Trend Micro Inc S/Adr

Yes, thank you. I hope you can see the slide. I would like to follow the PowerPoint slide and explain about the performance of Q2. This is a summary of the performance, net sales, 11% increase, and operating income. 15% increase, but ordinary income was only up by 1%. This is mostly due to the equity method affiliates. TX1 for ODA Security, startup company, and they suffered deficit and minus 15% of net income. Well, in overseas business, deferred tax assets have to be taken down and then it has to be built up again. And this is going to be adjusted in the next quarter. And this is why we are seeing a negative number for this particular quarter. Pre-gapped numbers, Forex impact, when this is excluded, the revenue was up by 2%, which was lower than expectation. Our COO, Kevin Simza, will explain about the main factors behind this later on. The purchase cycle for enterprise business is getting longer, and some of the deals did not really materialize in the second quarter. In the macroeconomic level, Fortinet, one of our competitors, also provided a similar explanation of their earnings announcements last week. So security investment environment is maybe getting tougher than before. On the next slide, you can see the gap based sales by region without the foreign impact. And we're seeing growth in all of the regions. EMEA, Europe growing very strongly as expected. And then we have a number by segment after gap. And again, a 13% increase in general for the enterprise business. Now, looking at the pre-gap number, excluding the Forex impact, minus 1% for Japan and minus 3% for Americas. and no longer double digit growth for Europe, only single digit growth this time. Major factors in Japan was a price increase in the previous quarter. There was a lot of front loading of the sales. So we had the double digit growth in Japan because of that, but now we have less renewals and there was a negative double digit growth and then we ended up with a negative 1% growth. In the Americas, as I mentioned before, the cycle is getting longer and these are the two biggest factors. And in the third quarter, we are already seeing recoveries. We will be seeing a recovery in this quarter, current quarter. That is our expectation. And here, again, we have the same gap and pre-gap numbers. And the enterprise is seeing a biggest decline, pre-gap of 2% against 8%. And consumer is at 2% against 3%, which means that pre-gap sales growth is mostly driven down by the enterprise business.

In regard to the subscription business, we have the ARR that is showing healthy growth. And several quarters back, it was about 30%. And this is down slightly. And it's over 20%. Meanwhile, for expenses, in the second quarter, there is an increase in the expenses. And on the upper side, you can see the software expenses and there's also the wages and the cloud expenses. Of course, as noted here, there is the foreign exchange impact, but we have this situation of the expenses. And we have been hiring. And we have stalled the recruitment slightly. We have been more cautious about hiring rather. Consequently, we have been focusing on cost control in this area. And here, the aforementioned situation is reflected. Meanwhile, when it comes to the highlights and lowlights, as for highlights, as already mentioned, we have tighter cost control, and the ARR continues to show healthy growth, and Vision One users are showing strong growth, and this will be explained later on. But for the future of our company, we'll be focusing efforts here. Meanwhile, for the lowlights, the enterprise users are going into a slower buying cycle, and in Japan, because of the front loading due to price increase, there has been a negative impact. And that's all from my side, but we have not made any changes in our annual forecast, and It will be necessary to achieve better results for the first half, but there will be explanation made from here onwards about what we are doing, and we believe that it will be possible for us to achieve this annual forecast. With that, I would like to close off my presentation. Thank you very much.

