Digital Arts Inc. (2326) AI Stock Analysis

• Market Cap: ¥86.31B
• Dividend Yield: 1.42%
• Average Volume (3M): 119.34K
• Price to Earnings (P/E): 26.3
• Beta (1Y): 0.99
• Revenue Growth: -6.04%
• EPS Growth: -24.88%
• Country: JP
• Employees: 252
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 62.86
• Shares Outstanding: 14,133,000
• 10 Day Avg. Volume: 113,130
• 30 Day Avg. Volume: 119,343
• PEG Ratio: -1.11
• Price to Book (P/B): 5.35
• Price to Sales (P/S): 9.31
• P/FCF Ratio: 33.27
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 66 Neutral
• Price Target: ¥6,804.00 ▲(7.66% Upside)

The score is anchored by strong financial quality (high margins and a debt-free balance sheet), but is pulled down by weak technical momentum (below key moving averages with negative MACD and low RSI/Stoch) and a moderately premium valuation (P/E 27.24 with a modest 1.42% yield).

Positive Factors

Debt-Free Balance Sheet

A debt-free balance sheet enhances financial stability and flexibility, allowing the company to invest in growth opportunities without financial strain.

High Margins

High margins indicate efficient operations and pricing power, supporting long-term profitability and competitive positioning in the software industry.

Share Buyback Strategy

The share buyback strategy can enhance shareholder value and optimize capital structure, reflecting management's confidence in the company's future prospects.

Negative Factors

Revenue Decline

A decline in revenue indicates potential challenges in maintaining market share or product demand, which could impact long-term growth and profitability.

Earnings Volatility

Volatility in earnings and cash flow can indicate operational instability, potentially affecting the company's ability to fund growth initiatives consistently.

Softening Profitability

Softening profitability suggests challenges in maintaining cost efficiency or pricing power, which could pressure margins and returns over the medium term.

Digital Arts Inc. Business Overview & Revenue Model

Company Description

Digital Arts Inc. develops and markets internet security software and appliances in Japan, the United States, Europe, and the Asia Pacific. It offers DigitalArts@Cloud that provides web security and email security in the cloud; i-FILTER, a web filtering software for corporations; i-FILTER Browser & Cloud, a web security solution for smart devices that prevents private usage, visualizes web access with logs and reports, and prevents leaks of critical information; i-FILTER for consumers, a parental control software; D-SPA, a proxy appliance product; m-FILTER, an email filtering software for corporations; and FinalCode, a persistent password-less file security and tracking solution. The company also provides consulting services related to information security solutions; and support services, software version updates, and web filtering databases. Digital Arts Inc. was founded in 1995 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Digital Arts Inc. generates revenue primarily through the sale of its software products and subscription-based services. The company’s key revenue streams include licensing fees for their software solutions, recurring subscription fees for cloud-based services, and maintenance and support contracts. Additionally, Digital Arts Inc. partners with various technology firms and enterprise clients to integrate their security solutions into broader IT infrastructures, which often involves long-term contracts and strategic partnerships. These partnerships not only enhance the company's market reach but also provide significant contributions to its overall earnings.

Digital Arts Inc. Financial Statement Overview

Summary

Digital Arts Inc. demonstrates strong financial health, characterized by high profitability, a debt-free balance sheet, and a history of consistent revenue growth. The robust income statement and balance sheet are tempered by limited current cash flow data. Overall, the company is well-positioned in the software application industry, with minimal financial risk and effective capital management.

Income Statement

The company shows strong profitability with a TTM (Trailing-Twelve-Months) gross profit margin of 66.5% and a net profit margin of 41.9%. Revenue growth is steady, with a 15.5% increase from 2022 to 2023, followed by a 10.3% increase in 2024. EBIT and EBITDA margins are robust at 42.5% and 51.0% respectively, indicating efficient operations and strong earnings before interest, taxes, depreciation, and amortization.

Balance Sheet

The company maintains a strong balance sheet with zero debt, resulting in an excellent debt-to-equity ratio. The return on equity (ROE) is impressive at 26.4% TTM, demonstrating effective use of shareholders' equity to generate profits. The equity ratio of 78.8% TTM reflects a strong capital structure with a healthy proportion of equity financing.

