Digital Arts Inc. · TSE:2326

Digital Arts — FY2016 Earnings Presentation

34 slides from Digital Arts's earnings presentation, May 9, 2017

  1. Slide 1: FY03/17 Consolidated Financial Results Reference Slides

    Digital Arts Inc. (2326) FY03/17 Consolidated Financial Results For Fiscal Year Ended March 31, 2017 （April 1, 2016 through March 31, 2017) Reference Slides May 9, 2017 Copyright © 2015 Digital Arts Inc.

  2. Slide 2: Key Financial Points

    FY03/17 Financial Results Reference Slides KEY FINANCIAL POINTS 2 Copyright © 2017 Digital Arts Inc.

  3. Slide 3: Key Financial Points

    Key Financial Points ① Dramatic increase in demands related to Local Government Security Cloud and Local Government Security Enhancement initiatives  Sales for i-FILTER series and m-FILTER series, the main offerings for the Public Sector, increased as a result of Ministry of Internal Affair and Com

  4. Slide 4: Consolidated Results Highlights

    FY03/17 Financial Results Reference Slides CONSOLIDATED RESULTS HIGHLIGHTS 4 Copyright © 2017 Digital Arts Inc.

  5. Slide 5: FY03/17 Highlights (Consolidated)

    FY03/17 Highlights (Consolidated) ¥ 5,058 million （YoY +¥1,058 million／+26.4％） Consolidated Net Sales Dramatic increase due mainly to large sales related to Local Government Security Cloud initiatives in the public sector. Operating ¥ 1,824 million （YoY +¥817 million／+81.2％） Income Personnel expense

  6. Slide 6: FY03/17 Summary (Consolidated Results)

    FY03/17 Summary Consolidated Results (million yen) FY03/17 FY03/16 FY03/17 YoY Forecast* Net Sales 4,000 5,058 +26.4% 5,000 Gross Profit 3,074 4,051 +31.8% ― Selling, General and Administration 2,067 2,227 +7.7% ― Expense Operating Income 1,006 1,824 +81.2% 1,700 Ordinary Income 994 1,811 +82.2% 1,7

  7. Slide 7: FY03/17 Summary (Non-Consolidated Results)

    FY03/17 Summary Non-Consolidated Results (million yen) FY03/17 FY03/16 FY03/17 YoY Forecast* Net Sales 4,018 5,104 +27.0% 5,000 Gross Profit 3,123 4,028 +28.9% ― Selling, General and Administration 1,788 1,960 +9.6% ― Expense Operating Income 1,335 2,067 +54.9% ― Ordinary Income 1,328 2,056 +54.8% 1

  8. Slide 8: Contributing Factors to Net Sales

    Contributing Factors to Net Sales m-FILTER FinalCode Others Series Sales 78 i‐FILTER Sales 93 Series Sales 316 569 YoY JPY + 1,058 million 4,000 5,058 Consolidated Consolidated Net Sales Net Sales FY03/16 FY03/17 8 Copyright © 2017 Digital Arts Inc.

  9. Slide 9: Contributing Factors to Operating Income

    Contributing Factors to Operating Income Domestic Personnel Ad & Promo Sales Expense Expense (incl. events for △173 domestic partners) Others △38 1,058 YoY JPY + 817 million 1,006 1,006 1,824 Consolidated Consolidated Operating Income Operating Income FY03/16 FY03/17 9 Copyright © 2017 Digital Arts

  10. Slide 10: Consolidated Net Sales Trend

    Consolidated Net Sales Trend （million yen） Continue to mark RECORD HIGH sales 5,058 （126%） 4,000 （118%） 3,402 3,027 2,906 （112%） 2,707 （104%） （107%） 2,306 （117%） 2,190 （105%） 1,852 （118%） 1,700 （109%） 1,387 （123%） （100%） FY 03/07 FY 03/08 FY 03/09 FY 03/10 FY 03/11 FY 03/12 FY 03/13 FY 03/14 FY 03/1

  11. Slide 11: Consolidated Net Sales Trend (by Quarter)

    Consolidated Net Sales Trend (by Quarter) （million yen） Exceeded YoY net sales in ALL QUARTERS 1,503 1,540 （123%） （133%） 1,253 （116%） 1,131 1,077 1,098 （121%） （135%） （119%） 937 916 902 （113%） 831 （97%） 803 811 （114%） （106%） 715 （119%） （113%） 673 650 643 （111%） （103%） （114%） （103%） 1Q 2Q 3Q 4Q 1Q 2Q

  12. Slide 12: COS and SG&A

    COS and SG&A ■COS and SG&A increased due to personnel expense increase in Japan. Overseas investment remained within period start forecast. （million yen） FY03/16 FY03/17 YoY Growth Key Factors Cost of Sales 926 1,007 ＋81 Increase in development Labor 373 443 ＋69 and consulting headcount in Japan Dep

  13. Slide 13: Cost of Sales (by Quarter)

    Cost of Sales (by Quarter) Increase in development personnel cost due to reinforcement in （million yen） new product development 283 Pesonnel Depreciation Other Accounts & Misc. （123%） 264 265 256 （93%） （100%） 238 240 （113%） 244 226 229 228 227 （114%） 219 （105%） 224 222 （110%） （118%） （113%） 72 （96%）

  14. Slide 14: Selling, General and Administrative Expenses (by Quarter)

    Selling, General and Administrative Expenses (by Quarter) SG&A increased due to increase in domestic personnel expenses （million yen） 586 576 596 Labor Publicity Others Overseas （148%） （113%） 556 （108%） （114%） 510 488 482 92 71 88 （125%） 68 498 （123%） （133%） （103%） 431 58 49 （111%） 396 394 408 73 72

  15. Slide 15: By Market

    FY03/17 Financial Results Reference Slides BY MARKET 15 Copyright © 2017 Digital Arts Inc.

