Slide 1: FY2006 1Q Results
Trend Micro FY2006. 1Q Results Mahendra Negi COO / CFO , Representative Director April 25, 2006 TRENDMICRO AppletTrap eDoctor INTERSCAN VIRUSWALL Trend Virus Control System VSAPI eManager PC-cillin Interscan eManager MacroTrap ISVW TVCS InterScan On-Line Scan GateLock ISWM InterScanWebManager InterS
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: Consolidated Results
Consolidated Results (unaudited) Three months (in million Yen) ended Mar 31, 1Q2005 1Q2006 YoY growth Net sales 17,301 20,594 19% Cost of sales 2,410 3,679 53% Operating expenses 7,590 8,569 13% Operating income (Margin) 7,301 (42%) 8,346 (41%) 14% Income before taxes 7,550 8,694 15% Net Income 4,55
Slide 4: USD based Results (Non-GAAP)
USD based Results (Non-GAAP) (unaudited) Three months (in thousand USD) ended Mar 31, 1Q2005 1Q2006 YoY change Net sales 165,414 179,645 9% Cost of sales 23,037 32,095 39% Operating expenses 72,568 74,749 3% Operating income 69,809 72,801 4% Income before taxes 72,191 75,839 5% Net Income 43,566 43,
Slide 5: Net Sales Growth by Region
Net Sales Growth by Region (unaudited) (in million Yen) 9,000 8,237 + 12% 8,000 7,366 1Q2005 7,000 1Q2006 6,000 + 12% + 39% 5,000 4,720 4,830 4,314 4,000 3,401 + 24% 3,000 2,166 2,000 1,748 36% 1,000 641 472 0 Japan US Europe Asia Pacific Latin America (In accordance with US GAAP) Copyright © 2006 T
Slide 6: Net Sales Growth by Region (constant currency)
Net Sales Growth by Region If currency exchange rates used for 1Q2005 were used for 1Q2006: (unaudited) (in million Yen) * ( ) : difference from GAAP base 9,000 8,237 + 12% 8,000 (0) 7,366 1Q2005 7,000 1Q2006 6,000 + 27% + 9% (-414) 4,710 (-120) 5,000 4,306 4,314 4,000 3,401 + 13% 3,000 (-185) 1,981
Slide 7: Q1 Highlights
Q1 Highlights z Strong growth in US continues z Growth in all regions and segments z Services business contributing to deferred revenue growth Copyright © 2006 Trend Micro Incorporated. All Rights Reserved. 7
Slide 8: Q1 Lowlights
Q1 Lowlights z Cost of CRM / ERP deployment higher than expected z People cost growing faster than expected Copyright © 2006 Trend Micro Incorporated. All Rights Reserved. 8
Slide 9: % share by region
% share by region (unaudited) 1Q2005 1Q2006 17,300 million Yen 20,594 million Yen Latin Latin Asia America Asia America Pacific 3% Pacific 3% 10% 11% Japan Japan Europe 42% Europe 40% 25% 23% US US 20% 23% (In accordance with US GAAP) Copyright © 2006 Trend Micro Incorporated. All Rights Reserved. 9
Slide 10: Sales by Segment
Sales by Segment (unaudited) (in million Yen) 1Q2005 1Q2006 20,000 Large Enterprise 28% 26% 5,347 16,000 4,783 Small & Medium 46% 47% 12,000 Consumer 26% 27% 9,677 8,000 7,999 Total 100% 100% 4,000 4,519 5,570 * 1Q2005 shown above is just for reference purposes to compare with this year. 0 1Q2005 1Q
Slide 11: Cost of sales & Operating expenses
Cost of sales & Operating expenses (excluding stock option expenses effects) (in million Yen) (unaudited) 14,000 Cost of sales (old) Maintenance Support 893 12,000 Sales, Marketing 768 R&D 610 564 712 ADM 322 640 10,000 412 1,981 1,809 581 1,735 373 1,687 8,000 1,456 5,723 5,533 5,951 6,000 5,073 4,
Slide 12: Headcount
Headcount Dec - 2005 - 2006 2,982 2,992 ADM, ADM, Business Process Business Process Sales, Sales, 494 Marketing 495 Marketing 828 847 + 10 Technical (+ 0%) Technical Support Support Research, Research, 860 Development 835 Development 800 815 Copyright © 2006 Trend Micro Incorporated. All Rights Rese
Slide 13: Non-operating Items
Non-operating Items (unaudited) Gain on sales of marketable securities Interest expense 3M Exchange loss Interest income 107 M 111 M Other expense 1M 357 M Income before taxes Operating income 8,694M 8,346 M (In accordance with US GAAP) Copyright © 2006 Trend Micro Incorporated. All Rights Reserved.
