Slide 1: FY2008 2Q / Semi Annual Results
Trend Micro FY2008. 2Q / Semi Annual Results Mahendra Negi COO / CFO , Representative Director August 12, 2008
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: FY2008 2Q Financial Highlight
FY2008. 2Q Financial Highlight 3 Copyright 2008 - Trend Micro Inc.
Slide 4: Consolidated Results
Consolidated Results Three months (in million Yen) (unaudited) ended Jun 30, 2Q2007 2Q2008 YoY growth Net sales 25,138 26,105 4% Cost of sales 4,241 3,859 - 9% Operating expenses 12,027 13,693 14% Operating income (Margin) 8,869 (35%) 8,552 (33%) - 4% Ordinary income 9,781 9,313 - 5% Net income 6,40
Slide 5: USD based Results (Non-GAAP)
USD based Results (Non-GAAP) (unaudited) Three months (in thousand USD) ended Jun 30, 2Q2007 2Q2008 YoY change Net sales 207,841 249,284 20% Cost of sales 35,070 36,852 5% Operating expenses 99,441 130,760 31% Operating income 73,329 81,670 11% Ordinary income 80,870 88,933 10% Net Income 52,948 37,
Slide 6: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) + 7% 10,000 9,885 9,241 9,000 2Q2007 8,000 + 4% + 9% 2Q2008 7,000 6,570 6,551 6,304 6,013 6,000 5,000 4,000 - 16% 3,000 2,765 2,325 2,000 - 5% 1,000 813 772 0 Japan US Europe Asia Pacific Latin America (In accordance with Japan GAAP) 6 Copyrigh
Slide 7: Net Sales Growth by Region (constant currency)
Net Sales Growth by Region If currency exchange rates used for 2Q2007 were used for 2Q2008: (in million Yen) (unaudited) * ( ) : difference from GAAP base + 7% 10,000 9,885 9,241 (0) 9,000 + 20% 2Q2007 8,000 7,589 (+1,018) + 8% 2Q2008 7,000 6,509 (-41) 6,304 6,013 6,000 5,000 - 11% 4,000 (+135) 3,00
Slide 8: % share by region
% share by region (unaudited) 2Q2007 2Q2008 25,138 million Yen 26,105 million Yen Latin Latin America America Asia Asia Pacific 3% Pacific 3% 11% 9% Japan Japan Europe 37% Europe 38% 24% 25% US US 25% 25% (In accordance with Japan GAAP) 8 Copyright 2008 - Trend Micro Inc.
Slide 9: Sales by Segment
Sales by Segment (unaudited) (in million Yen) YoY growth 24,000 Large Enterprise + 14% 7,669 8,748 20,000 Small & Medium - 7% 16,000 12,000 10,756 10,014 Consumer + 9% 8,000 4,000 6,712 7,341 0 2Q2007 2Q2008 (Non-GAAP) 9 Copyright 2008 - Trend Micro Inc.
Slide 10: Bookings (Amount of contracts concluded)
Bookings (Amount of contracts concluded) (in million Yen) (unaudited) 12,000 + 2% 11,000 10,871 11,066 10,000 2Q2007 9,000 2Q2008 + 3% 8,000 7,418 7,625 7,000 6,983 6,920 - 1% 6,000 5,000 4,000 3,650 3,246 - 11% 3,000 2,000 - 3% 1,000 943 910 0 Japan US Europe Asia Pacific Latin Am erica (Non-GAAP)
Slide 11: Local currency based Bookings (US, Europe)
Local currency based Bookings (US, Europe) US Bookings in $ and EMEA Bookings in € (unaudited) 2Q2007 2Q2007 ($ in thousands) 2Q2008 (€ in thousands) 2Q2008 70,000 45,000 + 13% 62,564 - 5% 40,000 38,742 60,000 55,485 36,900 35,000 50,000 30,000 40,000 25,000 30,000 20,000 15,000 20,000 10,000 10,000
Slide 12: Deferred Revenue
Deferred Revenue (in million Yen) (unaudited) * Total of current and long term 70,000 69,817 68,000 67,454 66,000 66,152 64,000 62,000 61,915 61,712 60,000 58,000 56,000 Jun-'07 Sep-'07 Dec-'07 Mar-'08 Jun-'08 (In accordance with Japan GAAP) 12 Copyright 2008 - Trend Micro Inc.
