Digital Arts Inc. · TSE:2326

Digital Arts — Q2 FY2017 Earnings Presentation

28 slides from Digital Arts's earnings presentation, Oct 30, 2017

  1. Slide 1: FY 03/18 Second Quarter Consolidated Financial Results

    Digital Arts Inc.（2326） FY 03/18 Second Quarter Consolidated Financial Results （April 1, 2017 though September 30, 2017） Reference Slides October 30, 2017 Copyright © 2015 Digital Arts Inc.

  2. Slide 2: Key Financial Points

    FY 03/18 Q2 Financial Results Reference Slides KEY FINANCIAL POINTS Copyright © 2017 Digital Arts Inc.

  3. Slide 3: Key Financial Points

    Key Financial Points ① Growth in the enterprise market made up for the non- recurrence of large projects for government agencies obtained in the same period of the previous FY, ensuring an increase in both sales and profits  Growth in m-FILTER in the enterprise market made up for the non-recurrence

  4. Slide 4: Consolidated Results Highlights

    FY03/18 Q2 Financial Results Reference Slides CONSOLIDATED RESULTS HIGHLIGHTS Copyright © 2017 Digital Arts Inc.

  5. Slide 5: FY03/18 Q2 Highlights (Consolidated)

    FY03/18 Q2 Highlights (Consolidated) JPY 2,468 million （YoY +48 million／ +2.0％） Consolidated Net Sales Growth in the enterprise market made up for the non-recurrence of large orders to government agencies obtained in the year-earlier period, ensuring YoY increase in sales JPY 922 million （YoY +132 m

  6. Slide 6: FY03/18 Q2 Summary: Consolidated Results

    FY03/18 Q2 Summary Consolidated Results (Unit: JPY million) FY03/17 FY03/18 FY03/18 YoY Q2 Q2 Forecast Net Sales 2,420 2,468 +2.0% 5,600 Gross Profits 1,922 2,000 +4.0% 4,450 Selling, General and Administration 1,132 1,078 ▲4.8% 2,450 Expense Operating Income 789 922 +16.8% 2,000 Ordinary Income 767

  7. Slide 7: FY03/18 Q2 Summary: Non-Consolidated Results

    FY03/18 Q2 Summary Non-Consolidated Results (Unit: JPY million) FY03/17 FY03/18 FY03/18 YoY Q1 Q2 Forecast Net Sales 2,465 2,474 +0.4% 5,550 Gross Profits 1,938 1,978 +2.1% 4,450 Selling, General and Administration 1,001 956 ▲4.5% 2,100 Expense Operating Income 936 1,021 +9.0% 2,350 Ordinary Income

  8. Slide 8: Consolidated Net Sales Trend

    Consolidated Net Sales Trend Continue to post RECORD HIGH sales (Unit: JPY million) 2,468 2,420 （102%） （125%） 1,935 （120%） 1,610 1,481 （109%） 1,351 （110%） 1,328 （120%） （102%） 1,103 1,010 （109%） 917 （110%） FY03/09 Q2 FY03/10 Q2 FY03/11 Q2 FY03/12 Q2 FY03/13 Q2 FY03/14 Q2 FY03/15 Q2 FY03/16 Q2 FY03/17

  9. Slide 9: Consolidated Net Sales Trend (by Quarter)

    Consolidated Net Sales Trend (by Quarter) Despite the non-recurrence of large projects obtained in the year- earlier period, organic growth was maintained 1,540 (Unit: JPY million) 1,503 （123%） （133%） 1,309 1,253 （87%） （116%） 1,158 1,131 1,098 1,077 （126%） （121%） （135%） （119%） 937 916 （113%） 803 811

  10. Slide 10: COS and SG&A

    COS and SG&A  The completion of initial investments connected to the commencement of overseas business contributed to the reduction in COS and SG&A （Unit：JPY million） FY03/17 FY03/18 YoY Growth Key Factors Q2 Q2 Cost of Sales 497 467 ▲29 Labor 215 200 ▲14 Depreciation 144 137 ▲6 Transfer to other a

  11. Slide 11: Cost of Sales (by Quarter)

    Cost of Sales (by Quarter) Overseas costs leveled off, resulting in slight decline in cost of sales (Unit: million JPY) 283 Labor Depreciation Other Accounts & Misc. （123%） 264 265 （93%） 256 （100%） 240 244 238 （113%） 232 235 228 224 227 72 222 （114%） （110%） （105%） （97%） （92%） （113%） （102%） 211 （96%）

  12. Slide 12: Selling, General and Administrative Expenses (by Quarter)

    Selling, General and Administrative Expenses (by Quarter) Revised the organizational structure, and effectively utilized resources in accordance with the medium- to long-term human resources strategy 586 596 569 Personnel Expenses Publicity 576 (Unit: million JPY) （148%） 556 （102%） Others Overseas （

  13. Slide 13: By Market

    FY 03/18 Q2 Financial Results Reference Slides BY MARKET Copyright © 2017 Digital Arts Inc.