Konnichiwa. I'd like to use this time to reveal Trend Micro's second phase of the transformation. Trend Micro has been focusing on our transformation in the past two years from our own premise to SaaS platform and also on the business side from the perpetual license to the subscription. But this transformation, mainly we are focusing on attaching and moving our customer to use our SaaS management platform. This is why we believe that customer, by using the SaaS platform, they can gain better protection, better solution. But that is just portion of our product offering that is in SaaS platform. Previously, we revealed two indicators, the SaaS customer growth and commercial ARR. Commercial ARR only includes the SaaS products ARR. The reason that we revealed these two indicators is because we believe we need to excel our operation on the SaaS technology platform. At the same time, we need to make sure we can compete in a pure subscription license model, SaaS ARR. And that was why we reviewed these two type of platform. indicator. Now, we believe after Vision One released, which Kevin already explained the significance of this new Vision One, it redefined the SDR and officially announced the attack service risk management capability and introduced companion AI. All of this is going to bring Trend Micro's business operation and business transformation into a second phase. Why? Because as you can see, originally we only focusing on the 35% SaaS products revenue growth, but with Vision One, After we integrate all the on-prem product, all the appliances product, and a lot more third-party product, we become the best hybrid environment support platform. And also, we can bring all these on-premise product interaction with our customer through Vision One. And therefore, they can all benefit from the overall one platform strategy and one platform experience. So I kept on emphasizing this is for larger enterprise because we believe that is where the possible goal going to be. The recent growth of cybersecurity budget mainly are coming from the larger enterprise where they have compliances and they have a lot of the cybersecurity risk become their business risk. And when they're facing this type of maybe economic downturn, they need to consolidate all their cybersecurity and focusing on reducing the cybersecurity risk. That's where we believe Trend Micro can help customers consolidate all those and provide a one platform experience. So Trend Micro has already actually been in this transformation and large enterprise is now 61% of our business. This large enterprise, I defined it as 500 seats and above. That's where we believe they will have the Security Operations Center. By that, I would want to introduce a new indicator. We call it hybrid ARR as our growth indicator. Hybrid ARR because Trend Micro is actually the only antivirus company that has transformed from antivirus to enterprise cybersecurity risk management company. We were the only one that exists in the AV leader quadrant and now also in the XDR, EDR leader quadrant. That is the transformation and a unique part of being an antivirus company in business. is that actually antivirus has a portion of our revenue is already in subscription, which is called patent subscription. Usually if customer pay $100 for antivirus product, 30% of that is a subscription and next year they need to resubscribe this 30%. So this 30% of the renewal revenue is very profitable and very important for the antivirus company. And we carry those revenues. renewal revenue into our transformation. So if I zoom in into the larger enterprise, which composed a large portion of our ARR, then you can see over the year, this green bar are the pure source PureSus subscription ARR but the blue portion is the perpetual license which is traditional or the old products that they still have a heavy portion that is in subscription that is that is total when you add them together that is the hybrid ARR. So those blow part the perpetual license patent subscription revenue. It's very nice. It's almost like we're collecting check, but there's a drawback of it. That is a lack of the interaction. with customer and therefore it's very hard to expand from there. If you say, oh, I have my gateway and endpoint, they just use the same pattern file, doesn't provide enough reason for customer to use the same, coming from the same vendor because one plus one does not equal three. But after vision one, that game has changed. after Vision One, whenever they add more Trend Micro sensor and have more data that is stored with Trend Micro and analyzed by Vision One platform, they can better have better visibility of a day over or cybersecurity risk and faster response, quicker, earlier detection of the threats. That is why we believe the Vision One platform will actually revitalize our original other 65% of the business and stop the bleeding from this perpetual ARR and accelerate more on the subscription ARR part. That's the total reason that we believe in the future after Vision 1, we will be able to use this, we call it hybrid ARR. It's a bigger number overall, but of course the growth rate will be flatter, not as deep like the pure SaaS part. But I think it's a better indicator of how Trend Micro's business will be growing. So this transformation, of course, will affect our sales process. This whole sales process is going to follow the platform. We call it the platform way of accelerating the growth, which is we use the onboarding, the processes we try to onboard more customers. onto vision one and then increase their assess time and therefore thereby they will expand to buy more functional sensors from Trend Micro. And during this whole process, we have introduced and built several tools to help us more efficient in this platform way of selling. For instance, Cyber Risk Assessment is a tool that can help bring on the new customer without zero friction, zero cost, and zero deployment for customer. They can quickly onboard and see how Vision One works. And after that, we will navigate them through Vision One and let them understand the platform, what the platform can do for them. And during all of this, we also collect all this information and we were able to provide and customize for each of our customer a better script how our salespeople should approach the customer and how to reduce their cyber risk in the most efficient and effective way. That's the sales with generative AI. So you can see now our whole sales process become very data-driven, and we monitor all the way from the adoption to the engagement score and the expansion. the platform adoption metric is what we are going to be focusing on. Just for less than one month, we announced this new version of Vision One. We are already starting to see the attach rate, the consumption, the engagement score is expanding, is increasing, and There is something that I'd like to introduce also is we have something very similar to AWS and Azure's committed consumption that we call Vision One credits. They can buy the credits and then they they decide flexibly they want to deploy this credit either on endpoint, on server, on gateway, on tipping point, or different places. We count all this. credit deployed or allocation as they consumed the Vision One. And the last part you can see here, the green part, the first week when we announced our attack service risk management, we see a lot of customers start to allocate the Vision One credit means they adopt and spend their their credits on this new function. And that will be the way that Trend Micro utilizing the one platform experience to expand our business in cybersecurity. So Vision One is not just a beautiful PowerPoint that we talk about all this functionality. Vision One is a true business innovation and a true business renovation. for Trend Micro. In the future, I hope we can share with all the investors about how we transform our business from traditional AV to hybrid AR growth.

