Slide 1: FY2008. 4Q / Annual Results
Trend Micro FY2008. 4Q / Annual Results Mahendra Negi COO / CFO , Representative Director February 17, 2009
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. 4Q Financial Highlight
FY2008. 4Q Financial Highlight （Fourth quarter ended December 31, 2008） 3 Copyright 2009 - Trend Micro Inc.
Slide 4: Consolidated Results
Consolidated Results Three months (in million Yen) (unaudited) ended Dec 31, 4Q2007 4Q2008 YoY growth Net sales 26,213 24,030 - 8% Cost of sales 4,403 3,646 - 17% Operating expenses 13,508 13,053 - 3% Operating income (Margin) 8,300 (32%) 7,330 (31%) - 12% Ordinary income 8,834 7,652 - 13% Net incom
Slide 5: USD based Results (Non-GAAP)
USD based Results (Non-GAAP) (unaudited) Three months (in thousand USD) ended Ｄｅｃ 31, 4Q2007 4Q2008 YoY change Net sales 231,748 250,158 8% Cost of sales 38,931 37,958 - 3% Operating expenses 119,428 135,887 14% Operating income 73,388 76,313 4% Ordinary income 78,108 79,664 2% Net Income 46,216 50,
Slide 6: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 10,000 9,463 9,987 + 6% 9,000 4Q2007 8,000 - 2% 4Q2008 7,000 6,582 6,472 6,344 - 24% 6,000 5,016 5,000 4,000 - 27% 3,000 2,832 2,060 2,000 - 28% 1,000 861 621 0 Japan US Europe Asia Pacific Latin America (In accordance with Japan GAAP) 6 Copyri
Slide 7: Net Sales Growth by Region (constant currency)
Net Sales Growth by Region If currency exchange rates used for 4Q2007 were used for 4Q2008: (in million Yen) (unaudited) * ( ) : difference from GAAP base 10,000 9,463 9,987 + 6% (0) 9,000 + 15% (+1,126) 4Q2007 8,000 7,471 - 2% (+1,465) 4Q2008 7,000 6,472 6,582 6,481 6,000 5,000 - 4% 4,000 (+663) 3,
Slide 8: Decomposition of Revenue (vs Last year)
Decomposition of Revenue （ｖｓ Ｌａｓｔ year） (未監査) Latin America Europe US Asia Pacific + 46M - 100M - 109M Japan + 998M Exchange impact + 524M - 3,541M 2007Ｑ4 Net sales 2008Ｑ4 Net sales 26,213 M 24,030 M (日本会計基準) 8 Copyright 2009 - Trend Micro Inc.
Slide 9: % share by region
% share by region (unaudited) 4Q2007 4Q2008 26,213 million Yen 24,030 million Yen Latin Latin America America Asia Asia Pacific 3% Pacific 3% 9% 11% Japan Japan Europe Europe 42% 36% 25% 21% US US 25% 26% (In accordance with Japan GAAP) 9 Copyright 2009 - Trend Micro Inc.
Slide 10: Sales by Segment
Sales by Segment (in million Yen) (unaudited) 24,000 YoY growth 9,588 20,000 7,782 All Corporate - 17% 16,000 Consumer + 17% 12,000 9,845 8,298 8,000 Large Enterprise - 19% 4,000 6,779 7,948 Sm all & Medium - 16% 0 Consum er + 17% 4Q2007 4Q2008 (Non-GAAP) 10 Copyright 2009 - Trend Micro Inc.
Slide 11: Bookings (Amount of contracts concluded)
Bookings (Amount of contracts concluded) (in million Yen) 12,000 - 1% 11,000 10,654 10,574 10,000 9,699 4Q2007 9,000 4Q2008 8,000 7,661 7,000 - 44% 6,000 5,385 - 49% 5,000 3,907 4,000 3,066 - 52% 3,000 2,000 1,458 - 59% 1,000 872 353 0 Japan US Europe Asia Pacific Latin Am erica (Non-GAAP) * “Bookin
Slide 12: Local currency based Bookings (US, Europe)
Local currency based Bookings (US, Europe) US Bookings in $ and EMEA Bookings in € (unaudited) 4Q2007 4Q2007 4Q2008 4Q2008 ($ in thousands) (€ in thousands) 80,000 70,000 69,298 - 7% - 3% 70,000 64,362 60,000 57,359 55,587 60,000 50,000 50,000 40,000 40,000 30,000 30,000 20,000 20,000 10,000 10,000
Slide 13: Deferred Revenue
Deferred Revenue (unaudited) (in million Yen) * Total of current and long term 70,000 68,000 69,817 66,000 64,000 67,454 67,516 62,000 66,152 60,000 65,166 58,000 56,000 54,000 52,000 50,000 Dec-'07 Mar-'08 Jun-'08 Sep-'08 Dec-'08 (In accordance with Japan GAAP) 13 Copyright 2009 - Trend Micro Inc.
