Slide 1: Trend Micro FY2014.2Q Results
Trend Micro FY2014.2Q Results Mahendra Negi CFO, Representative Director August 12, 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. 2Q Financial Highlight
FY2014. 2Q Financial Highlight （Second quarter ended June 30, 2014） Copyright © 2014 Trend Micro Incorporated. All rights reserved.
Slide 4: Q2 Consolidated Results
Q2 Consolidated Results (in million Yen) Three months YoY ended Jun 30, 2Q2013 2Q2014 growth Net sales 27,032 27,807 + 3% Cost of sales 4,796 4,682 - 2% Operating expenses 15,804 16,005 + 1% Operating income (Margin) 6,430 （ 24%） 7,119（ 26%） + 11% Ordinary income 8,031 7,748 - 4% Net income 4,754 4,
Slide 5: Progress (6 months)
Progress （6 months） 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 (Progress of 21,786 (Progress of Forecast: 49%) 20,000 Forecast 53%) 60,000 16,056 55,325 52,815 15,000 13,769 40,000 27,517 10,000 8,937 25,783 7,338 2
Slide 6: Q2 USD based Results (Non-GAAP)
Q2 USD based Results (Non-GAAP) (unaudited) Three months (in thousand USD) ended Jun 30, 2Q2013 2Q2014 YoY change Net sales 273,747 272,199 - 1% Cost of sales 48,577 45,838 - 6% Operating expenses 160,047 156,675 - 2% Operating income 65,123 69,686 + 7% Ordinary income 81,333 75,850 - 7% Net Income
Slide 7: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) (unaudited) 13,000 12,232 + 2% 11,966 12,000 2Q2013 11,000 2Q2014 10,000 9,000 8,000 - 2% + 11% 7,000 6,085 5,939 6,000 5,594 5,022 + 1% 5,000 4,000 3,282 3,302 3,000 + 9% 2,000 1,000 675 739 0 Japan North America Europe Asia Pacific Latin America
Slide 8: Net Sales Growth by Region
Net Sales Growth by Region (in million Yen) If currency exchange rates used for 2Q2013 were used for 2Q2014: (unaudited) 13,000 12,000 11,96612,232 + 2% * ( ) : difference from GAAP base (0) 11,000 2Q2013 10,000 2Q2014 9,000 - 6% +3% 8,000 (-196) (-443) 7,000 6,085 5,743 + 1% 6,000 5,022 5,150 (+8)
Slide 9: Decomposition of Revenue (vs. last year)
Decomposition of Revenue (vs. last year） (unaudited) Exchange impact North America Asia Pacific Latin America + 29M + 613M 2014Ｑ2 Europe + 80M - 342M Net Japan + 128M sales + 265M 27,807M 2013Ｑ2 Net sales 27,032M (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 2 0 Q3 20 4 20 1 20 2 20 3 20 4 20 1 20 2 20 3 20 4 20 1 20 2 20 3 20 4 20 1 2 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
Slide 11: Sales by Segment
(in million Yen) Sales by Segment (unaudited) 13,000 12,000 + 1% Growth rate (YoY) 11,000 Consumer - 4% 10,000 All Enterprise 6,098 + 7% 9,000 8,000 7,000 6,000 + 3% - 14% 377 + 3% 5,000 2,199 4,000 + 12% - 8% 3,000 6,133 5,217 927 + 6% 2,000 3,739 - 20% 2,375 + 4% 19 1,000 + 11% 0 719 Japan North A
Slide 12: "Cloud related" Gross sales
“Cloud related” Gross sales Gross Revenue JPY'M Deep Security / Hosted / CPVM / IDF 3,500 + 16% YoY 3,000 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 2014 Q2 “Notice” As above nu
Slide 13: % share by region
% share by region 2Q2013 2Q2014 27,032 million Yen 27,807 million Yen Latin Latin Asia America Asia America Pacific Pacific 2% 3% 12% 12% Europe Japan Europe Japan 19% 44% 20% 44% North North America America 23% 21%
Slide 14: "For reference" Pre-GAAP (Revenue before adjusting Deferred revenue)
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) (unaudited) + 0% 12,811 12,866 2Q2013 2Q2014 + 2% + 6% 5,760 5,159 + 17% 5,632 4,857 3,687 3,157 + 20% 685 821 Japan North America Europe Asia Pacific Latin America “Notice” (Non-GAAP) Pre-GAAP means Revenue before
