Digital Arts (2326) Q2 2027 earnings summary

Executive summary

• H1 FY2027 net sales rose 20.7% YoY to ¥6,024M; operating profit increased 37.8% to ¥2,785M, with a 46.2% operating margin.

• Contracts rose 3.9% to ¥6,889M as enterprise and government growth offset lower GIGA School Phase 2 orders.

Financial highlights

• Gross profit increased 21.1% to ¥4,159M; SG&A fell 2.7% to ¥1,373M, partly because prior-year anniversary costs did not recur.

• Ordinary profit rose 39.1% to ¥2,838M; parent-attributable profit increased 36.7% to ¥1,924M, and basic EPS was ¥143.50.

• Cash and cash equivalents rose ¥4,405M to ¥27,488M; advances received increased ¥3,357M to ¥11,157M as contracts accumulated.

Outlook and guidance

• FY2027 forecast unchanged: contracts ¥13,500M, net sales ¥12,000M, operating profit ¥5,400M, ordinary profit ¥5,505M and parent-attributable profit ¥3,770M.

• H1 progress was 51.0% of forecast contracts, 50.2% of net sales and 51.6% of operating profit; backlog is expected to cover about half of required H2 net sales.

• FY net sales forecast reflects carried-over contracts and cloud-service sales; contracts are expected to decline as GIGA Phase 2 acquisition has peaked.

• FY cost-of-sales forecast rises 14.6%, driven by development investment, software depreciation and cloud-user communication costs; SG&A forecast rises 2.5%.