Fiscal Year Ending March 31, 2020 First Half

Results Briefing
Digital Media Professionals Inc.
November 12, 2019
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.
Please be aware of the possibility that actual performance and results may differ considerably due to a variety of factors.
Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

1

Explanation of Results, Fiscal YearEnding March 31, 2020 First Half

2

This Fiscal Year's Topics andBusiness Progress3

Fiscal Year Ending March 31, 2020,
Full-Year Business Forecast andBlueprint for Future Growth
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2

1

Explanation of Results, Fiscal YearEnding March 31, 2020 First Half

2

This Fiscal Year's Topics andBusiness Progress3

Fiscal Year Ending March 31, 2020,
Full-Year Business Forecast andBlueprint for Future Growth
Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

3

Movements in the AI Industry⚫ Explosive increase in AI processing requirements such as image
recognition and natural language understanding⚫ Performance improvements reliant on evolution of semiconductor
processes reaching their limits (demise of Moore's Law)
→ Acceleration of development of systems optimized for domains- Semiconductors clearly shifting from general-purpose to application-specific- Utilization of data linked to customers and acquisition of domain knowledge are key- Domain optimization through integrating algorithms, software and hardware is adifferentiating factor⚫ Acquisition of AI start-ups continues, centered on GAMFA→ Competition to acquire AI personnel is fierce. Other companies cannot win on volume
and need to shift the axis of competition
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4

Fiscal Year Ending March 31, 2020 First Half

Results Highlights: P/L
1H FY 03/2020(Actual)Difference
between initial
forecast andactual results

1H FY 03/2019(Actual)YoY change

290

293

-107

351

-58

-115

-210

-207

-92

-17

-190

Ordinary
income

-135

-234

-231

-96

-8

-223

Net income

-135

-234

-231

-96

-8

-223

1H FY 03/2020

1H FY 03/2020(Initial estimate on
May 10)(Revised estimate on
Oct. 25)

Net sales

400

Operatingincome(Unit: million yen)

Differences compared to initial forecasts

Changes from the same period of previous year

⚫ Although LSI product business centered on the RS1 image
processing semiconductor was as planned, net sales fell below
the initial forecast due to some new IP licensing and AI-related
professional services projected for the first half being shifted tothe second half.
⚫ Despite expenses being almost as planned, operating income,ordinary income and net income fell below the initial forecasts
due to net sales falling below the initial forecast.

⚫ Net sales decreased due to a drop in NEDO* commission
revenue and a decline in running royalties centered on game
consoles⚫ Operating income, ordinary income and net income all
decreased due to the decrease in revenue, increased overall
expenses mainly due to strengthening the development system,
and recording of share issuance cost
* New Energy and Industrial Technology Development Organization

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5

Fiscal Year Ending March 31, 2020 First Half

Results Highlights: Net Sales by Business
IP core license businessSales¥82 million

YoY change-¥59 million⚫ Decrease in running royalties centered on game console customers⚫ Although multiple new license contracts of ZIA edge AI IP "DV series" were recorded, there
were no large projects equivalent to the large project recorded in the previous fiscal year
⚫ Some new IP licensing anticipated to be in the first half shifted to the second half

LSI product business

Sales¥111 million

YoY change +¥105 million⚫ Recorded sales of RS1 for volume production and "ZIA C3" AI FPGA modules

Professional services businessSales¥99 million

YoY change -¥103 million⚫ ¥100 million of the previous fiscal year's commissioned revenue related to NEDO's project"AI Platform for Artificial Intelligence (AI): An Energy Efficient AI Engine and an Integrated
Cloud of Heterogeneous AI engines" was stripped away (Became a subsidized project from thisfiscal year, resulting in the recording of non-operating income)⚫ Some commissioned projects anticipated to be in the first half shifted to the second half
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6

Fiscal Year Ending March 31, 2020 First Half

Results Highlights: B/S
Increased equity through business and capital tie-up with Yamaha Motor
End of March 2019

End of September
2019

Increase-decreaseamountCurrent assets

2,063

2,563

+500

Non-current assets

320

899

+579

2,383

3,462

+1,079Current liabilities

366

194

-172

Non-current liabilities

18

18

-0

Total liabilities

385

213

-172

Total net assets

1,998

3,249

+1,251

Total liabilities and net
assets

2,383

3,462

+1,079(Unit: million yen)

Total assets

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7

1

Explanation of Results, Fiscal YearEnding March 31, 2020 First Half

2

This Fiscal Year's Topics andBusiness Progress3

Fiscal Year Ending March 31, 2020,
Full-Year Business Forecast andBlueprint for Future Growth
Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

