Trend Micro
FY2013.4Q / Annual Results
Mahendra Negi COO/CFO, Representative
Director
February 18, 2014

2/17/2014

Copyri...
Forward Looking Statements
Certain Statements that we make in this presentation are forward-looking statements. These forw...
FY2013. 4Q Financial Highlight

(Fourth quarter ended December 31, 2013)

2/17/2014

Copyright © 2013 Trend Micro Incorpor...
Q4 Consolidated Results
Three months
ended Dec 31,

Net sales
Cost of sales
Operating expenses
Operating income
(Margin)

...
Progress (12months)
(in million Yen)

Revenue

120,000

(Forecast 107,200)

108,314

Operating Income

35,000

29,450

30,...
Q4 USD based Results (Non-GAAP)
Three months
ended Dec 31,

(unaudited)
(in thousand USD)

4Q2012

4Q2013

298,944

282,56...
Net Sales Growth by Region
(in million Yen)

13,000
12,000

(unaudited)

12,645

+ 8%

11,656

4Q2012

11,000

4Q2013

10,...
Net Sales Growth by Region
(in million Yen) If currency exchange rates used for 4Q2012 were used for 4Q2013:

13,000

12,6...
Decomposition of Revenue (vs. last year)
(unaudited)

Exchange impact
+ 3,024M

Japan

Latin America
Europe
North America
...
Constant currency Revenue growth
(YoY)

(unaudited)

20%

15%

10%

5%

4

13
20

20

13

Q

Q

3

2
Q

1
20

13

Q

4
20
...
Sales by Segment

(in million Yen)

13,000
12,000

Growth rate (YoY)

+ 14%

11,000
10,000
9,000

+ 12%

Consumer

All Ent...
“Cloud related” Gross sales
Revenue
3,500

Deep Security / Hosted / CPVM / IDF

3,000

JPY'M

2,500
2,000
1,500
1,000
500
...
% share by region
4Q2012

4Q2013

24,313 million Yen

28,428 million Yen
Latin
Asia America
Pacific
2%
12%

Latin
Asia Ame...
“For reference”
Pre-GAAP (Revenue before adjusting Deferred revenue)
(in million Yen)

11,893 11,834

(unaudited)
- 0%

4Q...
“For reference”
Pre-GAAP (Revenue before adjusting Deferred revenue)
If currency exchange rates used for 4Q2012 were used ...
Deferred Revenue
(in million Yen)

98,000
94,000
90,000
86,000
82,000
78,000
74,000
70,000
66,000
62,000
58,000
54,000
50,...
Deferred Revenue by Region
(in million Yen)

55,000
50,000

(unaudited)

51,258 50,777 -1%

* Total of current and long te...
Deferred Revenue by Region
If currency exchange rates used as of the end of 3Q2013 were used as of the end of 4Q2013:
(in ...
Cost

(in million Yen)

22,000

Stock options / Acquisition related costs
Office overhead
Administration
Goods / Softw are...
Pre-GAAPⅴs Total Costs
(unaudited)
(in million Yen)

Pre-GAAP

Total Costs

Pre-GAAP Margin

32,000
31%

30,000
28,000

29...
Cash flows
(unaudited)
(in million Yen)

4Q2012

4Q2013

YoY growth

Cash flows from operating activities

9,398

10,741

...
Sep - 2013
5,137
Admin,
Business Process

804
Technical
Support

1,294

1,376

1,327

Research,
Development

1,696

+ 80
(...
Non-operating & Extra-ordinary Items
(unaudited)

Other expense
Other income
Interest income
Gain on sales of
marketable s...
Balance Sheet
(unaudited)
(in million Yen)

change

Dec-2013

70,003

+ 9,629

79,632

20,790

+ 3,539

24,329

107,664

+...
Q4Highlights

• Strong quarter for Cloud related products
• Improvement in operating margins

Confidential | Copyright 201...
Q4 Lowlights

• Weak performance of consumer business in North
America
• Some major Enterprise deals slipped in North
Amer...
FY2013 12months (Annual)
Financial Highlight
Full year ended December 31, 2013
(January ~ December, 2013)

2/17/2014

Copy...
Annual Consolidated Results (12 months)
12 months
ended Dec 31,

2012(Q1-Q4)

Operating income
(Margin)

Ordinary income
N...
Net Sales Growth by Region
(in million Yen)