Slide 15: "For reference" Pre-GAAP (Revenue before adjusting Deferred revenue)
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) If currency exchange rates used for 2Q2013 were used for 2Q2014: (unaudited) + 0% 12,811 12,866 2Q2013 2Q2014 - 1% 5,632 5,561 - 2% + 16% 4,857 4,764 3,664 3,157 + 21% 685 829 Japan North America Europe Asia Pacifi
Slide 16: Deferred Revenue
Deferred Revenue (in million Yen) 98,000 94,396 * Total of current and long term 94,631 94,000 92,859 90,000 88,904 88,360 87,381 86,000 83,751 82,000 78,832 78,547 78,000 74,000 70,000 66,000 62,000 58,000 54,000 50,000 Jun-'12 Sep-'12 Dec-'12 Mar-'13 Jun-'13 Sep-'13 Dec-'13 Mar-'14 Jun-'14
Slide 17: Deferred Revenue by Region
Deferred Revenue by Region (in million Yen) (unaudited) 60,000 + 1% 53,579 54,019 * Total of current and long term 55,000 50,000 Mar-14 45,000 Jun-14 40,000 35,000 30,000 - 2% - 5% 25,000 20,000 + 4% 15,340 14,987 15,570 14,781 15,000 + 6% 10,000 8,753 9,132 5,000 1,475 1,386 0 Japan North America E
Slide 18: Deferred Revenue by Region
Deferred Revenue by Region If currency exchange rates used as of the end of 1Q2014 were used as of the end of 2Q2014: (in million Yen) (unaudited) 60,000 55,000 53,579 54,019 + 1% (0) * ( ) : difference from GAAP base Mar-14 50,000 * Total of current and long term Jun-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 20,000 217 370 305 2,917 476 3,174 2,858 18,000 2,820 2,829 16,000 2,812 3,117 2,908 1
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 30,348 35% 26,000 31% 29,567 28,295 24,000 27,144 26,511 32% 30% 26,774 27% 22,000 20,000 28% 25% 18,000 24% 16,000 20% 14,000 12,000 20,764 20,688 15% 20,601 10,000 18,444 19,052 18
Slide 21: Cash flows
Cash flows (unaudited) (in million Yen) 2Q2013 2Q2014 YoY growth Cash flows from operating activities 10,929 10,759 - 2% Cash flows from investing activities - 12,314 - 14,003 － Cash flows from financing activities 3,628 - 3,259 － Effect of exchange rate changes 1,527 - 274 － on cash and cash equiva
Slide 22: Headcount
Headcount Dec - 2013 Mar - 2014 5,201 5,219 Admin, Admin, Business Process Business Process Sales, Marketing Sales, Marketing 827 Technical Technical 1,505 Support Support Research, 1,228 Research, Development Development + 18 (+ 0%) 1,659 Latin Latin 66 EMEA EMEA 583 Japan Japan APAC APAC 680 US 63
Slide 23: Non-operating & Extra-ordinary Items
Non-operating & Extra-ordinary Items (unaudited) Other income Exchange loss Interest income 24M Loss on disposal of fixed assets - 178M Gain on reversal of Other expense stock option Gain on sales of 463M - 134M Interest expense - 36M - 9M 8M marketable securities Income 499M before income taxes Ord
Slide 24: Balance Sheet
Balance Sheet (unaudited) (in million Yen) Mar-2014 change Jun-2014 Assets Cash & cash equivalents 57,153 - 7,368 49,785 Account receivable (less allowance for doubtful accounts) 24,040 - 2,137 21,903 Marketable securities & Securities investments 121,908 + 12,146 134,054 Liabilities Deferred revenu
Slide 25: Q2 Highlights
Q2 Highlights • Recovery of US Enterprise business • No negative impact of consumption tax increase • Growth of strategic product revenues continues 25
Slide 26: Q2 Lowlights
Q2 Lowlights • US Consumer business still declining • Overall pricing pressure continues 26
Slide 27: FY2014 6 months Financial Highlight
FY2014 6 months Financial Highlight （January ～ June, 2014） Copyright © 2014 Trend Micro Incorporated. All rights reserved.
