Slide 1: Trend Micro FY2008 1Q / Annual Results
Trend Micro FY2008. 1Q / Annual Results Mahendra Negi COO / CFO , Representative Director April 28, 2008
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: FY2008 1Q Financial Highlight
FY2008. 1Q Financial Highlight (Notice) Each figure for 2007Q1 in this presentation is “Pro forma amount” to compare with 2008Q1 easily. (If each figure for 2007Q1 in accordance with US GAAP last year were in accordance with Japan GAAP) 3 Copyright 2008 - Trend Micro Inc.
Slide 4: Consolidated Results
Consolidated Results Three months (in million Yen) (unaudited) ended Mar 31, 1Q2007 1Q2008 YoY growth Net sales 23,252 25,604 10% Cost of sales 4,298 4,054 - 6% Operating expenses 11,584 13,211 14% Operating income (Margin) 7,368 (32%) 8,338 (33%) 13% Ordinary income 8,281 7,517 - 9% Net income 5,06
Slide 5: USD based Results (Non-GAAP)
USD based Results (Non-GAAP) (unaudited) Three months (in thousand USD) ended Mar 31, 1Q2007 1Q2008 YoY change Net sales 194,954 244,128 25% Cost of sales 36,044 38,661 7% Operating expenses 97,131 125,967 30% Operating income 61,779 79,500 29% Ordinary income 69,437 71,678 3% Net Income 42,470 43,8
Slide 6: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 10,000 9,823 + 15% 9,000 8,538 1Q2007 8,000 + 7% + 6% 1Q2008 7,000 6,178 6,185 6,000 5,788 5,825 5,000 4,000 + 13% 3,000 2,680 2,378 2,000 + 2% 1,000 721 735 0 Japan US Europe Asia Pacific Latin America (In accordance with Japan GAAP) 6 Copyrig
Slide 7: Net Sales Growth by Region (constant currency)
Net Sales Growth by Region If currency exchange rates used for 1Q2007 were used for 1Q2008: (in million Yen) (unaudited) * ( ) : difference from GAAP base 10,000 9,823 + 15% 9,000 8,538 (0) + 21% 1Q2007 8,000 (+847) 7,025 + 5% 1Q2008 7,000 6,089 (-96) 6,000 5,788 5,825 5,000 + 17% 4,000 (+98) 2,779
Slide 8: % share by region
% share by region (unaudited) 1Q2007 1Q2008 23,252 million Yen 25,604 million Yen Latin Latin Asia America America Pacific 3% Asia Pacific 3% 10% 10% Japan Japan Europe 37% Europe 38% 25% 24% US US 25% 24% (In accordance with Japan GAAP) 8 Copyright 2008 - Trend Micro Inc.
Slide 9: Sales by Segment
Sales by Segment (unaudited) (in million Yen) YoY growth 24,000 Large Enterprise + 6% 7,362 20,000 6,942 Small & Medium + 1% 16,000 10,786 12,000 Consumer 10,656 + 32% 8,000 4,000 7,455 5,652 0 1Q2007 1Q2008 (Non-GAAP) 9 Copyright 2008 - Trend Micro Inc.
Slide 10: Bookings (Amount of contracts concluded)
Bookings (Amount of contracts concluded) (in million Yen) (unaudited) 12,000 11,696 11,259 + 4% 11,000 10,000 1Q2007 9,000 1Q2008 8,000 7,039 7,000 - 26% 6,056 - 24% 6,000 5,226 5,000 4,608 4,000 - 22% 3,000 2,608 2,040 + 4% 2,000 1,000 698 730 0 Japan US Europe Asia Pacific Latin America * “Booking
Slide 11: Bookings (Amount of contracts concluded)
Bookings (Amount of contracts concluded) If currency exchange rates used for each previous Q were applied to each Q1’s deferred revenue balance amount (unaudited) (in million Yen) 12,000 11,696 11,259 + 4% 11,000 10,000 1Q2007 9,000 + 6% 1Q2008 8,000 7,636 7,178 7,000 5,991 - 10% 6,000 5,376 5,000 4
Slide 12: Local currency based Bookings (US, Europe)
Local currency based Bookings (US, Europe) US Bookings in $ and EMEA Bookings in € (unaudited) 1Q2007 1Q2007 ($ in thousands) 1Q2008 (€ in thousands) 1Q2008 80,000 45,000 + 19% 71,682 - 11% 70,000 40,000 38,632 60,200 35,000 34,384 60,000 30,000 50,000 25,000 40,000 20,000 30,000 15,000 20,000 10,00
Slide 13: Deferred Revenue
Deferred Revenue (in million Yen) (unaudited) * Total of current and long term 70,000 67,454 66,152 65,000 61,915 61,712 60,000 57,186 55,000 50,000 Mar-'07 Jun-'07 Sep-'07 Dec-'07 Mar-'08 (In accordance with Japan GAAP) 13 Copyright 2008 - Trend Micro Inc.
