Slide 1: Trend Micro FY2014.1Q Results
Trend Micro FY2014.1Q Results Mahendra Negi CFO, Representative Director May 13, 2014 Copyright © 2014 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. 1Q Financial Highlight
FY2014. 1Q Financial Highlight （First quarter ended March 31, 2014） Copyright © 2014 Trend Micro Incorporated. All rights reserved.
Slide 4: Q1 Consolidated Results
Q1 Consolidated Results (in million Yen) Three months YoY ended Mar 31, 1Q2013 1Q2014 growth Net sales 25,783 27,517 + 7% Cost of sales 5,048 4,622 - 8% Operating expenses 13,396 13,958 + 4% Operating income (Margin) 7,338 （ 28%） 8,937（ 32%） + 22% Ordinary income 7,646 9,686 + 27% Net income 4,820 6
Slide 5: Progress (3 months)
Progress （3 months） (in million Yen) Revenue Operating Income 120,000 (Forecast) 112,000 35,000 (Forecast) 30,100 108,314 30,000 100,000 29,450 25,000 80,000 79,885 21,786 20,000 60,000 (Progress of 52,815 (Progress of Forecast: 25%) 15,000 Forecast 30%) 13,769 40,000 27,517 10,000 8,937 (Progress o
Slide 6: Q1 USD based Results (Non-GAAP)
Q1 USD based Results (Non-GAAP) (unaudited) Three months (in thousand USD) ended Mar 31, 1Q2013 1Q2014 YoY change Net sales 278,829 267,755 - 4% Cost of sales 54,594 44,975 - 18% Operating expenses 144,872 135,818 - 6% Operating income 79,362 86,961 + 10% Ordinary income 82,694 94,250 + 14% Net Inco
Slide 7: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 13,000 12,000 11,742 11,934 + 2% 1Q2013 11,000 1Q2014 10,000 9,000 8,000 + 9% + 18% 7,000 5,998 5,632 6,000 5,480 5,000 4,779 + 5% 4,000 3,143 3,288 3,000 + 4% 2,000 1,000 637 662 0 Japan North America Europe Asia Pacific Latin America
Slide 8: Net Sales Growth by Region (constant currency)
Net Sales Growth by Region (in million Yen) If currency exchange rates used for 1Q2013 were used for 1Q2014: (unaudited) 13,000 11,934 + 2% * ( ) : difference from GAAP base 12,000 11,742 (0) 11,000 1Q2013 10,000 1Q2014 9,000 - 1% +2% 8,000 (-598) (-758) 7,000 + 3% 6,000 5,480 5,400 5,000 4,779 4,87
Slide 9: Decomposition of Revenue (vs. last year)
Decomposition of Revenue (vs. last year） (unaudited) Exchange impact North America Latin America + 1,407M Asia Pacific + 29M - 79M 2014Ｑ1 Europe + 89M Japan + 94M Net sales + 192M 27,517M 2013Ｑ1 Net sales 25,783M (Non-GAAP)
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 1 2 3 4 1 Q Q Q Q Q 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 13 13 13 13 14 20 20 20 20 20 20 20 20 20 2
Slide 11: Sales by Segment
(in million Yen) Sales by Segment 13,000 12,000 - 1% Growth rate (YoY) 11,000 Consumer - 0% 10,000 All Enterprise + 11% 9,000 5,686 8,000 7,000 6,000 + 4% + 0% 383 + 26% 5,000 2,368 4,000 + 17% - 3% 3,000 6,247 5,248 921 + 16% 2,000 3,630 1,000 2,366 + 8% 23 + 0% + 4% 0 638 Japan North America Europ
Slide 12: Cloud related Gross sales
“Cloud related” Gross sales Gross Revenue JPY'M Deep Security / Hosted / CPVM / IDF 3,500 3,000 + 27% YoY 2,500 2,000 1,500 1,000 500 - 2010 Q1 2010 Q2 2010 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 “Notice” As above numbers ar
Slide 13: % share by region
% share by region 1Q2013 1Q2014 25,783 million Yen 27,517 million Yen Latin Latin Asia America Asia America Pacific Pacific 2% 2% 12% 12% Europe Japan Europe Japan 19% 46% 20% 43% North North America America 21% 22%
Slide 14: For reference: Pre-GAAP
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) (unaudited) 14,865 + 14% 1Q2013 13,004 1Q2014 + 3% + 10% 5,877 + 9% 5,694 4,875 4,434 3,016 3,273 + 8% 625 675 Japan North America Europe Asia Pacific Latin America “Notice” (Non-GAAP) Pre-GAAP means Revenue before
Slide 15: For reference: Pre-GAAP (constant currency)
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) If currency exchange rates used for 1Q2013 were used for 1Q2014: (unaudited) 14,865 + 14% 1Q2013 13,004 1Q2014 - 6% 5,694 5,324 - 4% + 8% 4,434 4,235 3,258 3,016 + 11% 625 694 Japan North America Europe Asia Pacifi
Slide 16: Deferred Revenue
