Slide 1: Trend Micro FY2014.3Q Results
Trend Micro FY2014.3Q Results Mahendra Negi CFO, Representative Director November 12, 2014 Copyright © 2014 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: FY2014. 3Q Financial Highlight
FY2014. 3Q Financial Highlight （Third quarter ended September 30, 2014） Copyright © 2014 Trend Micro Incorporated. All rights reserved.
Slide 4: Q3 Consolidated Results
Q3 Consolidated Results (in million Yen) Three months YoY ended Sep 30, 3Q2013 3Q2014 growth Net sales 27,069 28,615 + 6% Cost of sales 4,890 5,272 + 8% Operating expenses 14,161 14,768 + 4% Operating income (Margin) 8,017 （ 30%） 8,574 （30%） + 7% Ordinary income 8,064 9,069 + 12% Net income 5,363 5,
Slide 5: Progress (9 months)
Progress （9 months） (in million Yen) Revenue Operating Income 120,000 (Forecast) 112,000 35,000 (Forecast) 30,100 108,314 30,000 100,000 (Progress of 29,450 (Progress of 83,941 Forecast 82%) 24,630 Forecast: 75%) 25,000 80,000 79,885 (Progress of 21,786 FY2013Act: 74%) 20,000 (Progress of 60,000 16,
Slide 6: Q3 USD based Results (Non-GAAP)
Q3 USD based Results (Non-GAAP) (unaudited) Three months (in thousand USD) ended Sep 30, 3Q2013 3Q2014 YoY change Net sales 273,540 275,153 + 1% Cost of sales 49,421 50,698 + 3% Operating expenses 143,106 142,008 - 1% Operating income 81,012 82,446 + 2% Ordinary income 81,492 87,207 + 7% Net Income
Slide 7: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 14,000 13,058 + 7% 13,000 12,196 3Q2013 12,000 3Q2014 11,000 10,000 9,000 + 1% + 7% 8,000 7,000 6,001 6,034 + 7% 6,000 5,138 5,474 5,000 4,000 3,083 3,303 + 15% 3,000 2,000 1,000 649 745 0 Japan North America Europe Asia Pacific Latin America
Slide 8: Net Sales Growth by Region (constant currency)
Net Sales Growth by Region (in million Yen) If currency exchange rates used for 3Q2013 were used for 3Q2014: (unaudited) 14,000 13,058 + 7% * ( ) : difference from GAAP base 13,000 12,196 (0) 12,000 3Q2013 11,000 3Q2014 10,000 - 4% + 1% 9,000 (-290) (-265) 8,000 + 1% 7,000 6,001 5,743 (-178) 6,000 5
Slide 9: Decomposition of Revenue (vs. last year)
Decomposition of Revenue (vs. last year） (unaudited) Asia Pacific Exchange impact Latin America North America Europe Japan + 769M + 61M + 41M + 69M - 257M + 862M 2014Ｑ3 Net sales 2013Ｑ3 28,615M Net sales 27,069M (Non-GAAP)
Slide 10: Constant currency Revenue growth
20 -5% 0% 5% 10% 15% 20% (YoY) 07 2 0 Q1 07 2 0 Q2 same period 07 2 0 Q3 07 2 0 Q4 08 2 0 Q1 08 2 0 Q2 08 2 0 Q3 08 2 0 Q4 09 2 0 Q1 09 2 0 Q2 09 2 0 Q3 09 2 0 Q4 10 2 0 Q1 10 2 0 Q2 10 Q 20 3 10 2 0 Q4 11 2 0 Q1 11 2 0 Q2 11 2 0 Q3 11 2 0 Q4 12 2 0 Q1 12 2 0 Q2 12 2 0 Q3 12 2 0 Q4 13 2 0 Q1 13 2 0
Slide 11: Sales by Segment
(in million Yen) Sales by Segment (unaudited) 14,000 13,000 Growth rate (YoY) + 12% 12,000 Consumer + 5% 11,000 All Enterprise + 6% 10,000 6,834 9,000 8,000 7,000 6,000 + 2% 2,186 - 9% 348 - 3% 5,000 4,000 + 7% + 7% 3,000 6,223 796 + 1% 3,847 5,126 2,000 + 9% - 23% 1,000 2,507 17 727 + 16% 0 Japan N
Slide 12: Cloud related Gross sales
“Cloud related” Gross sales Gross Revenue JPY'M Deep Security / Hosted / CPVM / IDF + 25% 3,500 YoY 3,000 2,500 2,000 1,500 1,000 500 - 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 “Notice” As
Slide 13: % share by region
% share by region 3Q2013 3Q2014 27,069 million Yen 28,615 million Yen Latin Latin Asia America Asia America Pacific Pacific 2% 3% 11% 12% Europe Japan Europe Japan 19% 45% 19% 46% North North America America 22% 21%
Slide 14: For reference Pre-GAAP
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) (unaudited) - 1% 12,923 12,857 3Q2013 3Q2014 + 3% + 10% 5,678 + 2% 5,535 4,723 4,274 3,152 3,225 + 30% 625 813 Japan North America Europe Asia Pacific Latin America “Notice” (Non-GAAP) Pre-GAAP means Revenue before
