Slide 1: Trend Micro FY2010.3Q Results
Trend Micro FY2010.3Q Results Mahendra Negi COO/CFO, Representative Director November 11, 2010
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: FY2010. 3Q Financial Highlight
FY2010. 3Q Financial Highlight （Third quarter ended September 30, 2010） 3 Copyright © 2010 Trend Micro Incorporated. All rights reserved.
Slide 4: Consolidated Results
Consolidated Results Three months (in million Yen) (unaudited) ended Sep 30, 3Q2009 3Q2010 YoY growth Net sales 24,848 23,950 - 4% Cost of sales 3,618 4,446 + 23% Operating expenses 12,829 13,660 + 6% Operating income (Margin) 8,399 (34%) 5,843 (24%) - 30% Ordinary income 8,615 5,859 - 32% Net incom
Slide 5: USD based Results (Non-GAAP)
USD based Results (Non-GAAP) (unaudited) Three months (in thousand USD) ended Sep 30, 3Q2009 3Q2010 YoY change Net sales 265,530 279,208 5% Cost of sales 38,668 51,832 34% Operating expenses 137,100 159,250 16% Operating income 89,762 68,125 -24% Ordinary income 92,066 68,310 -26% Net Income 55,778
Slide 6: Vs. Projection analysis (Operating income)
Vs. Projection analysis（Operating income） (unaudited) Sales side Cost side + 50M - 106M ・Japan ↑ ・US ↓ ・Latin ↓ ・Outside service ↑ 2010Ｑ3 2010Ｑ3 Projection Actual 5,900 M 5,843M (Non-GAAP) 6 Copyright © 2010 Trend Micro Incorporated. All rights reserved.
Slide 7: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 12,000 11,451 + 10% 11,000 10,435 10,000 3Q2009 9,000 3Q2010 8,000 - 17% 7,000 6,571 - 18% 6,000 5,485 5,092 5,000 4,173 4,000 + 9% 3,000 2,019 2,202 2,000 - 13% 1,000 729 637 0 Japan North Am erica Europe Asia Pacific Latin America (In accorda
Slide 8: Net Sales Growth by Region (constant currency)
Net Sales Growth by Region If currency exchange rates used for 3Q2009 were used for 3Q2010: (in million Yen) (unaudited) 12,000 11,451 + 10% * ( ) : difference from GAAP base 11,000 10,435 (0) 10,000 3Q2009 9,000 3Q2010 - 9% 8,000 (+497) 7,000 6,571 5,982 - 1% 6,000 5,092 5,040 (+866) 5,000 + 14% 4,
Slide 9: Decomposition of Revenue (vs Last year)
Decomposition of Revenue （ｖｓ Ｌａｓｔ year） Asia Pacific North America (unaudited) Japan + 275M - 588M Latin America Europe - 69M Exchange + 1,016M - 52M impact - 1,478M 2009Ｑ3 Net 2010Ｑ3 sales Net sales 24,848 M 23,950 M (Non-GAAP) 9 Copyright © 2010 Trend Micro Incorporated. All rights reserved.
