Slide 1: FY2007 3Q Results
Trend Micro FY2007. 3Q Results Mahendra Negi COO / CFO , Representative Director November 8, 2007
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: FY2007 3Q Financial Highlight
FY2007. 3Q Financial Highlight * We have converted to Japan GAAP from this quarter. 3 Copyright 2007 - Trend Micro Inc.
Slide 4: Consolidated Results
Consolidated Results Three months (in million Yen) (unaudited) ended Sep 30, 3Q2006 3Q2007 YoY growth Net sales 21,156 25,201 19% Cost of sales 3,731 4,276 15% Operating expenses 10,211 11,987 17% Operating income (Margin) 7,214 (34%) 8,937 (35%) 24% Ordinary income 8,059 11,198 39% Net income 4,814
Slide 5: USD based Results (Non-GAAP)
USD based Results (Non-GAAP) (unaudited) Three months (in thousand USD) ended Sep 30, 3Q2006 3Q2007 YoY change Net sales 181,802 214,374 18% Cost of sales 32,061 36,377 14% Operating expenses 87,747 101,970 16% Operating income 61,993 76,026 23% Ordinary income 69,253 95,260 38% Net Income 41,369 58
Slide 6: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 10,000 9,287 + 12% 9,000 8,315 3Q2006 8,000 + 32% 2Q2007 7,000 6,467 6,000 5,929 + 16% 5,000 4,897 5,118 4,000 + 25% 3,000 2,732 2,177 2,000 + 21% 1,000 785 646 0 Japan US Europe Asia Pacific Latin America (In accordance with Japan GAAP) 6 Copy
Slide 7: Net Sales Growth by Region (constant currency)
Net Sales Growth by Region If currency exchange rates used for 3Q2006 were used for 3Q2007: (in million Yen) (unaudited) * ( ) : difference from GAAP base 10,000 9,287 + 12% (0) 9,000 8,315 3Q2006 8,000 + 31% 3Q2007 7,000 6,401 (-65) + 6% (-493) 6,000 5,436 4,897 5,118 5,000 4,000 + 18% (-158) 3,000
Slide 8: % share by region
% share by region (unaudited) 3Q2006 3Q2007 21,156 million Yen 25,201 million Yen Latin Latin America Asia America Asia Pacific 3% Pacific 3% 10% 11% Europe Japan Japan 24% 39% Europe 37% 24% US US 23% 26% (In accordance with Japan GAAP) 8 Copyright 2007 - Trend Micro Inc.
Slide 9: Sales by Segment
Sales by Segment (unaudited) (in million Yen) YoY growth 24,000 Large Enterprise + 22% 7,615 20,000 6,260 Small & Medium + 9% 16,000 12,000 10,852 Consumer + 36% 9,951 8,000 4,000 6,734 4,943 0 3Q2006 3Q2007 (Non-GAAP) 9 Copyright 2007 - Trend Micro Inc.
Slide 10: Bookings (Amount of contracts concluded)
Bookings (Amount of contracts concluded) (in million Yen) (unaudited) 12,000 + 15% 11,000 10,349 10,000 3Q2006 9,027 9,000 3Q2007 8,000 - 7% 6,972 7,000 6,466 6,000 + 4% 5,000 4,7414,913 4,000 + 12% 3,000 2,678 2,382 2,000 - 4% 1,000 618 592 0 Japan US Europe Asia Pacific Latin Am erica (Non-GAAP) *
Slide 11: Bookings (Amount of contracts concluded)
Bookings (Amount of contracts concluded) If currency exchange rates used for 2Q2007 were used for 3Q2007: (in million Yen) (unaudited) * ( ) : difference from GAAP base 12,000 + 15% 11,000 10,349 (0) 10,000 3Q2006 9,027 9,000 3Q2007 + 9% 8,000 7,625 6,972 (+1,159) 7,000 6,000 + 7% 5,091 (+178) 5,000
Slide 12: Bookings (Amount of contracts concluded)
Bookings (Amount of contracts concluded) If currency exchange rates used for each previous Q were used for each Q: (in million Yen) (unaudited) 35,000 Applying to forex for that Q 30,116 30,000 Applying to forex for that previous Q 29,241 29,867 27,663 27,744 28,017 26,636 24,999 25,000 22,914 23,74
Slide 13: Cost of sales & Operating expenses
Cost of sales & Operating expenses (excluding both stock option expenses and amortization of goodwill effects) (in million Yen) (unaudited) Cost of sales (old) ※ Amortization of capitalized software, and Material 18,000 Maintenance Support Sales, Marketing 16,000 R&D Administrative 1,018 1,026 1,239
Slide 14: Bookings vs Total costs
Bookings vs Total costs (in million Yen) (unaudited) Bookings 30,000 Total Costs 30,116 29,867 27,663 25,000 24,999 23,742 22,914 22,295 20,000 15,000 16,269 16,264 15,644 15,883 13,982 13,942 12,684 10,000 5,000 0 2006Q1 2006Q2 2006Q3 2006Q4 2007Q1 2007Q2 2007Q3 * “Total costs” means COGS + SGA. (N
Slide 15: Q3 Highlights
Q3 Highlights • Increasing market share in North America • Effective cost control resulting in improved margins • Entry into the Data leak prevention business 15 Copyright 2007 - Trend Micro Inc.
