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Digital Arts Inc. Securities Code: 2326 July 31, 2026 From April 1, 2026 to June 30, 2026 Consolidated Financial Results for the First Three Months of the Fiscal Year Ending March 31, 2027
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Regarding “Contracts” and “Net sales” Copyright © Digital Arts Inc. 2 The total amount of orders received by the Company from its customers during the current accounting period (essentially equivalent to orders received). As an indicator, it shows the company's current performance in a more timely manner than net sales. Contracts Net sales The total of the amount of contracts acquired before the previous period that will be recognized as net sales in the current accounting period (net sales carried over) and the amount of contracts acquired during the current accounting period minus the amount of contracts that will be deferred and recognized as net sales in the next period and thereafter (deferred net sales).
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Copyright © Digital Arts Inc. 3 Operating profit Contracts Net sales The Group achieved significant growth in both net sales and profit by steadily capturing demand for cloud -based security solutions in the enterprise market, with contract wins related to Phase 2 of the GIGA School Concept and central government projects also contributing. FY Mar. 2026 1Q FY Mar. 2027 1Q 3,498 million yen 2,306 million yen +1,191 million yen /+51.7% YoY FY Mar. 2026 1Q 2,711 million yen 2,270 million yen +440 million yen /+19.4% YoY FY Mar. 2026 1Q 1,035 million yen 795 million yen +240 million yen /+30.2% YoY Key Points (FY Mar. 2027 1Q) FY Mar. 2027 1Q FY Mar. 2027 1Q
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INDEX 01. Consolidated Results Highlights 02. Non-consolidated Results Highlights 03. Status of Each Market and Product 04. FY03/27 Initiatives 05. FY03/27 Status of Measures 06. FY03/27 Full-Year Financial Forecast 07. FY03/27 Return to Shareholders Copyright © Digital Arts Inc.
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01. Consolidated Results Highlights Consolidated Financial Results for the First Three Months of the Fiscal Year Ending March 31, 2027 Copyright © Digital Arts Inc.
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The Group achieved significant growth in both net sales and profit , driven by the acquisition of enterprise cloud projects, projects for Phase 2 of the GIGA School Concept, and central government projects, and supported by effective cost control. Consolidated Statement of Income *1: Financial Forecast is the consolidated financial forecast announced on May 7, 2026. *2: EBITDA = Operating profit + Depreciation + Tax expenses included in operating expenses Copyright © Digital Arts Inc. 6 (Millions of Yen) FY Mar. 2027 Full -Year Forecast *1 Change YoY FY Mar. 2027 1Q FY Mar. 2026 1Q 13,500 +51.7% 3,498 2,306 Contracts 12,000 +19.4% 2,711 2,270 Net Sales 3,823 +28.4% 949 739 Cost of Sales 8,176 +15.1% 1,761 1,531 Gross profit 2,776 -1.3% 725 735 Selling, general and administrative expenses 5,400 +30.2% 1,035 795 Operating profit 45.0% -38.2% 35.0% Operating margin(%) 5,505 +31.5% 1,060 806 Ordinary profit 3,770 +29.2% 718 556 Profit attributable to owners of parent -+28.5% 1,332 1,037 EBITDA *2
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1,044 1,206 1,160 2,195 101 96 2,306 3,498 FY Mar. 2026 1Q FY Mar. 2027 1Q Enterprise Public Consumer -5.1% Consolidated Contracts and Net sales by Market (Millions of Yen) +15.5% +51.7% Trend in Consolidated Contracts by Market 1,169 1,318 999 1,296 101 96 2,270 2,711 FY Mar. 2026 1Q FY Mar. 2027 1Q Enterprise Public Consumer -5.4% +19.4% (Millions of Yen) Trend in Consolidated Net Sales by Market +12.7% +29.8 ％ +89.2% Copyright © Digital Arts Inc. 7 Enterprise sector market: Double -digit growth was achieved as demand for cloud -based security measures was captured. Public sector market: The acquisition of projects for Phase 2 of the GIGA School Concept and central government projects drove significant growth .