8

Areas of Application of Edge AI for Resolving Social Issues
Agriculture

Manufacturing

Unmanned farming equipment

Improvement of productivity associatedwith the labor shortage is an issue

Labor shortage in Japan andincreased global food demand●Forecast of agricultural workers in Japan2.19 million in 2010 → 1.42 million in 2035
(Source: Ministry of Agriculture, Forestry and Fisheries, October 2018)●Forecast of global food demand
4.47 billion tons in 2000 → 6.93 billion tons in 2050
(Source: Ministry of Agriculture, Forestry and Fisheries, September 2019)

Transportation

Internal and externalmonitoring of automobiles

Product quality testing

Examples ofresolving social
issues throughedge AI● Future efforts most emphasized in measures to secure
personnel by the manufacturing industry (large enterprises)
1st: Streamlining of production processes through theutilization of IT, IoT, Big Data, AI, etc.
2nd: Efforts to revise and improve human resource
development methods
3rd: Strengthening of recruitment of new graduates(Source: 2018 White Paper on Manufacturing Industries)

MedicalSupplementary pathology
diagnostic imaging

High burden on Japaneseradiologists

Increase in dangerous driving and rise in numberof fatal accidents involving elderly drivers●The number of CT/MRI readings per radiologist in Japan is
2.78× to 4.17× the number in other developed countries●Number of violations of duty to maintain distance between automobiles
7,133 in 2017 → 13,025 in 2018 → 6,873 in first half of 2019
● Number of fatal accidents involving elderly drivers in 2018 (per licensed population of 100,000)
80 or older: 11.1; 75 or older: 8.2; younger than 75: 3.4(Source: National Police Agency materials)

Source: Kanako K. Kumamaru et al. “Global and Japanese regional variations in radiologist potential
workload for computed tomography and magnetic resonance imaging examinations” Japanese journalof radiology, Feb. 2018

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9

Value Proposition and Monetization by DMP⚫ Provision of domain-specific solutions through a development system integrating algorithms,
software and hardware⚫ Monetization through optimization services and hardware acceleration for systems developed bycustomers
Algorithm development

AI
Optimization for each domain⚫ Mobility- Automatic and autonomous
driving- Advanced safe driving
support systems

Software development⚫ Industrial- FA- Robotics- Medical⚫ MaaS (Mobility as a Service)

Hardware development- Driver monitor- Hiyari-Hatto (Near miss)⚫ Other

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10

Progress of this Fiscal Year's Priority Topics
and Measures in the Time Ahead

1

Expanding RS1 Business2

Expanding Portfolio and Sales of
AI Products

3

Strengthening Collaboration with
Customers and Cultivating SpecificFieldsCopyright (C) Digital Media Professionals Inc. All Rights Reserved.

11

1

Expanding RS1 Business

RS1, Next-Generation Graphics Processor
Now Producing in Volume and Shipping⚫ Adopted by ZEEG, a joint venture
between Sammy and Universal
Entertainment, with shipments topachinko parlors starting in 2019
• As the number of titles scheduled forrelease increases, full expansion of
volume is expected from next fiscal year
• Adoption of ZEEG's industry-standard
chassis by other game machine
manufacturers is increased⚫ Support for android OS, with shipments forarcade machines scheduled to commence
this fiscal year

⚫ Maintaining and strengthening QCD
control, as demand for switching to new
regulation machines will gain momentum
with the full removal of the previous
regulation machines in January 2021

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12

2

Expanding Portfolio and Sales of AI Products

Strengthening of ZIA AI processor IP, module, and software product
IP Core ProductsCompact and highperformance AI
inference processor
IP that uses deeplearning
Application

UpdateInitiativ
es• AI-integrated camera SoC• Autonomous driving SoC• Announcement of DV720(8bit INT support)• Improvement of
performance• Enhancement of line-up

Module Products

Flexible and low
power consumption AI
inference processing
module, mounting
DMP DV700 to FPGA

Software Products and Services• Self-developed and advanced image
recognition engine based on AI andimage-processing technology• Provision of professional services
optimized for each domain

Application• Industrial machinery• Robotics• Medical equipment

Application

Update• Release of C3 Ver7.2(Improved performance)

UpdateInitiatives• Development of productswith high added value, suchas products with built-in
cameras

Initiatives• Driver monitoring• Analysis of near misses• Medical diagnosis• Sale of ZIA Plate• Acceleration of service aimed
at safe driving support (ZIA
SAFE)
• Optimization aimed at growthdomains

