Slide 1: Trend Micro FY2012.3Q Results
Trend Micro FY2012.3Q Results Mahendra Negi COO/CFO, Representative Director November 8, 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. 3Q Financial Highlight
FY2012. 3Q Financial Highlight （Third quarter ended September 30, 2012） Confidential | Copyright 2012 Trend Micro Inc. 3
Slide 4: Consolidated Results
Consolidated Results (unaudited) Three months (in million Yen) ended Sep 30, 3Q2011 3Q2012 YoY growth Net sales 24,015 23,836 - 1% Cost of sales 4,620 4,390 - 5% Operating expenses 12,513 13,337 + 7% Operating income (Margin) 6,881 (29%) 6,108 (26%) - 11% Ordinary income 8,705 6,233 - 28% Net income
Slide 5: USD based Results (Non-GAAP)
USD based Results (Non-GAAP) (unaudited) Three months (in thousand USD) ended Sep 30, 3Q2011 3Q2012 YoY change Net sales 308,599 303,188 - 2% Cost of sales 59,373 55,846 - 6% Operating expenses 160,794 169,643 + 6% Operating income 88,431 77,698 - 12% Ordinary income 111,861 79,284 - 29% Net Income
Slide 6: Vs. Projection analysis (Operating income)
Vs. Projection analysis（Operating income） Sales side Cost side - 271M + 136M •People cost ↓ •Japan ↑ •Marketing ↓ •US ↑ •Stock option cost ↑ •APAC ↓ 2012Ｑ3 2012Ｑ3 •EMEA ↓ Actual Projection 6,108 M 5,700 M (Non-GAAP) Confidential | Copyright 2012 Trend Micro Inc. 6 6
Slide 7: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 13,000 12,109 + 3% 12,000 11,722 11,000 3Q2011 10,000 3Q2012 9,000 8,000 7,000 - 4% - 7% 6,000 4,968 4,765 5,000 4,206 3,916 + 1% 4,000 3,000 2,528 2,555 - 17% 2,000 1,000 590 489 0 Japan North America Europe Asia Pacific Latin America (In acco
Slide 8: Net Sales Growth by Region (constant currency)
Net Sales Growth by Region (in million Yen) If currency exchange rates used for 3Q2011 were used for 3Q2012: (unaudited) 13,000 12,109 * ( ) : difference from GAAP base 12,000 11,722 + 3% 11,000 (0) 3Q2011 10,000 3Q2012 9,000 - 5% 8,000 (-47) + 4% 7,000 (+461) + 2% 6,000 5,000 4,968 4,717 (+10) 4,20
Slide 9: Decomposition of Revenue (vs. last year)
Decomposition of Revenue (vs. last year） Asia Pacific (unaudited) North America Europe Latin America Japan + 37M + 171M - 250M - 28M Exchange impact + 387M - 497M 2011Ｑ3 2012Ｑ3 Net Net sales sales 24,015M 23,836 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 3 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 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 -
Slide 11: Sales by Segment
Sales by Segment (in million Yen) 13,000 Growth rate 12,000 + 2% 11,000 Consumer - 2% 10,000 All Enterprise 9,000 6,277 8,000 7,000 6,000 5,000 4,000 2,044 277 3,000 5,832 2,000 3,639 750 2,720 1,000 1,805 3 0 485 Japan North Europe APAC Latin America (Non-GAAP) America Confidential | Copyright 2012
Slide 12: % share by region
% share by region (unaudited) 3Q2011 3Q2012 24,015 million Yen 23,836 million Yen Latin Latin Asia America Asia America Pacific Pacific 2% 2% 11% 11% Europe Japan Europe Japan 18% 49% 16% 51% North North America America 21% 20% (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) 12,712 + 10% 3Q2011 11,574 3Q2012 - 9% 5,074 4,640 - 16% 3,540 - 12% 2,965 2,831 2,502 - 5% 509 482 Japan North America Europe Asia Pacific Latin America (Non-GAAP) “Notice” Pre-GAAP means Revenue befor
Slide 14: For reference: Pre-GAAP (constant currency)
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) If currency exchange rates used for 3Q2011 were used for 3Q2012: (in million Yen) (unaudited) 12,712 + 10% 3Q2011 11,574 3Q2012 - 10% 5,074 4,583 - 8% 3,540 3,260 - 12% 2,831 2,492 + 8% 509 550 Japan North America Europe Asia Pacif
Slide 15: Deferred Revenue
Deferred Revenue (in million Yen) (unaudited) 82,000 * Total of current and long term 79,744 78,832 78,547 78,000 75,456 75,102 76,434 77,928 77,771 74,599 74,000 70,000 66,000 62,000 58,000 54,000 50,000 Sep-'10 Dec-'10 Mar-'11 Jun-'11 Sep-'11 Dec-'11 Mar-'12 Jun-'12 Sep-'12 (In accordance with Jap
Slide 16: Deferred Revenue by Region
Deferred Revenue by Region (in million Yen) (unaudited) 55,000 2% 50,000 47,668 48,766 * Total of current and long term 45,000 Jun-12 40,000 Sep-12 35,000 30,000 25,000 -5% 20,000 -8% 15,000 0% 12,835 12,238 10,000 10,351 9,571 6,973 6,957 1% 5,000 1,004 1,014 0 Japan North America Europe Asia Pacif