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2,234 838 2,270 795 2,711 1,035 2,603 1,213 2,722 1,226 2,436 1,092 2,842 1,320 2,707 1,413 2,999 1,448 9,982 4,558 10,835 4,791 Net sales Operating profit Net sales Operating profit Net sales Operating profit FY Mar. 2025 FY Mar. 2026 FY Mar. 2027 1Q 2Q 3Q 4Q Full-Year Forecast Full-Year Forecast Trend in Consolidated Net sales, Operating profit Copyright © Digital Arts Inc. 8 5,400 12,000 (Millions of Yen)
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927 1,031 1,379 2,466 2,306 3,498 FY Mar. 2026 1Q FY Mar. 2027 1Q License sales products/ Others Cloud service products Provision Type Ratio in Consolidated Contracts and Consolidated Net Sales In both contracts and in net sales , the cloud service product ratio increased . Copyright © Digital Arts Inc. 9 Trend in Consolidated Contracts 59.8％ 29.5％ 70.5％ 40.2％ +78.9% 1,026 1,110 1,244 1,601 2,270 2,711 FY Mar. 2026 1Q FY Mar. 2027 1Q License sales products/ Others Cloud service products Trend in Consolidated Net Sales 59.0％ 41.0％ 54.8％ 45.2％ +28.7% +19.4%+51.7% +11.2% +8.2% (Millions of Yen) (Millions of Yen)
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1,244 1,347 1,435 1,539 1,601 FY Mar. 2026 1Q FY Mar. 2026 2Q FY Mar. 2026 3Q FY Mar. 2026 4Q FY Mar. 2027 1Q +7.2% Quarterly Trend in Sales of Cloud Service Products Copyright © Digital Arts Inc. 10 Sales of cloud service products reached a record high , and the recurring revenue base is expected to continue to expand . +8.3% +6.5% +4.0% (Millions of Yen)
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The contract backlog decreased due to the recording of net sales from large-scale Next-Generation School Affairs DX projects for which orders were received in the previous year. The contract backlog increased significantly due to strong performance in orders received for projects for Phase 2 of the GIGA School Concept. Net sales for the current fiscal year increased due to an increase in orders for corporate cloud service projects and Next-Generation School Affairs DX projects. Sales to be posted for the current fiscal year increased as a result of strong performance in orders received for projects for Phase 2 of the GIGA School Concept. 1,846 2,622 1,423 1,576 1,845 7,523 1,164 1,067 6,279 12,790 End of Jun. 2025 End of Jun. 2026 Sales from the next fiscal year onward Sales from the next fiscal year onward (GIGA) Sales for the 2Q-4Q FY Mar. 2027 Sales for the 2Q-4Q FY Mar. 2027 (GIGA) Trend in Order Backlog Copyright © Digital Arts Inc. 11 Trend in Order Backlog Sales from the next fiscal year onward (GIGA) Sales for the 2Q -4Q FY Mar. 2027 Sales from the next fiscal year onward +10.7% +42.0% Sales for the 2Q -4Q FY Mar. 2027 (GIGA) +307.7% -8.3% +103.7% Contract balance grew significantly due to extremely strong orders for Phase 2 of the GIGA School Concept. (Millions of Yen)
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Consolidated Cost of Sales and Selling, General and Administrative Expenses Copyright © Digital Arts Inc. 12 Main Factors for Change Change YoY FY Mar. 2027 1Q FY Mar. 2026 1Q +210 949 739 Cost of sales Increased due to greater investment in development personnel +22 306 284 Labor Increased due to higher software amortization following new product releases +49 253 204 Depreciation Increased due to an increase in the number of cloud product users Note: Including the effect of foreign exchange rates (+18M) +123 503 380 Communication expenses Increased due to higher fees for AI tools and other services +40 168 127 Others -24 -281 -256 Transfer to other accounts -9725 735 Selling, general and administrative expenses Increased due to strengthening of sales and management departments +17 371 353 Personnel expenses Increased due to exhibiting at trade shows for the education sector +18 93 74 Advertising expenses Decreased due to lower hiring expenses and a reduction in 30th anniversary-related expenses -46 261 307 Others Although cost of sales increased due to growth in the number of users of cloud service products and new product releases, the Group achieved a cost structure in line with the Company’s expense plan by deploying AI to advance and streamline operations . (Millions of Yen)
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256 256 271 255 284 322 292 274 306 213 221 213 217 204 214 236 263 253 369 386 388 361 380 400 447 479 503 145 220 154 133 127 145 268 143 168 726 756 746 719 739 820 878 896 949 258 328 281 248 256 263 365 264 281 984 1,084 1,027 968 996 1,083 1,244 1,161 1,230 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Labor Depreciation Communication expenses Others Cost of Sales Transfer to other accounts Quarterly Trend in Consolidated Cost of Sales Copyright © Digital Arts Inc. 13 FY Mar. 2025 FY Mar. 2026 FY Mar. 2027 (Millions of Yen)