Slide 14: Deferred Revenue
Deferred Revenue (unaudited) (in million Yen) 40,000 35,000 37,912 35,381 30,000 31,250 28,949 29,666 25,000 20,000 15,000 10,000 5,000 0 Mar-'05 Jun-'05 Sep-'05 Dec-'05 Mar-'06 * Total of current and long term (In accordance with US GAAP) Copyright © 2006 Trend Micro Incorporated. All Rights Reserv
Slide 15: Deferred Revenue by Region
Deferred Revenue by Region (unaudited) (in million Yen) 16,000 15,125 + 8% * Total of current and long term 13,972 14,000 Dec-05 12,000 + 10% + 3% Mar-06 10,000 9,377 8,387 9,267 9,068 8,000 6,000 + 2% 4,000 2,766 2,819 + 11% 2,000 1,1891,324 0 Japan US Europe Asia Pacific Latin America (In accordan
Slide 16: Deferred Revenue by Region (constant currency)
Deferred Revenue by Region If currency exchange rates used as of the end of 4Q2005 were used as of the end of 1Q2006: (unaudited) (in million Yen) * ( ) : difference from GAAP base 16,000 15,125 + 8% * Total of current and long term 14,000 13,972 (0) 12,000 Dec-05 + 11% 10,000 + 1% Mar-06 9,314 9,06
Slide 17: Balance Sheet
Balance Sheet (unaudited) (in million Yen) Dec-2005 change Mar-2006 Assets Cash & cash equivalents 59,613 + 2,627 62,240 Account receivable (less allowance for doubtful accounts 19,199 -1,558 17,641 and sales returns) Marketable securities & Securities investments 33,555 + 2,159 35,714 Liabilities D
Slide 18: Q2 forecast assumptions
Q2 forecast assumptions z US growth higher than company average, Japan and EMEA at company average z SMB segment growth to be higher than average, Enterprise and Consumer at company average z Stock option expenses will be about 1.38Bn yen z Estimated exchange rate: 1USD = 117yen 1EUR = 143yen Copyri
Slide 19: Projection for 2Q2006
Projection for 2Q2006 (unaudited) For 2Q2006 Expected (in million Yen) Apr - Jun, 2006 YoY growth Net Sales 20,000 16% Operating Income 6,000 10% Net Income 3,250 -17% * Including stock option expense about 1,380M Yen (In accordance with US GAAP) If stock option expenses are not included Net Sales 2
Slide 20: Thank you!
Thank you! Copyright © 2006 Trend Micro Incorporated. All Rights Reserved. 20
Slide 21: Appendix: Quarterly Chart
Appendix Quarterly Chart FY2005 FY2006 (in million Yen) 1Q 2Q 3Q 4Q 1Q sales 17,301 17,189 17,975 20,565 20,594 (unaudited) Cost of sales 2,410 2,667 2,739 3,312 3,679 Operating expenses 7,590 9,052 8,374 9,314 8,569 Operating incom e 7,301 5,470 6,862 7,939 8,346 Net incom e 4,557 3,934 4,385 5,795