Table of Contents

■Participants

■Opening Greeting

■Company Overview

■Q&A

■Closing Greeting

■Participants

Digital Information Technology Inc <3916> President and CEO Satoshi Ichikawa.

Famous investor VTuber, Hasshan.

Fisco Market Reporter, Hiroe Takai (Host).

■Opening Greeting

▲ Fisco Takai

Hello everyone. This is Hiroe Takai, the Fisco Market Reporter. This time, we have the honor of welcoming Mr. Satoshi Ichikawa, the Representative Director of Digital Information Technology Inc., who will be engaging with the famous investor VTuber, Hasshan, to pose some intriguing questions based on theoretical stock price charts. In the latter part, we would like Mr. Ichikawa to answer the questions from Hasshan. Now, let me introduce Mr. Ichikawa and Hasshan who are joining us today. First, Mr. Satoshi Ichikawa, the Representative Director of Digital Information Technology Inc. Thank you for being here.

■Ichikawa

Thank you.

▲ Fisco Takai

Mr. Ichikawa joined Toyo IT Holdings, now known as Digital Information Technology Inc., in 2004. He became a managing director in 2014, was appointed senior managing director in 2016, and took office as president and CEO in July 2018. Digital Information Technology is listed on the Tokyo Stock Exchange Main Board, primarily engaged in Software Development of business systems and embedded systems, selling its own products such as Web Security, and is expanding its DX business area. Next, we have the well-known investor, Hasshan. Thank you.

● Hasshan

I am Hasshan. Thank you.

▲ Fisco Takai

As an IT engineer and part-time investor, Hasshan has achieved 0.1 billion yen by investing long-term in undervalued growth stocks. Currently, he has started his own business, developing a stock beginner site called KabBiz, which is accessible even for beginners without specialized financial knowledge, under the philosophy of realizing a sustainable stock market. As an investor VTuber distributing original investment content such as theoretical stock prices and monthly information, he is also active in money magazines, investment media, and social media, with cumulative sales of his business books exceeding 0.1 million copies.

■Company Overview

▲ Fisco Takai

Now, let's first have Mr. Ichikawa provide a company presentation. Hasshan, please feel free to raise any questions you may have. Alright, please go ahead.

■ DIT Ichikawa

The company overview, introduction of specific Business, mid-term goals, Dividends for shareholders, and recent performance explanation of the first quarter (1Q) will be provided. Firstly, as for the company overview, it is a company that has achieved 14 consecutive periods of revenue and profit growth. The secret to this 14-period consecutive revenue and profit growth will be discussed. We uphold a purpose of supporting the digital society (change) that continues "progress" with the power of IT (adaptability), enriching people's lives. This has permeated through all employees, and we place the highest importance on "adaptability to change."

As a specific example, with the spread of Smart Phones and the decline of Japanese manufacturers primarily focusing on feature phones, the company has also experienced a reduction in business but has pivoted significantly towards software related to Autos, thereby increasing performance. Following the work-style reform, a plethora of operational efficiency products and services have emerged in the market, and since around 2008, we have been developing our own product "xoBlos." Security ransomware attacks have occurred frequently, and our Security product "WebARGUS ransomware" was released in 2014. During the COVID-19 pandemic, we released an electronic contract service "Electronic Contract DD-Connect" suitable for remote work environments, and recently we are also actively working on generative AI technology. Being ahead of the times and fulfilling customer demands while continuously adapting to changes is believed to lead to sustainable growth.

The company, along with its group companies, has a scale of about 1,500 people and is divided into seven companies based on various business fields such as finance, e-commerce, and embedded systems. Each company operates independently in terms of finances, securing revenue, and cultivating its members, with more than seven executives in place. This explains the background of the company's business foundation's growth. Another growth factor is the continuous development of distinctive proprietary products in various fields. These corporate cultures are significant pillars of our company's identity. The mid-term growth model, utilizing these two characteristics, will be explained. In terms of business foundation, we provide new value and services that respond to social changes through steady work from stable customers. This foundation, combined with the expansion of business focused on our proprietary products and the utilization of new technologies, adds growth elements for creating next-generation businesses, thereby enhancing profitability in a short time. This is the company's mid-term growth model.