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314 296 313 304 353 416 369 336 371 106 92 60 49 74 44 54 66 93 248 244 223 219 307 213 219 250 261 669 633 597 574 735 675 643 654 725 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Personnel expenses Advertising expenses Others Quarterly Trend in Consolidated Selling, General and Administrative Expenses Copyright © Digital Arts Inc. 14 FY Mar. 2025 FY Mar. 2026 FY Mar. 2027 (Millions of Yen)
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Consolidated Balance Sheet Advances received increased due to the significant growth in contracts. Copyright © Digital Arts Inc. 15 Main Factors for Changes Change from end of FY Mar. 2026 As of end of 1Q FY Mar. 2027 As of end of FY Mar. 2026 As of end of 1Q FY Mar. 2026 Increase in cash and deposit (+867M), increase due to funds deposited for treasury share buybacks (+699M) +5.0% 26,340 25,080 19,907 Current assets Increased due to growth in orders +3.8% 23,950 23,083 18,431 (Cash and deposit) Software ( -80M), Software in progress (+92M) +1.8% 2,834 2,784 2,537 Non -current assets +4.7% 29,175 27,865 22,444 Total assets Advances received (+1,918M), Income taxes payable, etc. ( -453M) +16.7% 10,923 9,358 5,339 Current liabilities Increased following a sharp increase in contracts for cloud service products +24.6% 9,718 7,800 4,291 (Advances received) -0.6% 52 52 52 Non -current liabilities Treasury share buyback, etc. ( -297M), Dividends paid ( -672M), Profit (+718M) -1.4% 18,175 18,425 17,023 Equity capital -1.4% 18,199 18,454 17,052 Net assets Decreased due to share buybacks and dividends reducing equity, and higher advances received following contract growth. -62.3% 66.1% 75.8% Equity ratio -3.9% 19.2% 3.2% ROE -2.5% 13.6% 2.5% ROA (Millions of Yen)
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02. Non-consolidated Results Highlights Consolidated Financial Results for the First Three Months of the Fiscal Year Ending March 31, 2027 Copyright © Digital Arts Inc.
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Summary of Non-consolidated Results Copyright © Digital Arts Inc. 17 FY Mar. 2027 Full -Year Forecast *1 Change YoY FY Mar. 2027 1Q FY Mar. 2026 1Q 13,500 +51.8% 3,498 2,304 Contracts 12,000 +19.5% 2,711 2,268 Net Sales 3,823 +28.6% 949 738 Cost of Sales 8,176 +15.2% 1,761 1,529 Gross profit 2,768 -1.2% 724 733 Selling, general and administrative expenses 5,408 +30.2% 1,037 796 Operating profit 45.1% -38.3% 35.1% Operating margin(%) 5,513 +31.5% 1,062 808 Ordinary profit 3,775 +29.1% 720 558 Profit *1: Financial Forecast is the non-consolidated financial forecast announced on May 7, 2026. The Company achieved significant growth in both net sales and profit , driven by the acquisition of enterprise cloud projects, projects for Phase 2 of the GIGA School Concept, and central government projects, and supported by effective cost control. (Millions of Yen)
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03. Status of Each Market and Product Consolidated Financial Results for the First Three Months of the Fiscal Year Ending March 31, 2027 Copyright © Digital Arts Inc.
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994 1,044 1,206 895 1,160 2,195 102 101 96 1,993 2,306 3,498 FY Mar. 2025 1Q FY Mar. 2026 1Q FY Mar. 2027 1Q Enterprise Public Consumer Contracts for 1Q reached a record high. Trend in Consolidated Contracts by Market Copyright © Digital Arts Inc. 19 Enterprise Consumer Public (Millions of Yen)
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1,074 1,169 1,318 1,066 999 1,296 93 101 96 2,234 2,270 2,711 FY Mar. 2025 1Q FY Mar. 2026 1Q FY Mar. 2027 1Q Enterprise Public Consumer Net sales for 1Q reached a record high . Trend in Consolidated Net Sales by Market Copyright © Digital Arts Inc. 20 Enterprise Consumer Public (Millions of Yen)
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711 755 285 326 47 125 1,044 1,206 FY Mar. 2026 1Q FY Mar. 2027 1Q i-FILTER series m-FILTER series Other products Contracts and Net Sales in Market by Product Market Contracts Trends by Product +160.8% +6.2% +15.5% +14.4% 797 837 298 397 73 83 1,169 1,318 FY Mar. 2026 1Q FY Mar. 2027 1Q i-FILTER series m-FILTER series Other products +14.4% +5.1% +12.7% +32.8% Market Net Sales Trends by Product Copyright © Digital Arts Inc. 21 i-FILTER: In addition to web access security measures, demand is growing for managing the use of generative AI and unapproved cloud services. m-FILTER: Measures to replace PPAP served as a catalyst, driving both combined adoption with inbound email security solutions and migration to cloud services. Enterprise Sector Market (Millions of Yen) (Millions of Yen) Other products: Z -FILTER is capturing demand for integrated security management and emerging as a new growth driver .