Slide 14: Deferred Revenue by Region
Deferred Revenue by Region (in million Yen) (unaudited) * Total of current and long term 35,000 31,523 2% 30,937 30,000 Sep-08 25,000 Dec-08 -13% 20,000 18,371 15,935 3% 15,000 11,990 12,359 10,000 -12% 5,000 4,928 4,326 -21% 1,289 1,021 0 Japan US Europe Asia Pacific Latin America (In accordance wi
Slide 15: Deferred Revenue by Region (constant currency)
Deferred Revenue by Region If currency exchange rates used as of the end of 3Q2008 were used as of the end of 4Q2008: (in million Yen) (unaudited) * ( ) : difference from GAAP base * Total of current and long term 35,000 2% 30,937 31,523 (0) 30,000 Sep-08 25,000 Dec-08 -1% 20,000 (+2,261) 18,371 18,
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 18,000 Administrative 1,116 1,021 16,00
Slide 17: Bookings vs Total costs
Bookings vs Total costs (in million Yen) (unaudited) Bookings Total Costs 32,000 30,000 31,954 28,000 29,769 26,000 24,000 24,302 22,000 23,667 20,000 21,680 18,000 18,385 16,000 17,912 17,552 17,266 16,699 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 * “Total co
Slide 18: Q4 Highlights
Q4 Highlights • Operating margins maintained at 31% despite tough economic environment 18 Copyright 2009 - Trend Micro Inc.
Slide 19: Q4 Lowlights
Q4 Lowlights • Weakness in bookings across all regions • Weak performance of Enterprise business 19 Copyright 2009 - Trend Micro Inc.
Slide 20: Headcount
Headcount Sep - 2008 Dec - 2008 3,918 4,120 ADM, ADM, Business Process Business Process Sales, Sales, 587 616 Marketing Marketing 1,050 + 202 1,087 Technical (+ 5%) Technical Support Support 1,222 Research, 1,309 Research, Development Development 1,059 1,108 20 Copyright 2009 - Trend Micro Inc.
Slide 21: Non-operating & Extra-ordinary Items
Non-operating & Extra-ordinary Items (unaudited) Other income Equity in gains Exchange loss Reversal of stock purchase warrant of affiliated companies Loss on sales Legal settlement Interest income 270 M 233M of marketable securities Impairment loss on marketable securities 12 M 20M 250M Other expen
Slide 22: Balance Sheet
Balance Sheet (unaudited) (in million Yen) Sep-2008 change Dec-2008 Assets Cash & cash equivalents 65,626 - 4,765 60,861 Account receivable (less allowance for doubtful accounts) 20,317 + 1,411 21,728 Marketable securities & Securities investments 60,513 - 1,098 59,415 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” : 2% # Exposure as a % of our “Cash + Ma
Slide 24: FY2008 Annual Financial Highlight
FY2008 Annual Financial Highlight （Full year ended December 31, 2008） 24 Copyright 2009 - Trend Micro Inc.
Slide 25: Consolidated Results (Annual)
Consolidated Results (Annual) Fiscal year (in million Yen) (unaudited) ended Dec 31, FY2007 FY2008 YoY growth Net sales 99,805 101,707 2% Cost of sales 17,220 15,748 - 9% Operating expenses 49,108 54,155 10% Operating income (Margin) 33,476 (34%) 31,803 (31%) - 5% Ordinary income 38,096 33,640 - 12%
Slide 26: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 40,000 39,102 36,531 + 7% 35,000 FY2007 + 5% FY2008 30,000 - 2% 26,191 25,033 24,350 25,000 23,891 20,000 15,000 - 10% 10,708 9,596 10,000 - 8% 5,000 3,182 2,925 0 Japan US Europe Asia Pacific Latin America (In accordance with Japan GAAP) 26 Co
Slide 27: Net Sales Growth by Region (constant currency)
Net Sales Growth by Region If currency exchange rates used for FY2007 were used for FY2008: (in million Yen) (unaudited) * ( ) : difference from GAAP base 40,000 39,102 + 7% 36,531 (0) + 19% 35,000 (+3,637) FY2007 29,829 + 4% FY2008 30,000 (+1,334) 25,033 25,225 25,000 24,350 20,000 - 1% (+1,007) 15
Slide 28: Bookings (Amount of contracts concluded)
