Trend Micro Incorporated

And I would like to explain the fourth quarter performance. And this is the overview. 5% increase in net sales. And expenses was up 10%. And operating income was minus 45%. And then 2 billion net loss. This is probably not in line with the expectation, but I would like to do addition to the bottom. In the fourth quarter, what's really characteristic is that the slide is not moving at all. So should I share the screen? I think maybe there's a network problem. This is not connected. The slide is not moving forward at all. You cannot see the first screen either? No, this is just a cover page. Oh, I see.

In that case, yes.

Please share the screen. Apologies. Would you mind sharing the screen from your side? Can you see it now? Yes. Let's start with the summary page, and I'll repeat. At the top, we have net sales, as I said. And if you could pay attention to the pre-gap, post-gap versus pre-gap, the difference was about 20 billion yen or more. And as you know, Variable expense is related to pre-gap. So in the fourth quarter, we experienced the same thing last year. So there is more variable cost in the fourth quarter, compressing the operating income. And pre-gap base operating income is shown at the bottom, which is 23.2 billion yen in that positive territory. And the construction-related cost also was incurred. And on the next slide, yes, on this slide, starting from the top. Can you please go back one? Thank you. At the top, 1 billion yen. Cost was incurred in relation to the operating income. This is restructuring related. Obsolete hardware. We are trying to save expenses, costs. In order to do so, we have changed the hardware lineup. And due to that, we had extraordinary losses or expenses. And at the bottom of the slide, restructuring costs. Another item is shown here. This includes retirement expenses. Some of the employees left the company. So this is a really cost. And the reason we're doing this is because, as you'll hear from Everchance presentation, platform sales, sales and support organization, the systems have changed and we are trying to increase efficiency internally. And all of these expenses are posted in the fourth quarter. And I will talk about the forecast later, but starting from 1st of January, we can start fresh. So most of these expenses were accounted for in the fourth quarter. Without that, we would have been profitable. Next slide, please. On the left-hand side, the revenue, this is yen-denominated 100% achievement. On the right-hand side, as I have explained, there are extraordinary expenses that were posted. and only 94% achievement. And as you can see in the parenthesis in the top right, actually the achievement is 97% if you exclude these restructuring costs, but we are under by 3%. In terms of revenue in the fourth quarter, consumer sales in Japan and also overseas on-premise sales were lower than expected. So this explains the 3% underachievement. Next slide, please. As I've explained before, this is pre-gap versus total costs. You can see the trend. In the third quarter, pre-gap, post-gap were mostly in line. But in the fourth quarter, we have 58 billion, and the costs have also gone up. The red line indicates, excluding the restructuring cost, pre-gap opening profit margin was 29%, which is the same as last year. Next slide, please. Consumer and on-premise sales were worse than expected, but the subscription is showing two-digit, double-digit growth, 90% growth, especially Vision One platform sales is showing and sustaining high growth. Next slide. Cash flow status has not really changed, around 10 billion. We may be in the low spot in terms of operating income, but there is no change in cash flow. Next slide. This slide shows costs. Compared to the prior year, it's higher. But as you can see in the red part of this bar, 2.6 billion yen of weak yen impact is accounted for, and other expenses have gone up somewhat. So cost trend without the impact of FX will be shown in the later slide. This is a summary of highlights. First of all, we had highest revenue ever, and also double-digit growth in subscription ARR, and we have also implemented cost-saving measures. Not just one-off measures, but in order to grow revenue for the future, we are building the... ground so that we can maintain the cost level into the next year. This is the full year total, 100% net sales achievement, but operating income is only 94%, but it's actually 97% without restructuring cost. Net income is much lower, but this is due to the restructuring costs. And also in the third quarter, there was a lot of tax burden. And the extraordinary dividend was paid. And in addition to that, there was some extra tax in the third quarter. As you can see in green, we have a special dividend. It's usually 56. But we are adding ¥682. So per share, we are paying ¥738. And of course, this is subject to approval at the AGM on the 28th of March. Next slide. We can impact how big is that and where is it? Maybe this is difficult to see from Alice's perspective. So we are showing some of the key cost items at constant currency rate. And as you can see, COGS, this is a hardware-related inventory write-off included, and the cloud-related costs, a second one from the bottom. Last year, we built regional data center, and this year, we believe that we can keep it flat. And other than that, third one from the top, this is the biggest one, salary and benefit, headcount cost. In 23, this was 5%, and this is lower than the growth of revenue, but in this coming fiscal year, we will keep it flat, so we will try to control this. Next slide. And this year's forecast in terms of revenue, low single-digit growth in Japan and in the Americas, a slightly high end of the single-digit growth, and in Europe and Asia, 10% or more double-digit. In terms of profit, we will attempt to maintain the cost level same as the prior year, which should contribute to the improvement of profitability next slide please and this is the forecast 9% increase on an intermediate basis in net sales to 171 billion yen. So 6% growth without the FX impact. And operating income is 62% up. This is because this time around the situation is different. And another topic is shareholder return. In the third quarter, I have already explained this, but in the end, the accounts, the books have been closed and we can disclose specific numbers now. Dividends, 101 billion yen, so 738 yen per share. As I've explained, this includes 56 yen of a regular and 622 yen of one-time dividend. Other than that, 40 billion yen share buyback will be implemented starting from the 26th of the month until end of November. We will be buying back our shares.