Slide 1: FY2010.4Q / Annual Results
Trend Micro FY2010.4Q / Annual Results Mahendra Negi COO/CFO, Representative Director February 17,2011
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: FY2010. 4Q Financial Highlight
FY2010. 4Q Financial Highlight （Fourth quarter ended December 31, 2010） 3 Copyright © 2011 Trend Micro Incorporated. All rights reserved.
Slide 4: Consolidated Results
Consolidated Results Three months (in million Yen) (unaudited) ended Dec 31, 4Q2009 4Q2010 YoY growth Net sales 24,339 24,218 - 0% Cost of sales 4,263 4,222 - 1% Operating expenses 12,595 13,697 + 9% Operating income (Margin) 7,479 (31%) 6,298 (26%) - 16% Ordinary income 7,640 6,023 - 21% Net income
Slide 5: USD based Results (Non-GAAP)
USD based Results (Non-GAAP) (unaudited) Three months (in thousand USD) ended Dec 31, 4Q2009 4Q2010 YoY change Net sales 271,277 292,923 8% Cost of sales 47,524 51,066 7% Operating expenses 140,384 165,672 18% Operating income 83,368 76,185 - 9% Ordinary income 85,156 72,856 - 14% Net Income 39,778
Slide 6: Vs. Projection analysis (Operating income)
Vs. Projection analysis（Operating income） (unaudited) Sales side Cost side + 319M + 518M •People cost ↑ •APAC ↑ 2010Ｑ4 Actual 2010Ｑ4 Projection 6,298M 6,100 M (Non-GAAP) 6 Copyright © 2011 Trend Micro Incorporated. All rights reserved.
Slide 7: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 12,000 11,100 + 12% 11,000 10,000 9,887 4Q2009 9,000 4Q2010 8,000 - 16% 7,000 6,084 - 11% 6,000 5,232 5,124 5,000 4,671 + 12% 4,000 3,000 2,684 2,390 - 14% 2,000 1,000 743 637 0 Japan North America Europe Asia Pacific Latin America (In accordan
Slide 8: Net Sales Growth by Region
Net Sales Growth by Region If currency exchange rates used for 4Q2009 were used for 4Q2010: (in million Yen) (unaudited) * ( ) : difference from GAAP base 12,000 11,100 + 12% 11,000 (0) 10,000 9,887 4Q2009 9,000 4Q2010 - 9% + 6% 8,000 (+851) (+434) 7,000 6,084 6,000 5,558 5,523 5,232 + 14% 5,000 (+4
Slide 9: Decomposition of Revenue (vs. last year)
Decomposition of Revenue (vs. last year） Europe North America (unaudited) Asia Pacific + 290M - 526M Latin America Japan + 340M - 76M Exchange + 1,212M impact - 1,360M 2009Ｑ4 Net 2010Ｑ4 sales Net sales 24,339M 24,218 M (Non-GAAP) 9 Copyright © 2011 Trend Micro Incorporated. All rights reserved.