(unaudited)

55,000
+ 6%

50,000

45,803

FY2012 Q1-Q4

48,551

FY2013 Q1-Q4
...
Net Sales Growth by Region
If currency exchange rates used for 2012(Q1-Q4) were used for 2013(Q1-Q4):
(in million Yen)

(u...
Decomposition of Annual Revenue (vs. last year)
(unaudited)

Exchange impact
+ 10,983M

Latin America
Asia Pacific
North A...
“For reference”
Pre-GAAP (Revenue before adjusting Deferred revenue)
(in million Yen)
(unaudited)

50,10450,573

+ 1%

FY2...
“For reference”
Pre-GAAP (Revenue before adjusting Deferred revenue)
If currency exchange rates used for 2012(Q1-Q4) were ...
Sales by Segment (Annual)
(単位:百万円)

(未監査)

50,000

Growth rate (YoY)

45,000

+ 9%

35,000

+ 13%

Consumer

40,000

All E...
FY2013 Cost (12 months)
(in million Yen)
YoY Growth

90,000
Goods / Software &
Capitalization

80,000
70,000
60,000

- 34%...
Constant currency Revenue transition

(based on

(in million Yen)

(unaudited)

FY2005)

120,000
110,000
100,000
90,000
80...
Cash Dividends for FY2013
Policy for Ordinary dividend payout ratio : 65%

Dividends for FY2013
Special
(Anniversary)

21%...
Compensation for Share holders
Total compensation for shareholders growth rate

(in million Yen)

(unaudited)

Total compe...
FY2014 annual forecast assumptions

•Japan and Europe increase by around 5% YoY, US
flat YoY respectively
•Non operating i...
Projection for FY2014 Annual
(unaudited)

For FY2014
Jan - Dec, 2014

Net Sales
Operating Income
Ordinary Income
Net Incom...
Thank You

41
Appendix
(unaudited)

Quarterly Chart (1)

(in million Yen)

FY2012
Q1
Net sale s

Q2

FY2013
Q3

Q4

Q1

Q2

Q3

Q4

22,6...
Appendix
(unaudited)

Quarterly Chart (2)

