Trend Micro Incorporated

So we'd like to get started with China Micro's Q1 results for FY2024. So today we have Ohanjiro Neki, CFO and Representative Director, and also Kevin Semser, COO, and Akihiko Omikawa, Director and EVP. Kevin will be speaking through the video. And at the end of the session, we'd like to kindly ask you to fill out some questionnaires. For some of the questions, we would like to get your feedback on the IR day that we scheduled to hold this year. So without further ado, we'd like to hand over to Mahendra Nagy to go through our Q&A results. So, Mr. Nagi, please share the screen. Yes, thank you. Can you see the presentation? Yes.

So, this is a summary of the K1 results. Revenue grew by 12%. OP grew by 27%.

we were able to achieve double-digit growth for revenue and profit. Later, Kevin will offer you more details, and I will just give you the highlights. Looking at the sales growth, the enterprise revenue improved last year. In Q4, the growth rate slowed down, so there were some concerns around that. But from this fiscal year, we have started to see some improvement. And also, for the North American business, the enterprise business is growing by double digit. And looking at operating profit, the operating margin has improved by 2 percentage points. So now, in Q1, the OPM was 18%. And as you can see, this year, Our target is the improvement in the operating margin, so on that note, we were able to make a good start toward that goal. The ordinary income growth rate was higher, and this is because we had the devaluation gain of 2 billion yen on the affiliate stocks, And that's why the ordinary income grew by 52%. And looking at this quarter, the revenue and also the ordinary income achieved record high levels. And at the bottom, you can see the pre-gap numbers. The pre-gap revenue grew by 13%. A pre-gap OP grew by 32%. And the operating margin on a pre-gap basis was 18%. It improved from last year's 15%. There are some complications with these numbers. But I think that was the case in the past. But in Q1, I think we were able to see a very clear path. And this is a progress. for the four-year guidance. Revenue progress was 24%. For opening profit, the progress rate was 23%, which were both in line with our plans. The pre-gap sales and the pre-gap profit are shown here. Compared to a year, the opening margin improved from 15% to 18%. For the enterprise business, this is the ARR for the enterprise business. Previously, we were showing the subscription ARR, which is in the red here. And in terms of the dollar, the subscription ARR was 810 million, growing by 18%. And on top of that, with a dark card, brownish color. We have the perpetual ARR, and if we combine those two, we get the ARR for the enterprise. We use the word hybrid ARR, and we are combining these two ARR as enterprise ARR. Also, from this year, we are changing the way we disclose data, and we are now going to disclose this hybrid ARR. And Kevin will offer you more details later. And this is the cash flow. Nothing special to comment on this slide. And I think this is a slide that you may have high interest about. In January, we reduced the headcount, and there was a new release on that. So this quarter, They can't decrease by 249 people. On the right hand side, if you look at the pie chart, the reduction is mostly coming from sales and marketing and also tech support. This is not for cost reduction, but we would like to improve productivity by using technology. So that's why we're using generative AI. to improve the productivity of the business. And also below, you can see the geographical breakdown. The big impact was in Americas, shown in blue, and also EMEA. That's where we saw a big headcount reduction. And this is a trend of the cost. As you can see in the red box, the cost increased by 4.6 billion yen year-on-year, but most of that was due to foreign exchange. With that, before an exchange impact, the cost was relatively flat over last year. And nothing special to add on this slide. And I would like to quickly go through or summarize the Q1 highlight. As I said earlier, we were able to achieve the highest silver net revenue and annual income. And also in the U.S., we achieved double-digit growth for the enterprise business, and we were able to achieve improvement in the operating margin. And as for the guidance, we have not changed the full-year guidance. As I said earlier, this fiscal year, the big goal is to improve the operating margin. And with that, we would also like to achieve revenue growth and profit growth. And this is the That's all for me. Thank you very much.