Slide 1: Trend Micro FY2012.4Q Results
Trend Micro FY2012.4Q Results Mahendra Negi COO/CFO, Representative Director February 14, 2013 Confidential | Copyright 2012 Trend Micro Inc. 1
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: FY2012. 4Q Financial Highlight
FY2012. 4Q Financial Highlight （Forth quarter ended December 31, 2012） Confidential | Copyright 2012 Trend Micro Inc. 3
Slide 4: Consolidated Results
Consolidated Results Three months (in million Yen) (unaudited) ended Dec 31, 4Q2011 4Q2012 YoY growth Net sales 24,064 24,313 + 1% Cost of sales 4,519 4,574 + 1% Operating expenses 13,237 13,943 + 5% Operating income (Margin) 6,306 (26%) 5,795 (24%) - 8% Ordinary income 6,850 5,579 - 19% Net income
Slide 5: USD based Results (Non-GAAP)
USD based Results (Non-GAAP) (unaudited) Three months (in thousand USD) ended Dec 31, 4Q2011 4Q2012 YoY change Net sales 311,106 298,944 - 4% Cost of sales 58,425 56,249 - 4% Operating expenses 171,143 171,438 + 0% Operating income 81,536 71,257 - 13% Ordinary income 88,569 68,606 - 23% Net Income 5
Slide 6: Vs. Projection analysis (Operating income)
Vs. Projection analysis（Operating income） Cost side Sales side - 182M + 213M •People cost ↑ •Stock option cost ↓ •US ↑ 2012Ｑ4 •Outside service ↓ •EMEA ↑ Actual 2012Ｑ4 •Latin ↓ Projection 5,795 M 5,400 M (Non-GAAP) Confidential | Copyright 2012 Trend Micro Inc. 6 6
Slide 7: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 13,000 - 3% 12,000 12,028 11,656 11,000 4Q2011 10,000 4Q2012 9,000 8,000 7,000 + 4% + 3% 6,000 5,000 4,803 4,975 4,151 4,282 + 13% 4,000 3,000 2,864 - 1% 2,540 2,000 1,000 540 534 0 Japan North America Europe Asia Pacific Latin America (In acco
Slide 8: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) If currency exchange rates used for 4Q2011 were used for 4Q2012: (unaudited) 13,000 * ( ) : difference from GAAP base 12,000 12,028 11,656 - 3% 11,000 (0) 4Q2011 10,000 4Q2012 9,000 - 1% 8,000 (-243) + 2% 7,000 (-59) + 4% 6,000 (-213) 5,000 4,803 4,731 4,1
Slide 9: Decomposition of Revenue (vs. last year)
Decomposition of Revenue (vs. last year） (unaudited) Exchange impact Europe Japan Asia Pacific + 70M + 111M + 518M - 372M North America Latin America - 71M 2012Ｑ4 - 7M 2011Ｑ4 Net sales Net sales 24,313 M 24,064M (Non-GAAP) Confidential | Copyright 2012 Trend Micro Inc. 9
Slide 10: Constant currency Revenue growth
Constant currency Revenue growth (YoY) (unaudited) 20% 15% 10% 5% 0% 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20
Slide 11: Sales by Segment
Sales by Segment (in million Yen) 13,000 12,000 Growth rate 11,000 Consumer + 3% 10,000 All Enterprise + 0% 9,000 5,775 8,000 7,000 6,000 5,000 4,000 2,196 300 3,000 5,881 3,981 893 2,000 2,779 1,000 1,971 12 0 521 Japan North Europe APAC Latin America America (Non-GAAP) Confidential | Copyright 201
Slide 12: % share by region
% share by region (unaudited) 4Q2011 4Q2012 24,064 million Yen 24,313 million Yen Latin America Latin Asia Asia America Pacific 2% Pacific 2% 11% 12% Europe Japan Europe 17% Japan 50% 18% 48% North America North 20% America 20% (In accordance with Japan GAAP) Confidential | Copyright 2012 Trend Micr
Slide 13: For reference: Pre-GAAP
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) (unaudited) + 2% 11,648 11,893 4Q2011 4Q2012 - 9% - 1% 6,166 5,591 5,103 5,045 + 9% 2,994 2,744 + 1% 583 587 Japan North America Europe Asia Pacific Latin America (Non-GAAP) “Notice” Pre-GAAP means Revenue before a
Slide 14: For reference: Pre-GAAP
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) If currency exchange rates used for 4Q2011 were used for 4Q2012: (unaudited) (in million Yen) 11,648 11,893 + 2% 4Q2011 4Q2012 - 12% - 6% 6,166 5,399 5,103 4,777 + 0% 2,744 2,749 - 0% 583 580 Japan North America Europe Asia Pacific
Slide 15: Deferred Revenue
Deferred Revenue (in million Yen) (unaudited) 86,000 * Total of current and long term 83,751 82,000 79,744 78,832 78,547 78,000 76,434 77,928 77,771 74,599 75,456 74,000 70,000 66,000 62,000 58,000 54,000 50,000 Dec-'10 Mar-'11 Jun-'11 Sep-'11 Dec-'11 Mar-'12 Jun-'12 Sep-'12 Dec-'12 (In accordance w
