Slide 1: Trend Micro FY2015.3Q Results
Trend Micro FY2015.3Q Results Mahendra Negi CFO, Representative Director November 10, 2015 Copyright © 2015 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: FY2015. 3Q Financial Highlight
FY2015. 3Q Financial Highlight （Third quarter ended September 30, 2015）
Slide 4: Q3 Consolidated Results
Q3 Consolidated Results (in million Yen) Three months YoY ended Sep 30, 3Q2014 3Q2015 growth Net sales 28,615 30,930 + 8% Cost of sales 5,272 5,263 - 0% Operating expenses 14,768 17,041 + 15% Operating income (Margin) 8,574 （ 30%） 8,625 （28%） + 1% Ordinary income 9,069 10,517 + 16% Net income 5,726
Slide 5: Progress (9 months)
Progress （9 months） (in million Yen) Revenue Operating Income 140,000 40,000 (Forecast) 123,100 (Forecast) 34,200 120,000 35,000 33,652 (Progress of Forecast: 74%) 115,205 30,000 (Progress of Forecast: 71%) 100,000 91,599 24,120 24,630 25,000 83,941 80,000 (Progress of FY2014Act: 73%) (Progress of F
Slide 6: Q3 USD based Results (Non-GAAP)
Q3 USD based Results (Non-GAAP) (unaudited) Three months (in thousand USD) ended Sep 30, 3Q2014 3Q2015 YoY change Net sales 275,153 253,115 - 8% Cost of sales 50,698 43,072 - 15% Operating expenses 142,008 139,455 - 2% Operating income 82,446 70,587 - 14% Ordinary income 87,207 86,065 - 1% Net Incom
Slide 7: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 14,000 13,058 12,916 - 1% 13,000 3Q2014 12,000 3Q2015 11,000 10,000 + 23% 9,000 8,000 7,435 + 9% 7,000 5,942 6,034 6,000 5,474 + 15% 5,000 3,794 4,000 3,303 3,000 + 13% 2,000 1,000 745 842 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 3Q2014 were used for 3Q2015: (unaudited) 14,000 13,058 12,916 - 1% 13,000 3Q2014 (0) * ( ) : difference from GAAP base 12,000 3Q2015 11,000 10,000 + 5% + 10% 9,000 (-1,101) (+80) 8,000 7,000 6,333 6,034 6,022 + 15% 6,000
Slide 9: Decomposition of Revenue (vs. last year)
Decomposition of Revenue (vs. last year） (unaudited) Exchange impact Japan Latin America + 861M North America + 261M - 141M Asia Pacific + 299M 2015Ｑ3 Europe + 486M Net sales + 547M 30,930M 2014Ｑ3 Net sales 28,615M (Non-GAAP)
Slide 10: Constant currency revenue growth
-5% 0% 5% 10% 15% 20% 2007Q1 (YoY) same period 2007Q2 2007Q3 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 Constant currency Revenue growth 2014Q4 201
Slide 11: Sales by Segment
(in million Yen) Sales by Segment (unaudited) 14,000 13,000 - 6% Growth rate (YoY) 12,000 Consumer - 2% 11,000 All Enterprise + 14% 10,000 6,447 9,000 8,000 7,000 2,370 + 8% 6,000 332 - 5% 5,000 + 4% 4,000 + 32% 5,609 + 9% 806 + 1% 3,000 6,469 5,065 2,000 2,988 + 19% 16 - 7% 1,000 0 826 + 14% Japan
Slide 12: “Cloud related” Gross sales
“Cloud related” Gross sales + 51% YoY “Notice” As above numbers are just for internal use, they may be subject to some changes (Non-GAAP) hereafter. Confidential | Copyright 2012 Trend Micro Inc.
