Slide 1: Trend Micro FY2011.2Q Results
Trend Micro FY2011.2Q Results Mahendra Negi COO/CFO, Representative Director August 10,2011 Copyright 2011 Trend Micro Inc. 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: FY2011. 2Q Financial Highlight
FY2011. 2Q Financial Highlight （Second quarter ended June 30, 2011） Copyright 2011 Trend Micro Inc. 3
Slide 4: Consolidated Results
Consolidated Results Three months (in million Yen) (unaudited) ended Jun 30, 2Q2010 2Q2011 YoY growth Net sales 23,493 24,333 + 4% Cost of sales 4,025 4,343 + 8% Operating expenses 13,900 13,334 - 4% Operating income (Margin) 5,567 (24%) 6,655 (27%) + 20% Ordinary income 5,744 6,874 + 20% Net income
Slide 5: USD based Results (Non-GAAP)
USD based Results (Non-GAAP) (unaudited) Three months (in thousand USD) ended Jun 30, 2Q2010 2Q2011 YoY change Net sales 255,532 297,767 17% Cost of sales 43,788 53,145 21% Operating expenses 151,189 163,177 8% Operating income 60,554 81,444 34% Ordinary income 62,477 84,122 35% Net Income 35,211 48
Slide 6: Vs. Projection analysis (Operating income)
Vs. Projection analysis（Operating income） Sales side Cost side (unaudited) - 122M + 533M •People cost ↑ •Marketing cost ↓ •Outside service ↓ •Japan ↑ 2011Ｑ2 •APAC ↑ Actual 2011Ｑ2 •US ↓ Projection 6,655M 6,000 M (Non-GAAP) Copyright 2011 Trend Micro Inc. 6 6
Slide 7: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 12,000 11,296 + 13% 11,000 2Q2010 10,000 9,990 2Q2011 9,000 8,000 -12% 7,000 6,118 - 1% 6,000 5,365 5,000 4,408 4,354 + 16% 4,000 3,000 2,691 2,314 - 6% 2,000 1,000 662 624 0 Japan North America Europe Asia Pacific Latin America (In accordance
Slide 8: Net Sales Growth by Region (constant currency)
Net Sales Growth by Region If currency exchange rates used for 2Q2010 were used for 2Q2011: (in million Yen) (unaudited) * ( ) : difference from GAAP base 12,000 11,296 + 13% 11,000 (0) 9,990 2Q2010 10,000 9,000 2Q2011 - 1% 8,000 (+670) - 2% 7,000 6,118 6,036 (-21) 6,000 + 15% 5,000 4,408 4,333 (-33
Slide 9: Decomposition of Revenue (vs. last year)
Decomposition of Revenue (vs. last year） (unaudited) Asia Pacific North America Europe Latin America - 81M - 75M Japan + 342M - 21M Exchange impact + 1,306M - 630M 2011Ｑ2 2010Ｑ2 Net Net sales sales 24,333M 23,493M (Non-GAAP) Copyright 2011 Trend Micro Inc. 9
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 1 2 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 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 • Each growth rate shown above is
Slide 11: Sales by Segment
Sales by Segment (in million Yen) 12,000 Growth rate 11,000 10,000 Consumer + 13% 9,000 All Enterprise - 2% 5,667 8,000 7,000 6,000 5,000 2,493 326 4,000 3,000 5,628 4,027 897 2,000 2,872 1,000 1,794 9 615 0 Japan North Europe APAC Latin America America (Non-GAAP) Copyright 2011 Trend Micro Inc. 11
Slide 12: % share by region
% share by region (unaudited) 2Q2010 2Q2011 23,493 million Yen 24,333 million Yen Latin Latin Asia America Asia America Pacific Pacific 3% 3% 10% 11% Europe Japan Europe Japan 19% 43% 18% 46% North North America America 26% 22% (In accordance with Japan GAAP) Copyright 2011 Trend Micro Inc. 12
Slide 13: Bookings (Amount of contracts concluded)
Bookings (Amount of contracts concluded) (in million Yen) (unaudited) 11,17511,145 - 0% 2Q2010 2Q2011 - 2% + 62% 4,916 4,838 4,554 + 44% 3,033 2,817 2,106 +31% 461 604 Japan North America Europe Asia Pacific Latin America (Non-GAAP) * Bookings = Net sales + Deferred revenue balance as of this Q – De
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) 2010Q2 2010Q2 ($ in thousands) (€ in thousands) 2011Q2 2011Q2 70,000 45,000 62,722 + 3% + 4% 60,821 40,000 39,453 60,000 37,956 35,000 50,000 30,000 40,000 25,000 30,0
Slide 15: Deferred Revenue
Deferred Revenue (in million Yen) (unaudited) 82,000 * Total of current and long term 76,434 77,928 77,771 78,000 75,102 75,956 73,940 74,000 71,751 73,562 70,832 70,000 66,000 62,000 58,000 54,000 50,000 Jun-'09 Sep-'09 Dec-'09 Mar-'10 Jun-'10 Sep-'10 Dec-'10 Mar-'11 Jun-'11 (In accordance with Jap
Slide 16: Deferred Revenue by Region
Deferred Revenue by Region (in million Yen) (unaudited) 50,000 0% * Total of current and long term 45,000 44,707 44,557 40,000 Mar-11 35,000 Jun-11 30,000 25,000 -4% 20,000 2% 15,000 13,33712,810 11,92012,120 5% 10,000 6,694 7,036 -2% 5,000 1,268 1,248 0 Japan North America Europe Asia Pacific Latin
Slide 17: Deferred Revenue by Region (constant currency)
