Nine months ended December 31, 2019

Financial Results Supplementary Information

Digital Media Professionals Inc.
February 12, 2020
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.

Table of contents
Business description・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・3

Nine months ended December 31, 2019 Results Highlights
P/L・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 4
Net Sales by Business ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 5

B/S・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 6
Fiscal Year Ending March 31, 2020
Full-Year Business Forecast・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 7

Blueprint for Future Growth・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 8
Reference) Quarterly net sales trend・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・9Reference) Quarterly operating income trend・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・10

Reference) Major Activities (Fiscal Year Ending March 31, 2020)・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・11
Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

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Business description
Business
IP Core*1 License
BusinessLSI Product BusinessDescription

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 customersc) Maintenance and service fee: Revenue from maintenance of IP based on maintenance contract, etc.

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 ofthe 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 finalproduct with embeddedsemiconductor

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

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Nine months ended December 31, 2019

Results Highlights: P/LAlthough net sales were up but losses worsened year on year, a sustainable earnings base wasestablished by the stabilization of the management base due to the increase in sales of theamusement LSI RS1 and the expansion of AI business line
(Unit: million yen)

Net sales
OperatingincomeOrdinaryincome
Net income

Nine months ended Nine months ended
Dec 30, 2018
Dec 30, 2019

Amount change

493

661

-168

-53

-159

-105

-49

-166

-117

-49

-167

-117

⚫ Net sales increased mainly because sales of RS1 for mas-production compensated 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 lower profitability
attributable to the business mix, an increase in overall expenses mainly for strengthening thedevelopment system, and recording of share issuance cost
* New Energy and Industrial Technology Development Organization
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Nine months ended December 31, 2019

Results Highlights: Net Sales by Business
IP core license businessSales¥114 million

YoY change-¥62 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

LSI product business

Sales¥333 million

YoY change +¥311 million⚫ Recorded sales of RS1 for volume production and "ZIA C3" AI FPGA modules

Professional services business

Sales¥214 million

YoY change-¥80 million⚫ ¥125 million of the previous fiscal year's commissioned revenue related to NEDO's project"An Energy Efficient AI Engine and an Integrated Cloud of Heterogeneous AI engines" wasstripped away (Became a subsidized project from this fiscal year, and recorded ¥47 million in non-operating income
including revenue related to cancer companion diagnosis)

On the other hand, commissioned revenue of 14 million yen was recorded with the startof the NEDO’s "AI Edge Contest" project⚫ Mobility-related contract development projects including Yamaha Motor increased
Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

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Nine months ended December 31, 2019

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

End ofDecember 2019

Amountchange

Current assets

2,063

2,667+604

Cash & deposits +902, Accounts receivable -335

Non-current assets

320879+559

Investment securities +600

2,383

3,547+1,164

Current liabilities

366

217

-149

Non-current liabilities

1818-0Total liabilities

385

235-149

Total net assets

1,998

3,312+1,314

Total liabilities andnet assets

2,383

3,547+1,164(Unit: million yen)

Total assets

Major factors

Accounts payable -136

Capital stock +742, Capital surplus +742,
Retained earnings -167

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6

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
Operatingincome
Ordinaryincome
Net income

YoY change

FY 03/2019(Actual)Nine months
Dec 31, 2019
(Actual)

FY 03/2020(Forecast)

1,086661

1,300

214

19.6

28-15930

2

3.6

33-16630-3-9.935-16720-15-43.1

IncreaseIncreasedecrease amount decrease rate (%)

Forecast for the fourth quarter⚫ Steady shipments of "RS1" are expected to continue during the fourth quarter⚫ Large projects are expected in the IP core license business, resulting in higher overallprofitability⚫ In the AI-related professional services business, an increase of commissioned projects fromYamaha Motor, drive recorder-related customers, license plate-related customers, andindustrial customers is expected in addition to the revenue from the operation of "AI Edge
Contest", a NEDO commissioned project
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7

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•••••

AIProcessor 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.

8Reference) Quarterly net sales trend593(Unit: million yen)

418

368
347

314

301

214

232
168

149

141 137

188

184
142

87
60

43

1st Quarter61

2nd QuarterMar-16

Mar-17

3rd QuarterMar-18Mar-194th QuarterMar-20

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9Reference) Quarterly operating income trend
138

132

(Unit: million yen)

81

48

35

29

24

22-21-36-52-118-37-53

-61

-114
-131
-154

-233

1st Quarter

2nd QuarterMar-16

Mar-17

3rd QuarterMar-18Mar-194th QuarterMar-20

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

10Reference) 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 of Announcement/EventDetails

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, 2019October 1, 2019
October 8, 2019
October 25, 2019
November 8, 2019
December 10, 2019

"Research and development of AI hardware for AI pathology imaging system for cancer companion diagnostics" adopted as NEDO’s "Project for
Accelerating Innovative AI Chip Development"
Technical partnership with Computermind Corp. in an integrated environment spanning from creation of AI aimed at product visual inspections toimplementation 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 forHigh-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" forrealizing the driver monitoring, Hiyari-Hatto (near-miss) detection, and tailgating detection systems using drive recorders
Joined the international industry organization “The Autoware Foundation” that aims at the industry standard for autonomous driving OS
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11

<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.

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