Trend Micro Incorporated · TSE:4704

Trend Micro — Q3 2009 Earnings Presentation

31 slides from Trend Micro's earnings presentation, Nov 10, 2009

  1. Slide 1: Trend Micro FY2009.3Q Results

    Trend Micro FY2009.3Q Results Mahendra Negi COO/CFO, Representative Director November 10,2009 Classification 11/10/2009

  2. 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

  3. Slide 3: FY2009. 3Q Financial Highlight

    FY2009. 3Q Financial Highlight （Third quarter ended September 30, 2009） Classification 3 Copyright © 2009 Trend Micro Incorporated. All rights reserved.

  4. Slide 4: Consolidated Results

    Consolidated Results Three months (in million Yen) (unaudited) ended Sep 30, 3Q2008 3Q2009 YoY growth Net sales 25,968 24,848 - 4% Cost of sales 4,188 3,618 - 14% Operating expenses 14,197 12,829 - 10% Operating income (Margin) 7,582 (29%) 8,399 (34%) + 11% Ordinary income 9,157 8,615 - 6% Net incom

  5. Slide 5: USD based Results (Non-GAAP)

    USD based Results (Non-GAAP) (unaudited) Three months (in thousand USD) ended Sep 30, 3Q2008 3Q2009 YoY change Net sales 241,384 265,530 10% Cost of sales 38,935 38,668 - 1% Operating expenses 131,967 137,100 4% Operating income 70,482 89,762 27% Ordinary income 85,119 92,066 8% Net Income 54,488 55

  6. Slide 6: Vs. Projection analysis (Operating income)

    Vs. Projection analysis（Operating income） (unaudited) Cost side + 1,151M Sales side - 151M 2009Ｑ3 Actual •Japan ↑ • People cost ↓ 2009Ｑ3 •APAC ↓ • Marketing cost ↓ Projection • Outside service ↓ 8,399 M 7,400 M (Non-GAAP) Classification 6 Copyright © 2009 Trend Micro Incorporated. All rights reserve

  7. Slide 7: Net Sales Growth by Region

    Net Sales Growth by Region (in million Yen) (unaudited) 11,000 10,435 + 11% 10,000 9,405 3Q2008 9,000 3Q2009 8,000 7,098 - 7% 7,000 6,571 6,137 - 17% 6,000 5,092 5,000 4,000 - 20% 3,000 2,530 2,019 2,000 - 8% 1,000 795 729 0 Japan North America Europe Asia Pacific Latin America (In accordance with J

  8. Slide 8: Net Sales Growth by Region (constant currency)

    Net Sales Growth by Region If currency exchange rates used for 3Q2008 were used for 3Q2009: (in million Yen) (unaudited) * ( ) : difference from GAAP base 11,000 10,435 +11% 10,000 9,405 (0) 9,000 3Q2008 + 6% 8,000 7,544 (+972) 3Q2009 - 0% 7,098 (+1,031) 7,000 6,137 6,123 6,000 5,000 - 4% 4,000 (+42

  9. Slide 9: Decomposition of Revenue (vs Last year)

    Decomposition of Revenue （ｖｓ Ｌａｓｔ year） Asia Pacific Latin America Europe (unaudited) North America + 195M - 91M - 13M + 445M Japan Exchange + 1,030M impact - 2,686M 2008Ｑ3 Net 2009Ｑ3 sales Net sales 25,968 M 24,848 M (Non-GAAP) Classification 9 Copyright © 2009 Trend Micro Incorporated. All rights

  10. Slide 10: Sales by Segment

    Sales by Segment 11,000 Growth rate 10,000 9,000 Consumer + 5% 8,000 4,767 All Enterprise - 8% 7,000 6,000 5,000 2,944 291 4,000 3,000 5,668 4,801 2,000 3,626 419 1,000 1,600 15 713 0 Japan North Europe APAC Latin America America (Non-GAAP) Classification 10 Copyright © 2009 Trend Micro Incorporated