Bookings (Amount of contracts concluded) (in million Yen) (unaudited) 50,000 + 2% 43,838 45,000 43,135 FY2007 40,000 FY2008 35,000 - 17% 30,000 28,586 27,652 23,865 - 26% 25,000 20,331 20,000 - 26% 15,000 12,003 8,892 10,000 - 20% 5,000 3,106 2,492 0 Japan US Europe Asia Pacific Latin America * “Boo
Slide 29: Local currency based Bookings (US, Europe)
Local currency based Bookings (US, Europe) US Bookings in $ and EMEA Bookings in € (unaudited) FY2007 FY2007 ($ in thousands) FY2008 (€ in thousands) FY2008 280,000 269,296 180,000 + 8% 166,353 - 5% 249,396 157,779 240,000 160,000 140,000 200,000 120,000 160,000 100,000 120,000 80,000 60,000 80,000
Slide 30: Sales by Segment
Sales by Segment (in million Yen) (unaudited) 110,000 100,000 YoY growth 90,000 31,816 32,449 80,000 All Corporate - 4% 70,000 Consumer + 19% 60,000 50,000 38,474 42,110 40,000 30,000 Large Enterprise + 2% 20,000 25,878 30,783 Sm all & Medium 10,000 - 9% 0 Consum er + 19% Ｆ Ｙ 2007 Ｆ Ｙ 2008 (Non-GAAP
Slide 31: Cost of sales & Operating expenses
Cost of sales & Operating expenses (excluding both stock option expenses and amortization of goodwill effects) (unaudited) (in million Yen) FY 2007 FY 2008 70,000 4,366 3,765 Cost of sales (old) * 7% 6% 60,000 2,657 3,376 Maintenance 5% 4% 9,070 50,000 9,277 Support 14% 14% Sales, Marketing 46% 47%
Slide 32: Trend Micro's Cash Dividend policy
Trend Micro’s Cash Dividend policy Dividend payout ratio for FY2008 : 60% (Year-end dividends on the basis of a dividend ratio of 60% excluding the effect of stock option compensation expenses) (standard base) Trend Micro’s Policy 60% X Net Income 60% X (Net Income + Stock Option Expense) Stock Opti
Slide 33: Cash Dividends for FY2008
Cash Dividends for FY2008 (unaudited) Dividends for FY2008 Stock Option Expense 2,258M Total : 12,956 Million Yen 60% 60% X (19,247M + 2,258M) 100% Per Share: 97 Yen (- 13% YoY) Net Income Payout ratio results: 67% 19,247M FY2007: 111 Yen per share * Subject to the approval at the Ordinary General M
Slide 34: Return for Shareholders in FY2008
Return for Shareholders in FY2008 (unaudited) 1. Dividends* : 12,956 Million Yen 2. Buyback (done) : 6,994 Million Yen Total : 19,951 Million Yen （+14％ YoY） （ 104% as Return based on Net Income in 2008） * Subject to the approval at the Ordinary General Meeting of Shareholders scheduled in Buyback la
Slide 35: Compensation for Shareholders
Compensation for Share holders (in million Yen) (unaudited) Dividends Buy back + 14% 20,000 Total compensation for shareholders growth rate + 139% - 2% 18,000 6,994 16,000 Total compensation per Net income ratio 2,533 6,809 14,000 12,000 10,000 + 20% 8,000 + 63% 14,992 12,956 6,000 11,158 1,466 + 90
Slide 36: Q1 forecast assumptions
Q1 forecast assumptions • Japan increases by low single digits, while US decreases by single digit and Europe decreases by double digits due to forex headwind • Stock option expenses will be 0.5Bn yen • Estimated exchange rate: 1USD = 90 yen ( last year: 104 yen) 1EUR = 115 yen ( last year: 157 yen)
Slide 37: Projection for 1Q2009
Projection for 1Q2009 (unaudited) For 1Q2009 Expected (in million Yen) Jan - Mar, 2009 YoY growth Net Sales 22,500 - 12% Operating Income 5,200 - 38% Ordinary Income 5,300 - 30% Net Income 3,200 - 30% (In accordance with Japan GAAP) • Including both stock option expenses and amortization of goodwill
Slide 38: Appendix
Appendix 38 Copyright 2009 - Trend Micro Inc.
Slide 39: 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 24,030 Co st o f sale s 4,298 4,241 4,276 4,403 4,054 3,859 4,188 3,646 O pe r at in g e xpe n se s 11,584 12,027 11,987 13,508 13,211 13,
Slide 40: 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 9,987 US 5,788 6,304 6,467 6,472 6,178 6,570 7,098 6,344 Europe 5,825 6,013 5,929 6,582 6,185 6,551 6,137 5,016 Asia Pacific 2,378 2,765
Slide 41: Thank You
Thank You 41 Copyright 2009 - Trend Micro Inc.