I know

There's a lot of moving parts when we are doing the transformation and a lot of numbers that need to be clarified. It's very hard to explain all of this different business dynamic change in a one-hour IR meeting. So we are planning to have an investor day in the second half of 2020. this year, and I hope that we can meet all of the investors and share with you how are we going to grow with this hybrid ARR on our one platform experience. Thank you.

Thanks, Eva Mahendra. Hi, everyone. My name is Kevin Simser, and I'm the Chief Operating Officer for Trent. I thought what I would do is give a little bit of an update on the overall health and some of the execution dynamics within both our enterprise and our consumer businesses. As you know from the last time I presented, we're pretty focused in on our long-term plan of hitting $2.5 billion in gross sales, $1.5 billion in enterprise ARR, increasing both our net sales growth and our earnings margin so that we can hit the rule of 40, $100 million in protected assets, $500,000 in commercial customers, running on our SaaS platform and 18 million consumer customers. That's our long-term plan. As you know, we've had this business transformation that we've been working towards over the last several years, and that's resulted in us increasing our investments on the enterprise side of the business. And you can see that when you look at this view from 2020 to 2023, where not only did the pie get bigger, the amount of business that we've been doing get bigger, but also the percentage of our business coming from enterprise also got bigger. That's by design. That's what we've been investing in. That's where we expect the growth to actually come from. Within the enterprise business, it's a $2 billion 2025 gross sales target with $1.5 billion in enterprise ARR and the 100 million in protected assets in 500,000 commercial SaaS customers that I talked about earlier. That's our long-term plan. Of course, in order to execute on that, you really have to have a nice growing addressable market. And we feel like we've got a really, really broad total addressable market. We're in both the infrastructure security space. We're in the cloud security space. And increasingly, and one of our biggest growth areas has been all things security operation center, the SOC. And that totals to about $49 billion. So there's lots of addressable market out there for us. So how will we be doing? Well, quite honestly, Q2 did not meet our internal expectations. We had plans for More than 2% year-over-year growth, $348 million with 2% year-over-year growth was where we landed. And we saw a couple of different dynamics that I thought I'd share. In Japan, we actually saw an interesting thing that we just learned as a result of increasing our prices for the first time in over a decade. We increased our prices on April the 1st. And what we saw was that we had a substantial number of customers decide to renew early in Q1 versus waiting for the price increase. It was much higher than we anticipated. And consequently, what we saw in Q2 was renewals were quite far down. For the half, Japan did very well and right on their plan numbers. But for Q2, Japan was definitely down in renewals. In the rest of the globe, we started to see sort of an attribute that not many people are talking about, but as a result of some of the economic slowdown that we're seeing, we're definitely seeing many customers introduce more procurement checks and balances in the system, a lot more approvals being needed, a lot more signatures, sometimes a much more senior level needing to be involved in order to actually approve a procurement. And we saw that in the rest of the world outside of Japan. We had six transactions over $1 million that pushed from Q2 into Q3. We didn't lose any of them. They pushed from Q2 to Q3. And in particular, we saw three very large transactions in the Americas that pushed from Q2 into Q3. So that's really what contributed to our finish in Q2, 2% year-over-year growth. That said, I want to keep everybody focused in on where we have been leaning in and building that healthier business as we've been Really moving more and more to a subscription model. We've been moving more and more to a SaaS offering. And we saw really nice results there again. $128 million in gross sales. That's up 18% year over year. So we continue to do very well within our SaaS platform. SaaS now represents 35% of our overall enterprise gross sales. So we see as that starts to get bigger and bigger, It's just a healthier part of our overall business. It's not that on-premise perpetual licenses are bad. We just see this as a lot healthier in terms of how we do our jobs of stopping threat actors and helping our customers out. Another way that we measure it is in terms of our annual recurring revenue, our ARR on the enterprise side. Up at $722 million with 23% year-over-year growth, so we continue to do a nice job of growing our overall ARR. And I'm introducing something that you haven't seen yet, and that is exposing that our ARR is actually comprised of three attributes. The existing ARR, as deals close, They are closed at different times, so that's the existing. And then how we expand within an existing customer by selling more sensors or more add-on modules. And then new is truly adding new logos on top of our SaaS platform. So we've been doing a nice job of balancing the mix, and we see that as