Slide 28: Consolidated Results (6 months)
Consolidated Results (6 months) (in million Yen) 6 months (Progress vs. (Progress vs. last year’s YoY current year’s ended Jun 30, 2013(Q1-Q2) annual result) 2014(Q1-Q2) growth annual forecast) Net sales 52,815 (49%) 55,325 + 5% (49%) Cost of sales 9,845 9,304 - 5% Operating expenses 29,201 29,964 +
Slide 29: Net Sales Growth by Region
(in million Yen) Net Sales Growth by Region (unaudited) 30,000 28,000 FY2013 Q1-Q2 + 2% 26,000 24,000 23,709 24,166 FY2014 Q1-Q2 22,000 20,000 18,000 + 3% + 15% 16,000 14,000 11,56611,938 11,227 12,000 9,801 + 3% 10,000 8,000 6,425 6,591 + 7% 6,000 4,000 2,000 1,313 1,401 0 Japan North America Europ
Slide 30: Net Sales Growth by Region
(in million Yen) Net Sales Growth by Region If currency exchange rates used for 2013（Q1-Q2） were used for 2014（Q1-Q2）: (unaudited) 30,000 + 2% 28,000 FY2013 Q1-Q2 (0) 26,000 24,000 23,709 24,166 FY2014 Q1-Q2 22,000 - 4% +2% 20,000 18,000 (-786) (-1,203) 16,000 + 2% 14,000 11,56611,151 (-44) 12,000 9
Slide 31: "For reference" Pre-GAAP (Revenue before adjusting Deferred revenue)
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) (unaudited) 27,732 + 7% FY2013 Q1-Q2 25,815 FY2014 Q1-Q2 + 3% + 8% 11,637 + 13% 11,327 10,034 9,291 6,961 + 14% 6,173 1,310 1,497 Japan North America Europe Asia Pacific Latin America “Notice” (Non-GAAP) Pre-GAAP m
Slide 32: "For reference" Pre-GAAP (Revenue before adjusting Deferred revenue)
“For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) If currency exchange rates used for 2013(Q1-Q2) were used for 2014(Q1-Q2): 27,732 + 7% FY2013 Q1-Q2 25,815 FY2014 Q1-Q2 - 4% - 3% 11,32710,885 + 12% 9,291 9,000 + 16% 6,923 6,173 1,310 1,523 Japan North America Europe Asia Pacific
Slide 33: FY2014 Cost (6 months)
FY2014 Cost (6 months) (unaudited) (in million Yen) YoY Growth 45,000 Goods / Software & － Capitalization 40,000 + 1% 930 Selling & Marketing 5,606 5,678 35,000 6,157 Administration + 9% 30,000 5,656 25,000 3,702 3,458 Outside service - 7% 2,784 2,698 20,000 Office overhead - 3% 15,000 18,109 19,332
Slide 34: 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 35: Thank You
Thank You | i ,
Slide 36: 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 27,807 Co s t o f s ale s 5,048 4,796 4,890 4,642 4,622 4,682 O pe r at in g e x pe n s e s 13,396 15,804 14,161 16,122 13,958 16,005 O pe r at in g in c o m
Slide 37: 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 12,232 US 5,480 6,085 6,001 6,047 5,998 5,939 Eu r o pe 4,779 5,022 5,138 5,631 5,632 5,594 A s ia P ac ific 3,143 3,282 3,083 3,416 3,2