Slide 1: Consolidated Financial Results for the Fiscal Year Ending March 31, 2022
Consolidated Financial Results for the Fiscal Year Ending March 31, 2022 (From April 1, 2021 to March 31, 2022) Financial Results Briefing Materials May 10, 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 2023 FY03/23 Initiatives Return to Shareholders for Fiscal Year Ending March 31, 2023 2 Copyright © Digital Arts Inc.
Slide 3: Consolidated Results Highlights
Material on Consolidated Financial Results 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. Record high in consolidated net sales consolidated net sales 9,051 mill
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 Contracts 9,210million yen users along with the increasingly common practice of teleworking and growth in new customers for DAC (△2,258 million yen or △19.7% • Ord
Slide 6: Consolidated Results Summary
Consolidated Results Summary FY March 2022 FY March 2021 FY March 2022 Change YoY Full-Year （(Million yen) Forecast Contracts 11,469 9,210 △19.7％ - Net sales 6,825 9,051 +32.6% 9,000 Cost of goods sold 1,946 2,676 +37.5% 2,700 Gross profit 4,878 6,374 +30.7% 6,300 Selling, general and administrative
Slide 7: Trend in Consolidated Contracts
Trend in Consolidated Contracts Consolidated contracts increased steadily, excluding the impact of the GIGA School Concept. 7 (Million yen) • Consolidated contracts totaled 9,210 million Trend in Contracts yen, down 19.7% year on year. Steady progress continued, excluding the impact of License sales
Slide 8: Trend in Consolidated Contracts
Trend in Consolidated Contracts Brisk contract amount excluding the impacts of GIGA School Concept projects Trend in Contracts (Million yen) • Contract amount rose considerably by 24.7% License sales Cloud service GIGA School Concept or 1,502 million yen year on year from 6,083 products/Others produ
Slide 9: Trend in Order Backlog
Trend in Order Backlog Contracts for cloud service products grew while multi-year projects for the GIGA School Concept decreased. Net sales will decrease for the fiscal year after next and later. (Million yen) Trend in Order Backlog • Cloud service products cause net sales Sales to be recorded in th
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 9,051 (Million yen) Net sales and operating profit reached record highs. 2,364 1Q 2Q 3Q 4Q 6,823 5,839 5,639 2,074 2,134 5,115 1,674 1,500 1,565 4,126 1,649 1,402 1,376 1,101 2,977 2,632 1,083 2,627 1,901 2,326 1,004 945 954 1,687 1,546 1,514 679 1,309
Slide 13: Consolidated Cost of Goods Sold and SG&A Expenses
Consolidated Cost of Goods Sold and Selling, General and Administrative Expenses (Million yen) Change FY March 2021 FY March 2022 Main Factors for Change YoY Cost of goods sold 1,946 2,676 +729 DAC increased consultants Labor 1,192 1,440 +248 Bonuses to be paid to employees increased due to sales gr
Slide 14: Quarterly Trend in Consolidated Cost of Goods Sold
Quarterly Trend in Consolidated Cost of Goods Sold • Bonuses to be paid to employees increased due to sales growth. • Cloud server expenses will rise as a result of sales expansion of cloud products. (Million yen) Transfer to other 他勘定振替高 売上原価 Cost of goods sold accounts その他 Other 通信費 Communication
Slide 15: Quarterly Trend in Consolidated SG&A Expenses
Quarterly Trend in Consolidated Selling, General and Administrative Expenses • Bonuses to be paid to employees increased due to sales growth. • Increase due to online events held for partners and press advertising. Personnel 人件費 広告宣伝費 Advertising その他 Overseas 海外費用 (Million yen) expenses Other expens
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. As of end of FY As of end of FY Change from end (Million yen) March 202
Slide 17: Non-consolidated Results Highlights
Material on Consolidated Financial Results the Fiscal Year Ending March 31, 2022 Non-consolidated Results Highlights 17 Copyright © Digital Arts Inc.
