Slide 1: FY2011.4Q / Annual Results
Trend Micro FY2011.4Q / Annual Results Mahendra Negi COO/CFO, Representative Director February 16,2012
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: FY2011. 4Q Financial Highlight
FY2011. 4Q Financial Highlight （Fourth quarter ended December 31, 2011） Copyright © 2011 Trend Micro Incorporated. All rights reserved. 3
Slide 4: Consolidated Results
Consolidated Results Three months (in million Yen) (unaudited) ended Dec 31, 4Q2010 4Q2011 YoY growth Net sales 24,218 24,064 - 1% Cost of sales 4,222 4,519 + 7% Operating expenses 13,697 13,237 - 3% Operating income (Margin) 6,298 (26%) 6,306 (26%) + 0% Ordinary income 6,023 6,850 + 14% Net income
Slide 5: USD based Results (Non-GAAP)
USD based Results (Non-GAAP) (unaudited) Three months (in thousand USD) ended Dec 31, 4Q2010 4Q2011 YoY change Net sales 292,923 311,106 6% Cost of sales 51,066 58,425 14% Operating expenses 165,672 171,143 3% Operating income 76,185 81,536 7% Ordinary income 72,856 88,569 22% Net Income 38,369 50,0
Slide 6: Vs. Projection analysis (Operating income)
Vs. Projection analysis（Operating income） Sales side Cost side + 464M + 357M •Japan ↑ •Admin cost related to Forex ↑ (Onetime royalty income) •Onetime royalty payment ↑ 2011Ｑ4 2011Ｑ4 •US ↑ •Marketing cost ↓ Actual Projection •Europe ↓ 6,306M 6,200 M (Non-GAAP) 6 Copyright © 2011 Trend Micro Incorpor
Slide 7: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 13,000 + 8% 12,000 12,028 11,000 11,100 4Q2010 10,000 4Q2011 9,000 8,000 - 6% 7,000 - 11% 6,000 5,124 4,803 5,000 4,671 4,151 - 5% 4,000 3,000 2,684 2,540 - 15% 2,000 1,000 637 540 0 Japan North America Europe Asia Pacific Latin America (In acc
Slide 8: Net Sales Growth by Region (constant currency)
Net Sales Growth by Region If currency exchange rates used for 4Q2010 were used for 4Q2011: (in million Yen) (unaudited) * ( ) : difference from GAAP base 13,000 12,028 + 8% 12,000 (0) 11,100 11,000 4Q2010 10,000 4Q2011 9,000 + 0% 8,000 (+331) - 4% 7,000 (+317) 6,000 - 1% 5,124 5,135 5,000 4,671 4,4
Slide 9: Decomposition of Revenue (vs. last year)
Decomposition of Revenue (vs. last year） (unaudited) North America Europe Japan + 10M Asia Pacific - 202M Latin America - 20M - 14M + 928M Exchange impact - 856M 2010Ｑ4 Net 2011Ｑ4 sales Net sales 24,218M 24,064 M (Non-GAAP) Copyright © 2011 Trend Micro Incorporated. All rights reserved. 9
Slide 10: Constant currency Revenue growth
Constant currency Revenue growth (YoY) (unaudited) 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 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 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 • Each growth
Slide 11: Sales by Segment
Sales by Segment (in million Yen) 13,000 12,000 Growth rate 11,000 Consumer + 3% 10,000 All Enterprise - 3% 9,000 5,807 8,000 7,000 6,000 5,000 4,000 2,146 98 3,000 6,220 4,053 858 2,000 2,657 1,000 1,681 40 0 499 Japan North Europe APAC Latin America America (Non-GAAP) Copyright © 2011 Trend Micro
Slide 12: % share by region
% share by region (unaudited) 4Q2010 4Q2011 24,218 million Yen 24,064 million Yen Latin Latin America Asia America Asia Pacific 3% Pacific 2% 11% 11% Europe Europe Japan Japan 17% 19% 46% 50% North North America America 20% 21% (In accordance with Japan GAAP) Copyright © 2011 Trend Micro Incorporate
Slide 13: For reference: Pre-GAAP
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) (unaudited) + 3% 4Q2010 11,340 11,648 4Q2011 + 2% - 6% 6,025 6,166 5,425 5,103 - 0% 2,753 2,744 - 10% 649 583 Japan North America Europe Asia Pacific Latin America (Non-GAAP) “Notice” Pre-GAAP means Revenue before
Slide 14: For reference: Pre-GAAP (constant currency)
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) If currency exchange rates used for 4Q2010 were used for 4Q2011: (unaudited) (in million Yen) + 3% 11,340 11,648 4Q2010 4Q2011 + 10% + 1% 6,639 6,025 5,425 5,461 + 5% 2,885 + 4% 2,753 649 675 Japan North America Europe Asia Pacific
Slide 15: Deferred Revenue
Deferred Revenue (in million Yen) (unaudited) 82,000 * Total of current and long term 77,771 78,000 77,928 74,599 76,434 75,456 75,956 73,940 75,102 74,000 73,562 70,000 66,000 62,000 58,000 54,000 50,000 Dec-'09 Mar-'10 Jun-'10 Sep-'10 Dec-'10 Mar-'11 Jun-'11 Sep-'11 Dec-'11 (In accordance with Jap
