Digital Arts Inc. · TSE:2326
Digital Arts — Q3 FY03/22 Earnings Presentation
51 slides from Digital Arts's earnings presentation, Jan 31, 2022
Slide 1: Consolidated Financial Results for the First Three Quarters FY March 2022
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.
Slide 2: Contents
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.
Slide 3: Consolidated Results Highlights
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.
Slide 4: Key Points
Key Points Business has grown steadily, with the acquisition of projects due to the 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
Slide 5: Consolidated Results Highlights
Consolidated Results Highlights • Orders increased in the enterprise sector market, thanks to an increase in the number of cloud service 6,465 million yen users along with the increasingly common practice of teleworking and growth in new customers for DAC. Contracts (down △1,096 million yen or △14.5
Slide 6: Consolidated Results Summary (First Three Quarters of the Year)
Consolidated Results Summary (First Three Quarters of the Year) Progress FY March 2022 (Million yen) First 3 Quarters First 3 Quarters Vs Full- Change YoY Full-Year FY March 2021 FY March 2022 year Forecast Forecast Contracts 7,562 6,465 △14.5% - Net sales 4,750 6,686 +40.7% 9,000 74.3% Cost of good
Slide 7: Trend in Consolidated Contracts
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 • Consolidated contracts totaled 6,465 million 7,562 △14.5% yen, down 14.5% year on year.
Slide 8: Trend in Consolidated Contracts
Trend in Consolidated Contracts Brisk contract amount excluding the impacts of GIGA School Concept projects Trend in Contracts • Contract amount rose considerably by 32% Tren (Million yen) or 1,317 million yen year on year from 4,124 License sales Cloud service GIGA School Concept projects million y
Slide 9: Trend in Order Backlog
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) • Cloud service product
Slide 10: Supplement: Method of recording sales by product
Supplement）Method of recording sales by product Contract period (n months) ＋1 month maintenance fee • License fees make up a large Equivalent to Order backlog ・・・ proportion of the contract amount. This portion is License recorded in a lump sum as Amount equivalent to maintenance fee sales in the mo
Slide 11: Supplement: Relationship between contract amount and sales by product
Supplement) Relationship between contract amount and 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 b
Slide 12: Quarterly Trend in Net sales, Operating profit
Quarterly Trend in Net sales, Operating profit (Million yen) For the third quarter, net sales and operating profit hit record 6,686 highs, reflecting strength in the enterprise sector market and in the public sector market. 1Q 2Q 3Q 2,134 4,750 4,166 4,141 3,551 1,649 1,402 1,376 3,024 2,632 1,083 9
Slide 13: Consolidated Cost of Goods Sold and SG&A Expenses
Consolidated Cost of Goods Sold and Selling, General and Administrative Expenses First 3 Quarters First 3 Quarters Change Main Factors for Change (Million yen) FY March 2021 FY March 2022 YoY Cost of goods sold 1,362 1,940 +577 DAC increased consultants Labor 842 1,090 +248 Bonuses to be paid to emp
Slide 14: Quarterly Trend in Consolidated Cost of Goods Sold
Quarterly Trend in Consolidated Cost of Goods Sold 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. (Million yen) Cloud server expenses grew
Slide 15: Quarterly Trend in Consolidated SG&A Expenses
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 exp
Slide 16: Summary of Consolidated Balance Sheet
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 As of end of 3Q FY As of end of FY As of end of 3Q FY from end o
Slide 17: Non-consolidated Results Highlights
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.
Slide 18: Summary of Non-consolidated Results (First Three Quarters)
Summary of Non-consolidated Results(First Three Quarters) FY March 2022 Full year (Million yen) First 3 Quarters First 3 Quarters Change YoY Full-Year Achievem FY March 2021 FY March 2022 Forecast ent rate Contracts 7,005 5,706 △18.5% - Net sales 4,219 5,928 +40.5% 7,850 75.5% Cost of goods sold 918
Slide 19: By Market
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.
Slide 20: Consolidated Contract Amount by Market
Consolidated Contract Amount by Market (Million yen) 7,562 • In the enterprise sector market, the 321 6,465 contract amount was up 449 million yen, +4.4% (△14.5%) or 16.2%, given an increase in orders 335 Consumer received for the i-FILTER and m-FILTER series and the expansion of DAC as a 4,472 2,91
Slide 21: Consolidated Net Sales by Market
Consolidated Net sales by Market (Million yen) 6,686 (+40.7%) • In the enterprise sector market, net 327 Consumer sales were up 528 million yen, or +1.4% 18.8%, due to an increase in orders received for the i-FILTER and m-FILTER 4,750 Public 3,026 series as a result of an increase in 323 +86.4% tele
Slide 22: Trend in Consolidated Net Sales by Market
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 (Million yen) and advances in ICT education in schools. 6,686 327 Consumer 4,750 3,026 Public 4,166 4,141 323 3,551 37
Slide 23: Quarterly Trend in Consolidated Net Sales by Market
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 98 109 1,919 113 1,313 1,687 1,649 1,514 1,500 104 103 785 1,413
Slide 24: Enterprise Sector
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.
Slide 25: Net Sales in Enterprise Sector Market by Product
Net Sales in Enterprise Sector Market by Product i-FILTER series m-FILTER series FinalCode DAC Other (Million yen) 3,332 • Sales of the i-FILTER series remained (+18.8%) 2 strong, rising 123 million yen, or 7.4%, in response to growing corporate demand for 2,804 755 cybersecurity due to increased 6
Slide 26: Net Sales Growth and Expansion of DAC on a Non-consolidated Basis
Net Sales Growth and Expansion of DAC on a Non- consolidated Basis Number of consultants Consulting sales* Solution sales* (Persons) (Million yen) (Million yen) 68 62 730 55 549 43 End of FY March End of 3Q FY March FY Mar. 2021 FY Mar. 2022 FY Mar. 2021 FY Mar. 2022 2021 2022 3Q 3Q 3Q 3Q • Consulti
Slide 27: Public Sector
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.