Deferred Revenue (in million Yen) 98,000 94,631 * Total of current and long term 92,859 94,000 90,000 88,904 88,360 87,381 86,000 83,751 82,000 79,744 78,832 78,547 78,000 74,000 70,000 66,000 62,000 58,000 54,000 50,000 Mar-'12 Jun-'12 Sep-'12 Dec-'12 Mar-'13 Jun-'13 Sep-'13 Dec-'13 Mar-'14
Slide 17: Deferred Revenue by Region
Deferred Revenue by Region (in million Yen) (unaudited) 60,000 + 6% * Total of current and long term 55,000 53,579 50,777 50,000 Dec-13 45,000 Mar-14 40,000 35,000 30,000 - 3% - 4% 25,000 20,000 15,779 15,340 16,140 15,570 - 0% 15,000 8,753 + 1% 10,000 8,792 5,000 1,369 1,386 0 Japan North America E
Slide 18: Deferred Revenue by Region (constant currency)
Deferred Revenue by Region If currency exchange rates used as of the end of 4Q2013 were used as of the end of 1Q2014: (in million Yen) (unaudited) 60,000 55,000 53,579 + 6% 50,777 (0) * ( ) : difference from GAAP base Dec-13 50,000 * Total of current and long term Mar-14 45,000 40,000 35,000 - 1% -
Slide 19: Cost
Cost (unaudited) (in million Yen) Stock options / Acquisition related costs Salary & Benefit Office overhead Outside service Administration Selling & Marketing 22,000 Goods / Software Amortization & Capitalization 20,000 217 370 2,917 476 3,174 18,000 713 2,820 2,829 16,000 2,688 2,812 3,117 14,000
Slide 20: Pre-GAAP vs Total Costs
Pre-GAAPⅴs Total Costs (in million Yen) (unaudited) Pre-GAAP Total Costs Pre-GAAP Margin 32,000 40% 37% 30,000 28,000 35% 30,348 26,000 31% 29,567 24,000 27,144 26,511 32% 30% 26,774 22,000 20,000 28% 25% 18,000 24% 16,000 20% 14,000 12,000 20,601 20,764 15% 10,000 19,052 18,580 18,444 8,000 10% 6,0
Slide 21: Cash flows
Cash flows (unaudited) (in million Yen) 1Q2013 1Q2014 YoY growth Cash flows from operating activities 4,269 6,411 + 50% Cash flows from investing activities 8,353 - 12,304 － Cash flows from financing activities - 8,969 - 15,336 － Effect of exchange rate changes 3,238 - 900 － on cash and cash equival
Slide 22: Headcount
Headcount Dec - 2013 Mar - 2014 5,217 5,201 Admin, Admin, Business Process Business Process Sales, Marketing Sales, Marketing Technical Technical Support Support Research, Research, Development Development - 16 (- 0%) Latin Latin EMEA EMEA Japan Japan APAC APAC US US 22
Slide 23: Non-operating & Extra-ordinary Items
Non-operating & Extra-ordinary Items (unaudited) Other income Exchange gain Other expense Gain on reversal of stock option Gain on sales of 29M - 44M 5M marketable securities 95M Interest income 286M Income 380M before income taxes Ordinary Income 9,691M 9,686M Operating Income 8,937M (Non-GAAP)
Slide 24: Balance Sheet
Balance Sheet (unaudited) (in million Yen) Dec-2013 change Mar-2014 Assets Cash & cash equivalents 79,632 - 22,479 57,153 Account receivable (less allowance for doubtful accounts) 24,329 - 289 24,040 Marketable securities & Securities investments 112,053 + 9,855 121,908 Liabilities Deferred revenue
Slide 25: Q1 Highlights
Q1Highlights • Strong growth of consumer business in Japan • Good cost control resulting in 32% OP margin
Slide 26: Q1 Lowlights
Q1 Lowlights • US consumer business continues to decline • Weak performance in Europe • Pricing pressure on traditional malware products continues
Slide 27: Projection for FY2014 Annual (Unchanged)
Projection for FY2014 Annual (Unchanged) (unaudited) For FY2014 Expected (in million Yen) Jan - Dec, 2014 YoY growth Net Sales 112,000 + 3% Operating Income 30,100 + 2% Ordinary Income 32,000 - 1% Net Income 19,100 - 3% (Estimated exchange rate 1USD=100 yen, 1EUR=138 yen) In case of excluding a fore
Slide 28: Thank You
Thank You | i ,
Slide 29: 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 Co s t o f s ale s 5,048 4,796 4,890 4,642 4,622 O pe r at in g e x pe n s e s 13,396 15,804 14,161 16,122 13,958 O pe r at in g in c o m e 7,338 6,430 8,017
Slide 30: 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 US 5,480 6,085 6,001 6,047 5,998 Eu r o pe 4,779 5,022 5,138 5,631 5,632 A s ia P ac ific 3,143 3,282 3,083 3,416 3,288 L at in A m e r