Slide 1: FY2007 2Q / Semi Annual Results
Trend Micro FY2007. 2Q / Semi Annual Results Mahendra Negi COO / CFO , Representative Director August 9, 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 2Q Financial Highlight
FY2007. 2Q Financial Highlight * We have applied to Japan GAAP since this quarter. 3 Copyright 2007 - Trend Micro Inc.
Slide 4: Consolidated Results
Consolidated Results Three months (in million Yen) (unaudited) ended Mar 31, 2Q2006 2Q2007 YoY growth Net sales 20,447 25,138 23% Cost of sales 3,733 4,242 14% Operating expenses 10,250 12,027 17% Operating income (Margin) 6,465 (32%) 8,869 (35%) 37% Ordinary income 6,806 9,781 44% Net income 4,369
Slide 5: USD based Results (Non-GAAP)
USD based Results (Non-GAAP) (unaudited) Three months (in thousand USD) ended Jun 30, 2Q2006 2Q2007 YoY change Net sales 178,237 207,842 17% Cost of sales 32,538 35,071 8% Operating expenses 89,348 99,442 11% Operating income 56,351 73,330 30% Ordinary income 59,330 80,871 36% Net Income 37,446 52,9
Slide 6: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 10,000 9,241 + 14% 9,000 8,128 2Q2006 8,000 2Q2007 + 48% 7,000 6,305 6,013 + 17% 6,000 5,134 5,000 4,249 4,000 + 22% 3,000 2,765 2,270 2,000 + 22% 1,000 667 814 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 2Q2006 were used for 2Q2007: (in million Yen) (unaudited) * ( ) : difference from GAAP base 10,000 9,241 + 14% 9,000 (0) 8,128 8,000 2Q2006 + 41% 7,000 (-324) 2Q2007 + 4% 5,980 (-691) 6,000 5,322 5,134 5,000 4,249 4,000 + 11% (-241) 3,00
Slide 8: Changing from US GAAP to Japan GAAP
Changing from US GAAP to Japan GAAP We have applied to Japan GAAP since this quarter. * There is No impact to Net sales (Main differences between US GAAP and Japan GAAP for cost side) • Stock option expenses (Previously, we have recognized all of stock option expenses with rights existed. While, Jap
Slide 9: Quarterly numbers in accordance with Japan GAAP
Each quarter numbers in accordance with Japan GAAP from 1Q2006 to 1Q2007 (* just for reference) (unaudited) ※ There is No impact to Net sales. (in million Yen) FY2006 FY2007 Q1 Q2 Q3 Q4 Annual Q1 Net Sales 20,778 20,447 21,156 23,232 85,614 23,252 Cost of sales 3,679 3,826 3,886 4,503 15,894 4,429 O
Slide 10: % share by region
% share by region (unaudited) 2Q2006 2Q2007 20,447 million Yen 25,138 million Yen Latin Latin Asia America America Pacific 3% Asia Pacific 3% 11% 11% Japan Japan Europe 40% 40% Europe 37% 25% 24% US US 21% 25% (In accordance with Japan GAAP) 10 Copyright 2007 - Trend Micro Inc.
Slide 11: Sales by Segment
Sales by Segment (unaudited) (in million Yen) YoY growth 24,000 Large Enterprise + 33% 7,670 20,000 5,782 16,000 Small & Medium + 9% 12,000 10,757 9,842 8,000 Consumer + 39% 4,000 6,712 4,823 0 2Q2006 2Q2007 (Non-GAAP) 11 Copyright 2007 - Trend Micro Inc.
Slide 12: Bookings (Amount of contracts concluded)
Bookings (Amount of contracts concluded) (in million Yen) (unaudited) 12,000 + 30% 11,000 10,872 10,000 2Q2006 9,000 8,390 2Q2007 + 39% 8,000 7,419 + 29% 7,000 6,983 6,000 5,327 5,426 5,000 + 45% 4,000 3,650 3,000 2,514 2,000 + 48% 1,000 638 944 0 Japan US Europe Asia Pacific Latin Am erica * “Booki
Slide 13: Cost of sales & Operating expenses
Cost of sales & Operating expenses (excluding both stock option expenses and amortization of goodwill 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 1,019 1,
Slide 14: Bookings vs Total costs
Bookings vs Total costs (in million Yen) (unaudited) 30,000 Bookings Total Costs 30,117 29,867 27,663 25,000 23,742 22,915 22,296 20,000 15,000 15,884 16,269 15,645 13,983 13,942 12,685 10,000 5,000 0 2006Q1 2006Q2 2006Q3 2006Q4 2007Q1 2007Q2 * “Total costs” means COGS + SGA. (Non-GAAP) 14 Copyright
Slide 15: Q2 Highlights
Q2 Highlights • Strong growth in North America • Increase in market share • Virus Buster renewal rate maintained despite increase in renewal price 15 Copyright 2007 - Trend Micro Inc.