Slide 13: Deferred Revenue by Region
Deferred Revenue by Region (in million Yen) (unaudited) * Total of current and long term 30,000 29,840 28,659 4% 25,000 Mar-08 6% Jun-08 20,000 18,365 17,310 3% 15,000 14,342 14,711 10,000 21% 5,312 5,000 4,391 10% 1,449 1,587 0 Japan US Europe Asia Pacific Latin America (In accordance with Japan GA
Slide 14: Deferred Revenue by Region (constant currency)
Deferred Revenue by Region If currency exchange rates used as of the end of 1Q2008 were used as of the end of 2Q2008: (in million Yen) (unaudited) * ( ) : difference from GAAP base 30,000 29,840 28,659 4% (0) * Total of current and long term 25,000 Mar-08 Jun-08 20,000 0% 17,31017,292 (-1,073) -3% 1
Slide 15: Cost of sales & Operating expenses
Cost of sales & Operating expenses (excluding both stock option expenses and amortization of goodwill effects) (in million Yen) (unaudited) Cost of sales (old) ※ Amortization of capitalized software, and Material Maintenance Support 20,000 Sales, Marketing R&D 18,000 Administrative 1,116 899 16,000
Slide 16: Bookings vs Total costs
Bookings vs Total costs (in million Yen) (unaudited) Bookings Total Costs 32,000 30,000 31,954 29,867 29,769 28,000 26,000 27,663 24,000 24,999 24,302 22,000 20,000 18,000 16,000 17,912 17,552 17,266 16,269 16,264 14,000 15,883 12,000 10,000 8,000 6,000 4,000 2,000 0 2007Q1 2007Q2 2007Q3 2007Q4 2008
Slide 17: Q2 Highlights
Q2Highlights • Double digit growth continues in North America (Local currency base) • Launch of “Smart Protection Network” • Operating income margins being maintained despite adverse economic environment 17 Copyright 2008 - Trend Micro Inc.
Slide 18: Q2 Lowlights
Q2 Lowlights • Valuation loss on CDOs higher than expected • Delay in launch of Linksys package 18 Copyright 2008 - Trend Micro Inc.
Slide 19: Headcount
Headcount Mar - 2008 Jun - 2008 3,746 3,790 ADM, ADM, Business Process Business Process Sales, Sales, 526 556 Marketing Marketing 1,048 + 44 1,014 Technical (+ 1%) Technical Support Support 1,153 Research, Research, 1,166 Development Development 1,019 1,054 19 Copyright 2008 - Trend Micro Inc.
Slide 20: Non-operating & Extra-ordinary Items
Non-operating & Extra-ordinary Items (unaudited) Other income Loss on sales of marketable securities Equity in gains of affiliated companies Bad debt reversal Exchange gain 27 M 155M 15 M Impairment loss on marketable securities 137M 27M Interest income 1,962 M 735M Legal settlement 241 M Operating
Slide 21: Balance Sheet
Balance Sheet (unaudited) (in million Yen) Mar-2008 change Jun-2008 Assets Cash & cash equivalents 60,328 + 6,971 67,299 Account receivable (less allowance for doubtful accounts) 20,635 + 421 21,056 Marketable securities & Securities investments 58,220 + 4,281 62,501 Liabilities Deferred revenue (to
Slide 22: Snapshot of our CDO investments (Update)
Snapshot of our CDO investments （Update） # We don’t have any CDOs related to RMBS (e.g. Subprime mortgages). # Since the underlying cash flow is intact, we intend to hold till maturity. # Exposure as a % of our “Marketable securities & Securities investments” : 6% # Exposure as a % of our “Cash + Ma
Slide 23: FY2008 Semi Annual Financial Highlight
FY2008 Semi Annual Financial Highlight 23 Copyright 2008 - Trend Micro Inc.