Next, a concrete overview of the company. Digital Information Technology Inc. is a company with a workforce of 1,500 employees when including subsidiaries. Due to the long company name, stakeholders refer to it as DIT. An explanation of the group companies will be provided. First is DIT Marketing Services. DIT itself provides various customized systems for large enterprises, but DIT Marketing Services sells systems aimed at small and medium-sized enterprises. DIT America, LLC. is a subsidiary based in the American region, validating whether Japanese manufacturers' products operate without issues in America. Recently, three M&A transactions have occurred, with Simplism being a company that provides operational support. Another is System Product, which focuses on operational systems. Lastly, Jungle is a company currently devoted to producing new products based on its proprietary offerings.

An explanation of the development bases. DIT has bases in various locations across the Kanto region, including its subsidiaries. The regional bases include Osaka. Nearshore bases are located in Matsuyama City, Ehime Prefecture, and Sendai City, Miyagi Prefecture. Recently, a branch office was established in Hakodate City, Hokkaido, serving as a recruitment base for talent development. It is a base for procuring talent that is difficult to hire in Tokyo and Osaka. Focus will be placed on regional bases with plans to increase them throughout Japan.

● Hasshan

Mr. Ichikawa, is it alright if I ask a question.

■ DIT Ichikawa

Please proceed.

● Hasshan

There was a discussion about adopting an internal company system, where each department has its own president. There are several bases in the country, but what is the relationship between the company system and the headquarters?

■ DIT Ichikawa

There are five major bases categorized, and sometimes the local bases directly turn into companies. For example, the Osaka base is the West Japan Company, and the near-shore base in Ehime is called the Ehime Company.

● Hasshan

I understand well. Thank you.

■ DIT Ichikawa

Let me explain the brief history of our company. The parent company was established in 1982 under the name Toyo Computer Systems, with its beginnings in Kanazawa Bunko, Yokohama. It started as a third and fourth-tier supplier for major system integrators, with a team of less than 20 people. In the 1990s, the goal was to receive work directly from end customers and to expand into various IT fields, which led to the decision to establish separate companies for each IT sector, rather than enlarging Toyo Computer Systems. Toyo Techno is a company specializing in web development and the construction of e-commerce sites, which began gaining popularity at that time. The company Japanese Automaton, acquired through M&A, specializes in embedded system development. Toyo Youth Wear Service is responsible not only for development but also for the operation, maintenance, and support of the systems that have been completed. Anticipating what would be required in society, the company expanded into various IT fields, transforming each into a legal entity.

To facilitate collaboration among these companies, Toyo IT Holdings was formed in 2002, making all companies 100% subsidiaries. Then, in 2006, during the first attempt at going public, we received advice that it would be better to promote a single large entity capable of various endeavors rather than a small holding company. Thus, all the companies were merged into the holding company, now known as DIT. Since the small-scale days of the 1990s, we have continued to create our own products, with "xoBlos", released in 2010 for operational efficiency, and "WebARGUS", released in 2014 for security, still contributing to our revenue today. We take pride in being able to provide recognized products in society due to our continued investment in development since our founding. In 2015, we went public on JASDAQ, then moved on to the Second Section and First Section of the Tokyo Stock Exchange, and we are now in our 43rd fiscal year listed on the Main Board.

Here are the business segments and Revenue Composition. The primary focus is on the custom business system development and operation support for large corporations, which accounts for over 95% of the total. The Software Development business is broadly divided into three categories.

The first category is the Business Solutions business. This includes the development of various systems used by customers for their operations and the provision of operational support after development, making up over 56% of the total. The second category is the Embedded Solutions business. This involves developing software for products such as car navigation systems and mobile devices, as well as performing operational validation. This category accounts for just under 35% of the total. The third and most focused area is the Product Solutions business, where we develop and sell our own products, which accounts for slightly over 5%. The System Sales business is handled by our subsidiary DIT Marketing Services, which sells systems for small and medium-sized enterprises, accounting for just under 4% of the total.

[Digital Information Technology] Prominent investor Hasshan has a question for President Ichikawa! To be continued in Vol.2.