(in million Yen)
FY2012
( S ale s by r e gio n )
Japan

Q1

Q2

FY2013
Q3

Q4

...
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2013q4 e final_217

  1. 1. Trend Micro FY2013.4Q / Annual Results Mahendra Negi COO/CFO, Representative Director February 18, 2014 2/17/2014 Copyright © 2013 Trend Micro Incorporated. All rights reserved. 1
  2. 2. Forward Looking Statements Certain Statements that we make in this presentation are forward-looking statements. These forwardlooking 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 uncertainties. Many important factors could cause our actual results to differ materially from those expressed in our forward-looking statements. These factors include: difficulties in addressing new virus and other computer security problems;  timing of new product introductions and lack of market acceptance for our new products;  the level of continuing demand for , and timing of sales of , our existing products;  rapid technological change within the anti-virus software industry;  changes in customer needs for anti-virus software;  existing products and new product introductions by our competitors and the pricing of those products;  declining prices for our products and services;  the effect of future acquisitions on our financial condition and results of operations;  the effect of adverse economic trends on our principal markets;  the effect of foreign exchange fluctuations on our results of operations;  an increase in the incidence of product returns;  the potential lack of attractive investment targets; and  difficulties in successfully executing our investment strategy.  We assume no obligation to update any forward-looking statements. Confidential | Copyright 2012 Trend Micro Inc. 2
  3. 3. FY2013. 4Q Financial Highlight (Fourth quarter ended December 31, 2013) 2/17/2014 Copyright © 2013 Trend Micro Incorporated. All rights reserved. 3
  4. 4. Q4 Consolidated Results Three months ended Dec 31, Net sales Cost of sales Operating expenses Operating income (Margin) Ordinary income Net income (in million Yen) YoY growth 4Q2012 4Q2013 24,313 4,574 13,943 5,795 28,428 4,642 16,122 7,663 ( 24%) ( 27%) 5,579 2,680 8,713 4,656 + 56% + 74% 30,348 + 16% + 17% + 1% + 16% + 32% “For reference” Revenue before adjusting deferred revenue Pre-GAAP 26,112 ( In case of excluding a foreign exchange impact ) + 2% (Non-GAAP) If currency exchange rates used for 4Q2012 were used for 4Q2013 Net sales 24,313 25,403 + 4% * The JPY amount for 4Q2013 shown above has been calculated by applying to each foreign currency net sales amount for 4Q2013 the weighted average exchange rate between such foreign currency and JPY that was used to convert the net sales amount denominated in such foreign currency for 4Q2012 into a JPY net sales amount for Japan GAAP reporting purposes. (Non-GAAP) 4
  5. 5. Progress (12months) (in million Yen) Revenue 120,000 (Forecast 107,200) 108,314 Operating Income 35,000 29,450 30,000 100,000 (Forecast 26,400) 93,839 79,885 25,000 80,000 69,526 60,000 16,611 15,000 45,689 10,000 25,783 22,630 20,000 FY2012 22,407 20,000 52,815 40,000 21,786 FY2013 0 13,769 10,503 7,338 5,568 5,000 FY2012 FY2013 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 5
  6. 6. Q4 USD based Results (Non-GAAP) Three months ended Dec 31, (unaudited) (in thousand USD) 4Q2012 4Q2013 298,944 282,562 - 5% 56,249 46,142 - 18% 171,438 160,246 - 7% Operating income 71,257 76,174 + 7% Ordinary income 68,606 86,604 + 26% Net Income 32,963 46,284 + 40% Net sales Cost of sales Operating expenses YoY change (Non-GAAP) For each of the quarters shown in the table above, JPY Japan GAAP amounts have been converted to USD amounts using the exchange rates of USD=81.33 JPY for 4Q2012 and 1 USD =100.61 JPY for 4Q2013, respectively, which are the respective weighted average exchange rates used to convert USD net sales to JPY for these quarters. Confidential | Copyright 2012 Trend Micro Inc. 6