Slide 16: Q2 Lowlights
Q2 Lowlights • New business growth still below expectations • Europe still not fully recovered 16 Copyright 2007 - Trend Micro Inc.
Slide 17: Headcount
Headcount Mar - 2007 Jun - 2007 3,336 3,432 ADM, ADM, Business Process Business Process Sales, Sales, 513 Marketing 496 Marketing 975 + 107 994 Technical (+ 3%) Technical Support Support Research, 1,015 Research, 978 Development Development 870 927 17 Copyright 2007 - Trend Micro Inc.
Slide 18: Non-operating Items
Non-operating Items (unaudited) unaudited) Other income Loss on sales of marketable securities Equity in gains of affiliated comapanies Interest expense Gain on sales of marketable securities 5M Other expense 12 M 39 M 4M 26 M Exchange gain 11 M 185 M Interest income 700 M Ordinary Income 9,781M Ope
Slide 19: Balance Sheet
Balance Sheet (unaudited) (in million Yen) Mar-2007 change Jun-2007 Assets Cash & cash equivalents 68,438 + 10,853 79,291 Account receivable (less allowance for doubtful accounts) 20,698 + 329 21,027 Marketable securities & Securities investments 42,273 + 2,314 44,587 Liabilities Deferred revenue (t
Slide 20: FY2007 Semi Annual Financial Highlight
FY2007 Semi Annual Financial Highlight * We have applied to Japan GAAP since this Semi Annual. 20 Copyright 2007 - Trend Micro Inc.
Slide 21: Consolidated Results (Semi Annual)
Consolidated Results (Semi Annual) Six months (in million Yen) (unaudited) ended Jun 30, 1H2006 1H2007 YoY growth Net sales 41,225 48,390 17% Cost of sales 7,101 8,541 20% Operating expenses 19,567 23,612 21% Operating income (Margin) 14,557 (35%) 16,237 (34%) 12% Ordinary income 15,219 18,063 19% N
Slide 22: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 18,000 17,779 + 10% 16,155 1H2006 16,000 1H2007 14,000 + 33% + 15% 12,093 11,838 12,000 10,257 10,000 9,068 8,000 + 16% 6,000 5,143 4,435 4,000 17% 2,000 1,308 1,535 0 Japan US Europe Asia Pacific Latin America (In accordance with Japan GAAP) 2
Slide 23: Net Sales Growth by Region (constant currency)
Net Sales Growth by Region If currency exchange rates used for 1H2006 were used for 1H2007: (in million Yen) (unaudited) * ( ) : difference from GAAP base 18,000 17,779 + 10% (0) 16,155 1H2006 16,000 + 29% 1H2007 14,000 (-429) + 3% 12,000 11,664 (-1,232) 10,606 10,257 10,000 9,068 8,000 + 9% 6,000 (
Slide 24: Q3 forecast assumptions
Q3 forecast assumptions • North America grow higher than average, EMEA growth rate same and Japan lower than average. • Stock option expenses will be 0.3Bn yen • Estimated exchange rate: 1USD = 118 yen 1EUR = 161 yen 24 Copyright 2007 - Trend Micro Inc.
Slide 25: Projection for 3Q2007
Projection for 3Q2007 (unaudited) For 3Q2007 Expected (in million Yen) Jul - Sep, 2007 YoY growth Net Sales 24,400 15% Operating Income 7,400 3% Ordinary Income 9,000 12% Net Income 5,450 13% • Including both stock option expenses and amortization of goodwill （about 491M Yen） (In accordance with Jap
Slide 26: Regression chart of net sales
Regression chart of net sales (in million Yen) 30,000 Regression line 25,000 20,000 15,000 10,000 R2 = 0.9716 5,000 0 07 e 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 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
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 23,232 23,252 25,138 Co st o f sale s 3,368 3,733 3,731 4,321 4,299 4,242 O pe r at in g e xpe n se s 9,317 10,250 10,211 11,324 11,585 12,027 O pe r at in g in c o m
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 8,128 8,315 8,777 8,538 9,241 US 4,819 4,249 4,897 5,330 5,788 6,305 Europe 5,124 5,134 5,119 5,774 5,825 6,013 Asia Pacific 2,166 2,270 2,178 2,535 2,378 2,765 Latin Am eri
Slide 30: Thank You
Thank You 30 Copyright 2007 - Trend Micro Inc.