Trend Micro Incorporated

This is a summary of Q3.

Lead sales grew by 6%, and operating expenses and so on grew by 1%, and operating income grew by 30%. And operating margin improved from 18% to 22%. 18% was last year. You might remember one year ago in 2022, it increased from 12% to 18%, and this year it's 22%. So we're definitely seeing improvement in terms of our operating margin. Now, total operating expenses includes the remuneration that is linked to the share price because of the share price increase. Excluding that, 16 billion yen or 24% of our operating margin is what we have posted. And pre-gap growth is only 1%, as you can see at the bottom of the slide. Kevin Sanza will explain the details later, but I would like to share just one comment about consumer business in Japan. In the case of consumer business in Japan, the three-year version sales is as big as a percentage. and the three-year version basically is renewed in advance, and there is a bit of discount that is applied. But we stopped doing that from this quarter, and we want to increase the value added. We have actually increased the price this year. So price increase and also the absence of the discount for the earlier renewal contributed. to this, and compared to last year, 7% lower in terms of consumer business in Japan. But it is not really affecting the renewal. In this quarter, the renewal is going on toward maturity, so we'll go back to the normal renewal rate in this quarter, and consumer business pre-gap growth is already being achieved in this current fiscal quarter. As I've explained before, this is a stock option related cost increase or contribution related to the share price. Approximately 1.4 billion and after adjusting that, opening income, the impact was a 16 billion or 42% increase. So not only the sales but also Our balance of sales and profit has improved in this fiscal year. Moving on to the third quarter progress. The blue line shows the actual for this year. And the last year's result is shown in red. And you can see it was up and down. But this year, there was no extraordinary situation. And as you can see in the top right, this year's forecast is expected to be achieved. and this is pre-gap sales as well as expenses trend. As I've explained earlier, pre-gap number is impacted by the minus 7% of consumer business. In terms of ARR trend, we are sharing this with a investors because we're shifting to subscription business. So rather than the actual sales, the ARR represents the situation of the company more accurately. So this is enterprise ARR. Some of the details will be explained later. As you can see on this slide, dark blue is the subscription business. And you can see the growth is very steady. On the other hand, perpetual license is decreasing in this fiscal quarter. This is minus 9%. Again, this is driving the pre-gap sales growth.

Next is cash flow compared to last year, minus 48%.