Slide 1: Trend Micro FY2009.4Q / Annual Results
Trend Micro FY2009.4Q / Annual Results Mahendra Negi COO/CFO, Representative Director February 18,2010
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: FY2009 4Q Financial Highlight
FY2009. 4Q Financial Highlight （Fourth quarter ended December 31, 2009） 3 Copyright © 2010 Trend Micro Incorporated. All rights reserved.
Slide 4: Consolidated Results
Consolidated Results Three months (in million Yen) (unaudited) ended Dec 31, 4Q2008 4Q2009 YoY growth Net sales 24,030 24,339 + 1% Cost of sales 3,646 4,263 + 17% Operating expenses 13,053 12,595 - 4% Operating income (Margin) 7,330 (31%) 7,479 (31%) + 2% Ordinary income 7,652 7,640 - 0% Net income
Slide 5: USD based Results (Non-GAAP)
USD based Results (Non-GAAP) (unaudited) Three months (in thousand USD) ended Dec 31, 4Q2008 4Q2009 YoY change Net sales 250,158 271,277 8% Cost of sales 37,958 47,524 25% Operating expenses 135,887 140,384 3% Operating income 76,313 83,368 9% Ordinary income 79,664 85,156 7% Net Income 50,535 39,77
Slide 6: Vs. Projection analysis (Operating income)
Vs. Projection analysis（Operating income） (unaudited) Cost side Sales side + 640M - 360M 2009Ｑ4 •EMEA ↓ • People cost ↓ Actual 2009Ｑ4 • Sales & Marketing cost ↓ Projection • Software (internal use) 7,479 M Capitalization of developing costs ↓ 7,200 M (Non-GAAP) 6 Copyright © 2010 Trend Micro Incorpo
Slide 7: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 11,000 - 1% 10,000 9,987 9,887 4Q2008 9,000 4Q2009 8,000 - 4% 7,000 6,344 6,084 + 4% 6,000 5,016 5,232 5,000 4,000 + 16% 3,000 2,390 2,060 2,000 + 20% 1,000 621 743 0 Japan North America Europe Asia Pacific Latin America (In accordance with Jap
Slide 8: Net Sales Growth by Region (constant currency)
Net Sales Growth by Region If currency exchange rates used for 4Q2008 were used for 4Q2009: (in million Yen) (unaudited) * ( ) : difference from GAAP base 11,000 - 1% 9,987 9,887 10,000 (0) 9,000 4Q2008 + 3% 8,000 (+425) 4Q2009 - 0% 7,000 (-238) 6,3446,510 6,000 5,016 4,994 5,000 + 8% 4,000 (-158) 3
Slide 9: Decomposition of Revenue (vs Last year)
Decomposition of Revenue （ｖｓ Ｌａｓｔ year） (unaudited) Latin America Exchange Japan North America Europe impact + 67M - 99M - 22M + 26M Asia Pacific + 165M + 171M 2009Ｑ4 2008Ｑ4 Net Net sales sales 24,030 M 24,339 M (Non-GAAP) 9 Copyright © 2010 Trend Micro Incorporated. All rights reserved.