Slide 24: Consolidated Results (Annual)
Consolidated Results (Annual) (unaudited) (in million Yen) Six months ended Jun 30, 1H2007 1H2008 YoY growth Net sales 48,390 51,709 7% Cost of sales 8,540 7,914 - 7% Operating expenses 23,612 26,904 14% Operating income (Margin) 16,237 (34%) 16,890 (33%) 4% Ordinary income 18,063 16,830 - 7% Net in
Slide 25: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 20,000 19,709 + 11% 18,000 17,779 1H2007 16,000 1H2008 + 5% + 8% 14,000 12,093 12,748 12,737 12,000 11,838 10,000 8,000 - 3% 6,000 5,143 5,005 4,000 - 2% 2,000 1,535 1,508 0 Japan US Europe Asia Pacific Latin America (In accordance with Japan G
Slide 26: Net Sales Growth by Region (constant currency)
Net Sales Growth by Region If currency exchange rates used for 1H2007 were used for 1H2008: (in million Yen) (unaudited) * ( ) : difference from GAAP base 20,000 19,709 + 11% (0) 18,000 17,779 + 21% 1H2007 16,000 14,615 (+1,866) 1H2008 + 6% 14,000 12,591 (-145) 12,093 11,838 12,000 10,000 8,000 + 2%
Slide 27: Cash flows
Cash flows (unaudited) (in million Yen) Account 1H 2007 1H 2008 YoY growth Cash flows from operating activities 15,987 17,094 7% Cash flows from investing activities - 3,804 18,362 － Cash flows from financing activities - 12,707 - 21,229 67% Effect of exchange rate changes on cash and cash equivalen
Slide 28: Q3 forecast assumptions
Q3 forecast assumptions • Japan grow higher than average, EMEA growth rate same and North America lower than average (in JPY terms). • Stock option expenses will be 0.6Bn yen • Marketing expenses for the alliance with Linksys (slippage from Q2) will be 0.5Bn yen • Estimated exchange rate: 1USD = 105
Slide 29: Projection for 3Q2008
Projection for 3Q2008 (unaudited) For 3Q2008 Expected (in million Yen) Jul - Sep, 2008 YoY growth Net Sales 26,400 5% Operating Income 7,600 - 15% Ordinary Income 8,000 - 29% Net Income 4,900 - 29% (In accordance with Japan GAAP) • Including both stock option expenses and amortization of goodwill （a
Slide 30: Regression chart of net sales
Regression chart of net sales (in million Yen) Regression line 30,000 25,000 20,000 15,000 R 2 = 0.9804 10,000 5,000 0 08Q3e 02Q1a 02Q2a 02Q3a 02Q4a 03Q1a 03Q2a 03Q3a 03Q4a 04Q1a 04Q2a 04Q3a 04Q4a 05Q1a 05Q2a 05Q3a 05Q4a 06Q1a 06Q2a 06Q3a 06Q4a 07Q1a 07Q2a 07Q3a 07Q4a 08Q1a 08Q2a (Non-GAAP) 30 Copyr
Slide 31: Appendix
Appendix 31 Copyright 2008 - Trend Micro Inc.
Slide 32: Quarterly Chart (1)
Appendix Quarterly Chart (1) (unaudited) (in million Yen) FY2 0 0 7 FY2 0 0 8 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ｎｅｔ sale s 23,252 25,138 25,201 26,213 25,604 26,105 Co st o f sale s 4,298 4,241 4,276 4,403 4,054 3,859 O pe r at in g e xpe n se s 11,584 12,027 11,987 13,508 13,211 13,693 O pe r at in g in c o
Slide 33: Quarterly Chart (2)
Appendix Quarterly Chart (2) (unaudited) (in million Yen) FY2007 FY2008 （ Sales by region） Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Japan 8,538 9,241 9,287 9,463 9,823 9,885 US 5,788 6,304 6,467 6,472 6,178 6,570 Europe 5,825 6,013 5,929 6,582 6,185 6,551 Asia Pacific 2,378 2,765 2,732 2,832 2,680 2,325 Latin Am eri
Slide 34: Thank You
Thank You 34 Copyright 2008 - Trend Micro Inc.