Slide 18: Summary of Non-consolidated Results
Summary of Non-consolidated Results FY March 2022 （単位：百万円） (Million yen) FY March 2021 FY March 2022 Change YoY Full-Year Forecast Contracts 10,693 8,163 △23.7% - Net sales 6,074 8,003 +31.8% 7,850 Cost of goods sold 1,273 1,821 +43.0% 1,800 Gross profit 4,801 6,182 +28.8% 6,050 Selling, general and
Slide 19: By Market
Material on Consolidated Financial Results 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 Trend in Consolidated Contract Amount by Market (Million yen) • In the enterprise sector market, the 11,469 contract amount was up 532 million 430 yen, or 13.0%, given an increase in 9,210 orders received for the i-FILTER and +3.5% (△19.7%) m-FILTER series and
Slide 21: Consolidated Net sales by Market
Consolidated Net sales by Market Trend in Consolidated Net Sales by Market (Million yen) 9,051 • In the enterprise sector market, net (+32.6%) sales were up 575 million yen, or 444 Consumer 14.5%, due to an increase in orders received for the i-FILTER and m-FILTER +2.8% series as a result of an incr
Slide 22: Trend in Consolidated Net Sales by Market
Trend in Consolidated Net Sales by Market (Million yen) Record sales were achieved in both the enterprise sector and public 9,051 sector markets thanks to the increase in teleworking and advances in ICT 444 Consumer education in schools. 6,825 Public 432 4,046 5,841 5,641 516 445 5,058 5,116 2,408 3
Slide 23: Quarterly Trend in Consolidated Net Sales by Market
Quarterly Trend in Consolidated Net Sales by Market Net sales for the fourth quarters reached a record high, bolstered by strong performances in the enterprise sector and public sector markets. (Million yen) 2,632 115 2,364 116 2,134 2,074 Consumer 98 109 1,919 113 1,313 1,687 1,649 1,020 1,514 1,50
Slide 24: Enterprise Sector
Material on Consolidated Financial Results 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 Trend in Net Sales in Enterprise Sector Market by Product i-FILTER series m-FILTER series FinalCode DAC Other • Sales of the i-FILTER series remained strong, rising 94 million yen, or 4.0%, in 4,559 response to growing corporate demand for (Million ye
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) 65 1,015 91 55 780 58 End of FY March End of FY March FY March 2021 FY March 2022 FY March 2021 FY March 2022 2021 2022 • DAC actively hired
Slide 27: Public Sector
Material on Consolidated Financial Results the Fiscal Year Ending March 31, 2022 Public Sector 28 Copyright © Digital Arts Inc.
Slide 28: Net Sales of Public Sector Market by Product
Net Sales of Public Sector Market by Product Trend in Net Sales of Public Sector Market by Product i-FILTER series m-FILTER series FinalCode その他 Other • In addition to posted sales of GIGA School Concept projects that lasted (Million yen) 4,046 from the previous fiscal year, (+68.0%) contracts gaine
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. Competitors (Less than 10 companies) 27% i-FILTER 49% Charged filtering 51% already introduced 73% • The proportion of Boards of Education • i-FILTER's share grew
Slide 30: Consumer Sector
Material on Consolidated Financial Results the Fiscal Year Ending March 31, 2022 Consumer Sector 32 Copyright © Digital Arts Inc.
Slide 31: Net Sales of Consumer Sector Market by Product
Net Sales of Consumer Sector Market by Product Trend in Net Sales of Consumer Sector Market by Product For mobile terminals,other For computers • In products for computers, sales of multiple-year (Million yen) package products and i- 444 (+2.8%) FILTER® for Multi-Device, 432 which are available on m
Slide 32: Full-Year Financial Forecast for Fiscal Year Ending March 31, 2023
Material on Consolidated Financial Results the Fiscal Year Ending March 31, 2022 Full-Year Financial Forecast for Fiscal Year Ending March 31, 2023 34 Copyright © Digital Arts Inc.
Slide 33: Forecasts for Fiscal Year Ending March 31, 2023 (Consolidated)
Forecasts for Fiscal Year Ending March 31, 2023 (Consolidated) FY March 2022 FY March 2023 (Million yen) Full-Year Full-Year Change % Change Results Forecasts Net sales 9,051 10,500 ＋1,448 ＋16.0 % Cost of goods sold 2,676 3,350 ＋673 ＋25.2 % Gross profit 6,374 7,150 ＋775 ＋12.2 % Gross profit margin 7
Slide 34: Forecasts for Fiscal Year Ending March 31, 2023 (Non-consolidated)
Forecasts for Fiscal Year Ending March 31, 2023 (Non-consolidated) FY March 2022 FY March 2023 Full-Year Full-Year Change % Change (Million yen) Results Forecasts Net sales 8,003 9,000 ＋996 ＋12.4 % Cost of goods sold 1,821 2,150 ＋328 ＋18.0 % Gross profit 6,182 6,850 ＋667 ＋10.8 % Gross profit margin
Slide 35: Status of Consolidated Net Sales
Status of Consolidated Net Sales (Million yen） Consolidated Forecast • Net sales that will be carried over to and posted for the fiscal year in question will increase given an increase in the number of contracts acquired in previous fiscal years in connection with the GIGA School Concept in the publ
Slide 36: Status of Consolidated Net Sales
Status of Consolidated Net Sales (Million yen） Forecast by Market • In response to corporate needs for total 10,500 security solutions, we will enhance the (+16.0%) product lineup and improve links with 450 Consumer other companies' products in order to attract new clients. 9,051 +1.2% • We will inc
Slide 37: Consolidated Cost of Goods Sold and SG&A Expenses
Consolidated Cost of Goods Sold and Selling, General and Administrative Expenses Results for FY Forecast for FY Change (Million yen) Main Factors for Change March 2022 March 2023 YoY Cost of goods sold 2,676 3,350 +25.2% Labor 1,440 1,600 +11.1% DAC will increase the number of consultants. Depreciat
Slide 38: Status of Consolidated Cost of Goods Sold
Status of Consolidated Cost of Goods Sold Labor costs are expected to rise because DAC will increase the number of consultants. Communication expenses are expected to increase as a result of sales expansion of cloud products. (Million yen) Status of Consolidated Cost of goods sold FY March Communica
Slide 39: Status of Consolidated SG&A Expenses
Status of Consolidated Selling, General and Administrative Expenses Recruiting expenses (in the "other" category) will increase for increasing consulting personnel at DAC. (Million yen) Status of Consolidated Selling, General and Administrative Expenses FY March Personnel Advertising FY March Other
Slide 40: FY03/23 Initiatives
Material on Consolidated Financial Results the Fiscal Year Ending March 31, 2022 FY03/23 Initiatives 42 Copyright © Digital Arts Inc.