we move forward with our recently announced Vision One platform. We had a major release that Eva talked about. It was called Project Rainbow internally. That release just happened on the 3rd of July. And it's really a game changer, not just for us, but for our customers. Major, major enhancements in terms of our overall unified cybersecurity platform approach. We have a complete unified platform with a single console. But in particular, we can now really, really feather in and support a hybrid IT environment. So if a customer chooses to continue to run on-premise offerings, we can still add XDR capabilities in a really frictionless way. And we think this is a game changer for customers and for us. The platform even included tons of integration with third party providers and also all the rage right now is generative AI and those large language models and that is incorporated directly into our platform. So we really think we can approve the overall efficiency of a SOC analyst leveraging our platform. So vision one is going to be a major priority for us in terms of our growth plans. as we move into the second half. How we think about it is customers, we have a lot of customers today and we're fixated on getting them to adopt or attach Vision One. Once they've attached, we'll focus in on usage. The way we measure that usage is in the term that we use internally called an engagement score. We're sitting at around 31% of our overall enterprise installed base accounts where we've attached Vision One, 31%. So we're doing a nice job of attaching, but there's clearly lots to go. With 8,600 customers already running Vision One, we still have a lot of customers that we can continue to attach Vision One to. So that's the one dimension. The second dimension is We really want to improve their overall use of the platform and getting as much out of it as possible. And the way we look at that is the more sensors that they end up deploying or the different sensor types in particular. Are you using an endpoint, a cloud, an email, a network, an OT sensor type? All those sensor types actually start to improve the overall engagement. And we're sitting at around 22% of our attached Vision One customers that we would deem highly engaged. So we're going to be fixated on increasing that over time. And we feel like with increasing that over time, that our $1.5 billion ARR target for 2025 is still within reach. We need to double the number of Vision One customers that we attach to. That's achievable just within our installed base. We need to move from the 22% that are highly engaged now to 60% that are highly engaged and leveraging more of the platform. And we need to focus in on adding more SaaS new logos running on our Vision One XDR platform. So we have a methodology, we have a plan. It's very targeted and we're really leaning into it. On the new logo front, I thought I would share one thing that we're doing We've just announced in Q2, we announced a brand new MSSP partner program, and this is a big deal, a game changer for us. And we've been adding a number of large partners, including Panasonic, Hitachi, IBM, Capgemini, some really big partners to actually help out our customers by leveraging our platform. We've got several customer examples, which I think really sink home. how well we've been doing in U.S. healthcare. We had a really nice expansion opportunity with a healthcare company, 75,000 employees, complex physical data center, cloud environment. CrowdStrike tried to compete against, they couldn't, we won it. We won a really nice expansion win with a manufacturer in Germany, a really, really nice deal. Overall, fantastic expansion, running three sensors, email endpoint and network again we saw microsoft and crowdstrike and they just could not compete in this particular environment and then in a retail organization in uh in the amia region uh this was a brand new logo uh crowdstrike was already deployed and we managed to replace crowdstrike because they were just looking for a unified cyber security platform that went beyond an endpoint sensor, which is what we have. We fundamentally believe in XDR. We rebranded and we've been launching that brand through a roadshow, 139 city roadshow out in front of lots of customers. And we feel like that's a good way of sharing our stories. We've had over 6,000 customers and prospects actually come out to our roadshow and hear our story. hoping to hit 10,000 by the time the tour is done. So a really nice way of getting out and telling our story. On the consumer side, $500 million in gross sales is our target, 18 million consumer customers, and 25% from non-PC, which is part of our strategy. We hit our plan, internal plan number of 2% year-over-year growth. That's what we were targeting. And in particular, getting growth in those next generation offerings. We saw some really good liftoff in the mobile channel. Telco's a lot of liftoff with 29% year over year in EMEA. Business to business to consumers. So actually offering up our consumer offering through our commercial team. That's been growing nicely. And then some future innovation around identity production that you're going to see us doing more and more of. We're starting to get some liftoff there. So we're getting growth. and the areas that we want to be getting growth. Thank you very much, everybody. I appreciate you taking the time. Look forward to any questions that you might have. Thank you.