Cash Flow

The company's cash flow metrics show variability, with a TTM operating cash flow to net income ratio of 0, due to missing operating cash flow data. Historical data indicates solid free cash flow generation, though the absence of current period data limits the analysis. Free cash flow growth was strong in previous years, supporting financial flexibility.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	10.02B	9.98B	11.51B	10.44B	9.05B	6.83B
Gross Profit	7.06B	7.03B	6.93B	6.77B	6.38B	4.88B
EBITDA	5.42B	5.48B	5.31B	5.30B	5.02B	3.84B
Net Income	3.15B	3.18B	4.38B	3.06B	2.90B	2.06B
Balance Sheet
Total Assets	22.44B	22.63B	22.52B	21.15B	19.34B	14.86B
Cash, Cash Equivalents and Short-Term Investments	18.43B	17.95B	18.34B	17.02B	15.77B	11.38B
Total Debt	0.00	0.00	0.00	0.00	0.00	0.00
Total Liabilities	5.39B	5.26B	6.52B	6.98B	7.18B	4.80B
Stockholders Equity	17.05B	17.36B	16.00B	14.15B	12.14B	10.05B
Cash Flow
Free Cash Flow	0.00	2.79B	1.84B	2.28B	5.19B	4.39B
Operating Cash Flow	0.00	2.82B	2.83B	3.15B	6.17B	5.22B
Investing Cash Flow	0.00	-1.11B	1.01B	-867.00M	-978.00M	-830.00M
Financing Cash Flow	0.00	-2.10B	-2.54B	-1.05B	-810.00M	-671.00M

Digital Arts Inc. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 6320.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Positive
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:2326, the sentiment is Negative. The current price of 6320 is above the 20-day moving average (MA) of 6217.00, below the 50-day MA of 6707.60, and below the 200-day MA of 7173.38, indicating a bearish trend. The MACD of -184.95 indicates Negative momentum. The RSI at 28.79 is Positive, neither overbought nor oversold. The STOCH value of 34.95 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:2326.

Digital Arts Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4071	79 Outperform	¥103.34B	30.29	―	1.19%	22.78%	7.57%
4432	74 Outperform	¥126.26B	24.05	―	2.59%	5.22%	-6.62%
2492	69 Neutral	¥96.46B	58.56	―	0.72%	22.13%	254.87%
2326	66 Neutral	¥86.31B	26.26	―	1.42%	-6.04%	-24.88%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
3673	61 Neutral	¥65.82B	63.24	―	0.62%	18.86%	―
4776	―	¥125.25B	19.61	―	1.02%	26.47%	142.77%

Digital Arts Inc. Corporate Events

Digital Arts Advances Share Buyback, Acquires 41,000 Shares Under Ongoing Program

Digital Arts Inc. reported progress on its ongoing share buyback program, confirming the purchase of 22,200 shares of its common stock for a total of ¥147.1 million through market transactions on the Tokyo Stock Exchange between December 1 and December 31, 2025. Under a board-approved authorization from October 31, 2025, the company is allowed to repurchase up to 60,000 shares or ¥500 million by February 6, 2026, and had cumulatively acquired 41,000 shares for ¥282.4 million as of the end of December, indicating a continued commitment to capital efficiency and potential shareholder value enhancement through reduced share float.

The most recent analyst rating on (JP:2326) stock is a Hold with a Yen6804.00 price target. To see the full list of analyst forecasts on Digital Arts Inc. stock, see the JP:2326 Stock Forecast page.

Digital Arts Inc. Announces Share Buyback Progress

Digital Arts Inc. announced the acquisition of 18,800 of its own shares for JPY 135,328,000 between November 6 and November 30, 2025, as part of a broader plan approved by the Board of Directors to buy back up to 60,000 shares by February 2026. This move is part of the company’s strategy to enhance shareholder value and optimize its capital structure, potentially impacting its market positioning and investor relations.

Digital Arts Inc. Advances Share Buyback Strategy

Digital Arts Inc. announced the acquisition of 24,200 of its own shares, valued at JPY 181,253,000, through market purchases on the Tokyo Stock Exchange during October 2025. This move is part of a larger plan approved by the Board of Directors to acquire up to 63,000 shares, demonstrating the company’s strategy to enhance shareholder value and optimize capital structure.

Digital Arts Inc. Announces Share Buyback to Boost Capital Efficiency

Digital Arts Inc. announced its decision to acquire up to 60,000 of its own shares, aiming to improve capital efficiency and enhance shareholder returns. This strategic move, approved by the Board of Directors, involves a maximum investment of JPY 500,000,000 and will take place through market purchases on the Tokyo Stock Exchange between November 6, 2025, and February 6, 2026.

Digital Arts Inc. Reports Modest Growth and Announces Special Dividend

Digital Arts Inc. reported its consolidated financial results for the six months ending September 30, 2025, showing a slight increase in net sales by 3.2% compared to the previous year, despite a minor decline in operating and ordinary profits. The company announced a special dividend in commemoration of its 30th anniversary, reflecting a positive outlook with an 18.2% projected increase in net sales for the fiscal year ending March 31, 2026, indicating a strategic focus on growth and shareholder value.

Digital Arts Inc. Revises Financial Forecasts Amid GIGA School Project Success

Digital Arts Inc. has revised its full-year financial forecasts for the fiscal year ending March 31, 2026, due to favorable orders related to Phase 2 of the GIGA School Concept. While the contracts forecast has increased by 15.3%, the net sales and profits are expected to fall below previous estimates due to the prorated reporting of cloud service-based products. The company aims to expand its sustainable revenue base and explore new business opportunities.