Slide 28: Net Sales of Public Sector Market by Product
Net Sales of Public Sector Market by Product i-FILTER series m-FILTER series FinalCode Other (Million yen) 3,026 (+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 +18.5% and local government projects
Slide 29: GIGA School Concept
GIGA School Concept GIGA School Status*1 Introduction of charged filtering Share of charged filtering introduced Not yet introduced, etc. 29% Competitors (Less than 10 companies) i-FILTER Charged filtering 49% 51% already introduced 71% • The proportion of Boards of Education • i-FILTER's share grew
Slide 30: Consumer Sector
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.
Slide 31: Net Sales of Consumer Sector Market by Product
Net Sales of Consumer Sector Market by Product (Million yen） For mobile terminals,other For computers 327 323 (＋1.4%) • In products for computers, sales of multiple-year package products and 146 i-FILTER® for Multi-Device, which 155 △5.8% can be available on multiple terminals, remained strong. • Sa
Slide 32: Full-Year Financial Forecast for Fiscal Year Ending March 31, 2022
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.
Slide 33: Comparison of Previous Year Results and Forecasts (Consolidated)
Comparison between Results for Previous Fiscal Year and Forecasts for Fiscal Year Ending March 31, 2022 (Consolidated) FY March 2021 FY March 2022 (Million yen) Full-Year Full-Year Change % Change Results Forecasts Net sales 6,825 9,000 ＋2,175 ＋31.9 % Cost of goods sold 1,946 2,700 ＋754 ＋38.7 % Gros
Slide 34: Comparison of Previous Year Results and Forecasts (Non-consolidated)
Comparison between Results for Previous Fiscal Year and Forecasts for Fiscal Year Ending March 31, 2022 (Non-consolidated) FY March 2021 FY March 2022 (Million yen) Full-Year Full-Year Change % Change Results Forecasts Net sales 6,074 7,850 ＋1,776 ＋29.2 % Cost of goods sold 1,273 1,800 ＋527 ＋41.4 %
Slide 35: Status of Consolidated Net Sales
Status of Consolidated Net Sales (Million yen） • Net sales carried over will increase due to the impact of the amount of contracts acquired in the public sector market the previous fiscal year in connection with the GIGA School Concept. • New contracts of DAJ are expected to amount to 7,354 million
Slide 36: Status of Consolidated Net Sales
Status of Consolidated Net Sales 9,000 • We will further develop existing clients by (Million yen） (+31.9%) promoting the cross-utilization of Digital Arts 450 Consumer products as security measures for enterprises and acquire new clients by strengthening products. +4.1% 6,825 • We will gain new cus
Slide 37: Consolidated Cost of Sales and SG&A Expenses
Consolidated Cost of Sales and Selling, General and Administrative Expenses Results for FY Forecast for FY Change (Million yen） March 2022 YoY Main Factors for Change March 2021 Cost of goods sold 1,946 2,700 +38.7% Labor 1,192 1,480 +24.1% DAC increased consultants Depreciation 810 850 +4.8% Deprec
Slide 38: FY03/22 Initiatives
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.
Slide 39: FY03/22 Initiatives
FY03/22 Initiatives We will enhance products and functions to meet customers' needs for security measures in more extensive areas to expand sales of existing products. Protection against unknown threats Realization of “white operation” to prevent Web security malware infections via the web or emails
Slide 40: Protection against unknown threats
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 example
Slide 41: Penetration of White Operation
Penetration of "White Operation" Trend in i-FILTER v10 and m-FILTER v5 licenses used Realizing safe office IT environments protected through "White Operation" （Thousand licenses） 10,000 9,506 7,958 We will accelerate the spread of White Operation by continuously 4,665 enhancing products and function
Slide 42: Overview of DigitalArts gateway security solutions
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-mail Internet environment Enhancing SWG Web filtering (White Operation) SWG Addition of AV/sandbox functions this fiscal year E
Slide 43: Acceleration of GIGA School Concept
Acceleration of GIGA School Concept Introduction of filtering by Boards of Education*1 March 2021 December 2021 40% 33% Not yet 未導入introduced Not yet 未導入introduced 10% 18% 無償ﾌｨﾙﾀﾘﾝｸﾞ Free filtering 11% 無償ﾌｨﾙﾀﾘﾝｸﾞ Free filtering 11% 有償ﾌｨﾙﾀﾘﾝｸﾞ DNS Filtering Pay filtering 12% 有償ﾌｨﾙﾀﾘﾝｸﾞ Pay filtering
Slide 44: Measures to enhance resilience of municipal information systems
Measures to enhance resilience of municipal information systems Procurement for security cloud projects and projects to enhance resilience will be completed by FY2022. Procurement for municipalities will be carried out after completion of procurement for prefectures. Schedule for public-sector proje
Slide 45: Measures to enhance resilience of municipal information systems
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 the times including the digitization of government processes an
Slide 46: Acceleration of Synergies within the Group
Acceleration of Synergies within the Group We 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 servic
Slide 47: Acceleration of Synergies within the Group
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 lite
Slide 48: Return to Shareholders for Fiscal Year Ending March 31, 2022
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.
Slide 49: Return to Shareholders for Fiscal Year Ending March 31, 2022
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 shar
Slide 50: Notes on Descriptions
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 made by the management of Digital Arts Inc. on the basis of information currently availa
Slide 51: For internet convenience, safety and security
-For internet convenience, safety and security - Copyright © 2015 Digital Arts Inc.