Slide 16: Deferred Revenue by Region
Deferred Revenue by Region (in million Yen) (unaudited) 50,000 -1% * Total of current and long term 45,000 44,712 44,392 40,000 Sep-11 35,000 Dec-11 30,000 25,000 2% 20,000 4% 15,000 12,21712,496 7% 10,000 10,20710,615 6,514 6,963 4% 5,000 946 988 0 Japan North America Europe Asia Pacific Latin Amer
Slide 17: Deferred Revenue by Region (constant currency)
Deferred Revenue by Region If currency exchange rates used as of the end of 3Q2011 were used as of the end of 4Q2011: (in million Yen) (unaudited) 50,000 -1% (0) * ( ) : difference from GAAP base * Total of current and long term 45,000 44,712 44,392 40,000 Sep-11 35,000 Dec-11 30,000 25,000 -3% 8% (
Slide 18: Cost
Cost (in million Yen) Stock options / Acquisition related costs Salary & Benefit (unaudited) Office overhead Outside service 20,000 Administration Selling & Marketing Goods / Software Amortization & Capitalization 18,000 498 779 511 828 787 16,000 3,542 3,216 2,964 3,056 3,040 14,000 2,752 2,275 2,4
Slide 19: Pre-GAAP vs Total costs
Pre-GAAP vs Total costs (in million Yen) (unaudited) Pre-GAAP Total Costs 28,000 26,000 26,193 26,246 24,000 24,402 24,725 22,000 23,529 20,000 18,000 17,919 17,677 17,757 16,000 17,459 17,133 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 (Non-GAAP) * “Total costs
Slide 20: Cash flows
Cash flows (unaudited) (in million Yen) 項目 4Q2010 4Q2011 YoY growth Cash flows from operating activities 8,367 10,113 + 21% Cash flows from investing activities - 3,725 1,678 － Cash flows from financing activities 9 16 + 79% Effect of exchange rate changes - 267 - 32 － on cash and cash equivalents N
Slide 21: Q4 Highlights
Q4 Highlights • Continued growth in Strategic products • European growth recovers Copyright © 2011 Trend Micro Incorporated. All rights reserved. 21
Slide 22: Q4 Lowlights
Q4 Lowlights • Weakness in consumer and small business • Law suit against a particular type of consumer auto renewal in US may affect renewal rate in 2012 • Economic uncertainty keeping sales cycle long Copyright © 2011 Trend Micro Incorporated. All rights reserved. 22
Slide 23: Headcount
Headcount Sep - 2011 Dec - 2011 4,954 4,942 ADM, ADM, Business Process Business Process Sales, Sales, 778 Marketing 767 Marketing Technical 1,359 - 12 Technical 1,350 Support (- 0%) Support Research, Research, 1,333 1,322 Development Development 1,495 1,492 Copyright © 2011 Trend Micro Incorporated.
Slide 24: Non-operating & Extra-ordinary Items
Non-operating & Extra-ordinary Items (unaudited) Bad dept reversal Loss on sales of Gain on redemption of marketable securities Gain on sales of marketable securities marketable securities 130M Gain on reversal of 199M 995M Loss on disposal Equity in gains of stock option affiliated companies of fix
Slide 25: Balance Sheet
Balance Sheet (unaudited) (in million Yen) Sep-2011 change Dec-2011 Assets Cash & cash equivalents 68,516 + 3,367 71,883 Account receivable (less allowance for doubtful accounts) 19,914 + 1,047 20,961 Marketable securities & Securities investments 55,077 + 5,895 60,972 Liabilities Deferred revenue (
Slide 26: FY2011 Annual Financial Highlight
FY2011 Annual Financial Highlight （Full year ended December 31, 2011） Copyright © 2011 Trend Micro Incorporated. All rights reserved. 26
Slide 27: Consolidated Results (Annual)
Consolidated Results (Annual) Fiscal year (in million Yen) (unaudited) ended Dec 31, FY2010 FY2011 YoY growth Net sales 95,391 96,392 1% Cost of sales 16,726 17,895 7% Operating expenses 54,912 52,132 - 5% Operating income (Margin) 23,752 (25%) 26,364 (27%) 11% Ordinary income 23,835 28,690 20% Net
Slide 28: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 50,000 + 9% 46,070 45,000 42,325 FY2010 40,000 FY2011 35,000 - 10% 30,000 - 6% 25,000 22,726 20,452 20,000 18,258 17,147 + 9% 15,000 9,457 10,329 10,000 - 9% 5,000 2,623 2,391 0 Japan US Europe Asia Pacific Latin America (In accordance with Jap
Slide 29: Net Sales Growth by Region (constant currency)
