Trend Micro Incorporated (TMICF) Q2 2023 Earnings Call Transcript

Trend Micro Incorporated (OTCPK:TMICF) Q2 2023 Earnings Conference Call August 8, 2023 3:00 AM ET

Company Participants

Mahendra Negi – CFO

Eva Chen – Co-Founder and Group CEO

Kevin Simzer – Chief Operating Officer

Akihiko Omikawa – EVP Japan and Global Consumer Business

Conference Call Participants

Hiroto Segawa – Morgan Stanley Securities

Mahendra Negi

Yes. Thank you. I hope you can see the slide. I would like to follow the top one slide and explain about the performance of Q2. This is a summary of the performance.

Net sales, 11% increased and operating income 15% increased, but ordinary income was only up by 1%. This is mostly due to the equity method affiliates, takes one for OT security start-up company, and they suffered a 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-GAAP numbers, ForEx impact when this is excluded, the revenue was up by 2%, which was lower than expectation.

Our COO, Kevin Simzer, 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 the similar explanation at their earnings announcement last week. So security investment environment is maybe getting tougher than before.

On the next slide, you can see the GAAP-based sales by region without the ForEx 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 GAAP. And again, a

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