Slide 15: For reference Pre-GAAP (constant currency)
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) If currency exchange rates used for 3Q2013 were used for 3Q2014: (unaudited) 12,923 12,857 - 1% 3Q2013 3Q2014 - 3% + 5% 5,535 5,382 - 3% 4,274 4,501 3,152 3,043 + 24% 625 774 Japan North America Europe Asia Pacific
Slide 16: Deferred Revenue
Deferred Revenue (in million Yen) (unaudited) 98,000 94,973 * Total of current and long term 94,396 94,000 94,631 92,859 90,000 88,360 87,381 88,904 86,000 83,751 82,000 78,547 78,000 74,000 70,000 66,000 62,000 58,000 54,000 50,000 Sep-'12 Dec-'12 Mar-'13 Jun-'13 Sep-'13 Dec-'13 Mar-'14 Jun-'14 Sep
Slide 17: Deferred Revenue by Region
Deferred Revenue by Region (in million Yen) (unaudited) 60,000 * Total of current and long term + 0% 55,000 54,019 54,023 50,000 Jun-14 45,000 Sep-14 40,000 35,000 30,000 + 6% - 3% 25,000 + 1% 20,000 15,000 14,987 15,818 14,781 14,326 + 4% 10,000 9,132 9,267 5,000 1,475 1,538 0 Japan North America E
Slide 18: Deferred Revenue by Region (constant currency)
Deferred Revenue by Region If currency exchange rates used as of the end of 2Q2014 were used as of the end of 3Q2014: (in million Yen) (unaudited) 60,000 55,000 54,019 54,023 + 0% (0) * ( ) : difference from GAAP base Jun-14 50,000 * Total of current and long term Sep-14 45,000 40,000 35,000 - 2% -
Slide 19: Cost
Cost (unaudited) (in million Yen) Stock options / Acquisition related costs Salary & Benefit Office overhead Outside service Administration Selling & Marketing 22,000 Goods / Software Amortization & Capitalization 20,000 370 305 456 476 3,174 2,858 18,000 2,820 2,790 2,829 16,000 3,117 2,908 3,016 1
Slide 20: Pre-GAAP vs. Total Costs
Pre-GAAP vs. Total Costs (in million Yen) (unaudited) Pre-GAAP Total Costs Pre-GAAP Margin 32,000 40% 37% 30,000 28,000 30,348 35% 26,000 29,567 28,295 27,298 24,000 27,144 26,511 32% 30% 27% 27% 22,000 28% 20,000 25% 18,000 24% 16,000 20% 14,000 12,000 20,601 20,764 20,688 20,041 15% 10,000 19,052
Slide 21: Cash flows
Cash flows (unaudited) (in million Yen) 3Q2013 3Q2014 YoY growth Cash flows from operating activities 4,627 6,412 + 39% Cash flows from investing activities - 4,650 - 4,422 － Cash flows from financing activities 3,662 684 - 81% Effect of exchange rate changes 99 1,225 + 1133% on cash and cash equiva
Slide 22: Headcount
Headcount Jun - 2014 Sep - 2014 5,219 5,241 Admin, Admin, Business Process Business Process Sales, Marketing Sales, Marketing 827 806 Technical 1,505 Technical 1,545 Support Support 1,228 Research, 1,208 Research, Development Development + 22 1,659 (+ 0%) 1,682 Latin 66 Latin 67 EMEA EMEA 583 579 Ja
Slide 23: Non-operating & Extra-ordinary Items
Non-operating & Extra-ordinary Items (unaudited) Equity in gains of affiliated companies Gain on reversal of Gain on sales of marketable securities Other expense stock option Other income Exchange gain 12M 1M - 12M 9M 19M Interest income 33M 440M Income Ordinary Income before income taxes 9,069M 9,0
Slide 24: Balance Sheet
Balance Sheet (unaudited) (in million Yen) Jun-2014 change Sep-2014 Assets Cash & cash equivalents 49,785 + 4,301 54,086 Account receivable (less allowance for doubtful accounts) 21,903 + 143 22,046 Marketable securities & Securities investments 134,054 + 4,520 138,574 Liabilities Deferred revenue (
Slide 25: Q3 Highlights
Q3 Highlights • Recovery of US Enterprise business • Growth of strategic product revenues continues • Operating margins maintained 25
Slide 26: Q3 Lowlights
Q3 Lowlights • US Consumer business still declining • Overall pricing pressure continues 26
Slide 27: FY2014 9 months Financial Highlight
FY2014 9 months Financial Highlight （January ～ September, 2014） Copyright © 2014 Trend Micro Incorporated. All rights reserved.