I would like to explain about the status of business in the Japan region. I will start with this slide. This is the focus area for this fiscal year, and I'm showing you this slide once again just to go over this again. In the enterprise business, there was a global press release which started on the 3rd of July for this business. So we are refocusing on attack surface risk management, ASRM, and also XDR. And below that, you can see a whole range of different sensors. According to a third party like Gartner, well, mesh architecture is necessary, according to them, for security because different things are connected and there are so many sensors being required. But we have been working for 35 years as an antivirus company, which means that we already have many sensors and we are also able to integrate all of them. So this is a huge advantage for Trend Micro. And depending on the environment of existing users, the hybrid environment, we can also provide XDR So for the enterprise business, we will be very strongly focused on XDR. We want to promote the use of XDR and that in turn will visualize the company's risk through attack surface risk management. There are regulations that you need to comply with. And in the Western countries, for example, Europe, cybersecurity report has to be done within 72 hours. Otherwise, there's a penalty. In the United States, it should be within 24 hours. There is no such regulation for Japan, but many vendors claim to be able to do this, but they are unable to. However, our platform can do this in a speedy and efficient manner within 72 hours or 24 hours. Reporting, visualization, all of this is possible. We have a huge advantage, which we will be talking about. Now, with regard to consumer business, we want to achieve a 25% outside of PC. So beyond device security, we will be delivering more valued services. And this is the focus of our transformation. And this is a second quarter progress for the enterprise business. The first point is cybersecurity platform penetration. Compared to the end of last fiscal year, we have seen a 17% increase in the number of large enterprises using our XDR. Japan is lagging behind the US and Europe, but the number is definitely going up. And also of note, Our focus customers now have projects, including top management, and we're engaging in dialogue with these enterprises, enterprises projects. And as Kevin has mentioned today, CrowdStrike or Cyber Reason, users even are coming back to us or converting to us. So XDR and Vision One, are really driving such replacements. XDR and Vision One users are definitely seeing a new value or more new values which means that the annual trading volume per customer is growing at 36% year-on-year. So Vision One and XDR are definitely generating new values, and enterprises need to visualize company risks, especially large enterprises, have this responsibility to the society, and they definitely need to do this. And this movement has started in Europe and the United States, and it's also coming to Japan, driving the growth. And the second bullet point here is managed XDR service. We are increasing the number of partners. And service one is directly provided as a service from us. And Japan was lagging behind, but we made announcement in June. In the middle of June and before the end of the month, we already had two or three contracts with their direct service provided by Trend Micro. So the environment is becoming more complex and cyber security has been supported by expertise and efficiency is becoming more important. This is why this is happening.