Slide 16: Deferred Revenue by Region
Deferred Revenue by Region (in million Yen) (unaudited) 55,000 0% * Total of current and long term 50,000 48,766 48,893 45,000 Sep-12 40,000 Dec-12 35,000 30,000 25,000 11% 27% 20,000 15,000 13,636 12,238 12,154 13% 10,000 9,571 6,957 7,889 16% 5,000 1,014 1,176 0 Japan North America Europe Asia Pac
Slide 17: Deferred Revenue by Region
Deferred Revenue by Region If currency exchange rates used as of the end of 3Q2012 were used as of the end of 4Q2012: (in million Yen) (unaudited) 55,000 0% * ( ) : difference from GAAP base * Total of current and long term 50,000 48,766 48,893 (0) 45,000 Sep-12 40,000 Dec-12 35,000 30,000 25,000 0%
Slide 18: Cost
Cost (in million Yen) (unaudited) Stock options / Acquisition related costs Salary & Benefit Office overhead Outside service 20,000 Administration Selling & Marketing Goods / Softw are Amortization & Capitalization 18,000 528 828 1,004 562 610 3,137 16,000 3,051 3,051 3,056 2,779 14,000 2,700 2,768
Slide 19: Pre-GAAP vs Total Costs
Pre-GAAPⅴs Total Costs (未監査) (in million Yen) Pre-GAAP Total Costs Pre-GAAP Margin 28,000 35% 32% 26,000 31% 29% 24,000 30% 26,246 26% 22,000 24,730 26,112 24% 20,000 24,430 25% 18,000 23,304 16,000 20% 14,000 12,000 15% 10,000 17,757 18,124 17,728 18,517 17,061 8,000 10% 6,000 4,000 5% 2,000 0 0% 2
Slide 20: Cash flows
Cash flows (unaudited) (in million Yen) 項目 4Q2011 4Q2012 YoY growth Cash flows from operating activities 10,113 9,398 - 7% Cash flows from investing activities 1,678 - 19,060 － Cash flows from financing activities 16 - 176 － Effect of exchange rate changes on cash and cash equivalents - 32 4,678 － N
Slide 21: Q4 Highlights
Q4 Highlights • Good growth in Japan consumer business • Continued growth of strategic products Confidential | Copyright 2012 Trend Micro Inc. 21
Slide 22: Q4 Lowlights
Q4 Lowlights • Consumer business in US remains weak • Weak performance in Europe • Sales cycle for strategic products remains long Confidential | Copyright 2012 Trend Micro Inc. 22
Slide 23: Headcount
Headcount Sep - 2012 Dec - 2012 5,080 5,137 ADM, ADM, Business Process Sales, Business Process Sales, 806 Marketing 818 Marketing Technical 1,347 + 57 Technical 1,352 Support (+ 1%) Support 1,331 Research, Research, Development 1,345 Development 1,596 1,622 Confidential | Copyright 2012 Trend Micro
Slide 24: Non-operating & Extra-ordinary Items
Non-operating & Extra-ordinary Items (unaudited) Exchange loss Other income Gain on reversal of stock option Interest income Other expense 54M Impairment loss 315M -396M Devaluation loss on marketable securities Equity in losses of 459M -159M affiliated companies -780M -25M -2M Loss on sales of mark
Slide 25: Balance Sheet
Balance Sheet (unaudited) (in million Yen) Sep-2012 change Dec-2012 Assets Cash & cash equivalents 58,661 - 3,929 54,732 Account receivable (less allowance for doubtful accounts) 19,204 + 1,691 20,895 Marketable securities & Securities investments 80,138 + 19,264 99,402 Liabilities Deferred revenue
Slide 26: FY2012 Annual Financial Highlight
FY2012 Annual Financial Highlight （Full year ended December 31, 2012） Confidential | Copyright 2012 Trend Micro Inc. 26
Slide 27: Consolidated Results (Annual)
Consolidated Results (Annual) Fiscal year (in million Yen) (unaudited) ended Dec 31, FY2011 FY2012 YoY growth Net sales 96,392 93,839 - 3% Cost of sales 17,895 17,511 - 2% Operating expenses 52,132 53,920 + 3% Operating income (Margin) 26,364 (27%) 22,407 ( 24%) - 15% Ordinary income 28,690 22,661 -
Slide 28: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 50,000 46,070 45,803 - 1% 45,000 FY2011 40,000 FY2012 35,000 30,000 - 8% - 4% 25,000 20,452 18,869 20,000 17,147 16,396 + 3% 15,000 10,329 10,676 10,000 - 12% 5,000 2,391 2,093 0 Japan US Europe Asia Pacific Latin America (In accordance with Ja
Slide 29: Net Sales Growth by Region
Net Sales Growth by Region If currency exchange rates used for FY2011 were used for FY2012: (in million Yen) (unaudited) 50,000 - 1% * ( ) : difference from GAAP base 46,070 45,803 (0) 45,000 FY2011 40,000 FY2012 35,000 - 8% + 3% (-11) (+1,306) 30,000 25,000 20,452 18,857 + 3% 20,000 17,147 17,702 (
