Trend Micro FY2011.4Q / Annual Results. Mahendra Negi COO/CFO, Representative Director

Transcription

1 Trend Micro FY2011.4Q / Annual Results Mahendra Negi COO/CFO, Representative Director February 16,2012

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. Copyright 2011 Trend Micro Incorporated. All rights reserved. 2

3 FY Q Financial Highlight (Fourth quarter ended December 31, 2011) Copyright 2011 Trend Micro Incorporated. All rights reserved. 3

4 Three months ended Dec 31, Net sales Cost of sales Operating expenses Operating income (Margin) Net sales Consolidated Results 4Q ,218 4,222 13,697 6,298 (26%) 4Q ,064 4,519 13,237 6,306 YoY growth - 1% + 7% - 3% + 0% Ordinary income 6,023 6, % Net income 3,172 3, % For reference Revenue before adjusting deferred revenue Pre-GAAP If currency exchange rates used for 4Q2010 were used for 4Q2011 (in million Yen) (26%) (In accordance with Japan GAAP) 26,193 26, % ( In case of excluding a foreign exchange impact ) + 4% 24,218 24, % * The JPY amount for 4Q2011 shown above has been calculated by applying to each foreign currency net sales amount for 4Q2011 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 4Q2010 into a JPY net sales amount for Japan GAAP reporting purposes. Copyright 2011 Trend Micro Incorporated. All rights reserved. 4

5 USD based Results Three months ended Dec 31, Net sales Cost of sales Operating expenses Operating income Ordinary income 4Q ,923 51, ,672 76,185 4Q ,106 58, ,143 81,536 (in thousand USD) YoY change 6% 14% 3% 7% 72,856 88,569 22% Net Income 38,369 50,048 30% 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=82.68 JPY for 4Q2010 and 1 USD =77.35 JPY for 4Q2011, respectively, which are the respective weighted average exchange rates used to convert USD net sales to JPY for these quarters. Copyright 2011 Trend Micro Incorporated. All rights reserved. 5

6 Vs. Projection analysis(operating income) Sales side Cost side + 464M + 357M 2011Q4 Projection Japan (Onetime royalty income) US Europe Admin cost related to Forex Onetime royalty payment Marketing cost 2011Q4 Actual 6,200 M 6,306M 6 Copyright 2011 Trend Micro Incorporated. All rights reserved. 6

7 (in million Yen) 13,000 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, ,100 12,028 Net Sales Growth by Region + 8% - 6% 5,124 4,803 4,671-11% 4,151 2,684-5% 2,540 4Q2010 4Q % 540 Japan North America Europe Asia Pacific Latin America (In accordance with Japan GAAP) Copyright 2011 Trend Micro Incorporated. All rights reserved. 7

8 (in million Yen) 13,000 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Net Sales Growth by Region If currency exchange rates used for 4Q2010 were used for 4Q2011: 12,028 11, % (0) 5, % (+331) 5,135 * ( ) : difference from GAAP base 4,671 4,469 2,684 2,664 4Q2010 4Q2011 Japan North America Europe Asia Pacific Latin America * Each JPY amount for 4Q2011 shown above has been calculated by applying to the relevant foreign currency net sales amount for 4Q2011 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 4Q2010 into a JPY net sales amount for Japan GAAP reporting purposes. - 4% (+317) - 1% (+123) 637-2% (+83) 623 Copyright 2011 Trend Micro Incorporated. All rights reserved. 8

9 Decomposition of Revenue (vs. last year) 2010Q4 Net sales 24,218M Japan North America + 928M + 10M - 202M Europe Asia Pacific - 20M - 14M Latin America Exchange impact - 856M 2011Q4 Net sales 24,064 M Copyright 2011 Trend Micro Incorporated. All rights reserved. 9

10 Constant currency Revenue growth (YoY) 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 2007Q1 2007Q2 2007Q3 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 Each growth rate shown above is based on applying to each quarter the same currency rate as the previous year for the same period Copyright 2011 Trend Micro Incorporated. All rights reserved. 10