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877 1,079 99 189 22 27 999 1,296 FY Mar. 2026 1Q FY Mar. 2027 1Q i-FILTER series m-FILTER series Other products Contracts and Net Sales in Market by Product 930 1,280 193 899 36 15 1,160 2,195 FY Mar. 2026 １Q FY Mar. 2027 １Q i-FILTER series m-FILTER series Other products Market Contracts Trends by Product +89.2% +37.6% -57.6% Market Net Sales Trends by Product +18.9% +29.8% +23.1% Copyright © Digital Arts Inc. 22 +364.2% +91.2% Public Sector Market i-FILTER: Projects for Phase 2 of the GIGA School Concept drove growth, with progress also made in acquiring projects in the education sector . m-FILTER: In addition to acquiring central government projects, the Group captured demand for Security Improvements for Local Governments, expanding its business in the government sector . (Millions of Yen) (Millions of Yen)
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Copyright © Digital Arts Inc. 23 Introduction of filtering under the GIGA School Concept *1 Phase 2 of the GIGA School Concept (Jun. 2026) Share of i-FILTER 77 % Despite intensifying competition, i-FILTER secured a 77% market share under the GIGA School Concept. Order unit prices in 1Q FY Mar. 2027 were also more than 30% higher than in Phase 1. Public Sector Market Progress of the GIGA School Concept Phase 1 of the GIGA School Concept Share of i-FILTER 53 % Competitors (over 10 companies) 47% *1: According to our survey of 1,741 Boards of Education (Internal research) (June 2026) Competitors (8 companies) 23%
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04. FY03/27 Initiatives Consolidated Financial Results for the First Three Months of the Fiscal Year Ending March 31, 2027 Copyright © Digital Arts Inc.
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25 Copyright © Digital Arts Inc. Product Lineup The Information System Security Management and Assessment Program (ISMAP) is a program under which cloud services fulfilling the government’s security requirements are assessed and registered. The goal of ISMAP is to ensure that government agencies can procure cloud services with sufficient information security measures. SSE SSE enabling simple yet robust network security Web Integrating authentication from device log-ins to cloud access * Z-FILTER’s ISMAP registration application is being prepared. File encryption and remote deletion solutions Data protection and file transfer services Authentication Mail Pop-up warnings to prevent misdirected emails Endpoint Web Security Secure proxy appliance For households: Comprehensive security Helping users securely connect to websites without security concerns Helping users securely send and receive email without security concerns File ISMAP registration of cloud products in all areas offered to enterprises*
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Authentication Authentication security Communications Security Service Edge Web Security Mail Security Server Security Lineup expansion planned zDevices and Data File Security Lineup expansion planned File Security Endpoint security Backup of data Copyright © Digital Arts Inc. 26 To adapt to cybersecurity policies, including the Security Measures Evaluation System to Strengthen Supply Chains, the Company will address any areas where its current solutions are insufficient through in-house development or in collaboration with other companies. Authentication system SaaS E-mail Log collection and centralized management Monitoring detection and response analysis reports In -house business systems Websites VPN Vulnerability Phishing emails Infection via the Internet Spoofing Unauthorized login Website falsification Internal devices and data External devices and data Malware infection Data theft Malware infection Response to Cybersecurity Policies
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Recurring Revenue Model and Revenue Base Absorbing short -term fluctuations in project timing while strengthening the stable revenue base through ongoing relationships with existing customers, continued use, and cross -selling Copyright © Digital Arts Inc. 27 Revenue Structure Ongoing Business Relationships with Existing Customers Stable Continuous Use of Mainstay Products Maintaining a High Operating Margin Solid Revenue Base Maintenance & Expansion Cross -selling Upselling
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Copyright © Digital Arts Inc. 28 15.07 million Number of White Operation Users Number of White Operation users 0 reports of malware infection *1 *1: The number of reports on damage due to malware infection from users of Z-FILTER, i-FILTER Ver. 10, m-FILTER Ver. 5, i-FILTER@Cloud and m-FILTER@Cloud as of June 2026 (Source: Digital Arts)