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13

Topics - AI Products

ZIA Classifier adopted in the Hiyari-Hatto(near-miss) analysis utilizing Denso Ten's
drive recorder (Announced on October 8)Start of sale of "ZIA™ Plate"number plate recognition software⚫ Adopted in the image analysis service for the"G500/G500Lite" drive recorder provided by Denso
Ten⚫ Utilizing AI and deep learning technology to readregion name, classification number, hiragana andvehicle number with higher precision and 1/100 of theload of OCR technology• Recognition precision of 95% or higher• Recognition speed of 100ms or less(when using DMP C3 module)⚫ Detection and tracking of objects such as tracks,
vehicles, traffic lights and pedestrians from drive
recorder video using AI/deep learning technology
and image processing technology⚫ Ascertaining when, where and what kind of nearmiss incidents occurred in greater detail by
combining various types of sensor data with GPSdata⚫ Enhancement of detection and analysis ofdangerous driving by updating various AI models
and combining these with big data analysis ofvideo and sensor information(Announced on July 30)• Can recognize special plates
and various countries' plates
due to the use of AI• Adopted by major industrial
machinery manufacturer

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14

ZIA Classifier
Powerful support for development of the latest AI systems
optimized for customer domains

Driver Monitoring
SystemOutside-Car Surveillance
SystemAnalysis of near misses

Automatic / autonomous
driving systems for low
speed vehicles

Smart mirrors
Safe driving support
systems
Restar Holdings

Medical diagnostic
imagingCompany A: Privacy
Protection

Examples of systems specialized for customer domains
Deep learning inference engine
Learned model
Computer vision
Advanced Object Recognition /Classification Engines

Optimized library

Creation and optimization of systems specialized for a variety of domains by combining the latest AI algorithms

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15

Topics - Strengthening of Initiatives Aimed at AI Growth Domains
Full implementation of professional services aimed at development of safe driving
support systems (announced on November 8)
Systemizing the necessary functions into "ZIA™ SAFE" for realizing driver monitoring, Hiyari-Hatto (near-miss) detection, and tailgating detection
systems using drive recorders to provide support for the creation of advanced safe driving support systems by customers in a short period

Professional services aimed at safe driving support systems
Systemrequirement
specifications

Image analysis using AI and deep learning
Recognition of people,
vehicles and objects
Detection

Recognition of road andsurrounding conditions

Tracking

Analysis

Face andeyeline detection

Direction
estimation

Pose estimation

Distanceestimation

Privacyprotection

Prediction

Image data
Building blocks of "ZIA™ SAFE"➢➢

Customers' system• Driver monitoring• Near-miss detection• Tailgating detection➢➢

The building blocks of "ZIA™ SAFE" are combined and customized to match customer specifications
Creation of training labels, training, optimization of neural networks, performance evaluation, model compression,acceleration
GUI development
Realization of hardware acceleration according to customers' requirements for acceleration and low power consumption

Drive recorder

Image analysis engine

Image analysis tool
(UI/UX tool)

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16

Topics - AI Ecosystem

Technical partnership with Computermind Corp. in an
integrated environment spanning from creation of AI aimed
at product visual inspections to implementation of edge AI(Announced on October 1)⚫ Technical partnership for jointly creating AI and deep learning solutions
supporting the reduction of labor and automation of product visualinspections• Linking of ZIA™ C3 with Computermind's "DeepEye" development environment for
product visual inspections• It is possible to create a product visual inspection process not dependent on
personal resources or individual skills and know-how by converting the quality
determination know-how that had previously been dependent on the skills andexperience of skilled workers into image data, and automating inspections using AI.
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3

Strengthening Collaboration with Customers
and Cultivating Specific Fields⚫ Business and capital tie-up with Yamaha Motor
Currently performing joint development in business alliance areas such as developmentof automatic / autonomous driving systems in low speed areas, and development oflabor-saving and automation systems in agricultural areas, etc., that use robotics
technology⚫ Deeper exploration of the mobility area
• Currently conducting several projects on vehicle exterior and interior monitoring• Currently conducting several projects on number plate recognition⚫ Emergence into medical AI area
(Adopted in NEDO "Project for Accelerating Innovative AI Chip Development")• Research and development of AI hardware for AI pathology imaging system for cancer
companion diagnostics
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18

Adoption in NEDO Projects

Improvement of technological capability through NEDO projects,
application to own business and realization of social contributions
Adopted in "Project for Accelerating Innovative
AI Chip Development" (subsidized project)