11 Sales by Segment (in million Yen) 13,000 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, ,807 6,220 Japan 2,146 2,657 North America Consumer All Enterprise Growth rate + 3% - 3% 98 4, , Europe APAC Latin America Copyright 2011 Trend Micro Incorporated. All rights reserved. 11

12 % share by region Asia Pacific 11% 4Q ,218 million Yen Latin America 3% 4Q ,064 million Yen Latin America Asia Pacific 2% 11% Europe 19% Japan 46% Europe 17% Japan 50% North America 21% North America 20% (In accordance with Japan GAAP) Copyright 2011 Trend Micro Incorporated. All rights reserved. 12

13 For reference Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) 11,340 11, % 4Q2010 4Q % 5,425-6% 5,103 6,025 6,166-0% 2,753 2,744-10% 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. Copyright 2011 Trend Micro Incorporated. All rights reserved. 13

14 For reference Pre-GAAP (Revenue before adjusting Deferred revenue) If currency exchange rates used for 4Q2010 were used for 4Q2011: (in million Yen) 11,340 11, % 4Q2010 4Q % 6,025 5,425 5,461 6, % 2,753 2, % + 4% 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 Copyright to 2011 Trend some Micro Incorporated. changes All rights reserved. hereafter. 14

15 Deferred Revenue (in million Yen) 82,000 78,000 * Total of current and long term 73,562 75,956 73,940 75,102 74,000 76,434 77,928 77,771 74,599 75,456 70,000 66,000 62,000 58,000 54,000 50,000 Dec-'09 Mar-'10 Jun-'10 Sep-'10 Dec-'10 Mar-'11 Jun-'11 Sep-'11 Dec-'11 (In accordance with Japan GAAP) Copyright 2011 Trend Micro Incorporated. All rights reserved. 15

16 Deferred Revenue by Region (in million Yen) 50,000-1% 45,000 44,712 44,392 40,000 35,000 * Total of current and long term Sep-11 Dec-11 30,000 25,000 20,000 15,000 10,000 5, % 12,21712,496 10,20710,615 4% 7% 6,514 6, (In accordance with Japan GAAP) 4% 988 Japan North America Europe Asia Pacific Latin America Copyright 2011 Trend Micro Incorporated. All rights reserved. 16

17 Deferred Revenue by Region If currency exchange rates used as of the end of 3Q2011 were used as of the end of 4Q2011: (in million Yen) 50,000 45,000 44,712 44,392-1% (0) * ( ) : difference from GAAP base * Total of current and long term 40,000 35,000 Sep-11 Dec-11 30,000 25,000 20,000 15,000 10,000 5, % 12,717 12,286 10,207 8% (-210) (+370) 10,985 5% 6,514 6,744 Japan North America Europe Asia Pacific Latin America * Each JPY amount as of the end of 4Q2011 shown above has been calculated by applying to the relevant foreign currency deferred revenue amount as of the end of 4Q2011 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 3Q2011 into a JPY deferred revenue amount for Japan GAAP reporting purposes. 4% (-218) (+1) Copyright 2011 Trend Micro Incorporated. All rights reserved. 17

18 Cost (in million Yen) Stock options / Acquisition related costs Salary & Benefit Office overhead Outside service 20,000 Administration Selling & Marketing Goods / Software Amortization & Capitalization 18, ,000 3,542 2,964 3,216 3,056 3,040 14,000 2,752 2,275 2,461 2,258 2,768 12,000 10,000 8,000 6,000 4,000 2, ,887 1,807 1,655 1,532 1,716 1,300 1,317 1,328 1,280 1,243 6,982 7,369 7,384 7,094 7, ,119 1, Q2010 1Q2011 2Q2011 3Q2011 4Q2011 Copyright 2011 Trend Micro Incorporated. All rights reserved. 18

19 (in million Yen) 28,000 Pre-GAAP Pre-GAAP vs Total costs Total Costs 26,000 24,000 22,000 26,193 24,402 24,725 23,529 26,246 20,000 18,000 16,000 17,919 17,459 17,677 17,133 17,757 14,000 12,000 10,000 8,000 6,000 4,000 2, Q4 2011Q1 2011Q2 2011Q3 2011Q4 * Total costs means COGS + SGA. Copyright 2011 Trend Micro Incorporated. All rights reserved. 19