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White Operation -our unique model for security measures Copyright © Digital Arts Inc. 29 Conventional security measures mainly involve "detection and response" based on the premise of being attacked. However, as cyber attacks become more sophisticated and it becomes increasingly difficult to completely prevent damage using conventional approaches, companies now need to prevent attacks before they occur, by allowing only trusted communications and behavior. The Company’s White Operation Conventional approaches other than White Operation Point of Comparison Allow only trusted communications Find and intercept malicious communications Approach Designed to essentially prevent damage Based on post-damage response Security Perspective Created by the Company based on reliable sources of information The Company distributes the whitelist database to users (to reduce their person-hours) Build detection models based on attack logs Learning Data Eliminate access itself in the stages prior to a breach Detect and respond after a breach Order of Defense Measures Emphasis on proactive defense aiming for zero damage Assumption that a certain amount of damage is inevitable Risk Tolerance
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Demonstrating the Value of “White Operation” in the AI Era Conventional Security Measures Operations Unable to Keep Pace with Rising Threats in the AI Era More Threats → More Alerts → Greater Investigation and Decision -Making Burdens → Inability to Respond Conventional security operations cannot keep pace with rising threats in the AI era. Shift to White Operation —allowing only trusted communications and behavior . Find and Intercept Malicious Communications White Operation Allow Only Trusted Communications A World Where Users Can Access Websites and Receive Email Without Security Concerns Reducing Decision -Making Burdens for Safe, Worry -Free Use 30 Copyright © Digital Arts Inc.
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Copyright © Digital Arts Inc. 31 Addressing New Threats in the AI Era Leaks of confidential information Unintended leakage of confidential data through inputs to and outputs from AI systems Visualization of decision -making processes and audit preparedness Not being able to explain or audit AI decision- making processes is a serious governance risk As the use of AI expands, infrastructure for control and visualization for secure utilization will be increasingly essential to businesses. Malfunctions and improper output The risk of AI generating unexpected output and impacting business decision-making Risk of AI agents automatically executing tasks Loss of control due to AI agents autonomously executing tasks
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Summary of Patents and Patent Applications ① Filed Aug. 16, 2023 Editing AI responses and blocking access Patent No. 7598424 ② Filed Aug. 16, 2023 History- and location-based action recommendations Patent No. 7836283 ③ Filed Dec. 27, 2024 Evaluation of data entered by users and control of responses Patent No. 7826448 ④ Filed Aug. 27, 2025 Verification of accuracy through comparison of multiple AI outputs ⑤ Filed Oct. 30, 2025 Rejection or restriction of AI suggestions and instructions ⑥ Filed Oct. 31, 2025 Automatic generation of applications and schedules from work records ⑦ Filed Mar. 24, 2026 AI operation monitoring, human authentication, and log monitoring ⑧ Filed Apr. 15, 2026 Forced shutdown of AI operations The Company’s AI-Related Patent Portfolio Technology Foundation for AI -Related Solutions Patent Applications: 8 AI Security: 5 AI Utilization: 3 Patents Granted: 3 Input Evaluation ③ Evaluate inappropriate input Block or edit responses Output Editing ① Edit inappropriate responses Hide content and display reasons Response Validation ④ Compare multiple AI outputs to verify accuracy Usage Support ②⑤⑥ Suggestions and restrictions Generate applications and schedules Monitoring & Shutdown ⑦⑧ Monitor AI operations Stop upon detecting anomalies 32 Copyright © Digital Arts Inc. Patent Granted Patent Granted Patent Granted
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05. FY03/27 Status of Measures Consolidated Financial Results for the First Three Months of the Fiscal Year Ending March 31, 2027 Copyright © Digital Arts Inc.