Slide 30: Decomposition of Revenue (vs. last year)
Decomposition of Revenue （vs. last year） (unaudited) Asia Pacific North America Europe + 307M Japan + 554M - 1,595M Latin America Exchange - 267M impact - 59M - 1,494M FY2011 Net FY2012 sales Net sales 96,392M 93,839 M (Non-GAAP) 30
Slide 31: For reference: Pre-GAAP
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) (unaudited) 50,104 + 9% 46,040 FY2011 FY2012 - 10% - 9% 21,052 18,896 18,372 16,774 - 5% 11,133 10,616 - 5% 2,305 2,185 Japan US Europe Asia Pacific Latin America (Non-GAAP) “Notice” Pre-GAAP means Revenue before a
Slide 32: For reference: Pre-GAAP
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) If currency exchange rates used for FY2011 were used for FY2012: (in million Yen) (unaudited) + 9% 50,104 FY2011 46,040 FY2012 - 11% - 3% 21,052 18,760 18,372 17,805 - 6% 11,133 10,491 + 5% 2,305 2,419 Japan North America Europe As
Slide 33: FY2012 Annual Sales by segment
FY2012 Annual Sales by segment (in million Yen) (unaudited) 50,000 Growth rate 45,000 Consumer - 4% 40,000 All Enterprise - 2% 35,000 22,485 30,000 25,000 20,000 15,000 7,935 1,070 10,000 23,318 15,326 3,388 5,000 10,934 7,287 35 0 2,058 Japan North Europe APAC Latin America America (Non-GAAP) 33
Slide 34: FY2012 Annual Cost
FY2012 Annual Cost (in million Yen) (unaudited) 80,000 YoY Growth Goods / Software & - 7% 70,000 2,705 Capitalization 2,907 Selling & Marketing - 2% 12,020 60,000 12,277 Administration + 1% 9,848 50,000 9,764 + 2% Outside service 6,821 6,712 40,000 5,169 4,980 - 4% Office overhead 30,000 Salary & Be
Slide 35: Constant currency Revenue transition (based on FY2005)
Constant currency Revenue transition (based on FY2005) (in million Yen) (unaudited) 120,000 110,000 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 (Non-GAAP) •JPY net revenue amount for each fiscal year shown above is
Slide 36: Cash Dividends for FY2012
Cash Dividends for FY2012 Policy for Dividend payout ratio : 65% (unaudited) Dividends for FY2012 Total : 8,814 Million Yen 65% 100% Per Share: 67 Yen (- 22% YoY) Net Income 13,447M FY2011: 86 Yen per share * Subject to the approval at the Ordinary General Meeting of Shareholders scheduled in late M
Slide 37: Compensation for Share holders
Compensation for Share holders (in million Yen) (unaudited) Total compensation for shareholders growth rate Total compensation per Net income ratio Dividend Buyback 22,000 + 14% 20,000 + 139% - 2% 18,000 + 71% 2,533 6,994 16,000 6,809 - 36% 14,000 4,682 12,000 538 10,000 - 26% - 45% 8,000 + 20% 14,9
Slide 38: Q1 forecast assumptions
Q1 forecast assumptions •Japan is flat YoY, US and Europe increase by around 15% YoY respectively •Stock option related expenses will be 0.6Bn yen •Estimated exchange rate: 1USD = 90 yen ( last year: 79 yen) 1EUR = 120 yen ( last year: 104 yen) Confidential | Copyright 2012 Trend Micro Inc. 38
Slide 39: Projection for 1Q2013
Projection for 1Q2013 (unaudited) For 1Q2013 Expected (in million Yen) Jan - Mar, 2013 YoY growth Net Sales 24,700 + 9% Operating Income 5,600 + 1% Ordinary Income 5,900 + 2% Net Income 3,400 + 4% (In accordance with Japan GAAP) In case of excluding a foreign exchange impact (a rule of thumb) Net Sa
Slide 40: Thank you!
Thank you! Confidential | Copyright 2012 Trend Micro Inc. 40
Slide 41: Appendix: Quarterly Chart (1)
Appendix (unaudited) Quarterly Chart (1) (in million Yen) FY2011 FY2012 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ｎｅｔ sale s 23,980 24,333 24,015 24,064 22,630 23,058 23,836 24,313 Co st o f sale s 4,412 4,343 4,620 4,519 4,058 4,488 4,390 4,574 O pe r atin g e xpe n se s 13,046 13,334 12,513 13,237 13,003 13,636 13,
Slide 42: Appendix: Quarterly Chart (2)
Appendix Quarterly Chart (2) (unaudited) (in million Yen) FY2011 FY2012 （ S ale s by r e gio n ） Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Japan 11,023 11,296 11,722 12,028 10,874 11,162 12,109 11,656 US 5,315 5,365 4,968 4,803 4,369 4,758 4,765 4,975 Eu r o pe 4,435 4,354 4,206 4,151 4,193 4,003 3,916 4,282 Asia P a