20 Cash flows (in million Yen) 項目 4Q2010 4Q2011 YoY growth Cash flows from operating activities 8,367 10, % Cash flows from investing activities - 3,725 1,678 - Cash flows from financing activities % Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents 4,384 11, % Cash and cash equivalents at beginning of this quarter period 59,751 59,390-1% Cash and cash equivalents at end of this quarter period 64,136 71, % Copyright 2011 Trend Micro Incorporated. All rights reserved. 20

21 Q4 Highlights Continued growth in Strategic products European growth recovers Copyright 2011 Trend Micro Incorporated. All rights reserved. 21

22 Q4 Lowlights Weakness in consumer and small business Law suit against a particular type of consumer auto renewal in US may affect renewal rate in 2012 Economic uncertainty keeping sales cycle long Copyright 2011 Trend Micro Incorporated. All rights reserved. 22

23 Headcount Sep ,954 Dec ,942 ADM, Business Process 767 Sales, Marketing ADM, Business Process 778 Sales, Marketing Technical Support 1, (- 0%) Technical Support 1,350 1,333 Research, Development 1,495 1,322 Research, Development 1,492 Copyright 2011 Trend Micro Incorporated. All rights reserved. 23

24 Interest income 405M Non-operating & Extra-ordinary Items Other income Exchange gain 62M Gain on sales of marketable securities Equity in gains of affiliated companies 56M 22M 2M Gain on reversal of stock option Other expense 5M 1,094M Ordinary Income Bad dept reversal Gain on redemption of marketable securities 199M 130M 995M 110M Loss on sales of marketable securities Loss on disposal of fixed assets Income before income taxes Operating Income 6,306M 6,850M 7,169M (In accordance with Japan GAAP) Copyright 2011 Trend Micro Incorporated. All rights reserved. 24

25 Balance Sheet (in million Yen) Sep-2011 change Dec-2011 Assets Cash & cash equivalents Account receivable (less allowance for doubtful accounts) 68,516 19, , ,047 71,883 20,961 Marketable securities & Securities investments Liabilities Deferred revenue (total of current and long-term) Shareholders Equity Common Stock & Additional paid in capital Treasury Stock 55,077 74,599 39,498-26, ,895 60, , , ,460 (In accordance with Japan GAAP) Copyright 2011 Trend Micro Incorporated. All rights reserved. 25

26 FY2011 Annual Financial Highlight (Full year ended December 31, 2011) Copyright 2011 Trend Micro Incorporated. All rights reserved. 26

27 Consolidated Results (Annual) Fiscal year ended Dec 31, Net sales Cost of sales Operating expenses Operating income (Margin) Net sales 95,391 16,726 54,912 23,752 (25%) 96,392 17,895 52,132 26,364 (in million Yen) (27%) YoY growth 1% 7% - 5% 11% Ordinary income 23,835 28,690 20% Net income 12,720 17,341 36% Earnings per share (Yen) % Dividend per share (Yen) % Pre-GAAP FY2010 For reference Revenue before adjusting deferred revenue FY2011 (In accordance with Japan GAAP) 101,723 98,904-3% ( In case of excluding a foreign exchange impact ) 0% If currency exchange rates used for FY2010 were used for FY ,391 99, % * The JPY amount for FY2011 shown above has been calculated by applying to each foreign currency net sales amount for FY2011 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 FY2010 into a JPY net sales amount for Japan GAAP reporting purposes. Copyright 2011 Trend Micro Incorporated. All rights reserved. 27

28 (in million Yen) 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5, ,070 42,325 Net Sales Growth by Region + 9% - 10% 22,726 20,452 18,258-6% 17, % 9,457 10,329 FY2010 FY2011-9% 2,6232,391 Japan US Europe Asia Pacific Latin America (In accordance with Japan GAAP) Copyright 2011 Trend Micro Incorporated. All rights reserved. 28