Slide 10: Constant currency Revenue growth
Constant currency Revenue growth (YoY) (unaudited) 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 2 0 0 7 Q1 2 0 0 7 Q2 2 0 0 7 Q3 2 0 0 7 Q4 2 0 0 8 Q1 2 0 0 8 Q2 2 0 0 8 Q3 2 0 0 8 Q4 2 0 0 9 Q1 2 0 0 9 Q2 2 0 0 9 Q3 2 0 0 9 Q4 2 0 1 0 Q1 2 0 1 0 Q2 2 0 1 0 Q3 • Each growth rate shown above is based on applyi
Slide 11: Sales by Segment
Sales by Segment (in million Yen) 12,000 11,000 Growth rate 10,000 9,000 Consumer + 5% 5,717 All Enterprise - 8% 8,000 7,000 6,000 5,000 2,518 69 4,000 3,000 5,734 4,103 2,000 559 2,966 1,000 1,642 29 0 608 Japan North Europe APAC Latin America America 11 Copyright © 2010 Trend Micro Incorporated. A
Slide 12: % share by region
% share by region (unaudited) 3Q2009 3Q2010 24,848 million Yen 23,950 million Yen Asia Latin Latin Pacific America Asia America 8% 3% Pacific 3% 9% Japan Europe Japan Europe 42% 17% 48% 20% North North America America 26% 23% (In accordance with Japan GAAP) 12 Copyright © 2010 Trend Micro Incorporat
Slide 13: Bookings (Amount of contracts concluded)
Bookings (Amount of contracts concluded) (in million Yen) (unaudited) + 2% 12,287 12,564 3Q2009 3Q2010 - 7% + 25% 5,066 4,735 4,549 3,644 + 19% 2,679 2,257 - 13% 674 584 Japan North America Europe Asia Pacific Latin America (Non-GAAP) * Bookings = Net sales + Deferred revenue balance as of this Q –
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) 3Q2009 3Q2009 ($ in thousands) 3Q2010 3Q2010 (€ in thousands) 70,000 40,000 64,340 63,309 - 2% 35,684 + 20% 60,000 35,000 29,798 50,000 30,000 25,000 40,000 20,000 30,
Slide 15: Deferred Revenue
Deferred Revenue (in million Yen) (unaudited) 78,000 * Total of current and long term 75,956 75,102 73,562 73,940 74,000 71,751 70,832 70,000 69,707 67,516 65,166 66,000 62,000 58,000 54,000 50,000 Sep-'08 Dec-'08 Mar-'09 Jun-'09 Sep-'09 Dec-'09 Mar-'10 Jun-'10 Sep-'10 (In accordance with Japan GAAP
Slide 16: Deferred Revenue by Region
Deferred Revenue by Region (in million Yen) (unaudited) 50,000 3% 45,000 43,179 44,292 * Total of current and long term 40,000 Jun-10 35,000 Sep-10 30,000 25,000 -6% 20,000 4% 15,000 13,488 12,737 8% 10,000 10,188 10,564 5,793 6,270 -4% 5,000 1,289 1,236 0 Japan North America Europe Asia Pacific Lat
Slide 17: Deferred Revenue by Region (constant currency)
Deferred Revenue by Region If currency exchange rates used as of the end of 2Q2010 were used as of the end of 3Q2010: (in million Yen) (unaudited) * ( ) : difference from GAAP base 50,000 3% (0) * Total of current and long term 45,000 43,179 44,292 40,000 Jun-10 35,000 Sep-10 30,000 25,000 0% (+711)
Slide 18: Cost
Cost (in million Yen) Stock options / Acquisition related costs Salary & Benefit Office overhead Outside service (unaudited) 20,000 Administration Selling & Marketing Goods / Software Amortization & Capitalization 18,000 383 545 611 212 252 16,000 3,966 3,998 3,157 3,575 3,973 14,000 12,000 2,291 2,
Slide 19: Bookings vs Total costs
Bookings vs Total costs (in million Yen) (unaudited) Bookings Total Costs 30,000 28,000 26,000 27,068 26,122 24,000 25,113 22,000 23,928 20,000 21,477 18,000 17,685 17,926 18,106 16,000 16,859 16,448 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 (Non-GAAP) * “Tota
Slide 20: Cash flows
Cash flows (unaudited) (in million Yen) 項目 3Q2009 3Q2010 YoY growth Cash flows from operating activities 5,270 22 - 100% Cash flows from investing activities - 820 393 － Cash flows from financing activities -5 -3 － Effect of exchange rate changes - 1,550 - 623 － on cash and cash equivalents Net incr
Slide 21: Q3 Highlights
Q3 Highlights • Good quarter for European ENT business • New technology pipeline (especially Deep Security) building up 21 Copyright © 2010 Trend Micro Incorporated. All rights reserved.
