DIGITAL HEARTS : Presentation Material for the Three Months Ended June 30, 2021

Presentation Material

for the Three Months Ended June 30, 2021

August 10, 2021

Copyright© 2021 DIGITAL HEARTS HOLDINGS Co., Ltd. All Rights Reserved.

Tokyo Stock Exchange First Section: Code 3676

https://www.digitalhearts-hd.com/

Q1 FY2021 Financial Results

(The three months ended June 30, 2021)

Copyright© 2021 DIGITAL HEARTS HOLDINGS Co., Ltd. All Rights Reserved.

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Business Highlight for Q1 FY2021

High sales growth in the buoyant market

Net Sales

6,098 Mln yen

(YoY 119.7％)

• The Enterprise Biz maintained rapid growth due to the tailwind of DX, steady progress in increasing the number of clients and acquiring larger projects.
• The Entertainment Biz also achieved double- digit sales growth by steadily acquiring large- scale projects in the buoyant game market.

Significant profit	Operating Income
growth with
636 Mln yen
bigger sales and	(YoY 401.3％)
higher margin

• The Enterprise Biz turning into profitable from a loss of last Q1 due to good sales results and higher margin with better unit prices and improved operation rates, while continuing to invest in human capital for further growth.
• The Entertainment Biz also achieved profit growth of approx. 1.8 times (YoY) through the effects of higher sales and efficient management.

	Progress rate to	◼	Both net sales and operating income
	the full-year target		progressed ahead of the Company's Q1 target.
Strong start toward		◼	The consolidation of four subsidiaries acquired
Net Sales
achieving the full-
21.5%		through M&A is expected to contribute a
year target			further sales increase of Q2 or later.
Operating Income	◼	Building a foundation for our future growth to
	30.3%
		achieve the full-year target as the step to the
			Medium-Term Target of sales 50 billion yen.
Copyright© 2021 DIGITAL HEARTS HOLDINGS Co., Ltd. All Rights Reserved.	2

Topics for Q1 FY2021

Entertainment Business		Enterprise Business

Corporate

Appointed

the first female corporate auditor

Entertainment Business

High growth of debugging for console games in a robust market

Sales of Debugging for	Compared to Q1
(Mln yen) Console Games	FY2019 before
1,500	COVID-19
111%
1,000
500

0

Q1 FY2019 Q1 FY2020 Q1 FY2021

Acquired identity Inc. and expand diverse pool of IT human resources

Registered	Security	Registered
personnel	testers
IT experts
approx.	approx.
approx.13,000 people
100 people	8,000 people

Engineers in Vietnam

More projects from Chinese clients as synergies from M&A

Sales of Global Service

(Mln yen)	128%
500

0

Q1 FY2020

Q1 FY2021

Enterprise Business

For full-scale utilization of offshore in Vietnam

Launch full-stack	Bridge personnel
development as JV	from Japan

Increasing test automation projects in Vietnam for Japanese clients

approx.

400 people

※P/L consolidation from Q2 FY2021

Enterprise Business

Collaboration between

newly joined MK Partners and

LogiGear to acquire new clients

in Europe and the U.S.

Copyright© 2021 DIGITAL HEARTS HOLDINGS Co., Ltd. All Rights Reserved.

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※P/L consolidation from Q2 FY2021

Summary of Financial Results for

the Three Months Ended June 30, 2021

• High growth in net sales of 119% and operating income of 401% YoY.
• Both progressed at a pace exceeding the Company's forecasts.

(Mln Yen) Q1 FY2020 Q1 FY2021 YoY Change

Net sales	5,093	6,098	1,005	119.7%
Cost of sales	3,819	4,271	451	111.8%
Cost of sales (%)
75.0%	70.0%		-5.0points
Gross profit
1,273	1,827	553	143.5%
SG&A
1,115	1,191	76	106.8%
Operating income	158	636	477	401.3%
Operating income
3.1%	10.4%		+7.3points
margin
Ordinary income	194	670	476	344.9％
Profit attributable to	99	487	388	491.3%
owners of parent
EBITDA	255	732	477	286.8%

Copyright© 2021 DIGITAL HEARTS HOLDINGS Co., Ltd. All Rights Reserved.

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