Slide 10: Constant currency Revenue growth
Constant currency Revenue growth (YoY) (unaudited) 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 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 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 • Each growth rate shown above is based on applying to
Slide 11: Sales by Segment
Sales by Segment (in million Yen) 12,000 Growth rate 11,000 10,000 Consumer + 8% 9,000 All Enterprise - 4% 5,291 8,000 7,000 6,000 5,000 263 4,000 2,177 3,000 5,808 4,407 882 2,000 2,946 1,000 1,802 34 0 603 Japan North Europe APAC Latin America America (Non-GAAP) 11 Copyright © 2011 Trend Micro Inc
Slide 12: % share by region
% share by region (unaudited) 4Q2009 4Q2010 24,339 million Yen 24,218 million Yen Asia Latin Latin Pacific America Asia America Pacific 3% 10% 3% 11% Japan Japan Europe Europe 41% 46% 21% 19% North North America America 25% 21% (In accordance with Japan GAAP) 12 Copyright © 2011 Trend Micro Incorpor
Slide 13: Bookings (Amount of contracts concluded)
Bookings (Amount of contracts concluded) (in million Yen) (unaudited) + 2% 11,081 11,334 4Q2009 4Q2010 - 6% 7,111 - 24% 5,464 5,162 5,422 + 16% 2,994 2,585 - 23% 825 637 Japan North America Europe Asia Pacific Latin America (Non-GAAP) * Bookings = Net sales + Deferred revenue balance as of this Q –
Slide 14: Local currency based Bookings (US, Europe)
Local currency based Bookings (US, Europe) North America (*excluding Canada entity) Bookings in $ and EMEA Bookings in € (unaudited) 4Q2009 4Q2009 ($ in thousands) 4Q2010 (€ in thousands) 4Q2010 70,000 64,639 + 12% 60,000 53,735 54,131 + 1% 60,000 57,932 50,000 50,000 40,000 40,000 30,000 30,000 20,
Slide 15: Deferred Revenue
Deferred Revenue (in million Yen) (unaudited) 78,000 75,956 76,434 * Total of current and long term 73,940 75,102 74,000 73,562 71,751 70,832 70,000 69,707 65,166 66,000 62,000 58,000 54,000 50,000 Dec-'08 Mar-'09 Jun-'09 Sep-'09 Dec-'09 Mar-'10 Jun-'10 Sep-'10 Dec-'10 (In accordance with Japan GAAP
Slide 16: Deferred Revenue by Region
Deferred Revenue by Region (in million Yen) (unaudited) 50,000 1% * Total of current and long term 45,000 44,292 44,526 40,000 Sep-10 35,000 Dec-10 30,000 25,000 0% 20,000 7% 15,000 12,737 12,775 5% 10,564 11,315 10,000 6,270 6,580 0% 5,000 1,236 1,236 0 Japan North America Europe Asia Pacific Latin
Slide 17: Deferred Revenue by Region
Deferred Revenue by Region If currency exchange rates used as of the end of 3Q2010 were used as of the end of 4Q2010: (in million Yen) (unaudited) * ( ) : difference from GAAP base 50,000 1% (0) * Total of current and long term 45,000 44,292 44,526 40,000 Sep-10 35,000 Dec-10 30,000 25,000 2% (+229)
Slide 18: Cost
Cost (in million Yen) Stock options / Acquisition related costs Salary & Benefit Office overhead Outside service (unaudited) Administration Selling & Marketing 20,000 Goods / Softw are Amortization & Capitalization 18,000 383 545 498 611 252 16,000 3,966 3,998 3,542 3,575 3,973 14,000 2,492 2,429 2,
Slide 19: Bookings vs Total costs
Bookings vs Total costs (in million Yen) (unaudited) Bookings Total Costs 30,000 28,000 26,000 27,068 26,122 24,000 25,113 25,550 22,000 20,000 21,477 18,000 17,926 18,106 17,919 16,000 17,685 16,859 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 (Non-GAAP) * “Tota
Slide 20: Cash flows
Cash flows (unaudited) (in million Yen) 項目 4Q2009 4Q2010 YoY growth Cash flows from operating activities 6,687 8,367 + 25% Cash flows from investing activities - 14,785 - 3,725 － Cash flows from financing activities 167 9 - 94% Effect of exchange rate changes 744 - 267 － on cash and cash equivalents
Slide 21: Q4 Highlights
Q4 Highlights • US bookings grow double digits, mainly from strategic products • Global pipeline for virtualization / cloud security growing 21 Copyright © 2011 Trend Micro Incorporated. All rights reserved.
Slide 22: Q4 Lowlights
Q4 Lowlights • Pricing situation remains tough • Sales cycles remain long, especially for new technology • OEM deals yet to provide expected returns 22 Copyright © 2011 Trend Micro Incorporated. All rights reserved.