  11. Slide 11: % share by region

    % share by region (unaudited) 3Q2008 3Q2009 25,968 million Yen 24,848 million Yen Asia Latin Asia Latin Pacific America Pacific America 10% 3% 8% 3% Japan Japan 36% Europe Europe 42% 20% 24% North North America America 27% 26% (In accordance with Japan GAAP) Classification 11 Copyright © 2009 Trend

  12. Slide 12: Bookings (Amount of contracts concluded)

    Bookings (Amount of contracts concluded) (in million Yen) (unaudited) 12,287 + 17% 10,501 3Q2008 3Q2009 7,104 - 29% 5,066 + 7% 3,644 3,416 + 5% 2,257 2,146 + 36% 497 674 Japan North Am erica Europe Asia Pacific Latin Am erica (Non-GAAP) * Bookings = Net sales + Deferred revenue balance as of this Q

  13. Slide 13: Local currency based Bookings (US, Europe)

    Local currency based Bookings (US, Europe) North America (*excluding Canada) Bookings in $ and EMEA Bookings in € (unaudited) 3Q2008 3Q2009 3Q2008 ($ in thousands) (€ in thousands) 3Q2009 80,000 35,000 70,687 - 9% - 4% 30,906 29,798 70,000 64,340 30,000 60,000 25,000 50,000 20,000 40,000 15,000 30,0

  14. Slide 14: Deferred Revenue

    Deferred Revenue (unaudited) (in million Yen) * Total of current and long term 72,000 70,000 71,751 70,832 68,000 69,707 66,000 67,516 64,000 65,166 62,000 60,000 58,000 56,000 54,000 52,000 50,000 Sep-'08 Dec-'08 Mar-'09 Jun-'09 Sep-'09 (In accordance with Japan GAAP) Classification 14 Copyright ©

  15. Slide 15: Deferred Revenue by Region

    Deferred Revenue by Region (in million Yen) (unaudited) 40,000 37,506 5% 35,654 * Total of current and long term 35,000 Jun-09 30,000 Sep-09 25,000 20,000 16,963 15,458 -9% -12% 15,000 12,566 11,118 10,000 4% 5,000 5,305 5,542 -4% 1,261 1,206 0 Japan North America Europe Asia Pacific Latin America (

  16. Slide 16: Deferred Revenue by Region (constant currency)

    Deferred Revenue by Region If currency exchange rates used as of the end of 2Q2009 were used as of the end of 3Q2009: (in million Yen) (unaudited) * ( ) : difference from GAAP base 40,000 5% 37,506 35,654 (0) * Total of current and long term 35,000 Jun-09 30,000 Sep-09 25,000 -3% (+988) 20,000 16,96

  17. Slide 17: Cost

    Cost (in million Yen) (unaudited) Stock option & Goodwill Salary & Benefit Office overhead Outside service Administration Selling & Marketing Goods / Material 20,000 18,000 603 519 688 16,000 3,198 511 743 2,954 3,201 3,157 14,000 2,411 2,647 12,000 2,791 2,052 2,047 2,252 2,388 10,000 2,075 1,837 2

  18. Slide 18: Bookings vs Total costs

    Bookings vs Total costs (in million Yen) (unaudited) Bookings Total Costs 30,000 28,000 26,000 27,456 26,288 24,000 22,000 23,928 23,667 21,680 20,000 18,000 18,385 16,000 17,014 16,699 16,448 14,000 15,886 12,000 10,000 8,000 6,000 4,000 2,000 0 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 (Non-GAAP) * “Tota

  19. Slide 19: Cash flows

    Cash flows (unaudited) (in million Yen) 項目 3Q2008 (Pro-forma) 3Q2009 YoY growth Cash flows from operating activities 5,756 5,270 - 8% Cash flows from investing activities - 1,999 - 820 － Cash flows from financing activities 307 -5 － Effect of exchange rate changes - 5,092 - 1,550 － on cash and cash

  20. Slide 20: Q3 Highlights

    Q3 Highlights • New technology continues to get traction • Strong performance of retail business in Japan • Good cost control Classification 20 Copyright © 2009 Trend Micro Incorporated. All rights reserved.