Adopted in "Survey of issues for finding ideas regarding
Technology Development for AI Chip and Next-generation
Computing for High-efficiency and High-speed Processing"(commissioned project)⚫ Purpose⚫ Purpose

As the number of cancer diagnoses increases and advanced diagnosis isrequired, conduct research and development of AI pathology systems forcancer companion diagnosis with the aim of reducing the burden on
pathologists and improving the precision of diagnoses• Hold a contest on the precision of self-driving image recognition technology
for the world's engineers, researchers and students, etc. to discoverexcellent technology, advanced ideas and personnel• Improvement of recognition technology in self-driving vehicle image⚫ Details⚫ Details• Realize a companion diagnosis AI system presenting potential
treatment directions based on past data by combining pathologic image
recognition and clinical/surgery reports and applying AI technology inpathologic diagnosis such as that used to identify cancer tissue• By learning analysis results based on automatic characteristic analysis
algorithms for pathology images and clinical information databases,
perform research and development of AI hardware that realizes realtime image recognition and diagnosis processing on devices when
pathologists perform slide operations using a microscope⚫ Period: July 2019 - March 2020 (with extension)

DMP and SIGNATE jointly run the AI edge contest⚫ Role of DMP• Leveraging its strength of having a development system spanning AI
algorithms, software and hardware to hold and run the contest on theimplementation of AI mainly in edge devices (implementation of AI
algorithms in FPGA, etc.)• Creation of data sets
• Investigation and analysis of collected ideas, organization of effect andissues of discovery of ideas⚫ Period: August 2019 - February 2021 (with extension)

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19

Progress of Business and Capital Tie-UP with Yamaha Motor
Collaborating in the final commercialization process from developing
algorithms by applying AI technology through to mounting on products
Development of systems optimized for each product domain of
Yamaha Motor by using DMP's AI algorithms, software, and hardware
technology
Development centered on professional services is ongoing withthe aim of providing intelligence to the products of Yamaha Motorin the mobility area
⚫ Development of low-speed automatic / autonomous driving
systems (aimed at agriculture, factories, etc.)⚫ Development of advanced safe driving support systems for fastvehicles⚫ Acceleration of development speed from second quarter

Yamaha Motor Land Link Concept
Automated solution vehicle that freely roams
the land while sensing its surroundings.
Its path is determined by AI image recognition,and it can detect and avoid obstacles thatblock its way.

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20

1

Explanation of Results, Fiscal YearEnding March 31, 2020 First Half

2

This Fiscal Year's Topics andBusiness Progress3

Fiscal Year Ending March 31, 2020,
Full-Year Business Forecast andBlueprint for Future Growth
Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

21

Fiscal Year Ending March 31, 2020

Full-Year Business Forecast
The full-year business forecast remains the same as the initial forecast announced on May 10(Unit: million yen)

Net sales

FY 03/2019(Actual)

FY 03/2020(Forecast)

YoY change
Increase-decreaseamountIncrease-decrease
rate (%)

1,086

1,300

214

19.6

Operating income

28

30

2

3.6

Ordinary income

33

30

-3

-9.9

Net income

35

20

-15

-43.1

⚫ Shipments of "RS1" are expected to accelerate in the second half of the year
⚫ The IP core license business and the AI-related professional services business could recover
performance including the closure of ongoing deals from the first half
⚫ An increase of commissioned projects is expected as the business alliance with Yamaha Motor
accelerates in the second half
⚫ Operation of the "AI Edge Contest" that is a NEDO commissioned project will also contribute torevenue from the second half
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22

Blueprint for Future Growth
Evolve into the world's leading "AI Computing Company"
Integrated development of AI algorithms, software and hardware
Expansion into the growing IoT/AI field
Development of ZIA platform
•
•
•
•
•

AI

Processor IP
SoftwareModulesStrengthening of ecosystem with partners
Overseas expansion

AI solutions for Mobility / Industry• Autonomous driving• Robotics

Stable management foundation in theamusement market where we can win
Expand sales of RS1
Aiming for top share in amusement SoC

Phase 1

Expansion of the SoC / Module Business• High value-added modules• High-volume AI products

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

23

<Inquiries>
Digital Media Professionals Inc. Corporate Planning 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.

