Slide 1: FY2008 3Q Results
Trend Micro FY2008. 3Q Results Mahendra Negi COO / CFO , Representative Director November 4, 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 3Q Financial Highlight
FY2008. 3Q Financial Highlight 3 Copyright 2008 - Trend Micro Inc.
Slide 4: Consolidated Results
Consolidated Results Three months (in million Yen) (unaudited) ended Sep 30, 3Q2007 3Q2008 YoY growth Net sales 25,201 25,968 3% Cost of sales 4,276 4,188 - 2% Operating expenses 11,987 14,197 18% Operating income (Margin) 8,937 (35%) 7,582 (29%) - 15% Ordinary income 11,198 9,157 - 18% Net income 6
Slide 5: USD based Results (Non-GAAP)
USD based Results (Non-GAAP) (unaudited) Three months (in thousand USD) ended Sep 30, 3Q2007 3Q2008 YoY change Net sales 214,374 241,384 13% Cost of sales 36,377 38,935 7% Operating expenses 101,970 131,967 29% Operating income 76,026 70,482 -7% Ordinary income 95,260 85,119 -11% Net Income 58,391 5
Slide 6: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 10,000 9,287 9,405 + 1% 9,000 3Q2007 8,000 + 10% 7,098 + 4% 3Q2008 7,000 6,467 6,137 6,000 5,929 5,000 4,000 - 7% 3,000 2,732 2,530 2,000 + 1% 1,000 785 795 0 Japan US Europe Asia Pacific Latin America (In accordance with Japan GAAP) 6 Copyrigh
Slide 7: Net Sales Growth by Region (constant currency)
Net Sales Growth by Region If currency exchange rates used for 3Q2007 were used for 3Q2008: (in million Yen) (unaudited) * ( ) : difference from GAAP base 10,000 9,287 9,405 + 1% 9,000 (0) 7,756 + 20% 3Q2007 8,000 (+658) + 4% 3Q2008 7,000 6,467 6,145 (+7) 6,000 5,929 5,000 - 4% 4,000 (+82) 3,000 2,7
Slide 8: % share by region
% share by region (unaudited) 3Q2007 3Q2008 25,201 million Yen 25,968 million Yen Latin Latin America America Asia Asia 3% Pacific 3% Pacific 11 % 10% Japan Japan Europe 37 % Europe 36 % 24 % 24 % US US 26 % 27 % (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 7,615 8,555 All Corporate - 3% 20,000 Consumer + 19% 16,000 12,000 10,852 9,374 8,000 Large Enterprise + 12% 4,000 6,734 8,037 Small & Medium - 14% 0 Consumer + 19% 3Q2007 3Q2008 (Non-GAAP) 9 Copyright 2008 - Trend Micro Inc.
Slide 10: Bookings (Amount of contracts concluded)
Bookings (Amount of contracts concluded) (in million Yen) 12,000 + 1% 11,000 10,349 10,501 10,000 3Q2007 9,000 + 10% 3Q2008 8,000 7,104 7,000 6,466 6,000 - 30% 5,000 4,913 4,000 3,416 - 20% 3,000 2,678 2,146 - 16% 2,000 1,000 592 497 0 Japan US Europe Asia Pacific Latin Am erica (Non-GAAP) * “Bookin
Slide 11: Local currency based Bookings (US, Europe)
Local currency based Bookings (US, Europe) US Bookings in $ and EMEA Bookings in € (unaudited) 3Q2007 3Q2007 ($ in thousands) 3Q2008 (€ in thousands) 3Q2008 80,000 35,000 + 10% - 2% 70,687 31,618 30,906 70,000 30,000 64,410 60,000 25,000 50,000 20,000 40,000 15,000 30,000 20,000 10,000 10,000 5,000
Slide 12: Deferred Revenue
Deferred Revenue (in million Yen) (unaudited) * Total of current and long term 70,000 69,817 68,000 67,454 67,516 66,000 66,152 64,000 62,000 61,712 60,000 58,000 56,000 Sep-'07 Dec-'07 Mar-'08 Jun-'08 Sep-'08 (In accordance with Japan GAAP) 12 Copyright 2008 - Trend Micro Inc.