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Priority Area Initiatives The Group will continue its initiatives in three priority areas to achieve its financial targets. ③ ① ② - Implement high-touch sales to end users to upgrade the sales structure - Acquire orders from steadily growing Z-FILTER projects and generate more opportunities - Respond to policy-related projects such as the Security Measures Evaluation System to Strengthen Supply Chains - Provide solutions to security risks which are increasing in line with the increased use of AI Growth of security business - Increase market share regarding projects in the ongoing Phase 2 of the GIGA School Concept and increase the order unit prices - Acquire new Next-Generation School Affairs DX projects, secure a larger market share regarding projects for the Third-Phase Local Government Information Security Enhancement initiative for local governments and increase the order unit prices Increase in public sector market share Summary of initiatives - Develop and increase the number of sales personnel and strengthen the proposal framework to step up high-touch sales to end users - Strengthen the development team to swiftly incorporate customers' opinions into the development of products and features - Advance and streamline operations including the use of AI to improve the productivity of sales and development functions Strengthening of sales and development teams supporting high-touch sales Priority areas 34
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As Is Implementation of High-Touch Sales to End Users Increase the proposal capabilities of sales personnel and increase points of contact with customers to strengthen sales capabilities In parallel, construct a structure for providing end user feedback directly to development teams to improve development capabilities Copyright © Digital Arts Inc. 35 Indirect relationships In product sales, the Company's personnel accompany sales agents when visiting customers. The number of opportunities to engage in high- touch sales to end users, excluding GIGA School Concept customers, was limited. As a result, opportunities to directly understand corporate customers’ issues and needs were limited, creating challenges in strengthening sales capabilities and developing products and features. Sales agents Digital Arts Inc. End users To Be Reciprocal relationships The Company's sales staff will directly propose solutions to corporate customers, as they do to GIGA School Concept customers, to enhance their understanding of customers and increase their sales and development capabilities. The knowledge obtained from direct proposals will be shared with sales agents to strengthen partner sales as well. Sales agents Digital Arts Inc. End users
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Copyright © Digital Arts Inc. 36 Initiatives for Phase 2 of the GIGA School Concept POINT FY Mar. 2025 % of device replaced (results and forecast) FY Mar. 2026 FY Mar. 2027 FY Mar. 2028 onwards Others *Depending on the budget and other factors 0% 100% 49％ 11% 7% 50% It is projected that nearly 28% of all of the boards of education will renew their contracts for GIGA School devices in FY March 2027. the Company will continue to improve product features and closely manage individual projects , aiming to increase market share and order unit prices. In addition, the Company will continue to approach boards of education that have introduced free filtering products in FY March 2026 to maximize earning opportunities. GIGA device replacement timing It is expected that projects in Phase 2 of the GIGA School Concept will be renewed continually. The Company aims to further increase its market share and the order unit prices in this area. Source: The data were prepared by the Company based on data of the Ministry of Education, Culture, Sports, Science and Technology and media reports. Device Replacement Timing 49% 28% 5 %
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Advancement and Streamlining of Operations Using AI Internally Individual departments incorporate AI into their practical operations with a view to investing in growth and enhancing profitability. Copyright © Digital Arts Inc. 37 Increased development productivity Integration of AI into individual business processes to build a highly efficient operational foundation that is not solely dependent on increasing the number of staff members. Advancement of operations in the AI era Coding support Creation of specifications Organization of technical information Development Preparation of materials for proposals Production of meeting minutes and videos Lead scoring Sales and marketing Operations for different applications and approvals Labor management Accounting operations, etc. Management Accumulation of knowledge for responses Generation of responses Support Positive effect Higher rates of reaching negotiations and the successful acquisition of orders Higher response quality and speed Increased efficiency of back -office operations
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06. FY03/27 Full-Year Financial Forecast Consolidated Financial Results for the First Three Months of the Fiscal Year Ending March 31, 2027 Copyright © Digital Arts Inc.
