Slide 1: Trend Micro FY2013.4Q / Annual Results
Trend Micro FY2013.4Q / Annual Results Mahendra Negi COO/CFO, Representative Director February 18, 2014 2/17/2014 Copyright © 2013 Trend Micro Incorporated. All rights reserved. 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: FY2013 4Q Financial Highlight
FY2013. 4Q Financial Highlight （Fourth quarter ended December 31, 2013） 2/17/2014 Copyright © 2013 Trend Micro Incorporated. All rights reserved. 3
Slide 4: Q4 Consolidated Results
Q4 Consolidated Results (in million Yen) Three months YoY ended Dec 31, 4Q2012 4Q2013 growth Net sales 24,313 28,428 + 17% Cost of sales 4,574 4,642 + 1% Operating expenses 13,943 16,122 + 16% Operating income 5,795 7,663 + 32% (Margin) （ 24%） （ 27%） Ordinary income 5,579 8,713 + 56% Net income 2,68
Slide 5: Progress (12 months)
Progress （12months） (in million Yen) Revenue Operating Income 120,000 35,000 108,314 (Forecast 107,200) 30,000 29,450 100,000 93,839 (Forecast 26,400) 79,885 25,000 80,000 21,786 22,407 69,526 20,000 60,000 16,611 52,815 15,000 13,769 45,689 40,000 25,783 10,000 10,503 7,338 20,000 22,630 5,000 5,56
Slide 6: Q4 USD based Results (Non-GAAP)
Q4 USD based Results (Non-GAAP) (unaudited) Three months (in thousand USD) ended Dec 31, 4Q2012 4Q2013 YoY change Net sales 298,944 282,562 - 5% Cost of sales 56,249 46,142 - 18% Operating expenses 171,438 160,246 - 7% Operating income 71,257 76,174 + 7% Ordinary income 68,606 86,604 + 26% Net Incom
Slide 7: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 13,000 12,645 + 8% 12,000 11,656 4Q2012 11,000 4Q2013 10,000 9,000 8,000 + 22% + 32% 7,000 6,047 6,000 5,631 5,000 4,975 + 19% 4,282 4,000 3,416 3,000 2,864 + 29% 2,000 1,000 534 687 0 Japan North America Europe Asia Pacific Latin America Confi
Slide 8: Net Sales Growth by Region (constant currency)
Net Sales Growth by Region (in million Yen) If currency exchange rates used for 4Q2012 were used for 4Q2013: (unaudited) 13,000 12,645 + 8% * ( ) : difference from GAAP base 12,000 11,656 (0) 11,000 4Q2012 10,000 4Q2013 9,000 8,000 - 2% 7,000 (-1,157) +1% 6,000 (-1,289) 4,975 4,890 + 3% 5,000 (-477)
Slide 9: Decomposition of Revenue (vs. last year)
Decomposition of Revenue (vs. last year） (unaudited) Exchange impact + 3,024M Latin America Europe North America Asia Pacific 2013Ｑ4 + 53M Japan + 59M - 85M Net + 74M sales + 989M 28,428M 2012Ｑ4 Net sales 24,313M (Non-GAAP) Confidential | Copyright 2012 Trend Micro Inc. 9 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 3 4 1 2 3 4 Q Q Q Q Q Q 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 12 12 13 13 13 13 20 20 20 20 20 20 20 20 20 20 20 20
Slide 11: Sales by Segment
(in million Yen) Sales by Segment 13,000 12,000 Growth rate (YoY) + 14% 11,000 Consumer + 12% 10,000 All Enterprise + 20% 6,595 9,000 8,000 7,000 6,000 + 3% 390 + 30% + 5% 5,000 2,302 4,000 + 32% + 12% 3,000 5,241 1,000 6,050 + 35% 2,000 3,745 + 23% + 80% 1,000 2,416 22 + 28% 665 0 Japan North Ameri
Slide 12: Cloud related gross sales and revenue
“Cloud related” Gross sales Revenue Deep Security / Hosted / CPVM / IDF 3,500 3,000 2,500 JPY'M 2,000 1,500 1,000 500 - 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 (Non-GAAP) “Notice”