Slide 13: Deferred Revenue by Region
Deferred Revenue by Region (in million Yen) (unaudited) * Total of current and long term 35,000 4% 30,937 30,000 29,840 Jun-08 25,000 Sep-08 0% 20,000 18,365 18,371 -18% 15,000 14,711 11,990 10,000 -7% 5,312 4,928 5,000 -19% 1,587 1,289 0 Japan US Europe Asia Pacific Latin America (In accordance wit
Slide 14: Deferred Revenue by Region (constant currency)
Deferred Revenue by Region If currency exchange rates used as of the end of 2Q2008 were used as of the end of 3Q2008: (in million Yen) (unaudited) * ( ) : difference from GAAP base 35,000 4% 30,937 (0) * Total of current and long term 30,000 29,840 Jun-08 25,000 Sep-08 3% 20,000 18,365 18,866 (+494)
Slide 15: 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 1,021 16,00
Slide 16: Bookings vs Total costs
Bookings vs Total costs (in million Yen) (unaudited) Bookings Total Costs 32,000 30,000 31,954 28,000 29,867 29,769 26,000 24,000 24,999 24,302 23,667 22,000 20,000 18,000 17,912 18,385 16,000 17,266 17,552 16,269 16,264 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2007Q2 2007Q3 2007Q4 2008Q1 2008
Slide 17: Q3 Highlights
Q3 Highlights • Double digit growth in North America continues 17 Copyright 2008 - Trend Micro Inc.
Slide 18: Q3 Lowlights
Q3 Lowlights • Weaker than expected growth in Japan (consumer) • Weaker than expected performance of Large Enterprise segment 18 Copyright 2008 - Trend Micro Inc.
Slide 19: Headcount
Headcount Jun - 2008 Sep - 2008 3,790 3,918 ADM, ADM, Business Process Business Process Sales, Sales, 556 587 Marketing Marketing 1,014 + 128 1,050 Technical (+ 3%) Technical Support Support 1,166 Research, Research, 1,222 Development Development 1,054 1,059 19 Copyright 2008 - Trend Micro Inc.
Slide 20: Non-operating & Extra-ordinary Items
Non-operating & Extra-ordinary Items (unaudited) Other income Equity in gains of affiliated companies Loss on sales of marketable securities 9M Exchange gain 34 M 94M Other expense 52M 927M Interest income 750M Ordinary Income Income before income taxes Operating income 9,157 M 9,157 M 7,582 M (In a
Slide 21: Balance Sheet
Balance Sheet (unaudited) (in million Yen) Jun-2008 change Sep-2008 Assets Cash & cash equivalents 67,299 - 1,673 65,626 Account receivable (less allowance for doubtful accounts) 21,056 - 739 20,317 Marketable securities & Securities investments 62,501 - 1,988 60,513 Liabilities Deferred revenue (to
Slide 22: 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
Slide 23: Solid Balance Sheet
Solid Balance Sheet • Liabilities with interest: 0 (No leverage) • “Cash & cash equivalents” + “Marketable securities & Securities investments” balance as of Sep. 30: 126.1 Billion yen • Shareholder’s equity ratio (beneficial) as of Sep. 30: 83.8% *based on excluding Deferred revenue (that should be
Slide 24: Q4 forecast assumptions
Q4 forecast assumptions • Japan increases, while US decreases by single digit and Europe decreases by double digit due to forex headwind • Stock option expenses will be 0.6Bn yen • One time payment (receipt) related to intellectual property usage about 0.3Bn yen for extraordinary income • Estimated
Slide 25: Projection for 4Q2008
Projection for 4Q2008 (unaudited) For 4Q2008 Expected (in million Yen) Oct - Dec, 2008 YoY growth Net Sales 24,400 - 7% Operating Income 7,400 - 11% Ordinary Income 7,500 - 15% Net Income 4,800 - 8% (In accordance with Japan GAAP) • Including both stock option expenses and amortization of goodwill （
Slide 26: Regression chart of net sales
Regression chart of net sales * If currency exchange rates used for 1Q2002 were used for each quater (in million Yen) Regression line 30,000 25,000 20,000 15,000 R2 = 0.9843 10,000 5,000 0 08Q4e 02Q1a 02Q2a 02Q3a 02Q4a 03Q1a 03Q2a 03Q3a 03Q4a 04Q1a 04Q2a 04Q3a 04Q4a 05Q1a 05Q2a 05Q3a 05Q4a 06Q1a 06Q
Slide 27: Appendix
Appendix 27 Copyright 2008 - Trend Micro Inc.
Slide 28: 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 26,105 25,968 Co st o f sale s 4,298 4,241 4,276 4,403 4,054 3,859 4,188 O pe r at in g e xpe n se s 11,584 12,027 11,987 13,508 13,211 13,693 14,197 O
Slide 29: 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 9,885 9,405 US 5,788 6,304 6,467 6,472 6,178 6,570 7,098 Europe 5,825 6,013 5,929 6,582 6,185 6,551 6,137 Asia Pacific 2,378 2,765 2,732 2,832 2,680
Slide 30: Thank You
Thank You 30 Copyright 2008 - Trend Micro Inc.