  16. Slide 16: Summary: Net Sales by Market

    Summary: Net Sales by Market  +26.4% YoY growth in consolidated sales (Prev FY: +17.6% YoY)  Enterprise Sector resulted in a modest +14.9% YoY (Prev FY: +17.9% YoY) while Public Sector’s +49.9% YoY growth (Prev FY: +24.4 YoY) led overall performance.  Consumer Sector held firm despite steep decli

  17. Slide 17: Sales Trend by Market

    Sales Trend by Market Public sector led the Group’s performance by leveraging on solutions （million yen） that satisfy the level of security demanded by the Ministry of internal Affairs and Communications’ guidelines in strengthening local 5,058 government security （126%） 359 Enterprise Public Consum

  18. Slide 18: Quarterly Net Sales by Market

    Quarterly Net Sales by Market Public Sector, notably large civil service deals (2Q) and （million yen） deals related to local municipality cloud security (2Q-4Q) 1,503 1,540 led the Group’s overall business performance （133%） （123%） 105 84 1,253 Enterprise Public Consumer 1,131 （116%） 1,077 1,098 （12

  19. Slide 19: Enterprise Sector

    FY03/17 Financial Results Reference Slides ENTERPRISE SECTOR 19 Copyright © 2017 Digital Arts Inc.

  20. Slide 20: Enterprise Sector

    Enterprise Sector  Robust sales in mainstay i-FILTER series and FinalCode.  Successful turnaround for m-FILTER series in 2H for stable year-to-date growth.  Amid a series of incidents with large-scale leak of customer information, sales for FinalCode 5 surged leveraging enterprise-wide advanced f

  21. Slide 21: Public Sector

    FY03/17 Financial Results Reference Slides PUBLIC SECTOR 21 Copyright © 2017 Digital Arts Inc.

  22. Slide 22: Public Sector

    Public Sector  i-FILTER series and m-FILTER series, two main offerings in the Public Sector, soared as prefectural and local government executed plans to enhance cyber security under the Ministry of Internal Affairs and Communications’ guidelines on fundamental strengthening of local government sec

  23. Slide 23: Consumer Sector

    FY03/17 Financial Results Reference Slides CONSUMER SECTOR 23 Copyright © 2017 Digital Arts Inc.

  24. Slide 24: Consumer Sector

    Consumer Sector  Continued to partner with mobile and MVNO operators to expand sales and collaboration of i-FILTER (Consumer) for Smartphones.  PC version of i-FILTER (Consumer) held firm due to OEM-driven sales and robust shipments of multi-year packaged products, despite declines in the number o

  25. Slide 25: FY03/18 Forecast

    FY03/17 Financial Results Reference Slides FY03/18 FORECAST 25 Copyright © 2017 Digital Arts Inc.

  26. Slide 26: FY03/18 Forecast: Consolidated Forecast

    FY03/18 Forecast Consolidated Forecast  Japan: anticipate continuous and stable growth with the launch of an innovative new product, making an entry into a new market.  Overseas: conservative guidance at beginning of year. （million yen） FY 03/17 FY 03/18 Growth Actual Forecast Rate Net sales 5,058

  27. Slide 27: FY03/18 Forecast: Non-Consolidated Forecast

    FY03/18 Forecast Non-Consolidated Forecast  Japan: anticipate continuous and stable growth with the launch of an innovative new product, making an entry into a new market. （million yen） FY 03/17 FY 03/18 Growth Actual Forecast Rate Net Sales 5,104 5,550 8.7 % Gross Profit 4,028 4,450 10.5 % Selling

  28. Slide 28: FY03/18 Return to Shareholder

    FY03/18 Return to Shareholder ■ Dividend Distribution Digital Arts plans to return profit to its shareholders as follows: Projected dividend payout ratio for the period ending March 2018 : 31.2% of consolidated net income of the current period The amount of annual dividends for the period ending Mar

  29. Slide 29: FY03/18 Initiatives

    FY03/17 Financial Results Reference Slides FY03/18 INITIATIVES 29 Copyright © 2017 Digital Arts Inc.

  30. Slide 30: FY03/18 Initiatives: Enterprise and Public Sectors

    FY03/18 Initiatives ■ Enterprise and Public Sectors i-FILTER Series / m-FILTER Series Leverage internal dev team to offer protection against enterprise data loss and make a full-fledge entry into the external threat market • Next release of i-FILTER and m-FILTER, when installed together, realize end

  31. Slide 31: FY03/18 Initiatives: FinalCode (Japan)

    FY03/18 Initiatives ■ Enterprise and Public Sectors FinalCode (Japan) Enterprise Sector: Anticipate growing demand in light of legal reforms • FinalCode satisfies the requirements by the Electronic Books Maintenance Act to electronically store accounting books in a form that prevents data manipulati

  32. Slide 32: FY03/18 Initiatives: Overseas

    FY03/18 Initiatives ■ Overseas FinalCode (Overseas) FinalCode, Inc. leads to drive and close sales in overseas market • U.S. subsidiary, FinalCode, Inc., takes the lead in driving aggressive sales to close deals and increase exposure in the overseas market. • Awareness for file security is very high

  33. Slide 33: Forward Looking Statements

    Forward Looking Statements All statements herein, other than historical facts, contain forward-looking statements and are based on DA’s current plans, strategies and financial forecasts. These forward-looking statements are based upon management’s current assumptions and beliefs in light of the info

  34. Slide 34: For internet convenience, safety and security

    ‐ For internet convenience, safety and security ‐ Copyright © 2015 Digital Arts Inc.

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