Slide 13: % share by region
% share by region 4Q2012 4Q2013 24,313 million Yen 28,428 million Yen Latin Latin Asia America Asia America Pacific Pacific 2% 2% 12% 12% Europe Europe Japan Japan 18% 20% 44% 48% North North America America 20% 21% Confidential | Copyright 2012 Trend Micro Inc. 13
Slide 14: For reference: Pre-GAAP
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) (unaudited) - 0% 11,893 11,834 4Q2012 4Q2013 + 46% 8,172 + 17% 5,906 5,591 5,045 + 23% 3,669 2,994 + 31% 587 766 Japan North America Europe Asia Pacific Latin America (Non-GAAP) “Notice” Pre-GAAP means Revenue befo
Slide 15: For reference: Pre-GAAP (constant currency)
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) If currency exchange rates used for 4Q2012 were used for 4Q2013: (unaudited) (in million Yen) - 0% 11,893 11,834 4Q2012 4Q2013 + 13% 6,308 - 5% 5,591 5,045 4,777 + 6% 3,172 2,994 + 12% 587 655 Japan North America Europe Asia Pacifi
Slide 16: Deferred Revenue
Deferred Revenue (in million Yen) 98,000 * Total of current and long term 92,859 94,000 88,360 90,000 88,904 87,381 86,000 83,751 82,000 79,744 78,832 78,547 78,000 75,456 74,000 70,000 66,000 62,000 58,000 54,000 50,000 Dec-'11 Mar-'12 Jun-'12 Sep-'12 Dec-'12 Mar-'13 Jun-'13 Sep-'13 Dec-'13 Confide
Slide 17: Deferred Revenue by Region
Deferred Revenue by Region (in million Yen) (unaudited) 55,000 51,258 50,777 -1% * Total of current and long term 50,000 45,000 Sep-13 40,000 Dec-13 35,000 30,000 25,000 6% 26% 20,000 15,779 16,140 15,000 14,903 12,796 8% 10,000 8,173 8,792 12% 5,000 1,227 1,369 0 Japan North America Europe Asia Pac
Slide 18: Deferred Revenue by Region (constant currency)
Deferred Revenue by Region If currency exchange rates used as of the end of 3Q2013 were used as of the end of 4Q2013: (in million Yen) (unaudited) 55,000 51,258 50,777 -1% * ( ) : difference from GAAP base * Total of current and long term 50,000 (0) 45,000 Sep-13 40,000 Dec-13 35,000 30,000 -1% 16%
Slide 19: Cost
(in million Yen) Cost (unaudited) Stock options / Acquisition related costs Salary & Benefit Office overhead Outside service Administration Selling & Marketing 22,000 Goods / Softw are Amortization & Capitalization 217 370 20,000 2,917 476 3,174 18,000 528 713 2,829 3,137 2,688 2,812 16,000 3,117 14
Slide 20: Pre-GAAP vs Total Costs
Pre-GAAPⅴs Total Costs (unaudited) (in million Yen) Pre-GAAP Total Costs Pre-GAAP Margin 32,000 35% 32% 30,000 31% 28,000 29% 28% 30% 30,348 26,000 24% 24,000 27,144 26,774 25% 22,000 26,112 26,511 20,000 18,000 20% 16,000 14,000 15% 12,000 20,601 20,764 10,000 19,052 18,517 18,444 10% 8,000 6,000 4
Slide 21: Cash flows
Cash flows (unaudited) (in million Yen) 4Q2012 4Q2013 YoY growth Cash flows from operating activities 9,398 10,741 + 14% Cash flows from investing activities - 19,060 - 7,538 － Cash flows from financing activities - 176 1,468 － Effect of exchange rate changes 4,678 4,260 - 9% on cash and cash equiva
Slide 22: Headcount
Headcount Dec - 2013 Sep - 2013 5,137 5,217 Admin, Admin, Business Process Business Process Sales, Sales, 804 Marketing 818 Marketing Technical 1,370 Technical 1,376 Support Support Research, 1,327 Research, 1,294 Development Development 1,669 1,696 + 80 (+ 2%) Latin 67 Latin 63 EMEA EMEA 554 565 Ja