  21. Slide 21: (Source: NSS Labs, Inc.)

    (Source: NSS Labs, Inc.) Classification 21 Copyright © 2009 Trend Micro Incorporated. All rights reserved.

  22. Slide 22: Q3 Lowlights

    Q3 Lowlights • Lower than expected revenues in US and Europe • Enterprise selling cycle remains long Classification 22 Copyright © 2009 Trend Micro Incorporated. All rights reserved.

  23. Slide 23: Headcount

    Headcount Jun - 2009 Sep - 2009 4,304 4,349 ADM, ADM, Business Process Business Process Sales, Sales, Marketing Marketing 648 666 Technical 1,191 + 45 Technical 1,184 Support (+ 1%) Support Research, Research, Development Development 1,299 1,314 1,166 1,185 Classification 23 Copyright © 2009 Trend M

  24. Slide 24: Non-operating & Extra-ordinary Items

    Non-operating & Extra-ordinary Items (unaudited) Other income Exchange loss Equity in gains of affiliated companies Loss on sales of marketable securities Gain on sales of marketable securities Other expense 1M 22M 135M Interest income 3M Loss on disposal of fixed assets 13M 4M 32 M 341M Ordinary In

  25. Slide 25: Balance Sheet

    Balance Sheet (unaudited) (in million Yen) Jun-2009 change Sep-2009 Assets Cash & cash equivalents 71,259 + 8,669 79,928 Account receivable (less allowance for doubtful accounts) 19,565 + 545 20,110 Marketable securities & Securities investments 60,656 - 6,914 53,742 Liabilities Deferred revenue (to

  26. Slide 26: Snapshot of our CDO investments (Update)

    Snapshot of our CDO investments （Update） # We don’t have any CDOs related to RMBS (e.g. Subprime mortgages). # Since the underlying cash flow is intact, we intend to hold till maturity. # Exposure as a % of our “Marketable securities & Securities investments” : 3% # Exposure as a % of our “Cash + Ma

  27. Slide 27: Q4 forecast assumptions

    Q4 forecast assumptions •Europe increases by double digits, while Japan and US decreases by low single digits respectively •Stock option expenses will be 0.6Bn yen •Estimated exchange rate: 1USD = 91 yen ( last year: 96 yen) 1EUR = 132 yen ( last year: 126 yen) Classification 27 Copyright © 2009 Tre

  28. Slide 28: Projection for 4Q2009

    Projection for 4Q2009 (unaudited) For 4Q2009 Expected (in million Yen) Oct - Dec, 2009 YoY growth Net Sales 24,700 + 3% Operating Income 7,200 -2% Ordinary Income 7,400 -3% Net Income 4,400 - 9% (In accordance with Japan GAAP) • Including both stock option expenses and amortization of goodwill （abou

  29. Slide 29: Thank you!

    Thank you! Classification 29 Copyright © 2009 Trend Micro Incorporated. All rights reserved.

  30. Slide 30: Appendix: Quarterly Chart (1)

    Appendix Quarterly Chart (1) (unaudited) (in million Yen) FY2008 FY2009 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ｎｅｔ sale s 25,604 26,105 25,968 24,030 22,915 24,244 24,848 Co st o f sale s 4,054 3,859 4,188 3,646 3,597 3,511 3,618 O pe r atin g e xpe n se s 13,211 13,693 14,197 13,053 12,289 13,503 12,829 O pe r at

  31. Slide 31: Appendix: Quarterly Chart (2)

    Appendix Quarterly Chart (2) (unaudited) (in million Yen) FY2008 FY2009 （ S ale s by r e gio n ） Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Japan 9,823 9,885 9,405 9,987 9,784 9,631 10,435 US 6,178 6,570 7,098 6,344 5,953 6,729 6,571 Eu r o pe 6,185 6,551 6,137 5,016 4,748 5,100 5,092 Asia P ac ific 2,680 2,325 2,530

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