Slide 1: Trend Micro FY2012.2Q Results
Trend Micro FY2012.2Q Results Mahendra Negi COO/CFO, Representative Director August 9, 2012 Confidential | Copyright 2012 Trend Micro Inc. 1
Slide 2: Forward Looking Statements
Forward Looking Statements Certain Statements that we make in this presentation are forward-looking statements. These forward- looking statements are based upon management’s current assumptions and beliefs in light of the information currently available to it, but involve known and unknown risks and
Slide 3: FY2012 2Q Financial Highlight
FY2012. 2Q Financial Highlight （Second quarter ended June 30, 2012） Confidential | Copyright 2012 Trend Micro Inc. 3
Slide 4: Consolidated Results
Consolidated Results Three months (in million Yen) (unaudited) ended June 30, 2Q2011 2Q2012 YoY growth Net sales 24,333 23,058 - 5% Cost of sales 4,343 4,488 + 3% Operating expenses 13,334 13,636 + 2% Operating income (Margin) 6,655 (27%) 4,934 (21%) - 26% Ordinary income 6,874 5,043 - 27% Net incom
Slide 5: USD based Results (Non-GAAP)
USD based Results (Non-GAAP) (unaudited) Three months (in thousand USD) ended June 30, 2Q2011 2Q2012 YoY change Net sales 297,767 287,871 - 3% Cost of sales 53,145 56,030 + 5% Operating expenses 163,177 170,240 + 4% Operating income 81,444 61,600 - 24% Ordinary income 84,122 62,966 - 25% Net Income
Slide 6: Vs. Projection analysis (Operating income)
Vs. Projection analysis（Operating income） Sales side - 241M Cost side •Japan ↑ + 524M •EMEA ↓ 2012Ｑ2 •APAC ↓ •One time cost due to applying Projection the system of managing software 2012Ｑ2 development (non-cashout cost) ↑ Actual •Less than capitalization into Software in B/S (non-cashout cost) ↑ 4,
Slide 7: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 13,000 - 1% 12,000 11,296 11,162 11,000 2Q2011 10,000 2Q2012 9,000 8,000 - 11% 7,000 - 8% 6,000 5,365 5,000 4,758 4,354 4,003 - 2% 4,000 3,000 2,691 2,640 - 21% 2,000 1,000 624 493 0 Japan North America Europe Asia Pacific Latin America (In acc
Slide 8: Net Sales Growth by Region (constant currency)
Net Sales Growth by Region (in million Yen) If currency exchange rates used for 2Q2011 were used for 2Q2012: (unaudited) 13,000 * ( ) : difference from GAAP base 12,000 11,296 11,162 - 1% 11,000 (0) 2Q2011 10,000 2Q2012 9,000 - 10% 8,000 (+96) + 5% 7,000 (+567) + 3% 6,000 5,365 4,854 (+124) 5,000 4,
Slide 9: Decomposition of Revenue (vs. last year)
Decomposition of Revenue (vs. last year） (unaudited) Asia Pacific North America Europe + 73M + 216M - 511M Japan Latin America - 134M Exchange impact - 25M 2011Ｑ2 - 895M Net sales 2012Ｑ2 Net 24,333M sales 23,058 M (Non-GAAP) Confidential | Copyright 2012 Trend Micro Inc. 9
Slide 10: Constant currency Revenue growth
Constant currency Revenue growth (YoY) (unaudited) 20% 15% 10% 5% 0% 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11 12 12 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 -5% • Each
Slide 11: Sales by Segment
Sales by Segment (in million Yen) 13,000 Growth rate 12,000 11,000 Consumer - 7% 10,000 All Enterprise - 4% 9,000 5,371 8,000 7,000 6,000 5,000 4,000 2,247 277 3,000 5,790 2,000 3,726 884 2,510 1,000 1,756 -3 0 496 Japan North Europe APAC Latin America America (Non-GAAP) Confidential | Copyright 201
Slide 12: % share by region
% share by region (unaudited) 2Q2011 2Q2012 24,333 million Yen 23,058 million Yen Latin Latin Asia America America Pacific 3% Asia Pacific 2% 11% 11% Europe Japan Europe 18% 46% 17% Japan 48% North North America America 22% 21% (In accordance with Japan GAAP) Confidential | Copyright 2012 Trend Micr
Slide 13: For reference: Pre-GAAP
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) (unaudited) 12,870 + 14% 2Q2011 11,323 2Q2012 - 18% - 9% 5,160 4,228 4,605 4,203 - 13% 3,031 2,630 - 18% 604 497 Japan North America Europe Asia Pacific Latin America (Non-GAAP) “Notice” Pre-GAAP means Revenue befo
Slide 14: For reference: Pre-GAAP (constant currency)
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) If currency exchange rates used for 2Q2011 were used for 2Q2012: (unaudited) (in million Yen) 12,870 + 14% 2Q2011 11,323 2Q2012 - 17% + 5% 5,160 4,839 4,307 4,605 - 9% 3,031 2,764 + 1% 604 609 Japan North America Europe Asia Pacifi
Slide 15: Deferred Revenue
Deferred Revenue (in million Yen) (unaudited) 82,000 * Total of current and long term 79,744 78,832 78,000 77,928 77,771 74,599 73,940 75,102 76,434 75,456 74,000 70,000 66,000 62,000 58,000 54,000 50,000 Jun-'10 Sep-'10 Dec-'10 Mar-'11 Jun-'11 Sep-'11 Dec-'11 Mar-'12 Jun-'12 (In accordance with Jap
Slide 16: Deferred Revenue by Region
