal Year Ending March 2019,
Full-Year Business Forecast

3

Proposition for Future Growth

Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

3

Operating Environment of the Company
Semiconductor Industry
 According to SIA, semiconductor sales were the highest ever in August 2018 (three-monthaverage from June to August 2018), reaching US$40.16 billion. However, the year-on-year
growth rate has slowed, dropping to 14.9% from last year’s 20%.
By region, the growth rates were, in order, China (27%), United States (15%), Europe(9.5%) and Japan (8.5%)
 Demand for use in smartphones slowed, but demand for use in automobiles and IoT is
expected to drive the market in the future

AI / Visual Computing Field According to Tractica, more than 70 companies worldwide are developing new chips for AI
 According to Tractica, the AI chipset market will grow to US$66 billion (CAGR of 73%) by2025

 Annual AI edge device shipments in 2025 are expected to reach 2.6 billion units

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Fiscal Year Ending March 31, 2019 First HalfResults Highlights
Net sales came in about where expected, while profits
exceeded the plan Products operations (net sales of ¥6 million)• Sales of graphics processing LSI "RS1" (full-scale contribution to sales expected in fourthquarter)• Sales of DV700 AI evaluation kit "ZIA C2, C3" launched IP core licensing operations (net sales of ¥142 million)• Shipments of new products for cameras to semiconductor customers in Taiwan
contributed to sales, but running royalties for game machines and digital cameras fromexisting customers were weak
• ZIA Classifier licensing agreement for new customers• Licensing agreement for new "ZIA DV500" AI processor
For details see page 13

 Professional services operations (net sales of ¥202 million)• Commissioned projects from automotive equipment manufacturers centering on AI
applications remained strong• Development commissions from NEDO for power-saving AI engines also contributed
steadily to sales
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5Fiscal Year Ending March 31, 2019 First Half

Results Summary (P/L)(Unit: million yen)

1H FY 03/2019(Initial forecast)

1H FY 03/2019(Actual)Difference
between initialforecast andactual results

Net sales

360

351

-9442-91

Operatingincome-30-171318-35

Ordinary
income-30

-8

22

19-27

Net
income-30-82219-27

1H FY 03/2018(Actual)YoY change

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Fiscal Year Ending March 31, 2019 First Half

Analysis of Factors Behind Differences in ResultsDifferences compared to initial forecast• Professional services net sales came in higher than planned (+¥108 million), but IP
licensing and royalties and product sales came in lower than planned (-¥90 million
and -¥25 million, respectively)• Operating income increased ¥13 million owing to decreased SG&A (-¥16 million)
and other factors, while recording of foreign exchange gains (+¥7 million) resulted ina ¥22 million increase in ordinary income and net incomeChanges from the same period of previous year
• The main factor behind the change in net sales was a decrease in GPU IP licensing
and royalties (-¥92 million)• Completion of RS1 development resulted in the elimination of development
expenses, so SG&A improved, but lackluster sales resulted in the recording ofoperating and ordinary losses

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Fiscal Year Ending March 31, 2019 First Half

Results Summary (B/S)(Unit: million yen)

End of March 2018

End of September
2018

Current assets

1,774

1,678

-96

Non-current assets

346

317

-29

2,121

1,995-125

Current liabilities

22875

-153

Non-current liabilities

18180

Total liabilities247

94-153

Total net assets

1,873

1,901

27

Total liabilities and netassets

2,121

1,995-125

Total assets

Increase-decreaseamount Equity ratio of 95% remains at a high level
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Fiscal Year Ending March 31, 2019 First HalfTopics

Launch of ZIA DV500 AI Processor IP sales(announced on April 25, 2018)
ZIA™ DV500 block diagram

Ultra-small AI processor IP specializing in object recognition

Detection of humans, cars,
crosswalks, signs and otherobjects (SSD)

Internal Memory

Miniaturization achieved while maintaining high processing
performance by optimizing for scene understanding andobject recognition often used in industrial equipment andautomobile driving assistance systems

RISC-V processor
Convolution
Max/Average Pool.
Activation Func.
Output Cont.

AXI interconnect

Pixel-by-pixel classification for trees, sky, roads,
shoulders, buildings, humans and other objects (SegNet)

Sky

Trees
Car

SidewalkRoad

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9Fiscal Year Ending March 31, 2019 First Half

TopicsLaunch of ZIA C2/C3 edge AI module sales(announced on September 18, 2018) Compact, low power consumption and high performance AI inference processing module,mounting DMP DV700 to FPGA
 Providing C2 with Intel FPGA and C3 with Xilinx FPGA to cover industry-leading FPGAs
Advanced AI inference processing
High performance and accuracy with "ZIA™ DV700."

Power-conserving and fanless
No need for cooling fans, which tend to fail andrestrict structural design.

High usability
Supports Caffe and Keras AI development
frameworks.

 DMP DV700 AI processor IP
 FPGA: Intel Arria (C2), Xilinx Zynq (C3) Dual core ARM processor
 2GB main memory
 16GB flash memory Dimensions: 90 mm x 90 mm

Flexibility
Hardware can be updated by FPGA.

Long-term supply
Module utilizes FPGAs with sold track records oflong-term supply with industrial equipment.