  7. 7. Net Sales Growth by Region (in million Yen) 13,000 12,000 (unaudited) 12,645 + 8% 11,656 4Q2012 11,000 4Q2013 10,000 9,000 8,000 + 22% 7,000 + 32% 6,047 6,000 5,631 4,975 5,000 + 19% 4,282 4,000 3,416 2,864 3,000 + 29% 2,000 534 687 1,000 0 Japan North America Confidential | Copyright 2012 Trend Micro Inc. Europe Asia Pacific Latin America 7
  8. 8. Net Sales Growth by Region (in million Yen) If currency exchange rates used for 4Q2012 were used for 4Q2013: 13,000 12,645 12,000 11,656 + 8% (0) (unaudited) * ( ) : difference from GAAP base 11,000 4Q2012 10,000 4Q2013 9,000 8,000 - 2% (-1,157) 7,000 +1% (-1,289) 6,000 4,975 4,890 5,000 4,000 + 3% (-477) 4,282 4,341 2,864 3,000 2,939 + 10% (-100) 2,000 1,000 534 587 0 Japan North America Europe Asia Pacific Latin America * Each JPY amount for 4Q2013 shown above has been calculated by applying to the relevant foreign currency net (Non-GAAP) sales amount for 4Q2013 the weighted average exchange rate between such foreign currency and JPY that was used to convert the net salesCopyright 2012 Trend Micro Inc. such foreign currency for 4Q2012 into a JPY net sales amount for Confidential | amount denominated in 8 8 Japan GAAP reporting purposes.
  9. 9. Decomposition of Revenue (vs. last year) (unaudited) Exchange impact + 3,024M Japan Latin America Europe North America Asia Pacific + 53M - 85M + 59M + 74M 2013Q4 Net sales + 989M 28,428M 2012Q4 Net sales 24,313M (Non-GAAP) Confidential | Copyright 2012 Trend Micro Inc. 9 9
  10. 10. Constant currency Revenue growth (YoY) (unaudited) 20% 15% 10% 5% 4 13 20 20 13 Q Q 3 2 Q 1 20 13 Q 4 20 13 Q 3 20 12 Q 2 20 12 Q 1 20 12 Q 4 20 12 Q 3 11 Q 20 11 20 20 11 Q 2 1 Q 4 11 20 20 10 Q Q 3 2 10 20 10 20 20 10 Q Q 1 4 Q 3 20 09 Q 2 20 09 Q 1 20 09 Q 4 20 09 Q 3 20 08 Q 2 08 20 08 20 20 08 Q Q 1 4 Q 3 20 07 Q 2 07 20 07 20 20 07 Q Q 1 0% -5% • Each growth rate shown above is based on applying to each quarter the same currency rate as the previous year for the same period (Non-GAAP) Confidential | Copyright 2012 Trend Micro Inc. 10
  11. 11. Sales by Segment (in million Yen) 13,000 12,000 Growth rate (YoY) + 14% 11,000 10,000 9,000 + 12% Consumer All Enterprise + 20% 6,595 8,000 7,000 6,000 + 3% 2,302 5,000 + 5% 390 4,000 3,000 + 30% + 32% 6,050 2,000 + 35% 5,241 1,000 3,745 + 12% + 23% 2,416 1,000 22 665 0 Japan North America Europe APAC + 80% + 28% Latin America “Notice” As Sales by Segment numbers are just for internal use, they may be subject Confidential | Copyright 2012 to some changes hereafter. Trend Micro Inc. (Non-GAAP) 11
  12. 12. “Cloud related” Gross sales Revenue 3,500 Deep Security / Hosted / CPVM / IDF 3,000 JPY'M 2,500 2,000 1,500 1,000 500 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 (Non-GAAP) “Notice” As above numbers are just for internal use, they may be subject to some Confidential changes hereafter.| Copyright 2012 Trend Micro Inc. 12
  13. 13. % share by region 4Q2012 4Q2013 24,313 million Yen 28,428 million Yen Latin Asia America Pacific 2% 12% Latin Asia America Pacific 2% 12% Europe 18% Japan 48% North America 20% Confidential | Copyright 2012 Trend Micro Inc. Europe 20% Japan 44% North America 21% 13
  14. 14. “For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) 11,893 11,834 (unaudited) - 0% 4Q2012 4Q2013 + 46% 8,172 + 17% 5,906 5,045 5,591 + 23% 3,669 2,994 + 31% 587 Japan North America Europe Asia Pacific 766 Latin America (Non-GAAP) “Notice” Pre-GAAP means Revenue before adjusting deferred revenue and sales return allowance. Confidential As these numbers| Copyright 2012 Trend Micro Inc. use, they may be subject to some changes hereafter. are just for internal 14
