Slide 1: Trend Micro FY2014.4Q Results
Trend Micro FY2014.4Q Results Mahendra Negi CFO, Representative Director February 18, 2015 Copyright © 2015 Trend Micro Incorporated. All rights reserved. 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: FY2014. 4Q Financial Highlight
FY2014. 4Q Financial Highlight （Fourth quarter ended December 31, 2014） Copyright © 2015 Trend Micro Incorporated. All rights reserved.
Slide 4: Q4 Consolidated Results
Q4 Consolidated Results (in million Yen) Three months YoY ended Dec 31, 4Q2013 4Q2014 growth Net sales 28,428 31,264 + 10% Cost of sales 4,642 5,853 + 26% Operating expenses 16,122 16,390 + 2% Operating income (Margin) 7,663 （ 27%） 9,021 （29%） + 18% Ordinary income 8,713 9,487 + 9% Net income 4,656
Slide 5: Progress (12 months)
Progress （12 months） (in million Yen) Revenue Operating Income 140,000 40,000 (Progress of Forecast 103%) (Progress of Forecast 112%) 115,205 35,000 33,652 120,000 (Forecast 112,000) (Forecast 30,100) 108,314 30,000 100,000 29,450 83,941 24,630 25,000 80,000 79,885 21,786 20,000 60,000 16,056 55,325
Slide 6: Q4 USD based Results (Non-GAAP)
Q4 USD based Results (Non-GAAP) (unaudited) Three months (in thousand USD) ended Dec 31, 4Q2013 4Q2014 YoY change Net sales 282,562 272,339 - 4% Cost of sales 46,142 50,984 + 10% Operating expenses 160,246 142,770 - 11% Operating income 76,174 78,584 + 3% Ordinary income 86,604 82,645 - 5% Net Incom
Slide 7: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 14,000 13,511 + 7% 13,000 12,645 4Q2013 12,000 4Q2014 11,000 10,000 9,000 + 15% 8,000 + 8% 6,975 7,000 6,047 6,076 6,000 5,631 + 13% 5,000 3,864 4,000 3,416 3,000 + 22% 2,000 1,000 687 836 0 Japan North America Europe Asia Pacific Latin America
Slide 8: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) If currency exchange rates used for 4Q2013 were used for 4Q2014: (unaudited) 14,000 13,511 + 7% * ( ) : difference from GAAP base 13,000 12,645 (0) 12,000 4Q2013 11,000 4Q2014 10,000 + 1% 9,000 + 3% 8,000 (-859) (-266) 7,000 + 5% 6,047 6,116 5,631 5,809 (-
Slide 9: Decomposition of Revenue (vs. last year)
Decomposition of Revenue (vs. last year） Exchange impact (unaudited) North America + 1,432M Latin America 2014Ｑ4 Asia Pacific Europe + 68M Net + 117M Japan + 173M sales + 178M 31,264M + 865M 2013Ｑ4 Net sales 28,428M (Non-GAAP)
Slide 10: Constant currency Revenue growth
20 -5% 0% 5% 10% 15% 20% (YoY) 07 2 0 Q1 07 2 0 Q2 same period 07 2 0 Q3 07 2 0 Q4 08 2 0 Q1 08 2 0 Q2 08 2 0 Q3 08 2 0 Q4 09 2 0 Q1 09 2 0 Q2 09 2 0 Q3 09 2 0 Q4 10 2 0 Q1 10 2 0 Q2 10 2 0 Q3 10 2 0 Q4 11 2 0 Q1 11 2 0 Q2 11 2 0 Q3 11 2 0 Q4 12 2 0 Q1 12 2 0 Q2 12 2 0 Q3 12 2 0 Q4 13 2 0 Q1 13 2 0
Slide 11: Sales by Segment
(in million Yen) Sales by Segment (unaudited) 14,000 13,000 + 11% Growth rate (YoY) 12,000 + 8% Consumer 11,000 All Enterprise + 11% 10,000 7,292 9,000 8,000 7,000 2,284 - 1% - 4% 6,000 + 3% 376 5,000 + 25% + 9% 4,000 1,126 + 13% 3,000 6,219 5,700 4,691 + 13% 2,000 1,000 2,738 15 - 30% 0 820 + 23% J
Slide 12: Cloud related Gross sales