Deferred Revenue by Region (in million Yen) (unaudited) 55,000 4% * Total of current and long term 50,000 47,668 46,024 45,000 Mar-12 40,000 Jun-12 35,000 30,000 25,000 -6% 20,000 -11% 15,000 13,658 12,835 -5% 11,592 10,351 10,000 7,328 6,973 -12% 5,000 1,140 1,004 0 Japan North America Europe Asia
Slide 17: Deferred Revenue by Region (constant currency)
Deferred Revenue by Region If currency exchange rates used as of the end of 1Q2012 were used as of the end of 2Q2012: (in million Yen) (unaudited) 55,000 4% * ( ) : difference from GAAP base (0) * Total of current and long term 50,000 47,668 46,024 45,000 Mar-12 40,000 Jun-12 35,000 30,000 25,000 -3
Slide 18: Cost
Cost (in million Yen) Stock options / Acquisition related costs Salary & Benefit Office overhead Outside service (unaudited) Administration Selling & Marketing 20,000 Goods / Software Amortization & Capitalization 18,000 1,004 511 828 787 610 16,000 3,051 3,216 3,056 3,040 2,779 14,000 2,461 2,348 2
Slide 19: Pre-GAAP vs Total Costs
Pre-GAAPⅴs Total Costs (未監査) (in million Yen) Pre-GAAP Total Costs Pre-GAAP Margin 28,000 35% 32% 26,000 31% 24,000 29% 30% 27% 26,246 22,000 26% 24,725 24,730 20,000 23,529 24,430 25% 18,000 16,000 20% 14,000 12,000 15% 10,000 17,677 17,133 17,757 17,061 18,124 8,000 10% 6,000 4,000 5% 2,000 0 0% 2
Slide 20: Cash flows
Cash flows (unaudited) (in million Yen) 項目 2Q2011 2Q2012 YoY growth Cash flows from operating activities 8,841 10,167 + 15% Cash flows from investing activities - 379 - 5,058 － Cash flows from financing activities - 1,551 - 274 － Effect of exchange rate changes on cash and cash equivalents - 384 - 3
Slide 21: Q2 Highlights
Q2 Highlights • Continued growth in Strategic products • Europe and Japan continue to show despite challenging macro environment Confidential | Copyright 2012 Trend Micro Inc. 21
Slide 22: Q2 Lowlights
Q2 Lowlights • Higher than expected cost of customer acquisition in US retail • Change in R&D capitalization impacts earnings • Pricing pressure continues on traditional AV products Confidential | Copyright 2012 Trend Micro Inc. 22
Slide 23: Headcount
Headcount Mar - 2012 Jun - 2012 4,913 5,017 ADM, ADM, Business Process Sales, Business Process Sales, 751 Marketing Marketing 789 Technical 1,379 + 104 Technical 1,387 Support (+ 2%) Support Research, Research, 1,283 1,324 Development Development 1,500 1,517 Confidential | Copyright 2012 Trend Micro
Slide 24: Non-operating & Extra-ordinary Items
Non-operating & Extra-ordinary Items (unaudited) Other income Other expense Interest income 29M Exchange loss 143M 298M 75M Operating Ordinary Income Income before income taxes income 5,043M 5,043M 4,934M (Non-GAAP) Confidential | Copyright 2012 Trend Micro Inc. 24
Slide 25: Balance Sheet
Balance Sheet (unaudited) (in million Yen) Mar-2012 change Jun-2012 Assets Cash & cash equivalents 66,698 + 3,003 69,701 Account receivable (less allowance for doubtful accounts) 21,291 - 2,092 19,199 Marketable securities & Securities investments 65,761 + 904 66,665 Liabilities Deferred revenue (to
Slide 26: Q3 forecast assumptions
Q3 forecast assumptions •Japan and Europe are flat YoY respectively, US decreases by mid-teen •Stock option expenses will be 0.7Bn yen •Estimated exchange rate: 1USD = 78 yen ( last year: 78 yen) 1EUR = 96 yen ( last year: 110 yen) Confidential | Copyright 2012 Trend Micro Inc. 26
Slide 27: Q3 Extraordinary forecast assumptions
Q3 Extraordinary forecast assumptions (Extraordinary) Reversal of Stock option (buying back and cancellation) + 3,500 million Yen Prospect of loss on sales of Euro MMF in Q3 - 1,800 million Extraordinary income + 1,700 million
Slide 28: Projection for 3Q2012
Projection for 3Q2012 (unaudited) For 3Q2012 Expected (in million Yen) Jul - Sep, 2012 YoY growth Net Sales 23,700 - 1% Operating Income 5,700 - 17% Ordinary Income 6,000 - 31% Net Income 4,000 - 28% (In accordance with Japan GAAP) In case of excluding a foreign exchange impact (a rule of thumb) Net
Slide 29: Thank you!
Thank you! Confidential | Copyright 2012 Trend Micro Inc. 29
Slide 30: Appendix: Quarterly Chart (1)
Appendix (unaudited) Quarterly Chart (1) (in million Yen) FY2011 FY2012 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ｎｅｔ sale s 23,980 24,333 24,015 24,064 22,630 23,058 Co st o f sale s 4,412 4,343 4,620 4,519 4,058 4,488 O pe r atin g e xpe n se s 13,046 13,334 12,513 13,237 13,003 13,636 O pe r atin g in c o me 6,520
Slide 31: Appendix: Quarterly Chart (2)
Appendix Quarterly Chart (2) (unaudited) (in million Yen) FY2011 FY2012 （ S ale s by r e gio n ） Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Japan 11,023 11,296 11,722 12,028 10,874 11,162 US 5,315 5,365 4,968 4,803 4,369 4,758 Eu r o pe 4,435 4,354 4,206 4,151 4,193 4,003 Asia P ac ific 2,570 2,691 2,528 2,540 2,615 2