Slide 23: Headcount
Headcount Sep - 2010 Dec - 2010 4,831 4,846 ADM, ADM, Business Process Business Process Sales, Sales, Marketing 747 Marketing 746 Technical 1,335 + 15 Technical 1,304 Support (+ 0%) Support Research, 1,337 Research, 1,323 Development Development 1,458 1,427 23 Copyright © 2011 Trend Micro Incorporat
Slide 24: Non-operating & Extra-ordinary Items
Non-operating & Extra-ordinary Items Gain on sales of marketable securities (unaudited) unaudited) Other income Exchange loss Equity in gains of affiliated companies 2M 13M Interest income 14M 420M Other expense 330M Interest expense 213M Legal settlement 1M 1M Ordinary Income Operating income 6,023
Slide 25: Balance Sheet
Balance Sheet (unaudited) (in million Yen) Sep-2010 change Dec-2010 Assets Cash & cash equivalents 71,793 + 2,167 73,960 Account receivable (less allowance for doubtful accounts) 21,179 + 854 22,033 Marketable securities & Securities investments 57,938 + 2,145 60,083 Liabilities Deferred revenue (to
Slide 26: Snapshot of our CDO investments (Update)
Snapshot of our CDO investments （Update） # Exposure as a % of our “Marketable securities & Securities investments” : 2% # Exposure as a % of our “Cash + Marketable securities & Securities investments” : 1% (in million Yen) Ｂｅｇｉｎｎｉｎｇ Market value Current Maturity Name Vendor Write-down Unrealized P/L
Slide 27: Net unrealized loss on debt and equity securities (Euro MMF)
Net unrealized loss on debt and equity securities (Euro MMF) （*Update） # We have shown the loss of Euro MMF (due to Forex movement) in “Net unrealized loss on debt and equity securities” on our balance sheet # In case we sell these MMF and buy other securities for improving yield, we may have to pos
Slide 28: FY2010 Annual Financial Highlight
FY2010 Annual Financial Highlight （Full year ended December 31, 2010） 28 Copyright © 2011 Trend Micro Incorporated. All rights reserved.
Slide 29: Consolidated Results (Annual)
Consolidated Results (Annual) Fiscal year (in million Yen) (unaudited) ended Dec 31, FY2009 FY2010 YoY growth Net sales 96,346 95,391 - 1% Cost of sales 14,990 16,726 12% Operating expenses 51,218 54,912 7% Operating income (Margin) 30,137 (31%) 23,752 (25%) - 21% Ordinary income 31,714 23,835 - 25%
Slide 30: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 45,000 42,325 + 7% 39,740 FY2009 40,000 FY2010 35,000 - 10% 30,000 25,339 25,000 22,726 - 9% 20,174 20,000 18,258 + 13% 15,000 10,000 8,377 9,457 - 3% 5,000 2,716 2,623 0 Japan US Europe Asia Pacific Latin America (In accordance with Japan GAAP
Slide 31: Net Sales Growth by Region
Net Sales Growth by Region If currency exchange rates used for FY2009 were used for FY2010: (in million Yen) (unaudited) 45,000 42,325 + 7% * ( ) : difference from GAAP base 40,000 39,740 (0) FY2009 35,000 - 5% FY2010 (+1,465) 30,000 + 1% 25,000 25,33924,192 (+2,176) 20,435 20,000 20,174 + 11% (- 19
Slide 32: Decomposition of Revenue (vs. last year)
Decomposition of Revenue （vs. last year） Europe North America Asia Pacific + 260M (unaudited) - 1,146M Latin America Japan + 886M - 159M Exchange + 2,585M impact - 3,382M FY2009 Net FY2010 sales Net sales 96,346M 95,391 M (Non-GAAP) 32 Copyright © 2011 Trend Micro Incorporated. All rights reserved.