For the consumer market, for beyond device security, we have seen this kind of growth in Japan. And as you know, we have large consumer sales in Japan. And for each quarter, we have continued to grow. so that for our consumer business, 10% is represented by this. And we're seeing constant growth beyond device security. There are several challenges which we faced. For example, for smartphones, the prices are a bit high, but we have quite a few features. And so, In regard to the revenue per customer, we have solidly continued to increase, and we have home network security, which is a subsidiary of Kyushu Electric. Now, our routers have been incorporated for services To be deployed and we have also enhanced our support services. We have no email that introduces the utilization. And we're able to. Look at. the increasing the track record of this. We're also preparing a diagnostic service for security measures. And on a sampling basis, we have done this to some customers. And we have been able to understand better the situation. So we have gotten a lot of feedback about having regular services like this deployed, and so therefore we're making the preparations for services here to be provided.

Right now there are a lot of cases of fraud in Android talking about memory

lacking and there has been spam mail that has been sent to customers about lack of memory and so therefore we have focused upon this and we have implemented measures in this regard so in our consumer business we have been increasing the percentage represented by our newer initiatives and with that I would like to close off my presentation thank you

I have two questions. The first one is a longer sales cycle. What is the outlook of this situation? I understand that it's a little bit slow right now, but you are engaging in discussions with clients, customers. So is the situation improving or not?

I can cover that one, Mahendra. So a couple of different things maybe to add on the sales cycle. The one thing is that we maintained our guidance for the year. And the reason why we did that was a couple of different things. One is, the reason was a couple of different reasons. Number one is we're seeing our pipeline, our sales pipeline, to be larger than what we've normally seen. So it's about 20% larger than what we would normally run for a second half. So that's definitely giving us confidence. And then the other thing that I mentioned around the longer sales cycles, I also mentioned increased approvals being needed and some of the procurement process. modifications that many companies have put in place in order to more tightly control their expenditure. The one thing we did there was we introduced in the second half some sales incentives and the sales incentives are designed in the second half to close business earlier in the half. So we don't end up, we try to avoid the situation that we found ourselves in in Q2 where deals were trying to close in the last week and we just didn't have all the signatures in place. So there's a couple of different things that we've done as we go into the second half that we feel give us the confidence to keep our guidance in place. We do see the economic backdrop just like everybody else, but we feel confident.

Thank you. Next question. Thank you.

Next question is about ARR. In 2025, 1.5 billion yen is the target. And currently, it's a 722 million, according to my understanding. Is it correct? If this is the case, you need to grow quite fast every year. And maybe that is why you're talking about Vision One. And there are two sub-questions to this. Now, 23% growth rate, this is slower than before. And is this mostly affected by ARPU or net increase? What is the factor behind this? And secondly, Vision One and other initiatives, when will they start to accelerate the growth of ARR? What is the timing of this driving ARR?

So Kevin, maybe you can go ahead with this also. Maybe I can start and others can jump in. So, you're doing the math correctly. Our current published annual recurring revenue is $722 million. It grew at 23% year over year. And it would have been higher if we would have closed the deals that we closed in Q2, but directionally, the point we were chasing by putting visibility on our ARR is that we've got this core of our business, which is growing at a much faster rate than the rest. So that's really what we were trying to do. We do feel like uh we know what the plan looks like in order to get there we will have to increase the overall growth rate and in the chart that i showed i actually laid out you know what we would have to do and it really is going to be around vision one our attack surface risk management, our XDR unified platform. And we do feel that that will be able to allow us to accelerate our growth rate as we move into the next 10 quarters that we have in order to hit our 2025 target that we've laid out for ourselves.

I think that is the part that in Kevin's slide talking about the expansion part. We believe with Vision 1, because there's a correlation between all the different products and when they work together, it's working much better. And that's why we believe after Vision 1, even our on-prem product and SaaS product and appliances product will be becoming more much easier to expand those businesses within the same customer base.

