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Tokyo Feb 19, 2020 (Thomson StreetEvents) -- Edited Transcript of Trend Micro Inc earnings conference call or presentation Tuesday, February 18, 2020 at 7:00:00am GMT

Trend Micro Incorporated - Executive VP, GM of Japan, Global Consumer Business & IoT Business Promotion and Director

Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., Research Division - Senior Analyst

* Hiroko K. Sato

We're sorry to have kept you waiting, and now the time has come so we would like to begin the Trend Micro Fourth Quarter Financial Highlights Presentation.

We must first apologize for the fact that our CEO, Eva Chen, is not present here because of the Corona Virus we have seen the situation changing, and also because of the guidelines within the company for overseas trips we have forbidden overseas travel for personal purposes. And we deliberated the possibility of Eva Chen participating, but it was decided that through a video conference system she will be participating from overseas. Now we have our CFO, Mahendra Negi, who will be talking about the FY 2019 4th quarter financial highlights. And then from Eva Chen, we'll be hearing about the situation of 2019 as well as future strategy. And then Mr. Omikawa will be talking about the overall business situation in Japan.

And we have the presentation handouts not handed out yet to everybody, but this will be uploaded to our website later on.

Mahendra Negi, Trend Micro Incorporated - Group CFO, Executive VP & Representative Director [2]

This is Negi speaking. This is the actual results of the fourth quarter, I'm having difficulty with presentation.

I'm sorry for the delay. This is the actual results. We have a 4% increase in net sales and minus 1% for operating income, and you may think that this is less than what we expected. However, if you look at the pre-GAAP net sales, then you can see that there is a 9% growth. And it is -- for the first time, we are over JPY 53 billion, and it's excluding foreign exchange impact, plus 12%. But post-GAAP numbers are like this. We will be going into the details later on, but we believe that the fourth quarter results had been better than anticipated. This is our results as opposed to the annual forecast, and you can see that it's a 98% progress of forecast and 99% progress of forecast in terms of operating income. And if there were no fluctuations in the exchange rate we should have been able to have 100% attainment, but anyway, these are the results for the yen-denominated results, and then this is the dollar-denominated results.

As for net sales growth by region, excluding FX, then we can see that we're seeing growth. It's minus 4% in North America, but for pre-GAAP, we will see that numbers have been positive.

In regard to this slide, this is in comparison to past numbers, and if we have constant currency then this is the growth rate. And we've been explaining about this but there is a peak there. This is the acquisition of tipping point that is reflected. And last year, we had this peak because of the cycle, and now we've gone down in the third and fourth quarters, and now we're seeing recovery at this point.

This is the sales by segment. We have the consumer and enterprise, both combined here and both show positive growth. And there's -- it seems like it's negative numbers for North America, but we will be explaining about this later on, and you'll see that the results have been positive here as well.

As for enterprise sales in the form of hybrid infrastructure protection and also the user protection, we have seen that in the fourth quarter, both have seen double-digit growth. In the hybrid infrastructure protection, we have seen anticipated double-digit growth. Meanwhile, for user protection -- in antivirus measures taken, we are seeing growth because with the cloud security on Office 365 we have that reflected as well. We have a major deal here. And later on Eva Chen will be explaining about XDR. XDR is the next-generation response on our part for devices. And we have seen because of major deals, double-digit growth here.

This is the percentage of share by region. This is the pre-GAAP results, and if we exclude the FX impact, as already mentioned, in all regions, we have seen positive results. And we've seen this 5% in Europe, and we have especially high-growth in Europe and EMEA. So we have quite a high-growth rate in this area.

And then for the enterprise as well as the consumer market. If we look at the pre-GAAP results, then we see that there has been growth in both and it's 12% growth in -- there we can see in enterprise and the consumer also shows growth. And one reason is because of the end of service of Windows 7 and also because of the growth in the mobile channel that we see good results.