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Full -Year Financial Forecast for the Fiscal Year Ending March 31, 2027 (Consolidated) The Group expects that by increasing sales of new products, investing in human resources and enhancing products, net sales and operating profit will increase as it meets the growing demand for security and new governance-related demand following the increase in the utilization of AI. Copyright © Digital Arts Inc. 39 Note % Change Change FY Mar. 2027 Full-Year Forecast FY Mar. 2026 Full-Year Results Net sales are forecast to increase as a result of the accumulation of existing contracts, the expansion of sales of new and related products and the progress in the posting of sales from cloud service-related projects obtained in and before FY Mar. 2026, although contra cts are expected to decrease as the acquisition of projects for Phase 2 of the GIGA School Concept has already peaked. -18.7% -3,104 13,500 16,604 Contracts +10.8% +1,164 12,000 10,835 Net sales Depreciation is expected to increase due to greater investment in development personnel, product enhancements, and internal DX, while communication expenses are expected to rise as the number of cloud service product users grows. +14.6% +488 3,823 3,334 Cost of sales +9.0% +676 8,176 7,500 Gross profit --68.1% 69.2% Gross profit margin Personnel expenses are expected to increase due to investment in human resources, including base pay increases, recruitment, and training.+2.5% +67 2,776 2,708 Selling, general and administrative expenses +12.7% +609 5,400 4,791 Operating profit --45.0% 44.2% Operating margin +13.7% +664 5,505 4,840 Ordinary profit +10.0% +342 3,770 3,427 Profit attributable to owners of parent (Millions of Yen)
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Full -Year Financial Forecast for the Fiscal Year Ending March 31, 2027 (Non-Consolidated) Copyright © Digital Arts Inc. 40 Note % Change Change FY Mar. 2027 Full-Year Forecast FY Mar. 2026 Full-Year Results Net sales are forecast to increase as a result of the accumulation of existing contracts, the expansion of sales of new and related products and the progress in the posting of sales from cloud service-related projects obtained in and before FY Mar. 2026, although contrac ts are expected to decrease as the acquisition of projects for Phase 2 of the GIGA School Concept has already peaked. -18.7% -3,098 13,500 16,598 Contracts +10.8% +1,171 12,000 10,828 Net sales Depreciation is expected to increase due to greater investment in development personnel, product enhancements, and internal DX, while communication expenses are expected to rise as the number of cloud service product users grows. +14.7% +490 3,823 3,332 Cost of sales +9.1% +680 8,176 7,496 Gross profit --68.1% 69.2% Gross profit margin Personnel expenses are expected to increase due to investment in human resources, including base pay increases, recruitment, and training.+2.6% +70 2,768 2,697 SG & A +12.7% +609 5,408 4,798 Operating profit --45.1% 44.3% Operating margin +13.7% +663 5,513 4,850 Ordinary profit +9.8% +336 3,775 3,439 Profit (Millions of Yen) The Group expects that by increasing sales of new products, investing in human resources and enhancing products, net sales and operating profit will increase as it meets the growing demand for security and new governance-related demand following the increase in the utilization of AI.
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13,500 4,804 -6,280 12,000 New contracts for FY mar. 2027 New sales carried over*1 Deferred contract amount*2 Others*3 Consolidated net sales for FY Mar. 2027 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 Status of Consolidated Net Sales Consolidated net sales are forecast as follows: Copyright © Digital Arts Inc. 41 For FY Mar. 2027, the Group will construct a foundation in the enterprise sector market and accelerate implementation in the AI era with an eye toward the final fiscal year of the Medium-Term Management Plan. The Group will focus its efforts on expanding sales of new and related products, strengthening high-touch sales and acquiring projects in the public sector market. It is projected that consolidated net sales will be 12,000 million yen due to the posting of sales from contracts received in FY Mar. 2027 and sales of cloud service products for which orders were obtained in or before the previous fiscal year, while contracts are expected to shrink as the acquisition of projects for Phase 2 of the GIGA School Concept has already peaked. Net sales for the current fiscal year Status of Consolidated Net Sales (Millions of Yen) -24 *1:Sales recorded from the order backlog of contracts acquired in previous fiscal years *2:Contracts for the current fiscal year that are deferred to subsequent fiscal years (contract backlogs) *3:Sales returns and sales at overseas subsidiaries
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5,176 5,691 5,256 5,905 FY Mar. 2026 Results FY Mar. 2027 Forecast Enterprise Public Consumer Status of Consolidated Net Sales by Market Consolidated net sales by market are forecast as follows: Copyright © Digital Arts Inc. 42 12,000 10,835 Trend in Consolidated Net Sales by Market (Millions of Yen) +10.8 % +12.4 % +9.9 % +0.2 % 402 402 In the enterprise sector market, the Group will continue to expand sales of its mainstay i-FILTER and m-FILTER products and work to increase sales of Z-FILTER and other new and related products. The Group expects that net sales will increase due to it stepping up its high-touch sales to directly understand the issues faced by customers and working to improve the accuracy of its proposals and the order win rate. In the public sector market, the Group will strive to continuously obtain projects for Phase 2 of the GIGA School Concept, utilize the customer base established through projects to enhance features for educational institutions, and work on Next-Generation School Affairs DX projects and projects for security improvements for local governments.The Group expects that net sales will grow due to solution- proposal activities that pay attention to contact with end users to communicate the appeal of products that precisely fulfill their needs to achieve both a larger market share in terms of orders and higher project unit prices. Public sector market Enterprise sector market (61.9%) (44.7%) (68.7%) (53.9%) ( ): Proportion of cloud service products (51.4%) (59.4%)