  15. 15. “For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) If currency exchange rates used for 4Q2012 were used for 4Q2013: (in million Yen) 11,893 11,834 (unaudited) - 0% 4Q2012 4Q2013 + 13% 6,308 - 5% 5,045 4,777 5,591 + 6% 2,994 3,172 + 12% 587 Japan North America Europe Asia Pacific 655 Latin America (Non-GAAP) “Notice” Pre-GAAP means Revenue before adjusting deferred revenue and sales return allowance. Confidential Copyright 2012 Trend Micro Inc. As these numbers| are just for internal use, they may be subject to some changes hereafter. 15
  16. 16. Deferred Revenue (in million Yen) 98,000 94,000 90,000 86,000 82,000 78,000 74,000 70,000 66,000 62,000 58,000 54,000 50,000 * Total of current and long term 83,751 79,744 75,456 87,381 88,904 88,360 92,859 78,832 78,547 Dec-'11 Mar-'12 Jun-'12 Sep-'12 Dec-'12 Mar-'13 Jun-'13 Sep-'13 Dec-'13 Confidential | Copyright 2012 Trend Micro Inc. 16
  17. 17. Deferred Revenue by Region (in million Yen) 55,000 50,000 (unaudited) 51,258 50,777 -1% * Total of current and long term 45,000 Sep-13 Dec-13 40,000 35,000 30,000 25,000 6% 26% 20,000 14,903 15,000 15,779 16,140 12,796 10,000 8% 8,173 8,792 12% 5,000 1,227 0 Japan North America Confidential | Copyright 2012 Trend Micro Inc. Europe Asia Pacific 1,369 Latin America 17
  18. 18. Deferred Revenue by Region If currency exchange rates used as of the end of 3Q2013 were used as of the end of 4Q2013: (in million Yen) 55,000 50,000 (unaudited) 51,258 50,777 -1% (0) * ( ) : difference from GAAP base * Total of current and long term 45,000 Sep-13 40,000 Dec-13 35,000 30,000 -1% (-1,090) 25,000 16% (-1,344) 3% 14,903 14,688 15,000 12,796 (-69) 14,795 10,000 6% (-376) 20,000 8,173 8,416 5,000 1,227 1,299 0 Japan North America Europe Asia Pacific Latin America (Non-GAAP) * Each JPY amount as of the end of 4Q2013 shown above has been calculated by applying to the relevant foreign currency deferred revenue amount as of the end of 4Q2013 the exchange rate between such foreign currency and JPY that was used to convert the deferred revenue amount denominated in such foreign currency as of the end of 3Q2013 into a JPY deferred Confidential | Copyright 2012 Trend Micro Inc. revenue amount for Japan GAAP reporting purposes. 18
  19. 19. Cost (in million Yen) 22,000 Stock options / Acquisition related costs Office overhead Administration Goods / Softw are Amortization & Capitalization 16,000 14,000 12,000 10,000 2,917 528 713 3,137 2,688 2,700 1,964 476 2,812 2,844 1,768 1,737 1,225 (unaudited) 370 217 20,000 18,000 Salary & Benefit Outside service Selling & Marketing 3,174 2,829 1,404 3,117 2,680 1,833 1,736 1,391 1,380 1,362 8,000 6,000 9,701 7,866 8,408 1,290 672 4Q2012 1Q2013 8,707 9,473 4,000 2,000 0 Confidential | Copyright 2012 Trend Micro Inc. 1,583 2Q2013 1,259 1,403 3Q2013 4Q2013 (Non-GAAP) 19
  20. 20. Pre-GAAPⅴs Total Costs (unaudited) (in million Yen) Pre-GAAP Total Costs Pre-GAAP Margin 32,000 31% 30,000 28,000 29% 28% 26,000 24% 24,000 22,000 32% 26,112 26,774 30,348 27,144 35% 30% 25% 26,511 20,000 20% 18,000 16,000 14,000 15% 12,000 10,000 8,000 20,601 18,517 19,052 18,444 20,764 10% 6,000 5% 4,000 2,000 0 0% 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 (Non-GAAP) * “Total costs” means COGS + SGA. 20
  21. 21. Cash flows (unaudited) (in million Yen) 4Q2012 4Q2013 YoY growth Cash flows from operating activities 9,398 10,741 + 14% Cash flows from investing activities - 19,060 - 7,538 - Cash flows from financing activities - 176 1,468 - 4,678 4,260 - 9% Net increase (decrease) in cash and cash equivalents - 5,160 8,931 - Cash and cash equivalents at beginning of this quarter period 55,606 64,848 + 17% Increase in cash due to merger of consolidated subsidiary - 169 - 50,446 73,949 + 47% Effect of exchange rate changes on cash and cash equivalents Cash and cash equivalents at end of this quarter period Confidential | Copyright 2012 Trend Micro Inc. 21
