Digital Arts (2326) Q2 2025 earnings summary

Executive summary

• Net sales for the first six months were 4,838 million yen, down 13.0% year-over-year due to the transfer of a subsidiary; excluding this, net sales rose 6.2%, driven by strong enterprise and public sector demand for cloud security products and services.

• Operating profit declined 6.2% year-over-year to 2,052 million yen, impacted by increased data center communication expenses from higher cloud product usage.

• Profit attributable to owners of parent decreased 6.8% year-over-year to 1,417 million yen.

• The transfer of all shares in Digital Arts Consulting (DAC) at the end of the previous fiscal year reduced reported contracts and net sales by approximately 1,008 million yen each.

• The company re-established its Medium-Term Management Plan, focusing on security business growth, public sector expansion, and personnel investment.

Financial highlights

• Gross profit for the period was 3,355 million yen, with a gross margin of approximately 69.4%.

• EBITDA was 2,559 million yen, down 4.1% year-over-year.

• Basic earnings per share for the six months was 103.41 yen, compared to 108.90 yen in the prior year.

• Net assets increased to 16,370 million yen, with a capital adequacy ratio of 74.3%.

• Cash and cash equivalents at period end were 18,183 million yen.

Outlook and guidance

• Full-year consolidated net sales are forecast at 10,720 million yen, with operating and ordinary profit projected at 5,140 million yen, reflecting continued growth in cloud product sales and public sector projects.

• Profit attributable to owners of parent is forecast at 3,540 million yen, with basic EPS of 257.39 yen.

• Operating profit for the first half was below plan due to timing of sales recognition for cloud products, but full-year profit is expected to align with forecasts if current trends continue.

• Annual dividend is forecast to increase by 5 yen to 85 yen per share, marking the 11th consecutive year of dividend growth; target payout ratio is 33%.

• No changes to previously announced forecasts; actual results may differ due to economic and competitive factors.