Slide 1: Trend Micro FY2015.4Q Results
Trend Micro FY2015.4Q Results Mahendra Negi CFO, Representative Director February 18, 2016
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. 4Q Financial Highlight
FY2015. 4Q Financial Highlight （Forth quarter ended December 31, 2015） 3 Copyright © 2015 Trend Micro Incorporated. All rights reserved. 3
Slide 4: Q4 Consolidated Results
Q4 Consolidated Results (in million Yen) Three months YoY ended Dec 31, 4Q2014 4Q2015 growth Net sales 31,264 32,718 + 5% Cost of sales 5,853 5,552 - 5% Operating expenses 16,390 20,310 + 24% Operating income (Margin) 9,021 （ 29%） 6,855 （21%） - 24% Ordinary income 9,487 6,983 - 26% Net income 5,812
Slide 5: Q4 Special cost items
Q4 Special cost items • Bonus due to YoY growth of Pre-GAAP based operating income for 2H (no bonus in 2014Q4): Approx. 0.8 billion yen • Allowance for virtual share bonus plan corresponding with higher share price (from 4,215 yen as of 2015Q3 to 4,930 yen as of 2015Q4): Approx. 0.7 billion yen • Vo
Slide 6: Pre-GAAP vs Total Costs
Pre-GAAPⅴs Total Costs (in million Yen) (unaudited) Pre-GAAP Total Costs Pre-GAAP Margin 38,000 33% 36,000 32% 34,000 32% 32,000 30,000 31,624 36,046 31% 28,000 31,848 26,000 32,656 30,899 30% 24,000 27,298 22,000 30% 29% 20,000 28% 18,000 28% 28% 16,000 27% 28% 25,862 27% 14,000 22,950 12,000 22,24
Slide 7: Progress (12 months)
Progress （12 months） (in million Yen) Revenue Operating Income 140,000 40,000 (Progress of Forecast: 101%) 124,317 (Forecast 123,100 ) (Forecast 34,200) 120,000 35,000 (Progress of Forecast: 91%) 33,652 115,205 30,000 100,000 30,976 91,599 25,000 24,120 83,941 24,630 80,000 20,000 60,000 60,668 55,3
Slide 8: Q4 USD based Results (Non-GAAP)
Q4 USD based Results (Non-GAAP) (unaudited) Three months (in thousand USD) ended Dec 31, 4Q2014 4Q2015 YoY change Net sales 272,339 269,221 - 1% Cost of sales 50,984 45,687 - 10% Operating expenses 142,770 167,122 17% Operating income 78,584 56,411 - 28% Ordinary income 82,645 56,897 - 31% Net Incom
Slide 9: Net Sales Growth by Region
(in million Yen) Net Sales Growth by Region (unaudited) 16,000 + 2% 13,831 4Q2014 14,000 13,511 4Q2015 12,000 + 8% 10,000 + 9% 8,000 7,564 6,975 6,613 6,076 - 4% 6,000 3,864 3,719 4,000 + 18% 2,000 836 989 0 Japan North America Europe Asia Pacific Latin America
Slide 10: Net Sales Growth by Region (constant currency)
Net Sales Growth by Region (in million Yen) If currency exchange rates used for 4Q2014 were used for 4Q2015: (unaudited) 16,000 + 2% * ( ) : difference from GAAP base 4Q2014 14,000 13,511 13,831 (0) 4Q2015 12,000 + 3% + 17% 10,000 (-414) (+515) 8,000 7,150 7,128 6,975 + 3% 6,076 (+273) 6,000 3,992 +
Slide 11: Decomposition of Revenue (vs. last year)
Decomposition of Revenue (vs. last year） (unaudited) Asia Pacific Exchange impact North America Japan + 128M + 174M Latin America + 319M - 667M Europe + 446M 2015Ｑ4 + 1,051M Net sales 2014Ｑ4 Net 32,718M sales 31,264M (Non-GAAP)
Slide 12: Constant currency revenue growth
-5% 0% 5% 10% 15% 20% (YoY) 2007Q1 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 2014Q4 Constant currency Revenue growth 201
Slide 13: Sales by Segment
(in million Yen) Sales by Segment (unaudited) 14,000 13,000 - 1% Growth rate (YoY) 12,000 Consumer - 4% 11,000 10,000 7,216 All Enterprise + 9% 9,000 8,000 7,000 2,154 332 - 6% - 12% 6,000 5,000 + 6% 4,000 + 15% 6,280 + 10% 968 - 14% 3,000 6,615 5,410 2,000 - 28% 2,751 + 0% 11 1,000 + 19% 0 978 Japa
Slide 14: Cloud related Gross sales
“Cloud related” Gross sales + 34% 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 15: % share by region
% share by region 4Q2014 4Q2015 31,264 million Yen 32,718 million Yen Latin America Latin Asia Asia America Pacific 3% Pacific 3% 12% 11% Europe Japan Europe Japan 19% 43% 20% 42% North North America America 22% 23%
Slide 16: For reference: Pre-GAAP
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) (unaudited) 12,410 + 7% 4Q2014 + 20% 11,585 4Q2015 10,510 + 11% 8,752 7,898 7,113 - 10% 4,197 + 42% 3,795 1,431 1,008 Japan North America Europe Asia Pacific Latin America “Notice” (Non-GAAP) Pre-GAAP means Revenue