  22. 22. Sep - 2013 5,137 Admin, Business Process 804 Technical Support 1,294 1,376 1,327 Research, Development 1,696 + 80 (+ 2%) Latin 63 EMEA 565 554 620 Sales, Marketing Technical Support Research, Development EMEA US 818 1,370 Latin 67 649 Dec - 2013 5,217 Admin, Business Process Sales, Marketing 1,669 Japan Headcount Japan APAC 3,247 645 US APAC 616 3,328 22
  23. 23. Non-operating & Extra-ordinary Items (unaudited) Other expense Other income Interest income Gain on sales of marketable securities 374M Gain on reversal of stock option Exchange loss 183M -241M Interest expense -149M -1M 31M Loss on liquidation of subsidiary -728M Relocation expense 882M -232M Ordinary Income Income before income taxes 8,713M Operating Income 7,784M 7,663M (Non-GAAP) Confidential | Copyright 2012 Trend Micro Inc. 23
  24. 24. Balance Sheet (unaudited) (in million Yen) change Dec-2013 70,003 + 9,629 79,632 20,790 + 3,539 24,329 107,664 + 4,389 112,053 88,360 + 4,499 92,859 40,066 + 117 40,183 - 18,049 + 1,746 - 16,303 Sep-2013 Assets Cash & cash equivalents Account receivable (less allowance for doubtful accounts) Marketable securities & Securities investments Liabilities Deferred revenue (total of current and long-term) Shareholders’ Equity Common Stock & Additional paid in capital Treasury Stock Confidential | Copyright 2012 Trend Micro Inc. 24
  25. 25. Q4Highlights • Strong quarter for Cloud related products • Improvement in operating margins Confidential | Copyright 2012 Trend Micro Inc. 25
  26. 26. Q4 Lowlights • Weak performance of consumer business in North America • Some major Enterprise deals slipped in North America • Continued pricing pressure on traditional security products Confidential | Copyright 2012 Trend Micro Inc. 26
  27. 27. FY2013 12months (Annual) Financial Highlight Full year ended December 31, 2013 (January ~ December, 2013) 2/17/2014 Copyright © 2013 Trend Micro Incorporated. All rights reserved. 27
  28. 28. Annual Consolidated Results (12 months) 12 months ended Dec 31, 2012(Q1-Q4) Operating income (Margin) Ordinary income Net income Earnings per share (Yen) Dividend per share (Yen) 93,839 17,511 53,920 22,407 108,314 19,378 59,485 29,450 ( 24%) Net sales Cost of sales Operating expenses ( 27%) 22,661 13,447 102.21 67.00 32,456 19,595 147.53 125.00 “For reference” Revenue before adjusting deferred revenue Pre-GAAP 2013(Q1-Q4) (in million Yen) (Progress vs. YoY current year’s growth annual forecast) 98,577 + 15% (101%) + 11% + 10% + 31% (112%) + 43% + 46% + 44% + 87% (116%) (115%) *including special dividends 110,778 ( In case of excluding a foreign exchange impact ) + 12% + 1% (Non-GAAP) If currency exchange rates used for 2012(Q1-Q4) were used for 2013(Q1-Q4) Net sales 93,839 97,330 + 4% * The JPY amount for FY2013 shown above has been calculated by applying to each foreign currency net sales amount for FY2013 the weighted average exchange rate between such foreign currency and JPY that was used to convert the net sales amount denominated in such foreign currency for FY2012 into a JPY net sales amount for Japan GAAP reporting purposes. (Non-GAAP) 28
  29. 29. Net Sales Growth by Region (in million Yen) (unaudited) 55,000 + 6% 50,000 45,803 FY2012 Q1-Q4 48,551 FY2013 Q1-Q4 45,000 40,000 35,000 + 25% 30,000 + 25% 23,615 25,000 20,571 18,869 20,000 + 21% 16,396 15,000 10,676 12,925 + 27% 10,000 5,000 2,093 2,650 0 Japan US Europe Asia Pacific Latin America 29
  30. 30. Net Sales Growth by Region If currency exchange rates used for 2012(Q1-Q4) were used for 2013(Q1-Q4): (in million Yen) (unaudited) 55,000 50,000 45,000 45,803 48,551 + 6% (0) * ( ) : difference from GAAP base FY2012 Q1-Q4 FY2013 Q1-Q4 40,000 + 2% (- 4,306) 35,000 - 1% (- 4,294) 30,000 25,000 18,869 19,308 20,000 + 2% (- 1,992) 16,396 16,276 15,000 + 8% 10,676 10,000 10,933 5,000 (- 389) 2,093 2,260 0 Japan US Europe Asia Pacific Latin Am erica (Non-GAAP) * Each JPY amount for 2013(Q1-Q4) shown above has been calculated by applying to the relevant foreign currency net sales amount for 2013(Q1-Q4) the weighted average exchange rate between such foreign currency and JPY that was used to convert the net sales amount denominated in such foreign currency for 2012(Q1-Q4) into a JPY net sales amount for Japan GAAP reporting purposes. 30