Slide 28: Consolidated Results (9 months)
Consolidated Results (9 months) (in million Yen) 9 months (Progress vs. (Progress vs. last year’s YoY current year’s ended Sep 30, 2013(Q1-Q3) annual result) 2014(Q1-Q3) growth annual forecast) Net sales 79,885 (74%) 83,941 + 5% (75%) Cost of sales 14,736 14,577 - 1% Operating expenses 43,362 44,732
Slide 29: Net Sales Growth by Region
(in million Yen) Net Sales Growth by Region (unaudited) 40,000 35,905 37,225 + 4% FY2013 Q1-Q3 35,000 FY2014 Q1-Q3 30,000 + 2% 25,000 + 12% 20,000 17,567 17,972 16,701 14,940 + 4% 15,000 9,509 9,895 10,000 + 9% 5,000 1,962 2,146 0 Japan North America Europe Asia Pacific Latin America 29
Slide 30: Net Sales Growth by Region (constant currency)
(in million Yen) Net Sales Growth by Region If currency exchange rates used for 2013（Q1-Q3） were used for 2014（Q1-Q3）: (unaudited) 40,000 + 4% 35,905 37,225 (0) FY2013 Q1-Q3 35,000 FY2014 Q1-Q3 30,000 - 4% +2% 25,000 (-1,076) (-1,468) 20,000 17,567 16,896 + 2% 14,940 15,233 (-229) 15,000 + 9% 9,509
Slide 31: For reference Pre-GAAP
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) (unaudited) 40,590 + 5% FY2013 Q1-Q3 38,739 FY2014 Q1-Q3 + 3% + 9% 17,315 + 9% 16,862 14,757 13,566 10,186 9,325 + 19% 1,936 2,311 Japan North America Europe Asia Pacific Latin America “Notice” (Non-GAAP) Pre-GAAP
Slide 32: For reference Pre-GAAP (constant currency)
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) If currency exchange rates used for 2013(Q1-Q3) were used for 2014(Q1-Q3): 40,590 + 5% FY2013 Q1-Q3 38,739 FY2014 Q1-Q3 - 4% - 0% + 7% 16,862 16,268 13,501 13,566 + 19% 9,325 9,967 1,936 2,298 Japan North America Europe Asia Pacifi
Slide 33: FY2014 Cost (9 months)
FY2014 Cost (9 months) (unaudited) (in million Yen) YoY Growth 70,000 Goods / Software & - 72% Capitalization 60,000 392 Selling & Marketing + 0% 1,406 8,469 8,436 50,000 Administration + 10% 8,336 9,173 40,000 5,233 Outside service - 4% 5,439 4,147 4,092 30,000 Office overhead - 1% 20,000 Salary &
Slide 34: Projection for FY2014 Annual (Unchanged)
Projection for FY2014 Annual (Unchanged) (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%
Slide 35: Thank You
Thank You | i ,
Slide 36: Appendix: Quarterly Chart (1)
Appendix (unaudited) Quarterly Chart (1) (in million Yen) FY2013 FY2014 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ｎｅｔ s ale s 25,783 27,032 27,069 28,428 27,517 27,807 28,615 Co s t o f s ale s 5,048 4,796 4,890 4,642 4,622 4,682 5,272 O pe r at in g e x pe n s e s 13,396 15,804 14,161 16,122 13,958 16,005 14,768 O p
Slide 37: Appendix: Quarterly Chart (2)
Appendix (unaudited) Quarterly Chart (2) (in million Yen) FY2013 FY2014 （ S ale s by r e g io n ） Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 J apan 11,742 11,966 12,196 12,645 11,934 12,232 13,058 US 5,480 6,085 6,001 6,047 5,998 5,939 6,034 Eu r o pe 4,779 5,022 5,138 5,631 5,632 5,594 5,474 A s ia P ac ific 3,143 3,