Slide 17: For reference: Pre-GAAP (constant currency)
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) If currency exchange rates used for 4Q2014 were used for 4Q2015: (unaudited) 12,410 + 7% + 32% 4Q2014 11,585 11,529 4Q2015 + 6% 8,752 7,520 7,113 - 2% 4,197 4,095 + 89% 1,901 1,008 Japan North America Europe Asia P
Slide 18: Net sales & Pre-GAAP growth trend
Net sales & Pre-GAAP growth trend (on a constant currency basis) (Non-GAAP) 30% 25% 24% Net Sales 20% Pre-GAAP 15% 15% 13% 10% 7% 5% 0% -5% Total Enterprise Consumer -4% -10% -9% -15% • Each growth rate shown above is based on applying to each quarter the same currency rate as the previous year for
Slide 19: Deferred Revenue
Deferred Revenue (in million Yen) * Total of current and long term (unaudited) 106,000 102,000 99,245 98,693 98,108 100,071 97,980 98,000 94,973 94,631 94,396 94,000 92,859 90,000 86,000 82,000 78,000 74,000 70,000 66,000 62,000 58,000 54,000 50,000 Dec-'13 Mar-'14 Jun-'14 Sep-'14 Dec-'14 Mar-'15 Ju
Slide 20: Deferred Revenue by Region
Deferred Revenue by Region (in million Yen) (unaudited) 60,000 - 2% 55,010 53,922 * Total of current and long term 55,000 50,000 Sep-15 45,000 Dec-15 40,000 35,000 30,000 + 2% + 22% 25,000 20,000 17,063 17,444 17,800 - 17% 14,633 15,000 + 30% 10,000 9,653 7,977 5,000 1,620 2,099 0 Japan North Americ
Slide 21: Deferred Revenue by Region (constant currency)
Deferred Revenue by Region If currency exchange rates used as of the end of 3Q2015 were used as of the end of 4Q2015: (in million Yen) (unaudited) 60,000 55,010 53,922 - 2% 55,000 * ( ) : difference from GAAP base (0) Sep-15 50,000 * Total of current and long term 45,000 Dec-15 40,000 + 1% 35,000 (-
Slide 22: Cost
Cost (in million Yen) (unaudited) Stock Options / Acquisition Related Cost s Salary & Benefit Office Ov erhead Outside S erv ice Goods / Software Amortization 26,000 Adm inistration Selling & Marke ting & Capitalization Goods / S oftw are Amortization & Capitalization 1,270 24,000 421 Selling & Mark
Slide 23: Cash flows
Cash flows (unaudited) (in million Yen) 4Q2014 4Q2015 YoY growth Cash flows from operating activities 8,358 7,611 - 9% Cash flows from investing activities - 2,192 15,015 － Cash flows from financing activities 1,024 1,048 + 2% Effect of exchange rate changes 2,530 147 - 94% on cash and cash equivale
Slide 24: Headcount
Headcount Sep - 2015 Dec - 2015 5,229 5,190 Admin, Admin, Business Process Business Process 820 Sales, Marketing 807 Sales, Marketing Technical Technical Support 1,707 Support 1,644 1,021 1,011 Research, Research, Development Development - 39 1,728 1,681 (- 1%) Latin 75 Latin 74 EMEA EMEA 617 634 Ja
Slide 25: Non-operating & Extra-ordinary Items
Non-operating & Extra-ordinary Items (unaudited) Other income Equity in gains of Exchange loss Gain on reversal affiliated companies of stock option Loss on disposal of fixed assets Gain on sales of 12M Gain on business Loss on charge Impairment loss on marketable securities 172M - 446M transfer in
Slide 26: Balance Sheet
Balance Sheet (unaudited) (in million Yen) Sep-2015 change Dec-2015 Assets Cash & cash equivalents 51,159 + 22,679 73,838 Account receivable (less allowance for doubtful accounts) 24,833 + 5,136 29,969 Marketable securities & Securities investments 151,974 - 19,049 132,925 Liabilities Deferred reven
Slide 27: Q4 Highlights
Q4 Highlights • Strongest Enterprise pre GAAP revenue growth in at least 10 years • Strong performance by Europe • Cloud / network security products continue to do well 27
Slide 28: Q4 Lowlights
Q4 Lowlights • Decline in consumer revenues • Higher variable costs reduce margins 28
Slide 29: FY2015 12 months Financial Highlight
FY2015 12 months Financial Highlight （January ～ December, 2015） 29 Copyright © 2015 Trend Micro Incorporated. All rights reserved. 29
Slide 30: Consolidated Results (12 months)
Consolidated Results (12 months) (in million Yen) 12 months YoY (Progress vs. current year’s ended Dec 31, 2014(Q1-Q4) 2015(Q1-Q4) growth annual forecast) Net sales 115,205 124,317 + 8% (101%) Cost of sales 20,430 21,272 + 4% Operating expenses 61,122 72,069 + 18% Operating income 33,652 30,976 - 8%