And one final point just on it. I'm not sure if you picked up on it in my chart, but on that one chart where I did talk about the Vision One attachment, where I showed the 31%, and laid out what it meant to be a highly engaged customer. A highly engaged customer actually adds $100,000, $98,000 to our overall ARR. That's highly engaged customer. The difference between a highly engaged customer and a low engaged customer, where we have a lot of those, we do have a lot low engaged, which we will be working on and really focused on. It's 4X. It's four times. So we do feel like like eva said laid out with our vision one uh recent release that we'll be in a much much better spot to be able to improve our overall engagement score as we move forward so that will drive our arr up thank you very much that's all my questions thank you very much

Now, we will unmute the next person. If you are unmuted, please identify your name and affiliation. My name is Segawa. May I ask the question? Yes, we can hear you. Please go ahead. Thank you. I have two questions. First, now with the first half over, In regard to the profits going down, could you give us some idea about this, about why this came about? And also you mentioned about cost control, but do you have this situation because costs were more difficult to control or? In regard to the profit levels that you've achieved, is it despite the fact that you carried out cost controls that it went down to this level? Well, we look at the first half and the second half, and we disclose the numbers. And when we look at the profits, there is the pre-gap numbers difference that's the biggest reason. And we had not been able to achieve the pre-gap goals. And that has been reflected in our profit levels. And as already explained, in net sales, for the second half, we believe that improvement will take place. And as for cost control, it's not reducing costs, but rather, there was the COVID situation last year that still continued. But this year, We're looking at focusing on productivity so that we can be more productive. Does that answer your question? Thank you very much. Second point I'd like to ask about is in regard to net sales. In case of Europe and the United States, you've talked about longer sales cycle. And what about America and Europe? When you look at the situation of pre-gap, I believe that you can look at the growth that you can expect. But could you tell us about the details here? And also mentioned about slowing down of the economy. And Kevin mentioned about the slippage of the large deals. And if that explains the situation, that's fine. But as you move forward with Vision One, is this going to be a major driver for the future?

Kevin.

So a couple of different questions in there, and I'll take the last one first. And the short answer is yes, Vision One, our attack surface risk management, XDR, unified cybersecurity platform, will be a major thrust for us. in the second half and beyond. That is what we're really going to get. I like the way Eva described it, where she talked about sort of the second phase that we're in now, where we're going to be much, much more focused in on that. And we feel like this new release of our unified platform is going to position us very, very well for that. Regarding the slowdown, you know, There is no question that we are seeing companies, the reason why they're putting these additional process steps in place in order to control some expenditure is not because they don't believe that they need cybersecurity. Cybersecurity is very resilient in economic slowdowns. But people are still going to be questioning any and all procurements, and we are seeing more approvals being needed. In particular, where we saw that was in the Americas and in Europe, where we definitely had the majority of the deals push from Q2 to Q3. We saw that slowdown start to happen and more due diligence being needed on those procurements.

I'd like to also answer about the cost. Actually, part of the cost increase is because of our business transforms. into more toward larger enterprise sales. Originally, if you acquire a new enterprise customer, of course, the acquisition cost is much higher than you try to acquire a smaller business, which is a very scalable business, right? So the acquisition of the enterprise customer are much higher and the support, the SE, the core personnel, all those costs will be higher. The way to expand and to start to be profitable is this type of enterprise customer is need to... up the average top tier. You need to generate more revenue from the same customer. And that's why we have mentioned about Vision One and using Vision One to expand the business from the same customer. That's how we will be improving our business and our profitability.

What were the sizes of the deals that were shifted from the second quarter to the third quarter? Can you please talk about those deals?

We had In the video part of my recording, yes, I talked about, I just zeroed in on six rather large transactions that moved from Q2 into Q3. The six transactions were over $1 million and one that was over $5 million. the largest in the americas so it they were they were large transactions that would would have had a big impact on our q2 performance had they landed thank you maybe i'll just finish just because you brought it up we did close four of the six that pushed in the month of July, just for your information.

Thank you very much.