Slide 22: Q3 Lowlights
Q3 Lowlights • Overall pricing pressure continues, especially in consumer business • Legal settlement on license agreement dispute related to distribution of technology • CDO recovery held up due to complication in Lehman bankruptcy settlement 22 Copyright © 2010 Trend Micro Incorporated. All rights
Slide 23: Headcount
Headcount Jun - 2010 Sep - 2010 4,727 4,831 ADM, ADM, Business Process Business Process Sales, Sales, Marketing 746 Marketing 723 Technical 1,314 + 104 Technical 1,335 Support (+ 2%) Support Research, Research, 1,336 1,323 Development Development 1,354 1,427 23 Copyright © 2010 Trend Micro Incorpora
Slide 24: Non-operating & Extra-ordinary Items
Non-operating & Extra-ordinary Items (unaudited) Gain on sales of marketable securities Exchange loss Other income 1M Interest income 13M Equity in losses of affiliated companies 342M Other expense 354M 6M Legal settlement 4M 473M Impairment loss on marketable securities 459M Operating income Ordina
Slide 25: Balance Sheet
Balance Sheet (unaudited) (in million Yen) Jun-2010 change Sep-2010 Assets Cash & cash equivalents 73,997 - 2,204 71,793 Account receivable (less allowance for doubtful accounts) 19,642 + 1,537 21,179 Marketable securities & Securities investments 59,702 - 1,764 57,938 Liabilities Deferred revenue (
Slide 26: Snapshot of our CDO investments (Update)
Snapshot of our CDO investments （Update） # Exposure as a % of our “Marketable securities & Securities investments” : 2% # Exposure as a % of our “Cash + Marketable securities & Securities investments” : 1% (in million Yen) Ｂｅｇｉｎｎｉｎｇ Market value Current Maturity Name Vendor Write-down Unrealized P/L
Slide 27: Net unrealized loss on debt and equity securities (Euro MMF)
Net unrealized loss on debt and equity securities (Euro MMF) # We have shown the loss of Euro MMF (due to Forex movement) in “Net unrealized loss on debt and equity securities” on our balance sheet # In case we sell these MMF and buy other securities for improving yield, we may have to post valuatio
Slide 28: Q4 forecast assumptions
Q4 forecast assumptions •Japan increases by around 10%, US and Europe decrease by mid-teen percentage respectively (mainly due to negative Forex impact) •Stock option expenses will be 0.6Bn yen •Estimated exchange rate: 1USD = 80 yen ( last year: 90 yen) 1EUR = 112 yen ( last year: 133 yen) 28 Copyr
Slide 29: Projection for 4Q2010
Projection for 4Q2010 (unaudited) For 4Q2010 Expected (in million Yen) Oct - Dec, 2010 YoY growth Net Sales 23,700 - 3% Operating Income 6,100 - 18% Ordinary Income 5,800 - 24% Net Income 3,500 - 2% (In accordance with Japan GAAP) • Including both stock option expenses and acquisition related costs
Slide 30: Thank you!
Thank you! 30 Copyright © 2010 Trend Micro Incorporated. All rights reserved.
Slide 31: Appendix: Quarterly Chart (1)
Appendix (unaudited) Quarterly Chart (1) (in million Yen) FY2009 FY2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ｎｅｔ sale s 22,915 24,244 24,848 24,339 23,728 23,493 23,950 Co st o f sale s 3,597 3,511 3,618 4,263 4,032 4,025 4,446 O pe r at in g e xpe n se s 12,289 13,503 12,829 12,595 13,653 13,900 13,660 O pe r a
Slide 32: Appendix: Quarterly Chart (2)
Appendix Quarterly Chart (2) (unaudited) (in million Yen) FY2009 FY2010 （ S ale s by r e gio n ） Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Japan 9,784 9,631 10,435 9,887 9,782 9,990 11,451 US 5,953 6,729 6,571 6,084 5,999 6,118 5,485 Eu r o pe 4,748 5,100 5,092 5,232 5,005 4,408 4,173 Asia P ac ific 1,842 2,124 2,019