Slide 14: Deferred Revenue by Region
Deferred Revenue by Region (in million Yen) (unaudited) * Total of current and long term 30,000 28,659 7% 26,787 25,000 Dec-07 -5% Mar-08 20,000 18,26117,310 -10% 15,919 15,000 14,342 10,000 -13% 5,000 5,031 4,391 0% 1,454 1,449 0 Japan US Europe Asia Pacific Latin America (In accordance with Japan
Slide 15: Deferred Revenue by Region (constant currency)
Deferred Revenue by Region If currency exchange rates used as of the end of 4Q2007 were used as of the end of 1Q2008: (in million Yen) (unaudited) * ( ) : difference from GAAP base * Total of current and long term 35,000 7% 30,000 28,659 (0) 26,787 Dec-07 25,000 Mar-08 8% 20,000 19,720 (+2,409) 18,2
Slide 16: 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 Maintenance Support 20,000 Sales, Marketing R&D Administrative 18,000 1,116 16,000 759
Slide 17: Bookings vs Total costs
Bookings vs Total costs (in million Yen) (unaudited) Bookings Total Costs 32,000 30,000 31,954 29,867 28,000 26,000 27,663 24,000 24,999 24,302 22,000 20,000 18,000 16,000 17,912 17,266 16,269 16,264 14,000 15,883 12,000 10,000 8,000 6,000 4,000 2,000 0 2007Q1 2007Q2 2007Q3 2007Q4 2008Q1 * “Total co
Slide 18: Q1 Highlights
Q1 Highlights • Expansion of market share in North America • Recovery of market share in Japan consumer market • Expansion of relationship with Cisco (Linksys) into the consumer market 18 Copyright 2008 - Trend Micro Inc.
Slide 19: Q1 Lowlights
Q1 Lowlights • Weakness in Bookings, especially in EMEA • Exchange and valuation losses 19 Copyright 2008 - Trend Micro Inc.
Slide 20: Headcount
Headcount Dec - 2007 Mar - 2008 3,664 3,746 ADM, ADM, Business Process Sales, Business Process 523 Sales, Marketing 526 Marketing 1,056 + 82 1,048 Technical (+ 2%) Technical Support Support 1,093 Research, 1,153 Research, Development Development 992 1,019 20 Copyright 2008 - Trend Micro Inc.
Slide 21: Non-operating Items
Non-operating Items (unaudited) Other income Equity in gains of affiliated comapanies Exchange loss Gain on sales of marketable securities 22 M 1M Interest income 93M 1,488M 815M Loss on sales of marketable securities Interest expense 230M 2M Other expense 31 M Operating income Ordinary Income 8,338
Slide 22: Balance Sheet
Balance Sheet (unaudited) (in million Yen) Dec-2007 change Mar-2008 Assets Cash & cash equivalents 54,091 + 6,237 60,328 Account receivable (less allowance for doubtful accounts) 25,844 - 5,209 20,635 Marketable securities & Securities investments 85,350 - 27,130 58,220 Liabilities Deferred revenue
Slide 23: 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” : 7% # Exposure as a % of our “Cash + Ma
Slide 24: Cisco/Linksys and Trend Micro Securing the Home Network
Cisco/Linksys and Trend Micro Securing the Home Network • Objectives: Partnering to win in the home networking market with a security blanket to protect the entire home network – To protect the home network with its many wired devices – To expand Trend Micro brand awareness in the consumer marketpla
Slide 25: Q2 forecast assumptions
Q2 forecast assumptions • Japan and EMEA growth higher than average, North America lower than average (in JPY terms). • Stock option expenses will be 0.5Bn yen • Marketing expenses for the alliance with Linksys will be 0.5Bn yen • CDO write down will be 0.6Bn yen • Estimated exchange rate: 1USD = 10
Slide 26: Projection for 2Q2008
Projection for 2Q2008 (unaudited) For 2Q2008 Expected (in million Yen) Apr - Jun, 2008 YoY growth Net Sales 25,700 2% Operating Income 7,100 - 20% Ordinary Income 7,300 - 25% Net Income 4,100 - 36% (In accordance with Japan GAAP) • Including both stock option expenses and amortization of goodwill （a
Slide 27: Regression chart of net sales
Regression chart of net sales (in million Yen) Regression line 30,000 25,000 20,000 15,000 10,000 R 2 = 0.9793 5,000 0 08Q2e 02Q1a 02Q2a 02Q3a 02Q4a 03Q1a 03Q2a 03Q3a 03Q4a 04Q1a 04Q2a 04Q3a 04Q4a 05Q1a 05Q2a 05Q3a 05Q4a 06Q1a 06Q2a 06Q3a 06Q4a 07Q1a 07Q2a 07Q3a 07Q4a 08Q1a (Non-GAAP) 27 Copyright 2
Slide 28: Appendix
Appendix 28 Copyright 2008 - Trend Micro Inc.
Slide 29: Quarterly Chart (1)
Appendix Quarterly Chart (1) (unaudited) (in million Yen) FY2 0 0 7 FY2 0 0 8 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ｎｅｔ sale s 23,252 25,138 25,201 26,213 25,604 Co st o f sale s 4,298 4,241 4,276 4,403 4,054 O pe r at in g e xpe n se s 11,584 12,027 11,987 13,508 13,211 O pe r at in g in c o me 7,368 8,869 8,937
Slide 30: Quarterly Chart (2)
Appendix Quarterly Chart (2) (unaudited) (in million Yen) FY2007 FY2008 （ Sales by region） Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Japan 8,538 9,241 9,287 9,463 9,823 US 5,788 6,304 6,467 6,472 6,178 Europe 5,825 6,013 5,929 6,582 6,185 Asia Pacific 2,378 2,765 2,732 2,832 2,680 Latin Am erica 721 813 785 861 735 T
Slide 31: Thank You
Thank You 31 Copyright 2008 - Trend Micro Inc.