Slide 13: % share by region
% share by region 3Q2014 3Q2015 28,615 million Yen 30,930 million Yen Latin Latin Asia America Asia America Pacific Pacific 3% 3% 12% 12% Europe Japan Europe Japan 19% 46% 19% 42% North North America America 21% 24%
Slide 14: Pre-GAAP (Revenue before adjusting Deferred revenue)
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) (unaudited) 13,702 + 7% 3Q2014 12,857 3Q2015 + 21% 6,890 + 11% 5,678 5,247 + 23% 4,723 3,975 3,225 + 33% 1,083 813 Japan North America Europe Asia Pacific Latin America “Notice” (Non-GAAP) Pre-GAAP means Revenue be
Slide 15: Pre-GAAP (constant currency)
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) If currency exchange rates used for 3Q2014 were used for 3Q2015: (unaudited) 13,702 + 7% 3Q2014 12,857 3Q2015 + 4% + 13% 5,678 5,898 5,334 + 26% 4,723 4,061 3,225 + 60% 1,299 813 Japan North America Europe Asia Pac
Slide 16: Net sales & Pre-GAAP growth trend
Net sales & Pre-GAAP growth trend (on a constant currency basis) 20% 15% Net Sales 15% Pre-GAAP 11% 11% 10% 5% 5% 3% 0% Total Enterprise Consumer -5% -5% -10% • Each growth rate shown above is based on applying to each quarter the same currency rate as the previous year for the same period 16
Slide 17: Deferred Revenue
Deferred Revenue (in million Yen) * Total of current and long term (unaudited) 106,000 102,000 98,693 98,108 100,071 97,980 98,000 94,396 94,973 92,859 94,631 94,000 90,000 88,360 86,000 82,000 78,000 74,000 70,000 66,000 62,000 58,000 54,000 50,000 Sep-'13 Dec-'13 Mar-'14 Jun-'14 Sep-'14 Dec-'14 Ma
Slide 18: Deferred Revenue by Region
Deferred Revenue by Region (in million Yen) (unaudited) 60,000 54,46755,010 + 1% * Total of current and long term 55,000 50,000 Jun-15 45,000 Sep-15 40,000 35,000 30,000 - 5% - 7% 25,000 20,000 17,877 17,063 15,704 14,633 - 7% 15,000 10,325 9,653 - 4% 10,000 5,000 1,696 1,620 0 Japan North America E
Slide 19: Deferred Revenue by Region (constant currency)
Deferred Revenue by Region If currency exchange rates used as of the end of 2Q2015 were used as of the end of 3Q2015: (in million Yen) (unaudited) 60,000 54,467 55,010 + 1% 55,000 * ( ) : difference from GAAP base (0) Jun-15 50,000 * Total of current and long term 45,000 Sep-15 40,000 - 2% 35,000 (+
Slide 20: Cost
Cost (in million Yen) (unaudited) Stock Options / Acquisition Related Cost s Salary & Benefit Office Ov erhead 24,000 Outside S erv ice Adm inistration 486 421 Goods / Software Amortization 22,000 Selling & Marke ting 811 & Capitalization 496 305 3,440 20,000 456 2,813 Selling & Marketing 3,135 3,68
Slide 21: Pre-GAAP vs Total Costs
Pre-GAAPⅴs Total Costs (in million Yen) (unaudited) Pre-GAAP Total Costs Pre-GAAP Margin 36,000 33% 34,000 32% 32,000 32% 30,000 30% 28,000 31% 32,656 26,000 31,624 30,899 30% 24,000 28,295 31,848 22,000 27,298 29% 20,000 28% 28% 18,000 28% 16,000 27% 27% 14,000 22,950 22,304 27% 12,000 22,243 22,22
Slide 22: Cash flows
Cash flows (unaudited) (in million Yen) 3Q2014 3Q2015 YoY growth Cash flows from operating activities 6,412 6,825 + 6% Cash flows from investing activities - 4,422 - 422 － Cash flows from financing activities 684 560 - 18% Effect of exchange rate changes 1,225 - 2,892 － on cash and cash equivalents
Slide 23: Headcount
Headcount Jun - 2015 Sep - 2015 5,225 5,229 Admin, Admin, Business Process Business Process Sales, Marketing 811 820 Sales, Marketing Technical Technical Support 1,679 Support 1,707 1,044 1,021 Research, Research, Development Development +4 1,691 1,681 (+ 0%) Latin 71 Latin 75 EMEA EMEA 603 617 Japa
Slide 24: Non-operating & Extra-ordinary Items
Non-operating & Extra-ordinary Items Equity in losses of affiliated companies (unaudited) Other expense Other income Loss on sales of marketable securities Interest expenses Interest income 142M - 58M - 27M - 4M - 1M 1M 377M Gain on reversal Exchange gain of stock option Gain on sales of 667M market
Slide 25: Balance Sheet