Slide 41: Current Circumstances Surrounding Cyber Security Measures
Current Circumstances Surrounding Cyber Security Measures (1) Mounting needs for Measures against malware (2) comprehensive security infections Diversification of cloud services and the spread of remote working and home Malware threats are intensifying due to learning meant an increase in ICT assets
Slide 42: (1) Mounting Needs for Comprehensive Security
(1) Mounting Needs for Comprehensive Security Diversification of cloud services and the spread of remote working and home learning meant an increase in ICT assets that need to be protected and expansion of the domain of security threats. Security solutions providing broader security measures than ev
Slide 43: (1) Mounting Needs for Comprehensive Security
(1) Mounting Needs for Comprehensive Security To meet the needs for comprehensive security, roll out Digital Arts' original next- generation secure web gateways (SWGs) featuring enhanced functions of the existing URL filtering software (i-FILTER) and a wide range of additional security solutions. (A
Slide 44: (2) Measures against Malware Infections
(2) Measures against Malware Infections Financial loss from ransomware and confidential information theft by targeted attacks rank high among the 10 major security threats with the diversification and sophistication of cyberattacks. Rank * The ordinal number in parentheses ( ) represents the Ten maj
Slide 45: (2) Measures against Malware Infections
(2) Measures against Malware Infections m-FILTER and i-FILTER provide protection against infection through e-mail for Digital Arts products. FinalCode and i-FILTER prevent information theft even in the case of intrusion by any means other than e-mail. The status of zero reports on infection damage i
Slide 46: (3) Strengthening Security Measures for Public Institutions
(3) Strengthening Security Measures for Public Institutions Security cloud projects for prefectural governments generally proceed as scheduled. Procurement for improving the resilience for municipal governments is making progress following completion of procurement for prefectural governments and it
Slide 47: (3) Strengthening Security Measures for Public Institutions
(3) Strengthening Security Measures for Public Institutions All solutions shown in the outline of countermeasures for municipal information systems are possible using combinations of Digital Arts products. We will win projects mainly for m-FILTER with Anti-Virus and Sandbox. Overview of Solutions fo
Slide 48: (3) Strengthening Security Measures for Public Institutions
(3) Strengthening Security Measures for Public Institutions A number of cases of damage from cyber attacks sustained by medical institutions have occurred in recent years. In light of that, the security guidelines for the medical industry will be strengthened. It is possible to provide large medical
Slide 49: (4) Enhancing Security Measures for GIGA School Devices
(4) Enhancing Security Measures for GIGA School Devices Some boards of education that introduced free DNS filtering solutions are shifting to i- FILTER and other paid filtering solutions for purposes of strengthening security and reducing clerical workloads. Introduction of filtering by Boards of Ed
Slide 50: Penetration of "White Operation"
Penetration of "White Operation" Realizing safe office IT environments protected Trend in i-FILTER v10 and m-FILTER v5 through "White Operation" Licenses Used (Thousand licenses) 12,000 10,022 7,958 4,665 We reached the March 2022 target of 3,604 10 million licenses. We will broaden the product line
Slide 51: Acceleration of Synergies within the Group
Acceleration of Synergies within the Group We release a one-stop service encompassing sales, construction and operation of Digital Arts products. The use of D-Alert paves the way for services from the detection of incidents to recovery. Consulting services Clients in the enterprise ＆ sector market “
Slide 52: 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 advisory D Alert QuickIR option Identify current issues through security assessm
Slide 53: Return to Shareholders for Fiscal Year Ending March 31, 2023
Material on Consolidated Financial Results the Fiscal Year Ending March 31, 2022 Return to Shareholders for Fiscal Year Ending March 31, 2023 55 Copyright © Digital Arts Inc.
Slide 54: Return to Shareholders for Fiscal Year Ending March 31, 2023
Return to Shareholders for Fiscal Year Ending March 31, 2023 We are planning to pay dividends as follows to return a portion of our earnings to our shareholders. Target payout ratio for fiscal year ending March 31, 2023: 32.4% Annual dividends of surplus forecasted for fiscal year ending March 31, 2
Slide 55: 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 56: For internet convenience, safety and security
-For internet convenience, safety and security - Copyright © 2015 Digital Arts Inc.