29 Net Sales Growth by Region If currency exchange rates used for FY2010 were used for FY2011: (in million Yen) 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5, ,325 46, % (0) 22,72622,512 * ( ) : difference from GAAP base - 1% (+2,060) 18,258 17,988-1% (+840) 9, % (+ 71) 10,401 FY2010 FY2011 2,623 * Each JPY amount for FY2011 shown above has been calculated by applying to the relevant foreign currency net sales amount for FY2011 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 FY2010 into a JPY net sales amount for Japan GAAP reporting purposes. - 3% (+ 146) 2,538 Japan US Europe Asia Pacific Latin America Copyright 2011 Trend Micro Incorporated. All rights reserved. 29

30 Decomposition of Revenue (vs. last year) Asia Pacific Japan + 943M + 3,744M Europe North America - 269M Latin America - 213M - 84M Exchange impact - 3,118M FY2010 Net sales FY2011 Net sales 95,391M 96,392 M Copyright 2011 Trend Micro Incorporated. All rights reserved. 30

31 For reference Pre-GAAP (Revenue before adjusting Deferred revenue) (in million Yen) 47,946 46,040-4% - 5% FY2010 FY ,111 21,052 18,713-2% 18, % 10,297 11,133-13% 2,654 2,305 Japan US 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. Copyright 2011 Trend Micro Incorporated. All rights reserved. 31

32 For reference Pre-GAAP (Revenue before adjusting Deferred revenue) If currency exchange rates used for FY2010 were used for FY2011: (in million Yen) 47,946 46,040-4% FY2010 FY ,111 23, % 18,713 19, % + 9% 10,297 11,209-7% 2,654 2,467 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 Copyright to 2011 Trend some Micro Incorporated. changes All rights reserved. hereafter. 32

33 FY2011 Annual Sales by segment (in million Yen) 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5, ,782 23,287 Japan 9, ,116 North America 16,391 Consumer All Enterprise 3,313 7,016 Growth rate + 7% - 2% 85 2,306 Europe APAC Latin America Copyright 2011 Trend Micro Incorporated. All rights reserved. 33

34 (in million Yen) 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 2,039 15,481 12,277 10,169 9,764 7,550 5,042 27,615 28,997 FY2011 Annual Cost 2,907 6,712 5,169 Goods / Software & Capitalization Selling & Marketing Administration Outside service Office overhead Salary & Benefit Stock option & Acqusition related costs YoY Growth + 43% - 21% - 4% - 11% + 3% + 5% + 12% 0 3,740 4,199 FY 2010 FY 2011 Total Headcount - 2% + 2% Copyright 2011 Trend Micro Incorporated. All rights reserved. 34

35 Constant currency Revenue transition (based on FY2005) (in million Yen) 120, , ,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 JPY net revenue amount for each fiscal year shown above is calculated using each foreign currency exchange rate applied in FY2005 Copyright 2011 Trend Micro Incorporated. All rights reserved. 35

36 Cash Dividends for FY2011 Policy for Dividend payout ratio : 65% Dividends for FY % Total : 11,313 Million Yen 100% Per Share: 86 Yen Net Income 17,341M (+ 23% YoY) FY2010: 70 Yen per share * Subject to the approval at the Ordinary General Meeting of Shareholders scheduled in late March, 2012 Copyright 2011 Trend Micro Incorporated. All rights reserved. 36

37 Compensation for Share holders (in million Yen) 22,000 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Dividends Buyback Total compensation for shareholders growth rate + 14% Total compensation per Net income ratio + 20% + 63% 1, % + 139% - 2% 2,533 6,994 6,809-36% % 4,682-26% 14,992 11,158 12,956 12,144 11,313 9,347 2,007 4,794 7,509 2,014 1, % 41% 39% 40% 93% 74% 104% 72% 73% 92% (Between FY2000 and FY2005 in accordance with US GAAP) Copyright 2011 Trend Micro Incorporated. All rights reserved. 37