  31. 31. Decomposition of Annual Revenue (vs. last year) (unaudited) Exchange impact + 10,983M Latin America Asia Pacific North America Japan + 439M + 256M Europe + 166M - 119M FY2013 Net sales + 2,748M 108,314M FY2012 Net sales 93,839M (Non-GAAP) 31
  32. 32. “For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) (unaudited) 50,10450,573 + 1% FY2012 Q1-Q4 FY2013 Q1-Q4 + 20% + 30% 22,768 18,896 21,738 + 22% 16,774 12,995 10,616 + 24% 2,185 Japan US Europe Asia Pacific 2,702 Latin America (Non-GAAP) “Notice” Pre-GAAP means Revenue before adjusting deferred revenue and sales return allowance. As these numbers are just for internal use, they may be subject to some changes hereafter. 32
  33. 33. “For reference” Pre-GAAP (Revenue before adjusting Deferred revenue) If currency exchange rates used for 2012(Q1-Q4) were used for 2013(Q1-Q4): (unaudited) (in million Yen) 50,573 50,104 + 1% FY2012 Q1-Q4 FY2013 Q1-Q4 - 1% + 2% 18,896 18,636 16,774 17,179 + 4% 10,616 11,071 + 6% 2,185 2,306 Japan North America Europe Asia Pacific Latin America “Notice” Pre-GAAP means Revenue before adjusting deferred revenue and sales return allowance. As these numbers are just for internal use, they may be subject to some changes hereafter. (Non-GAAP) 33
  34. 34. Sales by Segment (Annual) (単位:百万円) (未監査) 50,000 Growth rate (YoY) 45,000 + 9% 35,000 + 13% Consumer 40,000 All Enterprise + 17% 24,502 30,000 25,000 + 3% 20,000 + 22% 9,649 1,420 + 33% 15,000 10,000 + 28% 24,049 19,151 + 25% + 10% 3,743 + 163% 13,966 5,000 9,182 0 Japan North America Europe APAC + 26% 93 + 24% 2,556 Latin America “Notice” As Sales by Segment numbers are just for internal use, they may be subject (Non-GAAP) to some changes hereafter. 34
  35. 35. FY2013 Cost (12 months) (in million Yen) YoY Growth 90,000 Goods / Software & Capitalization 80,000 70,000 60,000 - 34% Selling & Marketing - 3% 1,777 2,705 12,020 11,610 11,454 Administration + 16% 7,272 + 11% + 20% 5,539 40,000 6,821 4,980 + 7% Salary & Benefit 9,848 Outside service Office overhead 50,000 30,000 20,000 (unaudited) 30,219 36,289 Stock option & Acqusition related costs + 2% 10,000 0 4,836 4,919 FY 2012 Q1-Q4 FY 2013 Q1-Q4 + 10% Total Headcount + 2% (Non-GAAP) 35
  36. 36. Constant currency Revenue transition (based on (in million Yen) (unaudited) FY2005) 120,000 110,000 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 (Non-GAAP) •JPY net revenue amount for each fiscal year shown above is calculated(Non-GAAP)foreign currency using each exchange rate applied in FY2005 36
  37. 37. Cash Dividends for FY2013 Policy for Ordinary dividend payout ratio : 65% Dividends for FY2013 Special (Anniversary) 21% 100% Net Income (considering special dividends, payout ratio 86% ) Per share: (ordinary) 95 Yen (+42% YoY) Ordinary 19,595M Total: 16,857 million Yen 65% + (Special) 30 Yen *25th Anniversary of the Company’s initiation Total Dividends per share: 125 Yen *FY2012: 67 Yen per share * Subject to the approval at the Ordinary General Meeting of Shareholders scheduled in late March, 2014 37
  38. 38. Compensation for Share holders Total compensation for shareholders growth rate (in million Yen) (unaudited) Total compensation per Net income ratio 22,000 Dividends Buyback + 14% + 112% 20,000 + 139% - 2% 18,000 1,848 2,533 16,000 + 71% 6,994 - 36% 6,809 14,000 4,682 538 12,000 - 26% 10,000 - 45% + 20% 8,000 16,857 14,992 + 63% 6,000 + 90% 1,466 4,000 12,956 12,144 11,158 11,313 9,347 8,814 7,509 2,007 2,000 2,014 4,794 1,829 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 26% 41% 39% 40% 93% 74% 104% 72% 73% 92% 65% 95% (Between FY2002 and FY2005 in accordance with US GAAP) 38