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Fiscal Year Ending March 31, 2019 First HalfTopics
Technical collaboration with Macnica and XCompass on
integrated environment from AI generation to edge AI
implementation for manufacturing (announced on September 19, 2018)"ZIA™ C2/C3"edge AI module

Integrated AI environment
for manufacturing:

Learning
Product images
Equipment
vibration
Voltagevariation, etc.

"Manufacturing－IX"

Learneddata

Built intoedge device

XCompass
Integrated development
environment capable ofeasy learning without
specialized knowledge ofAI for manufacturing

High performance withAI for anomaly
detection andpredictive maintenance

Build edge AI systems in short periods of time in wide range of fields● Factory automation● Self-contained robots in distribution● Medical treatment

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Fiscal Year Ending March 31, 2019 First HalfTopics
Collaboration with PALTEK Collaboration on edge AI solution utilizing Xilinx FPGA(announced on August 30, 2018)

 Distributorship agreement signed for ZIA C3 (announced on November 6, 2018)
Acceleration of edge AI for industrial IoT
FieldsApplications
Exampleapplication

FA cameras, robots, construction machinery, agricultural machinery, inspection equipment,
medical equipment
Visual inspection, predictive maintenance, foreign matter/noise inspection, course recognition,
obstacle detection, crop yield determination, etc.

Exampleapplication

Defect determination

BeforeStreamlining ofproduction line
Human tracking

After

Human recognition
Flow management

Prohibited area

Judgment byhuman eyeAutomatic determination
by AI robot

Human tracking, humanrecognition, flow management

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Fiscal Year Ending March 31, 2019 First HalfTopics"ZIA™ DV500" adopted in UKC camera monitoring system
Joint development of on-board camera monitoring system (CMS) equipped withSony image sensor
Sales to be launched in February 2019

FPGA(XILINX)

Image sensor
SonyAI core

LCD module

Camera module

Watch out forbicycle

Illustration of CMS smart mirror
A car is coming

Automatic recognition and warning ofhumans, bicycles, cars, etc.

• No restriction of field of vision by luggage in vehicle orvehicle body
• Not affected by weather and provides greater visibility
than regular mirrors

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1

Explanation of Results, Fiscal YearEnding March 31, 2019 First Half

2

Fiscal Year Ending March 2019,
Full-Year Business Forecast

3

Proposition for Future Growth

Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

14

Fiscal Year Ending March 31, 2019 First Half

Priority Measures
 Full-scale launch of SoC business with launch of "RS1" mass production• Aim to make industry standard platform as it has been adopted by several influential
customers, and focus on supporting launch of customer products

 Expand sales of ZIA platform products and enhance portfolio• Cultivate new ZIA Classifier customers• Land DV700/DV500 licensing agreements• Promote sales of “ZIA C2” and “ZIA C3” AI FPGA modules for embedded devices

 Promotion of alliances• Provide AI solutions through collaboration with partner companies

more…
 Promotion of development commissions from NEDO for power-saving AIengines
 Promotion of AI-related professional services for automotive equipment
manufacturers▶▶▶ Continue to promote these initiatives and achieve full-year targets
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DMP AI Strategy
 Broad-scoped edge AI portfolio, including IP, hardware/software
products, and services
 Provision of solutions through ecosystem
System development partner

Module sales partners

Services
ZIA Classifier
Automated driving algorithms

IP

AI solution partners

DV500 core
DV700 core

SoC/module products
ZIA C2 module
ZIA C3 module-Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

16Fiscal Year Ending March 2019

Full-Year Business Forecast
Net sales, operating income and ordinary income will all increase withincrease in RS1 sales volume and expansion of AI products and services(Unit: million yen)

FY 03/2018(Actual)

FY 03/2019(Forecast)

Net sales

973

Operatingincome

YoY change(Amount)(Increasedecrease rate)

1,200

227

23.3%

69

100

31

44.9%

Ordinary
income

66

100

34

51.5%

Net income

109

90-19-19.0%

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1

Explanation of Results, Fiscal YearEnding March 31, 2019 First Half

2

Fiscal Year Ending March 2019,
Full-Year Business Forecast

3

Proposition for Future Growth

Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

18

Proposition for Future GrowthEstablishment of new growth domains
Expansion into the growing IoT/AI field
Integrated development of AI algorithms, software and hardware
Development of ZIA platform
••
•
•
•

Establishment of a SoC businessplatform in the amusement market
where we can win•
•AI processors for edge computing
SoftwareModules
Provision of solutions with partners
Overseas development

Expansion of professional services
centered on automotive industry

Volume production of new product "RS1"
Aim to make it an industry standard
platform• Automated driving algorithms

Expansion of the SoC / Module Business• Top share in amusement SoC• High-volume AI products

Current position
Phase 1

Phase 2Phase 3Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

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Thank you for listening.
<Inquiries>
Digital Media Professionals Inc. Administrative Department
Tel. +81-3-6454-0450
URL: https://www.dmprof.com/en/ir/

Forward-looking statements contained within this document are based on currently available
information and involve risks and uncertainties, including macroeconomic conditions andtrends in the industries in which we are engaged. As such, actual results may differ
materially from those anticipated.

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