38 Q1 forecast assumptions Japan and Europe decrease by mid single digit respectively, US decreases by mid-teen Stock option expenses will be 0.7Bn yen Estimated exchange rate: 1USD = 76 yen ( last year: 82 yen) 1EUR = 100 yen ( last year: 113 yen) Copyright 2011 Trend Micro Incorporated. All rights reserved. 38

39 Projection for 1Q2012 For 1Q2012 Jan - Mar, 2012 Expected YoY growth (in million Yen) Net Sales Operating Income Ordinary Income 22,500 4,600 4,900-6% - 29% - 22% Net Income 2,700-32% (In accordance with Japan GAAP) Including both stock option expenses and amortization of goodwill (about 0.9 Bn Yen) In case of excluding a foreign exchange impact (a rule of thumb) Net Sales - 1% Copyright 2011 Trend Micro Incorporated. All rights reserved. 39

40 Thank you! Copyright 2011 Trend Micro Incorporated. All rights reserved. 40

41 Appendix 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 24,015 24,064 Co st o f sale s 4,032 4,025 4,446 4,222 4,412 4,343 4,620 4,519 O pe r atin g e xpe n se s 13,653 13,900 13,660 13,697 13,046 13,334 12,513 13,237 O pe r atin g in c o me 6,042 5,567 5,843 6,298 6,520 6,655 6,881 6,306 O r din ar y in c o me 6,207 5,744 5,859 6,023 6,260 6,874 8,705 6,850 Ne t in c o me 3,529 3,237 2,781 3,172 3,995 3,934 5,540 3,871 (Co sts) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Goods / Software Amortization & Capitalization S e llin g & Mar ke tin g 3,973 3,966 3,998 3,542 2,964 3,216 3,040 3,056 Admin istr atio n 2,494 2,492 2,429 2,752 2,275 2,461 2,258 2,768 O u tside se r vic e 1,797 1,821 2,043 1,887 1,807 1,655 1,532 1,716 O ffic e o ve r h e ad 1,179 1,267 1,295 1,300 1,317 1,328 1,280 1,243 S alar y & Be n e fit 6,784 7,002 6,846 6,982 7,369 7,384 7,094 7,149 Stock option c ost Ac qu isition re late d c osts To tal 17,685 17,926 18,106 17,919 17,459 17,677 17,133 17,757 Th e n u mbe r of e mploye e s 4,575 4,727 4,831 4,846 4,848 4,882 4,954 4,942 Applie d r ate to ye n (US $ ) Applie d r ate to ye n (Eu r o) Copyright 2011 Trend Micro Incorporated. All rights reserved. 41

42 Appendix Quarterly Chart (2) FY2010 FY2010 (in million Yen) ( Sale s by re gio n ) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Japan 9,782 9,990 11,451 11,100 11,023 11,296 11,722 12,028 US 5,999 6,118 5,485 5,124 5,315 5,365 4,968 4,803 Eu r o pe 5,005 4,408 4,173 4,671 4,435 4,354 4,206 4,151 Asia P ac ific 2,254 2,314 2,202 2,684 2,570 2,691 2,528 2,540 Latin Ame ric a To t al 23,728 23,493 23,950 24,218 23,980 24,333 24,015 24,064 ( Sale s by se gme n t) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 All En t e r pr ise 15,680 15,168 15,055 15,569 15,251 14,938 14,814 15,113 Co n su me r 8,047 8,325 8,895 8,649 8,728 9,394 9,200 8,951 To t al 23,728 23,493 23,950 24,218 23,980 24,333 24,015 24,064 ( Pre - GAAP by re gio n ) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Japan 13,441 11,483 11,681 11,340 11,494 11,323 11,574 11,648 US 5,583 5,664 5,438 5,425 5,714 5,160 5,074 5,103 Eu r o pe 4,420 4,328 3,938 6,025 4,060 4,605 3,540 6,166 Asia P ac ific 2,287 2,627 2,628 2,753 2,525 3,031 2,831 2,744 Latin Ame ric a To t al 26,584 24,665 24,280 26,193 24,402 24,725 23,529 26,246 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. Copyright 2011 Trend Micro Incorporated. All rights reserved. 42