Balance Sheet (unaudited) (in million Yen) Jun-2015 change Sep-2015 Assets Cash & cash equivalents 47,223 + 3,936 51,159 Account receivable (less allowance for doubtful accounts) 24,336 + 497 24,833 Marketable securities & Securities investments 156,538 - 4,564 151,974 Liabilities Deferred revenue (
Slide 26: Q3 Highlights
Q3 Highlights • Strong growth of cloud security products continues • Enterprise Pre-GAAP growth double digit in constant currency 26
Slide 27: Q3 Lowlights
Q3 Lowlights • Decline in consumer revenues • Weaker Yen inflating costs 27
Slide 28: FY2015 9 months Financial Highlight
FY2015 9 months Financial Highlight （January ～ September, 2015）
Slide 29: 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, 2014(Q1-Q3) annual result) 2015(Q1-Q3) growth annual forecast) Net sales 83,941 (73%) 91,599 + 9% (74%) Cost of sales 14,577 15,719 + 8% Operating expenses 44,732 51,759
Slide 30: Net Sales Growth by Region
(in million Yen) Net Sales Growth by Region (unaudited) 45,000 + 4% 38,768 FY2014 Q1-Q3 40,000 37,225 FY2015 Q1-Q3 35,000 30,000 + 21% + 5% 25,000 21,760 17,530 20,000 17,972 16,701 + 13% 15,000 11,201 + 9% 10,000 9,895 5,000 2,338 2,146 0 Japan North America Europe Asia Pacific Latin America 30
Slide 31: Net Sales Growth by Region (constant currency)
(in million Yen) Net Sales Growth by Region If currency exchange rates used for 2014（Q1-Q3） were used for 2015（Q1-Q3）: (unaudited) 45,000 + 4% 38,768 (0) FY2014 Q1-Q3 40,000 37,225 * ( ) : difference from GAAP base FY2015 Q1-Q3 35,000 + 3% +9% 30,000 (-3,224) (+617) 25,000 18,536 18,148 + 9% 20,000
Slide 32: Pre-GAAP (Revenue before adjusting Deferred revenue)
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) (unaudited) 41,925 + 3% FY2014 Q1-Q3 40,590 FY2015 Q1-Q3 + 22% + 13% 21,162 + 16% 16,728 17,315 14,757 11,845 10,186 + 17% 2,710 2,311 Japan North America Europe Asia Pacific Latin America “Notice” (Non-GAAP) Pre-G
Slide 33: Pre-GAAP (constant currency)
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) If currency exchange rates used for 2014(Q1-Q3) were used for 2015(Q1-Q3): + 3% 40,590 41,925 FY2014 Q1-Q3 FY2015 Q1-Q3 + 4% + 17% 18,030 + 13% 17,322 17,315 14,757 11,488 10,186 + 31% 3,028 2,311 Japan North America Europe Asia Pa
Slide 34: FY2015 Cost (9 months)
FY2015 Cost (9 months) (unaudited) (in million Yen) YoY Growth 80,000 Goods / Software & Capitalization + 258% 70,000 Selling & Marketing + 11% 1,404 60,000 9,390 + 16% 392 Administration 8,469 50,000 10,624 Outside service + 11% 9,173 5,798 40,000 5,233 4,614 Office overhead + 13% 4,092 30,000 Sala
Slide 35: Projection for FY2015 Annual (Unchanged)
Projection for FY2015 Annual (Unchanged) (unaudited) For FY2015 Expected (in million Yen) Jan - Dec, 2015 YoY growth Net Sales 123,100 + 7% Operating Income 34,200 + 2% Ordinary Income 36,600 + 2% Net Income 22,600 + 1% (Estimated annual exchange rate 1USD=118 yen, 1EUR=134 yen) “Reference” actual e
Slide 36: Trend Micro Acquires HP TippingPoint
Trend Micro Acquires HP TippingPoint • Border-less security and increase in targeted attacks • Combine Trend Micro Deep Discovery Breach Detection with TippingPoint Next Gen Intrusion Prevention System (NGIPS) • TippingPoint products with over 300 employees and 2300 customers TippingPoint TippingPoi
Slide 37: Thank You
Thank You 37
Slide 38: Appendix: Quarterly Chart (1)
Appendix (unaudited) Quarterly Chart (1) (in million Yen) FY2014 FY2015 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ｎｅｔ s ale s 27,517 27,807 28,615 31,264 29,893 30,774 30,930 Co s t o f s ale s 4,622 4,682 5,272 5,853 5,250 5,205 5,263 O pe r at in g e x pe n s e s 13,958 16,005 14,768 16,390 16,972 17,745 17,041 O p
Slide 39: Appendix: Quarterly Chart (2)
Appendix (unaudited) Quarterly Chart (2) (in million Yen) FY2014 FY2015 （ S ale s by r e g io n ） Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 J apan 11,934 12,232 13,058 13,511 12,920 12,931 12,916 US 5,998 5,939 6,034 6,975 6,894 7,431 7,435 Eu r o pe 5,632 5,594 5,474 6,076 5,740 5,848 5,942 A s ia P ac ific 3,288 3,