Net Sales Growth by Region If currency exchange rates used for FY2010 were used for FY2011: (in million Yen) (unaudited) 50,000 + 9% * ( ) : difference from GAAP base 46,070 (0) 45,000 42,325 FY2010 40,000 - 1% FY2011 (+2,060) 35,000 - 1% (+840) 30,000 25,000 22,72622,512 + 10% 20,000 18,258 17,988
Slide 30: Decomposition of Revenue (vs. last year)
Decomposition of Revenue （vs. last year） Europe Asia Pacific North America (unaudited) - 269M Latin America + 943M - 213M - 84M Japan Exchange impact + 3,744M - 3,118M FY2011 FY2010 Net Net sales sales 95,391M 96,392 M (Non-GAAP) Copyright © 2011 Trend Micro Incorporated. All rights reserved. 30
Slide 31: For reference: Pre-GAAP
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) (unaudited) 47,946 46,040 - 4% FY2010 FY2011 - 5% - 2% 22,111 21,052 18,713 18,372 + 8% 11,133 - 13% 10,297 2,654 2,305 Japan US Europe Asia Pacific Latin America (Non-GAAP) “Notice” Pre-GAAP means Revenue before a
Slide 32: For reference: Pre-GAAP (constant currency)
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) If currency exchange rates used for FY2010 were used for FY2011: (unaudited) (in million Yen) 47,946 46,040 - 4% FY2010 FY2011 + 5% + 3% 23,149 22,111 18,713 19,247 + 9% 11,209 10,297 - 7% 2,654 2,467 Japan North America Europe Asi
Slide 33: FY2011 Annual Sales by segment
FY2011 Annual Sales by segment (in million Yen) (unaudited) 50,000 Growth rate 45,000 Consumer + 7% 40,000 All Enterprise - 2% 35,000 22,782 30,000 25,000 20,000 9,336 756 15,000 10,000 23,287 16,391 3,313 5,000 11,116 7,016 85 0 2,306 Japan North Europe APAC Latin America America (Non-GAAP) Copyrig
Slide 34: FY2011 Annual Cost
FY2011 Annual Cost (unaudited) (in million Yen) YoY Growth 80,000 Goods / Software & + 43% Capitalization 70,000 2,039 2,907 Selling & Marketing - 21% 15,481 12,277 60,000 - 4% Administration 50,000 10,169 9,764 Outside service - 11% 6,712 40,000 7,550 5,169 Office overhead + 3% 5,042 30,000 Salary
Slide 35: 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 •JPY net revenue amount for each fiscal year shown above is calculated using e
Slide 36: Cash Dividends for FY2011
Cash Dividends for FY2011 Policy for Dividend payout ratio : 65% (unaudited) Dividends for FY2011 Total : 11,313 Million Yen 65% 100% Per Share: 86 Yen (+ 23% YoY) Net Income 17,341M FY2010: 70 Yen per share * Subject to the approval at the Ordinary General Meeting of Shareholders scheduled in late
Slide 37: Compensation for Share holders
Compensation for Share holders (in million Yen) (unaudited) Dividends Buyback 22,000 Total compensation for shareholders growth rate + 14% 20,000 Total compensation per Net income ratio + 139% - 2% 18,000 + 71% 2,533 6,994 16,000 6,809 - 36% 14,000 4,682 538 12,000 - 26% 10,000 + 20% 8,000 14,992 +
Slide 38: Q1 forecast assumptions
Q1 forecast assumptions •Japan and Europe decrease by mid single digit respectively, US decreases by mid-teen •Stock option expenses will be 0.7Bn yen •Estimated exchange rate: 1USD = 76 yen ( last year: 82 yen) 1EUR = 100 yen ( last year: 113 yen) Copyright © 2011 Trend Micro Incorporated. All righ
Slide 39: Projection for 1Q2012
Projection for 1Q2012 (unaudited) For 1Q2012 Expected (in million Yen) Jan - Mar, 2012 YoY growth Net Sales 22,500 - 6% Operating Income 4,600 - 29% Ordinary Income 4,900 - 22% Net Income 2,700 - 32% (In accordance with Japan GAAP) • Including both stock option expenses and amortization of goodwill
Slide 40: Thank you!
Thank you! Copyright © 2011 Trend Micro Incorporated. All rights reserved. 40
Slide 41: Appendix: Quarterly Chart (1)
Appendix (unaudited) Quarterly Chart (1) (in million Yen) FY2010 FY2011 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ｎｅｔ sale s 23,728 23,493 23,950 24,218 23,980 24,333 24,015 24,064 Co st o f sale s 4,032 4,025 4,446 4,222 4,412 4,343 4,620 4,519 O pe r atin g e xpe n se s 13,653 13,900 13,660 13,697 13,046 13,334 12,
Slide 42: Appendix: Quarterly Chart (2)
Appendix Quarterly Chart (2) (unaudited) (in million Yen) FY2010 FY2010 （ S ale s by r e gio n ） Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Japan 9,782 9,990 11,451 11,100 11,023 11,296 11,722 12,028 US 5,999 6,118 5,485 5,124 5,315 5,365 4,968 4,803 Eu r o pe 5,005 4,408 4,173 4,671 4,435 4,354 4,206 4,151 Asia P ac