Deferred Revenue by Region If currency exchange rates used as of the end of 1Q2011 were used as of the end of 2Q2011: (in million Yen) (unaudited) 50,000 0% * ( ) : difference from GAAP base 45,000 44,707 44,557 (0) * Total of current and long term 40,000 Mar-11 35,000 Jun-11 30,000 25,000 -1% 2% (+
Slide 18: Cost
Cost (in million Yen)Stock options / Acquisition related costs Salary & Benefit (unaudited) Office overhead Outside service Administration Selling & Marketing 20,000 Goods / Software Amortization & Capitalization 18,000 383 545 498 779 511 16,000 3,542 3,966 3,998 2,964 3,216 14,000 2,492 2,429 2,75
Slide 19: Bookings vs Total costs
Bookings vs Total costs (in million Yen) (unaudited) Bookings Total Costs 28,000 26,000 24,000 25,113 25,550 25,474 24,176 22,000 20,000 21,477 18,000 17,926 18,106 17,919 17,459 17,677 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 (Non-GAAP) * “Total costs
Slide 20: Cash flows
Cash flows (unaudited) (in million Yen) 項目 2Q2010 2Q2011 YoY growth Cash flows from operating activities - 15% 10,413 8,841 Cash flows from investing activities - 4,793 - 379 － Cash flows from financing activities - 227 - 1,551 － Effect of exchange rate changes - 2,512 - 384 － on cash and cash equiv
Slide 21: Q2 Highlights
Q2 Highlights • Continued strong growth of strategic products • Recovery in operating margins Copyright 2011 Trend Micro Inc. 21
Slide 22: Q2 Lowlights
Q2 Lowlights • Enterprise growth slows down • Weakness in small company business • Overall macro Economic situation is worsening Copyright 2011 Trend Micro Inc. 22
Slide 23: Headcount
Headcount Mar - 2011 Jun - 2011 4,848 4,882 ADM, ADM, Business Process Business Process Sales, Sales, 746 Marketing 758 Marketing Technical 1,332 + 34 Technical 1,332 Support (+ 1%) Support 1,310 Research, 1,318 Research, Development Development 1,460 1,474 Copyright 2011 Trend Micro Inc. 23
Slide 24: Non-operating & Extra-ordinary Items
Non-operating & Extra-ordinary Items Equity in gains of (unaudited) affiliated companies Loss on sales of marketable securities Other income Gain on sales of 12M 69M marketable securities 916M 827M Interest income Other expense 119M Exchange loss 443M 96M Income before income taxes Operating Income
Slide 25: Balance Sheet
Balance Sheet (unaudited) (in million Yen) Mar-2011 change Jun-2011 Assets Cash & cash equivalents 67,660 + 6,112 73,772 Account receivable (less allowance for doubtful accounts) 21,007 - 1,131 19,876 Marketable securities & Securities investments 56,480 - 600 55,880 Liabilities Deferred revenue (to
Slide 26: Q3 forecast assumptions
Q3 forecast assumptions •Japan increases by single digit, Europe flat and US decreases by single digit respectively •Stock option expenses will be 0.7 Bn yen •Estimated exchange rate: 1USD = 78 yen ( last year: 86 yen) 1EUR = 110 yen ( last year: 111 yen) Copyright 2011 Trend Micro Inc. 26
Slide 27: Q3 Non-operating & Extraordinary forecast assumptions
Q3 Non-operating & Extraordinary forecast assumptions (Non operating) Interest income + 300 million Yen Reclassification of loss on sales + 1,451 million of Euro MMF in Q1-Q2 (to Extraordinary) Non operating income + 1,751 million (Extraordinary) Reversal of Stock option (due to expiration) + 3,600
Slide 28: Projection for 3Q2011
Projection for 3Q2011 (unaudited) For 3Q2011 Expected (in million Yen) Jul - Sep, 2011 YoY growth Net Sales 24,600 + 3% Operating Income 6,800 + 16% Ordinary Income 8,500 + 45% Net Income 5,400 + 94% (In accordance with Japan GAAP) • Including both stock option expenses and amortization of goodwill
Slide 29: THANK YOU!
THANK YOU! Classification 8/9/2011 Copyright 2011 Trend Micro Inc. 29
Slide 30: Appendix: Quarterly Chart (1)
Appendix (unaudited) Quarterly Chart (1) (in million Yen) FY2010 FY2011 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ｎｅｔ sale s 23,728 23,493 23,950 24,218 23,980 24,333 Co st o f sale s 4,032 4,025 4,446 4,222 4,412 4,343 O pe r at in g e xpe n se s 13,653 13,900 13,660 13,697 13,046 13,334 O pe r at in g in c o me 6,0
Slide 31: Appendix: Quarterly Chart (2)
Appendix Quarterly Chart (2) (unaudited) (in million Yen) FY2010 FY2010 （ S ale s by r e gio n ） Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Japan 9,782 9,990 11,451 11,100 11,023 11,296 US 5,999 6,118 5,485 5,124 5,315 5,365 Eu r o pe 5,005 4,408 4,173 4,671 4,435 4,354 Asia P ac ific 2,254 2,314 2,202 2,684 2,570 2,6