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

24Appendix

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25

Business description
Business
IP Core*1 License
Business

LSI Product Business

Description

Major Customers

Development and license offer of hardware IP (logic design data etc.) and software IP (mainly hardware
control drivers and supporting tools for contents creation) necessary for drawing detailed images and artificial
intelligence*2 (AI) such as deep learning*3a) License fee
Compensation through offering IP core license in the process of developing products such as home appliancesby customersb) Running royalty
Compensation received according to the number of products incorporating IP core shipped by customers

Semiconductor manufacturer/
Manufacturer of final product withembedded semiconductor

Development, manufacturing (outsourced) and sales of graphics LSI*4 (SoC*5) mainly for amusement
equipment
Development, manufacturing (outsourced) and sales of AI LSI (FPGA*6) for AI equipment

Professional Service
Business

Provision of design service of studying and optimizing the entire SoC system by integrating various IP cores of
the Company, software service of developing and optimizing algorithm based on GPU*7/vision /AI technology
cultivated through development of in-house products, etc.

Semiconductor trading
company/Manufacturer of final
product with embedded
semiconductor
Manufacturer of final product withembedded semiconductor*1: Partial circuit modules within an LSI, designed for a specific function (e.g. graphics IP core). IP stands for Intellectual Property.
*2: Software and system that enable computers to make human-like perceptions and judgments such as computer programs that understand and judge sentences, images, conversations,sounds, etc.
*3: A type of machine learning method that realizes artificial intelligence by utilizing human brain imitated neural network mechanism, which is being commercialized in the field of image
recognition*4: Large-scale integrated circuits composed of silicon wafers (materials with properties intermediate between conductors and insulators used in the manufacture of semiconductor
products). LSI stands for Large Scale Integration and is also called "semiconductor".
*5: Integrated circuit (design method) that integrates a series of functions (systems) required on one semiconductor chip. SoC stands for System on a Chip.
*6: Integrated circuit that allows buyers or designers to set and change the configuration after manufacturing. FPGA stands for Field Programmable Gate Array.
*7: Arithmetic unit or processor specialized in real-time image processing represented by computer games. GPU stands for Graphics Processing Unit. By utilizing its better performance inparallel computing performance than CPU, technologies called GPGPU (General-Purpose computing on GPU) that apply its computing resources to purposes other than image
processing are applied to the AI​​/deep learning field.
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26

Major Activities (Fiscal Year Ending March 31, 2020)
Each item is linked to PR/IR news (in Japanese or English) of DMP’s website.
Date ofAnnouncement/Event

Details

April 3 - April 5, 2019

Partners exhibited ZIATM C3 KITs at AI (Artificial Intelligence) EXPO

April 10, 2019

Release of ZIA™ C3 KIT Ver. 7.1

May 10, 2019

Business and capital alliance with Yamaha Motor Co., Ltd.

May 16, 2019

Image processing processor "RS1" adopted by ZEEG, a joint venture between Sammy and Universal Entertainment as units and parts forpachinko/pachislot machines

May 17, 2019

Acquired certification of International standard "ISO9001"

May 20 - May 23, 2019

Exhibit at "Embedded Vision Summit 2019" (Santa Clara, California, USA)May 21, 2019

Release of ZIA™ DV720 IP Core

June 7, 2019

President Yamamoto invited to the Pitch to the Minister hosted by Mr. Takuya Hirai, Minister in charge of Information Technology Policy

June 12 - June 14, 2019

Exhibit at "Image Sensing Show 2019"

June 24, 2019

Release of ZIA™ C3 KIT Ver. 7.2

July 24, 2019

Mr. Takuya Hirai, Minister in charge of Information Technology Policy, visited DMP

July 30, 2019

Release of license plate recognition software "ZIA™ Plate"August 7, 2019
October 1, 2019
October 8, 2019
October 25, 2019
November 8, 2019

"Research and development of AI hardware for AI pathology imaging system for cancer companion diagnostics" adopted as NEDO’s "Projectfor Accelerating Innovative AI Chip Development"
Technical partnership with Computermind Corp. in an integrated environment spanning from creation of AI aimed at product visual inspections
to implementation of edge AI
Image recognition engine ZIA™ Classifier is adopted for Hiyari-Hatto (near-miss) image analysis for DENSO TEN Drive Recorder
Adopted for NEDO project of "Survey of issues for finding ideas regarding Technology Development for AI Chip and Next-generation
Computing for High-efficiency and High-speed Processing"
Going into full scale in professional services for safe driving support system development. Systemizing the necessary functions into "ZIA™
SAFE" for realizing the driver monitoring, Hiyari-Hatto (near-miss) detection, and tailgating detection systems using drive recorders
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27