  14. Slide 14: Summary: Net Sales by Market

    Summary: Net Sales by Market  Despite the lack of large projects such as those in the previous FY, managed to sustain +2.0% growth  Attained +18.9% growth in the enterprise sector, offsetting the non-recurrence of large public sector projects  Continued to attain solid sales in the consumer marke

  15. Slide 15: Sales Trend by Market

    Sales Trend by Market Enterprise sales continue to support high (Unit: million JPY) overall growth 2,420 2,468 （102%） （125%） 179 Enterprise Public Consumer 174 1,935 （120%） 1,610 170 922 1,481 （109%） 1,096 1,328 1,351 （110%） （102%） 175 （120%） 1,103 186 754 1,010 （109%） 130 140 917 （110%） 609 132 536

  16. Slide 16: Quarterly Net Sales By Market

    Quarterly Net Sales By Market Growth in the enterprise sector ensured stable (Unit: million JPY) overall growth 1,540 1,503 （123%） （133%） 105 1,309 Enterprise Public Consumer 84 1,253 （87%） （116%） 1,158 1,131 86 1,077 93 1,098 （126%） （121%） （119%） （135%） 602 92 937 80 97 916 80 799 （113%） 497 803 81

  17. Slide 17: Enterprise Sector

    FY 03/18 Q2 Financial Results Reference Slides ENTERPRISE SECTOR Copyright © 2017 Digital Arts Inc.

  18. Slide 18: Enterprise Sector

    Enterprise Sector  Solid sales of mainstay i-FILTER series  Recovery in sales of m-FILTER from the last FY, secured strong growth again  Secured small-start and test deployment projects for FinalCode Series YoY 104.3 ％ Series YoY 127.1 ％ YoY 134.5 ％ 18 Copyright © 2017 Digital Arts Inc.

  19. Slide 19: Public Sector

    FY 03/18 Q2 Financial Results Reference Slides PUBLIC SECTOR Copyright © 2017 Digital Arts Inc.

  20. Slide 20: Public Sector

    Public Sector  Due to the effects of the Ministry of Internal Affairs and Communications’ guidelines on fundamental strengthening of local government security, local governments’ awareness has increased, leading to the increased adoption of FinalCode  Although projects were attained, it was not en

  21. Slide 21: Consumer Sector

    FY 03/18 Q2 Financial Results Reference Slides CONSUMER SECTOR Copyright © 2017 Digital Arts Inc.

  22. Slide 22: Consumer Sector

    Consumer Sector  Continued to expand partnerships and sales through mobile and MNVO operators for i-FILTER (Consumer), promoted expanded sales and expanded collaboration for mobile device version of i-FILTER for smartphone  Despite the continued decline in PC shipments in Japan, and the otherwise

  23. Slide 23: FY 03/18 Forecast

    FY 03/18 Q2 Financial Results Reference Slides FY 03/18 FORECAST Copyright © 2017 Digital Arts Inc.

  24. Slide 24: FY 03/18 Forecast: Consolidated Forecast

    FY 03/18 Forecast Consolidated Forecast  Japan: Anticipate continuous and stable growth with the launch of a new product in a new market  Subsidiaries: Conservative initial outlook (Unit: million JPY, except where stated otherwise) FY 03/17 FY 03/18 Growth Rate Actual Forecast Net Sales 5,058 5,60

  25. Slide 25: FY 03/18 Forecast: Non-Consolidated Forecast

    FY 03/18 Forecast Non-Consolidated Forecast  Japan: Anticipate continuous and stable growth with the launch of a new product in a new market (Unit: million JPY, except where stated otherwise) FY 03/17 FY 03/18 Growth Rate Actual Forecast Net Sales 5,104 5,550 8.7 % Gross Profit 4,028 4,450 10.5 % S

  26. Slide 26: FY 03/18 Return to Shareholder

    FY 03/18 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 for current period The annual dividend amount for the period ending March 2018:

  27. Slide 27: Notice

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

  28. Slide 28: Contributing to a more convenient, comfortable and safe internet

    ‐Contributing to a more convenient, comfortable and safe internet- Copyright © 2015 Digital Arts Inc.

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