Slide 23: Non-operating & Extra-ordinary Items
Non-operating & Extra-ordinary Items (unaudited) Other expense Other income Gain on reversal of stock option Exchange loss Interest income 183M -241M Loss on Interest expense liquidation of subsidiary -149M -1M 31M Gain on sales of 374M marketable securities -728M Relocation expense 882M -232M Ordin
Slide 24: Balance Sheet
Balance Sheet (unaudited) (in million Yen) Sep-2013 change Dec-2013 Assets Cash & cash equivalents 70,003 + 9,629 79,632 Account receivable (less allowance for doubtful accounts) 20,790 + 3,539 24,329 Marketable securities & Securities investments 107,664 + 4,389 112,053 Liabilities Deferred revenue
Slide 25: Q4 Highlights
Q4Highlights • Strong quarter for Cloud related products • Improvement in operating margins Confidential | Copyright 2012 Trend Micro Inc. 25
Slide 26: Q4 Lowlights
Q4 Lowlights • Weak performance of consumer business in North America • Some major Enterprise deals slipped in North America • Continued pricing pressure on traditional security products Confidential | Copyright 2012 Trend Micro Inc. 26
Slide 27: FY2013 12 months (Annual) Financial Highlight
FY2013 12months （Annual） Financial Highlight Full year ended December 31, 2013 （January ~ December, 2013） 2/17/2014 Copyright © 2013 Trend Micro Incorporated. All rights reserved. 27
Slide 28: Annual Consolidated Results (12 months)
Annual Consolidated Results (12 months) (in million Yen) (Progress vs. 12 months YoY current year’s ended Dec 31, 2012(Q1-Q4) 2013(Q1-Q4) growth annual forecast) Net sales 93,839 108,314 + 15% (101%) Cost of sales 17,511 19,378 + 11% Operating expenses 53,920 59,485 + 10% Operating income 22,407 29,
Slide 29: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 55,000 + 6% 50,000 FY2012 Q1-Q4 48,551 45,803 FY2013 Q1-Q4 45,000 40,000 35,000 + 25% 30,000 23,615 + 25% 25,000 18,869 20,571 + 21% 20,000 16,396 15,000 12,925 10,676 + 27% 10,000 5,000 2,093 2,650 0 Japan US Europe Asia Pacific Latin America
Slide 30: Net Sales Growth by Region (constant currency)
Net Sales Growth by Region If currency exchange rates used for 2012（Q1-Q4） were used for 2013（Q1-Q4）: (in million Yen) (unaudited) 55,000 + 6% * ( ) : difference from GAAP base 50,000 FY2012 Q1-Q4 48,551 (0) 45,803 FY2013 Q1-Q4 45,000 40,000 + 2% - 1% 35,000 (- 4,306) (- 4,294) 30,000 25,000 + 2% 20
Slide 31: Decomposition of Annual Revenue (vs. last year)
Decomposition of Annual Revenue (vs. last year） (unaudited) Exchange impact + 10,983M Latin America Asia Pacific Europe North America FY2013 + 166M - 119M Net Japan + 256M + 439M sales + 2,748M 108,314M FY2012 Net sales 93,839M (Non-GAAP) 31
Slide 32: For reference: Pre-GAAP
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) (unaudited) + 1% 50,10450,573 FY2012 Q1-Q4 FY2013 Q1-Q4 + 20% + 30% 22,768 21,738 + 22% 18,896 16,774 12,995 10,616 + 24% 2,185 2,702 Japan US Europe Asia Pacific Latin America (Non-GAAP) “Notice” Pre-GAAP means Re
Slide 33: For reference: Pre-GAAP (constant currency)
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) If currency exchange rates used for 2012(Q1-Q4) were used for 2013(Q1-Q4): (in million Yen) (unaudited) 50,573 + 1% FY2012 Q1-Q4 50,104 FY2013 Q1-Q4 - 1% + 2% + 4% 18,896 18,636 16,774 17,179 10,616 11,071 + 6% 2,185 2,306 Japan No