Slide 10: Sales by Segment
Sales by Segment (in million Yen) 11,000 Growth rate 10,000 9,000 Consumer + 1% All Enterprise + 1% 8,000 4,498 7,000 6,000 5,000 2,673 302 4,000 3,000 4,929 5,389 533 2,000 3,411 1,000 1,857 33 709 0 Japan North Europe APAC Latin America America (Non-GAAP) 10 Copyright © 2010 Trend Micro Incorporat
Slide 11: % share by region
% share by region (unaudited) 4Q2008 4Q2009 24,030 million Yen 24,339 million Yen Latin Asia Latin America Pacific America Asia Pacific 3% 10% 3% 9% Japan Japan Europe Europe 42% 41% 21% 21% North US America 26% 25% (In accordance with Japan GAAP) 11 Copyright © 2010 Trend Micro Incorporated. All ri
Slide 12: Bookings (Amount of contracts concluded)
Bookings (Amount of contracts concluded) (in million Yen) (unaudited) + 5% 11,081 10,574 4Q2008 4Q2009 + 32% 7,111 + 40% 5,464 5,385 3,907 + 77% 2,585 + 133% 1,458 825 353 Japan North Am erica Europe Asia Pacific Latin Am erica (Non-GAAP) * Bookings = Net sales + Deferred revenue balance as of this
Slide 13: Local currency based Bookings (US, Europe)
Local currency based Bookings (US, Europe) North America (*excluding Canada) Bookings in $ and EMEA Bookings in € (unaudited) 4Q2008 4Q2009 4Q2008 ($ in thousands) (€ in thousands) 4Q2009 70,000 64,362 60,000 - 10% 55,587 53,735 - 3% 60,000 57,932 50,000 50,000 40,000 40,000 30,000 30,000 20,000 20,
Slide 14: Deferred Revenue
Deferred Revenue (unaudited) (in million Yen) * Total of current and long term 74,000 72,000 73,562 70,000 71,751 70,832 69,707 68,000 66,000 64,000 65,166 62,000 60,000 58,000 56,000 54,000 52,000 50,000 Dec-'08 Mar-'09 Jun-'09 Sep-'09 Dec-'09 (In accordance with Japan GAAP) 14 Copyright © 2010 Tre
Slide 15: Deferred Revenue by Region
Deferred Revenue by Region (in million Yen) (unaudited) 45,000 3% * Total of current and long term 40,000 38,699 37,506 35,000 Sep-09 Dec-09 30,000 25,000 20,000 -4% 17% 15,000 15,458 14,838 12,997 11,118 10,000 4% 5,542 5,737 7% 5,000 1,206 1,289 0 Japan North America Europe Asia Pacific Latin Amer
Slide 16: Deferred Revenue by Region (constant currency)
Deferred Revenue by Region If currency exchange rates used as of the end of 3Q2009 were used as of the end of 4Q2009: (in million Yen) (unaudited) * ( ) : difference from GAAP base 45,000 3% * Total of current and long term 40,000 (0) 38,699 37,506 35,000 Sep-09 Dec-09 30,000 -6% 25,000 (-243) 20,00
Slide 17: Cost
Cost (in million Yen) (unaudited) Stock option & Goodwill Salary & Benefit Office overhead Outside service Administration Selling & Marketing Goods / Material 20,000 18,000 519 688 455 16,000 511 743 2,954 3,201 3,575 14,000 2,411 3,157 12,000 2,791 2,052 2,047 2,252 2,411 10,000 2,075 1,837 2,356 1
Slide 18: Bookings vs Total costs
Bookings vs Total costs (in million Yen) (unaudited) Bookings Total Costs 30,000 28,000 26,000 27,456 27,068 26,288 24,000 23,928 22,000 20,000 21,680 18,000 16,000 17,014 16,859 16,699 16,448 14,000 15,886 12,000 10,000 8,000 6,000 4,000 2,000 0 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 (Non-GAAP) * “Tota
Slide 19: Cash flows
Cash flows (unaudited) (in million Yen) 項目 4Q2008 (Pro-forma) 4Q2009 YoY growth Cash flows from operating activities 8,623 6,687 - 22% Cash flows from investing activities - 5,800 - 14,785 － Cash flows from financing activities 252 167 － Effect of exchange rate changes - 7,794 744 － on cash and cash
Slide 20: Q4 Highlights
Q4 Highlights • New technology helping new customer acquisition • Margins maintained despite aggressive pricing by competition 20 Copyright © 2010 Trend Micro Incorporated. All rights reserved.
Slide 21: Q4 Lowlights
Q4 Lowlights • End of year revenues weaker than expected • Weak performance by Consumer business in N America • Lower number of multiple year deals (affecting bookings / cash flow YoY comparison) 21 Copyright © 2010 Trend Micro Incorporated. All rights reserved.
