TMICF - Trend Micro Incorporated (TMICF) Q4 2023 Earnings Call Transcript
2024-02-15 20:22:08 ET
Trend Micro Incorporated (TMICF)
Q4 2023 Earnings Conference Call
February 15 2024 2:00 AM ET
Company Participants
Mahendra Negi - Chief Financial Officer
Eva Chen - Chief Executive Officer and Co-Founder
Kevin Shimzer - Chief Operating Officer
Akihiko Omikawa - EVP Japan and Global Consumer Business
Conference Call Participants
Hideaki Tanaka - Mitsubishi UFJ Morgan Stanley
Hiroko Sato - Jefferies Japan Limited
Satoru Kikuchi - SMBC Nikko Securities
Mitsunobu Tsuruo - Citigroup Global Markets Japan
Presentation
Mahendra Negi
[Foreign Language] [Interpreted] 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 your expectation but I would like to [attention] to the bottom.
In the fourth quarter, what's really characteristic is that -- [Off Topic].
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-GAAP, post-GAAP versus pre-GAAP, the difference was about ¥20 billion or more. And as you know, variable expense is related to pre-GAAP. So, in the fourth quarter, we explained the same thing last year. So, there is more variable cost in the fourth quarter compressing the operating income. And pre-GAAP-based operating income is shown at the bottom, which is ¥23.2 billion, in that positive territory.
And the restructuring 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 cost was incurred in relation to the operating income. This is restructuring related, obsolete hardware. We are trying to save the expenses costs. In order to do so, we have changed the hardware lineup, and due to that, we had extraordinary losses or expenses.
And 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 the related cost. And the reason we're doing this is because, as you'll hear from Eva Chen's presentation, platform sales, our sales and support organization, the systems have changed, and we are trying to increase the efficiency internally. And all of these expenses are posted in the fourth quarter. And I will talk about the forecast later, but starting from 1 st 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 a 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 have explained before, this is pre-GAAP versus total costs. You can see the trend. In the third quarter, pre-GAAP, post-GAAP 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-GAAP operating profit margin was 29%, which is the same as last year....
Trend Micro Incorporated (TMICF) Q4 2023 Earnings Call Transcript