Slide 17: Deferred Revenue by Region (constant currency)
Deferred Revenue by Region If currency exchange rates used as of the end of 2Q2012 were used as of the end of 3Q2012: (in million Yen) (unaudited) 55,000 2% * ( ) : difference from GAAP base * Total of current and long term 50,000 47,66848,766 (0) 45,000 Jun-12 40,000 Sep-12 35,000 30,000 25,000 -3%
Slide 18: Cost
Cost (in million Yen) (unaudited) Stock options / Acquisition related costs Salary & Benefit Office overhead Outside service Administration Selling & Marketing 20,000 Goods / Software Amortization & Capitalization 18,000 1,004 828 562 787 610 16,000 3,051 3,051 3,056 2,779 3,040 14,000 2,348 2,370 2
Slide 19: Pre-GAAP vs Total Costs
Pre-GAAPⅴs Total Costs (in million Yen) Pre-GAAP Total Costs Pre-GAAP Margin (unaudited) 28,000 32% 35% 26,000 31% 24,000 30% 27% 26,246 22,000 26% 24,730 24% 20,000 23,529 24,430 25% 23,304 18,000 16,000 20% 14,000 12,000 15% 10,000 17,757 18,124 17,133 17,061 17,728 8,000 10% 6,000 4,000 5% 2,000
Slide 20: Cash flows
Cash flows (unaudited) (in million Yen) 項目 3Q2011 3Q2012 YoY growth Cash flows from operating activities 2,660 4,398 + 65% Cash flows from investing activities - 2,894 - 15,744 － Cash flows from financing activities 0 - 168 － Effect of exchange rate changes on cash and cash equivalents - 3,375 58 －
Slide 21: Q3 Highlights
Q3 Highlights • Growth in Japan despite tough market conditions • On a constant currency basis, improvement in growth rate over last quarter Confidential | Copyright 2012 Trend Micro Inc. 21
Slide 22: Q3 Lowlights
Q3 Lowlights • Growth in EMEA and US remains weak • SMB business remains weak • Pricing pressure continues Confidential | Copyright 2012 Trend Micro Inc. 22
Slide 23: Headcount
Headcount Jun - 2012 Sep - 2012 5,017 5,080 ADM, ADM, Business Process Business Process Sales, Sales, 789 Marketing 806 Marketing Technical 1,387 + 63 Technical 1,347 Support (+ 1%) Support Research, Research, 1,324 1,331 Development Development 1,517 1,596 Confidential | Copyright 2012 Trend Micro
Slide 24: Non-operating & Extra-ordinary Items
Non-operating & Extra-ordinary Items (unaudited) Gain on reversal of Loss on sales of stock option marketable securities -1,334M Equity in gains of Exchange loss 3,765M affiliated companies Other expense Other income Loss on sales of Interest income 2M marketable securities 38M -153M Interest expens
Slide 25: Balance Sheet
Balance Sheet (unaudited) (in million Yen) Jun-2012 change Sep-2012 Assets Cash & cash equivalents 69,701 - 11,040 58,661 Account receivable (less allowance for doubtful accounts) 19,199 +5 19,204 Marketable securities & Securities investments 66,665 + 13,473 80,138 Liabilities Deferred revenue (tot
Slide 26: Q4 forecast assumptions
Q4 forecast assumptions •Japan decreases by low-single digit, US and Europe are flat YoY respectively •Stock option expenses will be 1.2Bn yen •Estimated exchange rate: 1USD = 79 yen ( last year: 77 yen) 1EUR = 103 yen ( last year: 104 yen) Confidential | Copyright 2012 Trend Micro Inc. 26
Slide 27: Q4 Extraordinary income forecast assumptions
Q4 Extraordinary income forecast assumptions Reversal of Stock option (due to expiration) + 100 million Yen Impairment loss on Goodwill & Software asset - 800 million Yen Prospect of loss on sales of Euro MMF in Q4 - 300 million Yen (the unsold rest of planned sales in Q3 ) Extraordinary income - 1,
Slide 28: Projection for 4Q2012
Projection for 4Q2012 (unaudited) (in million Yen) For 4Q2012 Expected Oct - Dec, 2012 YoY growth Net Sales 24,100 0% Operating Income 5,400 - 14% Ordinary Income 5,700 - 17% Net Income 2,300 - 41% (In accordance with Japan GAAP) In case of excluding a foreign exchange impact (a rule of thumb) Net S
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 23,836 Co st o f sale s 4,412 4,343 4,620 4,519 4,058 4,488 4,390 O pe r atin g e xpe n se s 13,046 13,334 12,513 13,237 13,003 13,636 13,337 O pe r at
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 12,109 US 5,315 5,365 4,968 4,803 4,369 4,758 4,765 Eu r o pe 4,435 4,354 4,206 4,151 4,193 4,003 3,916 Asia P ac ific 2,570 2,691