Slide 22: Headcount
Headcount Sep - 2009 Dec - 2009 4,349 4,434 ADM, ADM, Business Process Business Process Sales, Sales, Marketing Marketing 666 682 Technical 1,184 + 85 Technical 1,208 Support (+ 2%) Support Research, Research, Development 1,338 Development 1,314 1,185 1,206 22 Copyright © 2010 Trend Micro Incorporat
Slide 23: Non-operating & Extra-ordinary Items
Non-operating & Extra-ordinary Items (unaudited) Other income Equity in losses of affiliated companies Exchange gain Interest expense Interest income 72M 16M 1M VAT adjustment 5M 194M Loss on disposal of fixed assets 294M 120M Impairment loss on marketable securities 54M Ordinary Income Income befor
Slide 24: Specific factors of income tax for Q4
Specific factors of income tax for Q4 1) The impact of tax payment related to past earnings : Approximately 500 million yen 2) The impact of the reversal of deferred tax assets relating to overseas stock options : Approximately 600 million yen 24 Copyright © 2010 Trend Micro Incorporated. All rights
Slide 25: Balance Sheet
Balance Sheet (unaudited) (in million Yen) Sep-2009 change Dec-2009 Assets Cash & cash equivalents 79,928 - 5,657 74,271 Account receivable (less allowance for doubtful accounts) 20,110 + 2,873 22,983 Marketable securities & Securities investments 53,742 + 11,370 65,112 Liabilities Deferred revenue
Slide 26: 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” : 3% # Exposure as a % of our “Cash + Ma
Slide 27: FY2009 Annual Financial Highlight
FY2009 Annual Financial Highlight （Full year ended December 31, 2009） 27 Copyright © 2010 Trend Micro Incorporated. All rights reserved.
Slide 28: Consolidated Results (Annual)
Consolidated Results (Annual) Fiscal year (in million Yen) (unaudited) ended Dec 31, FY2008 FY2009 YoY growth Net sales 101,707 96,346 - 5% Cost of sales 15,748 14,990 - 5% Operating expenses 54,155 51,218 - 5% Operating income (Margin) 31,803 (31%) 30,137 (31%) - 5% Ordinary income 33,640 31,714 -
Slide 29: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 40,000 39,102 39,740 + 2% 35,000 FY2008 FY2009 - 3% 30,000 26,191 25,339 - 16% 25,000 23,891 20,174 20,000 15,000 - 13% 9,596 10,000 8,377 - 7% 5,000 2,925 2,716 0 Japan US Europe Asia Pacific Latin America (In accordance with Japan GAAP) 29 Co
Slide 30: Net Sales Growth by Region (constant currency)
Net Sales Growth by Region If currency exchange rates used for FY2008 were used for FY2009: (in million Yen) (unaudited) * ( ) : difference from GAAP base 40,000 39,102 39,740 + 2% (0) + 7% 35,000 (+2,592) FY2008 30,000 - 2% FY2009 27,931 (+3,342) 26,191 25,000 23,891 23,517 20,000 + 1% (+1,321) 15,
Slide 31: Decomposition of Revenue (vs Last year)
Decomposition of Revenue （ｖｓ Ｌａｓｔ year） (unaudited) Asia Pacific Latin America Europe Japan + 101M - 373M + 504M North America + 637M Exchange impact + 1,739M - 7,970M FY2008 Net sales FY2009 Net 101,707 M sales 96,346 M (Non-GAAP) 31 Copyright © 2010 Trend Micro Incorporated. All rights reserved.