Slide 33: Bookings (Amount of contracts concluded)
Bookings (Amount of contracts concluded) (in million Yen) (unaudited) 50,000 46,916 48,152 + 3% 45,000 FY2009 40,000 FY2010 35,000 - 15% 30,000 25,000 24,242 - 20% 20,664 20,811 20,000 16,576 + 5% 15,000 10,000 9,787 10,300 - 14% 5,000 2,983 2,570 0 Japan US Europe Asia Pacific Latin America * “Book
Slide 34: Local currency based Bookings (US, Europe)
Local currency based Bookings (US, Europe) North America (*excluding Canada entity) Bookings in $ and EMEA Bookings in € (unaudited) FY2009 FY2010 FY2009 FY2010 280,000 180,000 253,874 250,377 - 1% 163,225 + 4% 160,000 157,197 240,000 140,000 200,000 120,000 160,000 100,000 120,000 80,000 60,000 80,
Slide 35: FY2010 Annual Sales by segment
FY2010 Annual Sales by segment (in million Yen) (unaudited) 45,000 Growth rate 40,000 35,000 Consumer + 5% 19,770 All Enterprise - 4% 30,000 25,000 20,000 10,456 807 15,000 10,000 22,555 17,450 2,738 12,269 5,000 144 6,718 0 2,479 Japan North Europe APAC Latin America America (Non-GAAP) 35 Copyright
Slide 36: FY2010 Annual Cost
FY2010 Annual Cost (unaudited) (in million Yen) YoY Growth 80,000 Goods / Software & Capitalization + 28% 70,000 2,039 Selling & Marketing + 25% 1,587 15,481 60,000 12,346 Administration + 8% 50,000 10,169 9,431 Outside service - 0% 40,000 7,570 7,550 5,185 5,042 Office overhead - 3% 30,000 Salary &
Slide 37: Constant currency Revenue transition (based on FY2005)
Constant currency Revenue transition (based on FY2005) (in million Yen) (unaudited) 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 •JPY net revenue amount for each fiscal year shown above is calculated using each foreign cur
Slide 38: Trend Micro's Cash Dividend policy
Trend Micro’s Cash Dividend policy Dividend payout ratio for FY2010 : 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 39: Cash Dividends for FY2010
Cash Dividends for FY2010 (unaudited) Dividends for FY2010 Stock Option Expense 2,680M Total : 9,347 Million Yen 60% ≒ 60% X (12,720M + 2,680M) 100% Per Share: 70 Yen (- 23% YoY) Net Income Payout ratio : 73% 12,720M FY2009: 91 Yen per share * Subject to the approval at the Ordinary General Meeting
Slide 40: Compensation for Share holders
Compensation for Share holders (in million Yen) (unaudited) Dividends Buyback 22,000 + 14% 20,000 Total compensation for shareholders growth rate + 139% - 2% 18,000 Total compensation per Net income ratio 6,994 16,000 2,533 6,809 - 36% 14,000 12,000 538 - 26% 10,000 + 20% 8,000 + 63% 14,992 11,158 1
Slide 41: Q1 forecast assumptions
Q1 forecast assumptions •Japan increases by around 10%, US and Europe decreases by around 10% respectively •Stock option expenses will be 0.7Bn yen •Estimated exchange rate: 1USD = 80 yen ( last year: 91 yen) 1EUR = 112 yen ( last year: 126 yen) 41 Copyright © 2011 Trend Micro Incorporated. All righ
Slide 42: Projection for 1Q2011
Projection for 1Q2011 (unaudited) For 1Q2011 Expected (in million Yen) Jan - Mar, 2011 YoY growth Net Sales 23,500 - 1% Operating Income 5,900 - 2% Ordinary Income 6,000 - 3% Net Income 3,300 - 6% (In accordance with Japan GAAP) • Including both stock option expenses and amortization of goodwill （ab
Slide 43: Thank you!
Thank you! 43 Copyright © 2011 Trend Micro Incorporated. All rights reserved.
Slide 44: Appendix: Quarterly Chart (1)
Appendix (unaudited) Quarterly Chart (1) (in million Yen) FY2009 FY2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ｎｅｔ sale s 22,915 24,244 24,848 24,339 23,728 23,493 23,950 24,218 Co st o f sale s 3,597 3,511 3,618 4,263 4,032 4,025 4,446 4,222 O pe r at in g e xpe n se s 12,289 13,503 12,829 12,595 13,653 13,900 13
Slide 45: Appendix: Quarterly Chart (2)
Appendix Quarterly Chart (2) (unaudited) (in million Yen) FY2009 FY2010 （ S ale s by r e gio n ） Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Japan 9,784 9,631 10,435 9,887 9,782 9,990 11,451 11,100 US 5,953 6,729 6,571 6,084 5,999 6,118 5,485 5,124 Eu r o pe 4,748 5,100 5,092 5,232 5,005 4,408 4,173 4,671 Asia P ac ifi