Slide 31: Net Sales Growth by Region
(in million Yen) Net Sales Growth by Region (unaudited) 60,000 + 4% 52,599 FY2014 Q1-Q4 50,736 FY2015 Q1-Q4 50,000 40,000 + 18% + 6% 30,000 29,325 24,948 24,143 22,778 + 8% 20,000 14,920 + 12% 13,760 10,000 3,327 2,982 0 Japan North America Europe Asia Pacific Latin America 31
Slide 32: Net Sales Growth by Region (constant currency)
(in million Yen) Net Sales Growth by Region If currency exchange rates used for 2014（Q1-Q4） were used for 2015（Q1-Q4）: (unaudited) 60,000 + 4% 52,599 (0) * ( ) : difference from GAAP base FY2014 Q1-Q4 50,736 FY2015 Q1-Q4 50,000 + 3% +11% 40,000 (-3,635) (+1,122) 30,000 + 7% 25,690 25,266 24,948 22,7
Slide 33: For reference: Pre-GAAP
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) (未監査) 54,336 + 4% FY2014 Q1-Q4 52,175 FY2015 Q1-Q4 + 19% + 16% 29,061 27,238 + 9% 24,428 23,510 15,641 14,384 + 25% 4,141 3,319 Japan North America Europe Asia Pacific Latin America “Notice” (Non-GAAP) Pre-GAAP mea
Slide 34: For reference: Pre-GAAP (constant currency)
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) If currency exchange rates used for 2014(Q1-Q4) were used for 2015(Q1-Q4): 54,336 + 4% FY2014 Q1-Q4 52,175 FY2015 Q1-Q4 + 5% + 23% 28,852 + 8% 24,428 25,551 23,510 15,583 14,384 + 49% 4,929 3,319 Japan North America Europe Asia Pac
Slide 35: FY2015 Cost (12 months)
FY2015 Cost (12 months) (unaudited) (in million Yen) YoY Growth 100,000 Goods / Software & Capitalization + 122% 2,674 90,000 Selling & Marketing + 11% 13,494 80,000 1,204 12,154 Administration + 14% 70,000 14,288 12,556 Outside service + 6% 60,000 7,657 7,244 6,152 50,000 Office overhead + 10% 5,58
Slide 36: Constant currency Revenue transition (based on FY2005)
Constant currency Revenue transition (based on FY2005) (in million Yen) (unaudited) 130,000 120,000 110,000 100,000 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 FY2014 FY2015 (Non-GAAP) •JPY net revenue amount for eac
Slide 37: Cash Dividends for FY2015
Cash Dividends for FY2015 Policy for Ordinary dividend payout ratio : 70% Dividends for FY2015 Total: 15,060 million Yen 100% Net Income Per share: 110 Yen 70% (Ordinary dividends: -5% YoY) 21,435M *FY2014:116 Yen per share (Ordinary:116 Yen) * Subject to the approval at the Ordinary General Meeting
Slide 38: Dividend policy from FY2016
Dividend policy from FY2016 Year-end dividends on the basis of a dividend payout ratio of 70%, calculated after excluding the effect of TippingPoint related amortization of goodwill, net of tax 70% x (Net income + After-tax impact of amortization of goodwill) Our Policy Negative impact of Negative i
Slide 39: Compensation for Shareholders
Compensation for Shareholders (unaudited) The ratio of 10 years’ cumulative total compensation to (in million Yen) Net income from 2006 to 2015: 83% Total compensation for shareholders growth rate Ratio of Total compensation to Net income 22,000 Dividends Buyback + 14% 20,000 + 112% + 1% + 139% - 2%
Slide 40: FY2016 annual forecast assumptions
FY2016 annual forecast assumptions •Japan increases by low single digit YoY, US (including TippingPoint) increases by around 40% YoY and Europe increases by around 5% YoY, respectively. •Non operating income will be around 1.5Bn yen and there will be no Extra-ordinary items •Estimated exchange rate:
Slide 41: Projection for FY2016 Annual
Projection for FY2016 Annual (unaudited) For FY2016 Expected (in million Yen) Jan - Dec, 2016 YoY growth Net Sales 138,800 + 12% Operating Income 27,300 - 12% Ordinary Income 28,900 - 15% Net Income 18,700 - 13% (Operating income excluding “Acquisition related + 5% amortization and depreciation”) (N
Slide 42: Thank You
Thank You 42
Slide 43: 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 32,718 Co s t o f s ale s 4,622 4,682 5,272 5,853 5,250 5,205 5,263 5,552 O pe r at in g e x pe n s e s 13,958 16,005 14,768 16,390 16,972 17,7
Slide 44: 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 13,831 US 5,998 5,939 6,034 6,975 6,894 7,431 7,435 7,564 Eu r o pe 5,632 5,594 5,474 6,076 5,740 5,848 5,942 6,613 A s ia