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Main Factors for Change Change YoY FY Mar. 2027 Full-Year Forecast FY Mar. 2026 Full-Year Results +14.6% 3,823 3,334 Cost of Sales Investment in new products and personnel for functional development +6.5% 1,249 1,172 Labor Increase in depreciation associated with software development and improvement +15.8% 1,063 919 Depreciation Communication expenses are expected to increase following the increase in the number of cloud service product users. +19.3% 2,037 1,707 Communication expenses -3.5% 661 685 Others Transfer of costs related to software development to other accounts +3.4% -1,189 -1,150 Transfer to other accounts +2.5% 2,776 2,708 SG & A Investments in human resources, such as investments to increase staff, increase base pay and provide an incentive plan +3.1% 1,522 1,476 Personnel expenses Investments in marketing to increase sales of new and related products and to acquire projects in the public sector market+3.3% 248 240 Advertising expenses +1.4% 1,004 991 Others Consolidated Cost of Sales and Selling, General and Administrative Expenses The Group will continue to build a foundation in the enterprise sector market and invest in growth to accelerate implementation in the AI era. It is projected that the cost of sales and selling, general and administrative expenses will increase, chiefly because of the increase in development personnel, improvement of product features and expansion of the sales team. Copyright © Digital Arts Inc. 43 (Millions of Yen)
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3,334 3,823 FY Mar. 2026 Results Labor Depreciation Commnicaion expenses Others Transfer to other accounts FY Mar. 2027 Forecast 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 Status of Consolidated Cost of Sales Depreciation is expected to increase due to investment in personnel for new product and feature development and software development and improvement. Communication expenses are expected to increase as the number of cloud service product users grows. Copyright © Digital Arts Inc. 44 Status of Consolidated Cost of Sales (Millions of Yen) -38 +329 +145 +76 -24
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Status of Consolidated Selling, General and Administrative Expenses Personnel expenses are expected to increase due to greater investment in human resources, a priority area under the Medium -Term Management Plan. Copyright © Digital Arts Inc. 45 Status of Consolidated Selling, General and Administrative Expenses (Millions of Yen) 2,708 + 45 + 8 + 13 2,776 FY Mar. 2026 Results Personnel expenses Advertising expenses Others FY Mar. 2027 Forecast 0 500 1,000 1,500 2,000 2,500 3,000
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07. FY03/27 Return to Shareholders Consolidated Financial Results for the First Three Months of the Fiscal Year Ending March 31, 2027 Copyright © Digital Arts Inc.
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75 80 85 95 100 FY Mar. 2023 FY Mar. 2024 FY Mar. 2025 FY Mar. 2026 FY Mar. 2027 Dividend (in yen) per share Shareholder Return Policy Copyright © Digital Arts Inc. 47 Shareholder Return Policy for FY Ending Mar. 2027 Purchase of treasury shares We will purchase treasury shares flexibly in consideration of the trends in our performance and the stock market and other factors. Amount of treasury shares purchased (Estimate) 500 million ye n 930 million yen 740 million yen 1,130 million yen Flexible purchase of treasury shares Dividends The Company plans to pay an annual dividend of 100 yen per share, marking its 13th consecutive year of dividend increases. Major policy Implementation of progressive dividends and a total return ratio target of 50 % or more 1,000 million yen ＋
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Notes on Descriptions デジタルアーツ, DIGITAL ARTS, i-FILTER, i-FILTER Anti-Virus & Sandbox, i-FILTER@Cloud Anti-Virus & Sandbox, i-FILTER@Cloud Dアラート発信レポートサービス, info board, Active Rating System, D-SPA, Anti-Virus & Sandbox for D-SPA, NET FILTER, SP-Cache, White Web, ZBRAIN, クレデンシャルプロテクション, ホワイト運用, m-FILTER, m-FILTER MailFilter, m-FILTER Archive, m-FILTER Anti-Spam, m-FILTER Anti-Virus & Sandbox, m-FILTER@Cloud Anti-Virus & Sandbox, m-FILTER@Cloud Dアラート発信レポートサービス, m-FILTER File Scan, Mail Detox, m-FILTER EdgeMTA, EdgeMTA, FinalCode, i-フィルター, DigitalArts@Cloud, Desk, Desk Event, a-FILTER, f-FILTER, Z-FILTER, Dアラート, Dコン テンツ, and other names, logos, icons, designs, and related elements associated with Digital Arts Inc. and its products are registered trademarks or trademarks of Digital Arts Inc. Copyright © Digital Arts Inc. 48 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. based on information currently available to it. They may be subject to considerable change depending on changes in the environment and other factors, and the Company does not in any way guarantee the achievement of the projections. Digital Arts Inc. will disclose any significant changes that occur in the future as appropriate. With some exceptions, the basic figures in this presentation are rounded down to the nearest million yen.
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