Slide 32: Bookings (Amount of contracts concluded)
Bookings (Amount of contracts concluded) (in million Yen) (unaudited) 50,000 46,916 + 7% 45,000 43,838 FY2008 40,000 FY2009 35,000 + 2% 30,000 24,242 + 2% 25,000 23,865 20,331 20,811 20,000 + 10% 15,000 9,787 10,000 8,892 + 20% 5,000 2,492 2,983 0 Japan US Europe Asia Pacific Latin Am erica * “Booki
Slide 33: Local currency based Bookings (US, Europe)
Local currency based Bookings (US, Europe) North America (*excluding Canada) Bookings in $ and EMEA Bookings in € (unaudited) FY2008 FY2008 ($ in thousands) FY2009 (€ in thousands) FY2009 280,000 269,296 253,874 - 6% 180,000 - 0% 160,000 157,779 157,197 240,000 140,000 200,000 120,000 160,000 100,00
Slide 34: FY2009 Annual Sales by segment
FY2009 Annual Sales by segment (in million Yen) (unaudited) 40,000 Growth rate 35,000 Consumer + 5% 30,000 18,208 All Enterprise - 10% 25,000 20,000 11,186 1,174 15,000 10,000 21,531 18,999 14,152 1,757 5,000 6,619 88 2,627 0 Japan North Europe APAC Latin America (Non-GAAP) America 34 Copyright © 20
Slide 35: FY2009 Annual Cost
FY2009 Annual Cost YoY Growth (unaudited) (in million Yen) 70,000 2,045 Goods / Material + 17% 2,398 12,382 Selling & Marketing - 0% 60,000 12,346 Administration - 17% 50,000 10,610 8,764 Outside service - 14% 40,000 8,799 7,570 Office overhead + 9% 4,751 5,185 30,000 Salary & Benefit - 5% 20,000 St
Slide 36: Trend Micro's Cash Dividend policy
Trend Micro’s Cash Dividend policy Dividend payout ratio for FY2009 : 60% (Year-end dividends on the basis of a dividend ratio of 60% excluding the effect of stock option compensation expenses) (standard base) Trend Micro’s Policy 60% X Net Income 60% X (Net Income + Stock Option Expense) Stock Opti
Slide 37: Cash Dividends for FY2009
Cash Dividends for FY2009 (unaudited) Dividends for FY2009 Stock Option Expense 2,404M Total : 12,144 Million Yen 60% 60% X (17,638M + 2,404M) 100% Per Share: 91 Yen (- 6% YoY) Net Income Payout ratio : 69% 17,638M FY2008: 97 Yen per share * Subject to the approval at the Ordinary General Meeting of
Slide 38: Return for Shareholders in FY2009
Return for Shareholders in FY2009 (unaudited) 1. Dividends* : 12,144 Million Yen 2. Buyback (done) : 538 Million Yen Total : 12,682 Million Yen （-36％ YoY） （ 72% Return based on Net Income in 2009） * Subject to the approval at the Ordinary General Meeting of Shareholders scheduled in Buyback late Mar
Slide 39: Compensation for Shareholders
Compensation for Share holders (unaudited) (in million Yen) Dividends Buyback 22,000 + 14% Total compensation for shareholders growth rate 20,000 + 139% - 2% 18,000 Total compensation per Net income ratio 6,994 - 36% 16,000 2,533 6,809 14,000 538 12,000 10,000 + 20% 8,000 + 63% 14,992 12,956 12,144
Slide 40: Q1 forecast assumptions
Q1 forecast assumptions •ＵＳ increases by low single digit, Japan flat and Europe decreases by low single digit respectively •Stock option expenses will be 0.6Bn yen •Estimated exchange rate: 1USD = 90 yen ( last year: 94 yen) 1EUR = 125 yen ( last year: 122 yen) 40 Copyright © 2010 Trend Micro Incor
Slide 41: Projection for 1Q2010
Projection for 1Q2010 (unaudited) For 1Q2010 Expected (in million Yen) Jan - Mar, 2010 YoY growth Net Sales 23,400 + 2% Operating Income 5,700 - 19% Ordinary Income 6,100 - 23% Net Income 3,600 - 25% (In accordance with Japan GAAP) • Including both stock option expenses and amortization of goodwill
Slide 42: Thank you!
Thank you! 42 Copyright © 2010 Trend Micro Incorporated. All rights reserved.
Slide 43: Appendix: Quarterly Chart (1)
Appendix Quarterly Chart (1) (unaudited) (in million Yen) FY2008 FY2009 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ｎｅｔ sale s 25,604 26,105 25,968 24,030 22,915 24,244 24,848 24,339 Co st o f sale s 4,054 3,859 4,188 3,646 3,597 3,511 3,618 4,263 O pe r atin g e xpe n se s 13,211 13,693 14,197 13,053 12,289 13,503 12,
Slide 44: Appendix: Quarterly Chart (2)
Appendix Quarterly Chart (2) (unaudited) (in million Yen) FY2008 FY2009 （ S ale s by r e gio n ） Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Japan 9,823 9,885 9,405 9,987 9,784 9,631 10,435 9,887 US 6,178 6,570 7,098 6,344 5,953 6,729 6,571 6,084 Eu r o pe 6,185 6,551 6,137 5,016 4,748 5,100 5,092 5,232 Asia P ac ific