Slide 16: Q3 Lowlights
Q3 Lowlights • Weaker than expected booking numbers • Delay in VB 2008 launch 16 Copyright 2007 - Trend Micro Inc.
Slide 17: Headcount
Headcount Jun - 2007 Sep - 2007 3,432 3,527 ADM, ADM, Business Process Business Process Sales, Sales, 496 513 Marketing Marketing 994 + 95 1,023 Technical (+ 3%) Technical Support Support 1,015 Research, 1,059 Research, Development Development 927 932 17 Copyright 2007 - Trend Micro Inc.
Slide 18: Non-operating Items
Non-operating Items (unaudited) Equity in gains of affiliated comapanies Other income Exchange loss 10 M Gain on sales of 19 M 575 M Loss on sales of marketable securities marketable securities 13 M 27 M Other expense 2,076M Interest income 771 M Ordinary Income 11,198M Operating income 8,937M (In a
Slide 19: Balance Sheet
Balance Sheet (unaudited) (in million Yen) Jun-2007 change Sep-2007 Assets Cash & cash equivalents 79,291 - 11,021 68,270 Account receivable (less allowance for doubtful accounts) 21,027 - 1,245 19,782 Marketable securities & Securities investments 44,587 + 26,049 70,636 Liabilities Deferred revenue
Slide 20: New technology acquired - Data Leak Prevention (DLP)
New technology acquired - Data Leak Prevention (DLP) • DLP is protection against breaches of: – Privacy: Customers and employee information – Intellectual Property: Contracts, source code, schematics… • Regulatory Compliance Driven – PCI, SB-1386, SOX, J-SOX, HIPAA… • High Growth Market – >50% annua
Slide 21: Provilla LeakProof
Provilla LeakProof™ • Addresses Insider Threats Protect Educate – Accidental or malicious breach by insiders – Endpoint, USB, email, offline • Unique technology Anti-leak – Fast matching at endpoint – Client Scan fingerprint, customer information, keywords – Invisible, robust • Global solution – Lan
Slide 22: Growth of hosted services
Growth of hosted services 140,000 40,000,000 Daily Email Traffic 120,000 35,000,000 100,000 30,000,000 End Users 25,000,000 80,000 End-Users 20,000,000 60,000 Traffic (Email/Daily) 15,000,000 40,000 10,000,000 20,000 5,000,000 - - Q306 Q406 Q107 Q207 Q307 Hosted mail boxes CY QTR 60,000,000 1,600,00
Slide 23: Growth of scanning in the cloud
Growth of scanning in the cloud (In Million) 14 Total Hits per day PROTECTED by 12 Total Web Threat Protection 10 12 Million (10/25/2007) 8 6 4 Italian Job 2 0 10’06 11’06 12’06 01’07 02’07 03’07 04’07 05’07 06’07 07’07 08’07 09’07 10’07 (In Million) 4,000 3,500 # of Daily User Hits to Trend Micro 3
Slide 24: Q4 forecast assumptions
Q4 forecast assumptions • North America growth higher than company average, both EMEA and Japan growth rate same as average. • Stock option expenses will be 0.4Bn yen • Estimated exchange rate: 1USD = 113 yen 1EUR = 163 yen 24 Copyright 2007 - Trend Micro Inc.
Slide 25: Projection for 4Q2007
Projection for 4Q2007 (unaudited) For 4Q2007 Expected (in million Yen) Oct - Dec, 2007 YoY growth Net Sales 25,700 11% Operating Income 8,400 11% Ordinary Income 9,100 6% Net Income 5,300 -9% • Including both stock option expenses and amortization of goodwill （about 593M Yen） (In accordance with Jap
Slide 26: Regression chart of net sales
Regression chart of net sales (in million Yen) Regression line 30,000 25,000 20,000 15,000 2 10,000 R = 0.9778 5,000 0 e 02 a 02 a 02 a 03 a 03 a 03 a 03 a 04 a 04 a 04 a 04 a 05 a 05 a 05 a 05 a 06 a 06 a 06 a 06 a 07 a 07 a 07 a 07 a Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q
Slide 27: Appendix
Appendix 27 Copyright 2007 - Trend Micro Inc.
Slide 28: Quarterly Chart (1)
Appendix Quarterly Chart (1) (unaudited) (in million Yen) FY2 0 0 6 FY2 0 0 7 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ｎｅｔ sale s 20,778 20,447 21,156 23,231 23,252 25,138 25,201 Co st o f sale s 3,368 3,732 3,731 4,320 4,298 4,241 4,276 O pe r at in g e xpe n se s 9,316 10,249 10,211 11,324 11,584 12,027 11,987 O p
Slide 29: Quarterly Chart (2)
Appendix Quarterly Chart (2) (unaudited) (in million Yen) FY2006 FY2007 （ Sales by region） Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Japan 8,028 8,127 8,315 8,776 8,538 9,241 9,287 US 4,818 4,249 4,897 5,329 5,788 6,304 6,467 Europe 5,123 5,133 5,118 5,774 5,825 6,013 5,929 Asia Pacific 2,165 2,270 2,177 2,534 2,378
Slide 30: Thank You
Thank You 30 Copyright 2007 - Trend Micro Inc.