Slide 34: Sales by Segment (Annual)
Sales by Segment （Annual） (単位：百万円) (未監査) 50,000 Growth rate (YoY) 45,000 + 9% 40,000 Consumer + 13% 24,502 All Enterprise + 17% 35,000 30,000 25,000 + 3% + 22% + 33% 20,000 9,649 1,420 15,000 + 10% + 28% + 25% 24,049 19,151 3,743 10,000 13,966 + 163% 5,000 + 26% 9,182 93 + 24% 0 2,556 Japan North Am
Slide 35: FY2013 Cost (12 months)
FY2013 Cost (12 months) (in million Yen) (unaudited) 90,000 YoY Growth Goods / Software & - 34% 80,000 Capitalization 1,777 Selling & Marketing - 3% 70,000 2,705 11,610 12,020 Administration + 16% 60,000 11,454 9,848 7,272 Outside service + 7% 50,000 6,821 5,539 40,000 Office overhead + 11% 4,980 30
Slide 36: Constant currency Revenue transition (based on FY2005)
Constant currency Revenue transition (based on FY2005) (in million Yen) (unaudited) 120,000 110,000 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 (Non-GAAP) •JPY net revenue amount for each fiscal year shown ab
Slide 37: Cash Dividends for FY2013
Cash Dividends for FY2013 Policy for Ordinary dividend payout ratio : 65% Dividends for FY2013 Special Total: 16,857 million Yen (Anniversary) 21% (considering special dividends, payout ratio 86% ) 100% Net Income Per share: (ordinary) 95 Yen (+42% YoY) Ordinary + 65% (Special) 30 Yen 19,595M *25th
Slide 38: Compensation for Share holders
Compensation for Share holders (in million Yen) Total compensation for shareholders growth rate (unaudited) Total compensation per Net income ratio 22,000 Dividends Buyback + 14% + 112% 20,000 + 139% - 2% 18,000 1,848 2,533 6,994 + 71% 16,000 6,809 - 36% 14,000 4,682 12,000 538 - 26% - 45% 10,000 +
Slide 39: FY2014 annual forecast assumptions
FY2014 annual forecast assumptions •Japan and Europe increase by around 5% YoY, US flat YoY respectively •Non operating income will be around 1.9Bn yen and there will be no Extra-ordinary items •Estimated exchange rate: 1USD = 100 yen ( last year: 98 yen) 1EUR = 138 yen ( last year: 130 yen) Confide
Slide 40: Projection for FY2014 Annual
Projection for FY2014 Annual (unaudited) For FY2014 Expected (in million Yen) Jan - Dec, 2014 YoY growth Net Sales 112,000 + 3% Operating Income 30,100 + 2% Ordinary Income 32,000 - 1% Net Income 19,100 - 3% In case of excluding a foreign exchange impact (a rule of thumb) Net Sales + 2% (Non-GAAP) C
Slide 41: Thank You
Thank You 41
Slide 42: Appendix: Quarterly Chart (1)
Appendix (unaudited) Quarterly Chart (1) (in million Yen) FY2012 FY2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ｎｅｔ sale s 22,630 23,058 23,836 24,313 25,783 27,032 27,069 28,428 Co st o f sale s 4,058 4,488 4,390 4,574 5,048 4,796 4,890 4,642 O pe r at in g e xpe n se s 13,003 13,636 13,337 13,943 13,396 15,804 14
Slide 43: Appendix: Quarterly Chart (2)
Appendix Quarterly Chart (2) (unaudited) (in million Yen) FY2012 FY2013 （ S ale s by r e gio n ） Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Japan 10,874 11,162 12,109 11,656 11,742 11,966 12,196 12,645 US 4,369 4,758 4,765 4,975 5,480 6,085 6,001 6,047 Eu r o pe 4,193 4,003 3,916 4,282 4,779 5,022 5,138 5,631 Asia P a