“Cloud related” Gross sales Gross Revenue JPY'M Deep Security / Hosted / CPVM / IDF 6,000 + 48% YoY 5,000 4,000 3,000 2,000 1,000 - 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 “Notice”
Slide 13: % share by region
% share by region 4Q2013 4Q2014 28,428 million Yen 31,264 million Yen Latin Latin Asia America Asia America Pacific Pacific 3% 2% 12% 12% Europe Japan Europe Japan 20% 44% 19% 43% North North America America 21% 22%
Slide 14: Pre-GAAP (Revenue before adjusting Deferred revenue)
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) (unaudited) - 2% 11,834 11,585 4Q2013 4Q2014 8,752 + 7% + 20% 8,172 7,113 5,906 + 14% 4,197 3,669 + 32% 766 1,008 Japan North America Europe Asia Pacific Latin America “Notice” (Non-GAAP) Pre-GAAP means Revenue bef
Slide 15: Pre-GAAP (Revenue before adjusting Deferred revenue)
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) If currency exchange rates used for 4Q2013 were used for 4Q2014: (unaudited) 11,834 11,585 - 2% 4Q2013 + 3% 4Q2014 8,172 8,381 + 6% 6,231 5,906 + 5% 3,867 3,669 + 27% 766 973 Japan North America Europe Asia Pacific
Slide 16: Net sales & Pre-GAAP growth trend
Net sales & Pre-GAAP growth trend (on a constant currency basis) 8% Net Sales 6% Pre-GAAP 6% 5% 5% 4% 4% 2% 2% 0% Total Enterprise Consumer -2% -4% -6% -5% • Each growth rate shown above is based on applying to each quarter the same currency rate as the previous year for the same period 16
Slide 17: Deferred Revenue
Deferred Revenue (in million Yen) (unaudited) 102,000 98,693 * Total of current and long term 98,000 94,973 94,631 94,396 94,000 92,859 90,000 88,904 88,360 87,381 86,000 83,751 82,000 78,000 74,000 70,000 66,000 62,000 58,000 54,000 50,000 Dec-'12 Mar-'13 Jun-'13 Sep-'13 Dec-'13 Mar-'14 Jun-'14 Sep
Slide 18: Deferred Revenue by Region
Deferred Revenue by Region (in million Yen) (unaudited) 60,000 * Total of current and long term 54,023 - 3% 55,000 52,303 50,000 Sep-14 45,000 Dec-14 40,000 35,000 30,000 + 11% + 20% 25,000 20,000 17,519 17,151 + 8% 15,818 14,326 15,000 9,995 + 12% 10,000 9,267 5,000 1,724 1,538 0 Japan North Americ
Slide 19: Deferred Revenue by Region
Deferred Revenue by Region If currency exchange rates used as of the end of 3Q2014 were used as of the end of 4Q2014: (in million Yen) (unaudited) 60,000 54,023 55,000 52,303 - 3% * ( ) : difference from GAAP base (0) Sep-14 50,000 * Total of current and long term Dec-14 45,000 40,000 35,000 + 1% +
Slide 20: Cost
Cost (unaudited) (in million Yen) Stock options / Acquisition related co sts Sala ry & Bene fit Offi ce overhe ad Outside se rvice 24,000 Admini stration Sell ing & Mar keting Goo ds / S oftware Amortiza tion & Capitalization 22,000 811 20,000 370 305 456 2,858 3,684 3,174 2,790 18,000 2,820 16,000
Slide 21: Pre-GAAP vs Total Costs
Pre-GAAPⅴs Total Costs (in million Yen) (unaudited) Pre-GAAP Total Costs Pre-GAAP Margin 36,000 40% 34,000 37% 32% 32,000 32% 35% 30,000 27% 28,000 27% 28% 30,348 29,567 30% 26,000 32,656 24,000 26,511 28,295 27,298 25% 22,000 20,000 18,000 20% 16,000 14,000 22,243 15% 12,000 20,764 20,688 10,000 20