  39. 39. FY2014 annual forecast assumptions •Japan and Europe increase by around 5% YoY, US flat YoY respectively •Non operating income will be around 1.9Bn yen and there will be no Extra-ordinary items •Estimated exchange rate: 1USD = 100 yen ( last year: 98 yen) 1EUR = 138 yen ( last year: 130 yen) Confidential | Copyright 2012 Trend Micro Inc. 39
  40. 40. Projection for FY2014 Annual (unaudited) For FY2014 Jan - Dec, 2014 Net Sales Operating Income Ordinary Income Net Income Expected YoY growth 112,000 + 3% 30,100 32,000 19,100 (in million Yen) + 2% - 1% - 3% In case of excluding a foreign exchange impact (a rule of thumb) Net Sales Confidential | Copyright 2012 Trend Micro Inc. + 2% (Non-GAAP) 40
  41. 41. Thank You 41
  42. 42. Appendix (unaudited) Quarterly Chart (1) (in million Yen) FY2012 Q1 Net sale s Q2 FY2013 Q3 Q4 Q1 Q2 Q3 Q4 22,630 23,058 23,836 24,313 25,783 27,032 27,069 28,428 4,058 4,488 4,390 4,574 5,048 4,796 4,890 4,642 13,003 13,636 13,337 13,943 13,396 15,804 14,161 16,122 O pe r at in g in c o me 5,568 4,934 6,108 5,795 7,338 6,430 8,017 7,663 O r din ar y in c o me 5,804 5,043 6,233 5,579 7,646 8,031 8,064 8,713 Ne t in c o me 3,283 3,285 4,196 2,680 4,820 4,754 5,363 4,656 Co st o f sale s O pe r at in g e xpe n se s (Co st s) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Go o ds / S o ft war e Amo r t izat io n & Capit alizat io n S e llin g & Mar ke t in g 610 1,004 562 528 713 217 476 370 2,779 3,051 3,051 3,137 2,688 2,917 2,829 3,174 Admin ist r at io n 2,428 2,348 2,370 2,700 2,844 2,812 2,680 3,117 O u t side se r vic e 1,559 1,708 1,785 1,768 1,737 1,964 1,736 1,833 O ffic e o ve r h e ad 1,237 1,285 1,231 1,225 1,380 1,404 1,362 1,391 S alar y & Be n e fit 7,464 7,697 7,192 7,866 8,408 9,701 8,707 9,473 S t o c k o pt io n c o st 625 688 1,191 952 429 1,330 1,008 1,131 Ac qu isit io n r e lat e d c o st s 356 340 344 337 242 252 250 272 17,061 18,124 17,728 18,517 18,444 20,601 19,052 20,764 Th e n u mbe r o f e mplo ye e s 4,913 5,017 5,080 5,137 5,094 5,110 5,137 5,217 Applie d r at e t o ye n (US $ ) 79.43 80.10 78.62 81.33 92.47 98.75 98.96 100.61 Applie d r at e t o ye n (Eu r o ) 103.96 102.79 98.40 105.60 121.89 128.91 131.09 136.97 To t al Confidential | Copyright 2012 Trend Micro Inc. 42
  43. 43. Appendix (unaudited) Quarterly Chart (2) (in million Yen) FY2012 ( S ale s by r e gio n ) Japan Q1 Q2 FY2013 Q3 Q4 Q1 Q2 Q3 Q4 10,874 11,162 12,109 11,656 11,742 11,966 12,196 12,645 US 4,369 4,758 4,765 4,975 5,480 6,085 6,001 6,047 Eu r o pe 4,193 4,003 3,916 4,282 4,779 5,022 5,138 5,631 Asia P ac ific 2,615 2,640 2,555 2,864 3,143 3,282 3,083 3,416 577 493 489 534 637 675 649 687 22,630 23,058 23,836 24,313 25,783 27,032 27,069 28,428 Lat in Ame r ic a To t al ( S ale s by se gme n t ) All En t e r pr ise Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 15,025 14,280 14,483 15,135 16,383 17,040 17,362 18,118 7,605 8,777 9,353 9,177 9,400 9,991 9,706 10,310 22,630 23,058 23,836 24,313 25,783 27,032 27,069 28,428 Co n su me r To t al ( P r e - GAAP by r e gio n ) Japan Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 12,628 12,870 12,712 11,893 13,004 12,811 12,923 11,834 US 4,981 4,228 4,640 5,045 5,694 5,632 5,535 5,906 Eu r o pe 4,013 4,203 2,965 5,591 4,434 4,857 4,274 8,172 Asia P ac ific 2,488 2,630 2,502 2,994 3,016 3,157 3,152 3,669 618 497 482 587 625 685 625 766 24,730 24,430 23,304 26,112 26,774 27,144 26,511 30,348 Lat in Ame r ic a To t al “Notice” Pre-GAAP means Revenue beforeTrend Micro Inc. adjusting deferred revenue and sales return allowance. Confidential | Copyright 2012 As these numbers are just for internal use, they may be subject to some changes hereafter. 43

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