Slide 22: Cash flows
Cash flows (unaudited) (in million Yen) 4Q2013 4Q2014 YoY growth Cash flows from operating activities 10,741 8,358 - 22% Cash flows from investing activities - 7,538 - 2,192 － Cash flows from financing activities 1,468 1,024 - 30% Effect of exchange rate changes 4,260 2,530 - 41% on cash and cash eq
Slide 23: Headcount
Headcount Sep - 2014 Dec - 2014 5,241 5,258 Admin, Admin, Business Process Business Process Sales, Marketing Sales, Marketing 806 808 Technical 1,545 Technical 1,576 Support Support 1,208 1,174 Research, Research, Development Development + 17 1,682 (+ 0%) 1,700 Latin 67 Latin 65 EMEA EMEA 579 588 Ja
Slide 24: Non-operating & Extra-ordinary Items
Non-operating & Extra-ordinary Items (unaudited) Exchange gain Loss on disposal of fixed assets Other income Equity in losses of affiliated companies Gain on sales of Interest expense Gain on change in equity marketable securities 44M 54M - 125M Gain on reversal of stock option Interest income 82M -
Slide 25: Balance Sheet
Balance Sheet (unaudited) (in million Yen) Sep-2014 change Dec-2014 Assets Cash & cash equivalents 54,086 + 9,023 63,109 Account receivable (less allowance for doubtful accounts) 22,046 + 4,025 26,071 Marketable securities & Securities investments 138,574 + 3,569 142,143 Liabilities Deferred revenue
Slide 26: Q4 Highlights
Q4 Highlights • Strongest ever quarter for strategic products drives enterprise sales • Highest ever operating profits (quarterly as well as annually) 26
Slide 27: Q4 Lowlights
Q4 Lowlights • Consumer business declines across the board • Strategic products sales in Japan below expectations 27
Slide 28: FY2014 12 months Financial Highlight
FY2014 12 months Financial Highlight （January ～ December, 2014） Copyright © 2015 Trend Micro Incorporated. All rights reserved.
Slide 29: Consolidated Results (12 months)
Consolidated Results (12 months) (in million Yen) 12 months YoY (Progress vs. current year’s ended Dec 31, 2013(Q1-Q4) 2014(Q1-Q4) growth annual forecast) Net sales 108,314 115,205 + 6% (103%) Cost of sales 19,378 20,430 + 5% Operating expenses 59,485 61,122 + 3% Operating income 29,450 33,652 + 14%
Slide 30: Net Sales Growth by Region
(in million Yen) Net Sales Growth by Region (unaudited) 60,000 + 5% FY2013 Q1-Q4 50,736 50,000 48,551 FY2014 Q1-Q4 40,000 + 6% + 11% 30,000 23,615 24,948 22,778 + 6% 20,571 20,000 13,760 12,925 + 13% 10,000 2,650 2,982 0 Japan North America Europe Asia Pacific Latin America 30
Slide 31: Net Sales Growth by Region
(in million Yen) Net Sales Growth by Region If currency exchange rates used for 2013（Q1-Q4） were used for 2014（Q1-Q4）: (unaudited) 60,000 + 5% * ( ) : difference from GAAP base FY2013 Q1-Q4 48,551 50,736 (0) FY2014 Q1-Q4 50,000 40,000 - 3% +2% (-1,944) (-1,738) 30,000 23,615 23,003 + 2% 20,571 21,03
Slide 32: Pre-GAAP (Revenue before adjusting Deferred revenue)
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) (unaudited) 52,175 + 3% FY2013 Q1-Q4 50,573 FY2014 Q1-Q4 + 7% + 8% 24,428 23,510 + 11% 22,768 21,738 14,384 + 23% 12,995 2,702 3,319 Japan North America Europe Asia Pacific Latin America “Notice” (Non-GAAP) Pre-GAA
Slide 33: Pre-GAAP (Revenue before adjusting Deferred revenue)
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) If currency exchange rates used for 2013(Q1-Q4) were used for 2014(Q1-Q4): + 3% 52,175 FY2013 Q1-Q4 50,573 FY2014 Q1-Q4 - 1% + 1% 21,882 + 6% 22,768 22,499 21,738 12,995 13,834 + 21% 2,702 3,272 Japan North America Europe Asia Paci
Slide 34: FY2014 Cost (12 months)
FY2014 Cost (12 months) (unaudited) (in million Yen) YoY Growth 90,000 Goods / Software & - 32% Capitalization 80,000 1,777 1,204 Selling & Marketing + 5% 12,154 70,000 11,610 Administration + 10% 60,000 11,454 12,556 7,244 Outside service - 0% 50,000 7,272 5,539 5,583 40,000 Office overhead + 1% 30
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 FY2013 FY2014 (Non-GAAP) •JPY net revenue amount for each fiscal year s
Slide 36: Cash Dividends for FY2014
Cash Dividends for FY2014 Policy for Ordinary dividend payout ratio : 70% (5% up from prior policy ) Dividends for FY2014 Total: 15,629 million Yen 100% Net Income Per share: 116 Yen 70% (Ordinary dividends: +22% YoY) 22,303M *FY2013:125 Yen per share (Ordinary:95 Yen & Special:30 Yen) * Subject to
Slide 37: Compensation for Share holders
Compensation for Share holders (in million Yen) Total compensation for shareholders growth rate (unaudited) Total compensation per Net income ratio 22,000 Dividends Buyback + 14% + 112% + 1% 20,000 + 139% - 2% 18,000 1,848 + 71% 3,344 2,533 6,994 16,000 6,809 - 36% 14,000 4,682 12,000 538 - 26% - 45
Slide 38: FY2015 annual forecast assumptions
FY2015 annual forecast assumptions •Japan increases by around 5% YoY, US also increases by around 10% YoY and Europe decreases by around 5% (due to stronger Yen) YoY, respectively •Non operating income will be around 2.4Bn yen and there will be no Extra-ordinary items •Estimated exchange rate: 1USD
Slide 39: Projection for FY2015 Annual
Projection for FY2015 Annual (unaudited) For FY2015 Expected (in million Yen) Jan - Dec, 2015 YoY growth Net Sales 123,100 + 7% Operating Income 34,200 + 2% Ordinary Income 36,600 + 2% Net Income 22,600 + 1% In case of excluding a foreign exchange impact (a rule of thumb) Net Sales + 4% (Non-GAAP)
Slide 40: Thank You
Thank You | i ,
Slide 41: Appendix: Quarterly Chart (1)
Appendix (unaudited) Quarterly Chart (1) (in million Yen) FY2013 FY2014 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ｎｅｔ s ale s 25,783 27,032 27,069 28,428 27,517 27,807 28,615 31,264 Co s t o f s ale s 5,048 4,796 4,890 4,642 4,622 4,682 5,272 5,853 O pe r at in g e x pe n s e s 13,396 15,804 14,161 16,122 13,958 16,0
Slide 42: Appendix: Quarterly Chart (2)
Appendix (unaudited) Quarterly Chart (2) (in million Yen) FY2013 FY2014 （ S ale s by r e g io n ） Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 J apan 11,742 11,966 12,196 12,645 11,934 12,232 13,058 13,511 US 5,480 6,085 6,001 6,047 5,998 5,939 6,034 6,975 Eu r o pe 4,779 5,022 5,138 5,631 5,632 5,594 5,474 6,076 A s ia