As for the North American region update, in this slide, you can see that we do not give estimates of each region, but in regard to the situation of North America, we have a temporary situation so we have this slide prepared. This is the last time. And for the third quarter, what we anticipated, and what the actual results in the fourth quarter, we were looking at 15% to 20% growth from the third quarter to the fourth quarter. And ultimately, we were able to grow 32% quarter-over-quarter and 6% year-over-year growth from the third quarter to the fourth quarter. So we have seen good growth here. And in the enterprise market, unfortunately, we are continuing to see negative results.

As for the outlook of 2020, overall, we believe it will be flat. But for the enterprise business, there will be negative results. There will be increase in the enterprise business, but a decline in the consumer business. So that, overall, it should be flat for 2020. This is the deferred revenues. In the previous meeting, we mentioned about the FX impact, leading to a decrease here, and there may be some FX impact but the major impact here is, as already mentioned, the enterprise sales has been good. And if it concentrates in December, then the deferred revenue area became large although this was not posted on the balance sheet, this number has increased. And this is the deferred revenue by region. Meanwhile, for the expenses, you can see that the biggest element is the salaries. The reason why this has increased is because, in regards to salaries, this is the sales before deferred revenues. And so there is a linkage to the salary and bonuses that's reflected.

And on the upper side, as the stock prices go up, we see an increase in this area. And for selling and marketing, this has increased because there has been major events and this was concentrated in the fourth quarter, like in the case of the last year. So each quarter, this has increased. And as for the cloud area in green, this has increased and this is because of the SaaS-related expenses, and this will continue to increase from here onwards. Meanwhile, for pre-GAAP net sales, if we look at the profits, we have set a record in our company here. And we have the bonuses for employees that have been taken into calculation. And the reason why the salaries have increased is because the pre-GAAP increase that we see here.

As for cash flow, the reason why this is negative is because of the uncollected accounts receivables. And this should be resolved with the turn of the year, and we have increased by 153 persons. There was a Cloud Conformity, a cloud company that was acquired in October. This accounted for 50 persons and also research and development as well as for the customer-facing area, we have increased personnel. And we have the highlights and low lights.

As for Q4 highlights, as already mentioned, the enterprise business has seen double-digit growth. And in North America, we have seen pre-GAAP year-over-year growth turned positive. And furthermore, in the consumer business, in Japan, focusing on mobile, we have seen growth.

(foreign language)

lowlight, negative 1% of operating income. And the sales is deferred, but the cost is not really deferred, and that is impacting negatively the operating income. SaaS back-end cost is increasing, as I mentioned before, and these are some of the lowlights.

Looking at the full year numbers. We have been announcing this every quarter, so I don't have any additional comments except for the dividends, which you may be interested in.

Sometimes, when we speak to our investors, we say that we don't know what's going to happen tomorrow. And sometimes the investors feel some concerns, but this is going back all the way to 2005. At constant exchange rate, the revenue is increasing steady over time. Although we don't know exactly what would happen tomorrow. Our business model is very stable. And this is the dividend. Payout ratio is the same at the 70% of net income. And after-tax negative impact of TippingPoint related amortization is added JPY 160 per share, pending approval at the shareholders' meeting.

This is the planned dividend. This is lower by 2% compared to the previous term. Last year, it was JPY 163. This is due to loss on exchange rate. And the yen-based dividend is stronger than the American dollar-based dividends. Moving on to shareholder compensation.

Last year, we conducted share buyback, 99% of our company's cash flow is basically returned to our shareholders in the form of dividends, 95% of the profit. We don't conduct shareholders -- share buyback every year, but if there is excess cash, we do consider share buyback. And if you combine share buyback and dividends, as you can see, we are returning a high level of cash to our shareholders.

For FY '20, this is the outlook. 5% growth is expected in Japan and the flat growth in North America and the Europe. And the JPY 118 to JPY 120 is used, so basically flat growth. And in Asia, we expect about 10% growth. Salaries and cloud usage cost is expected to increase. I'm sure that Eva will talk about SaaS and our focus on SaaS, which means that SaaS back-end costs will further increase.

So cost will increase due to salary increase and cloud-related costs and the profit is expected to be flat. Now ordinary income is supposed to be showing a negative growth, 5% growth in net sales, but the flat growth in operating income due to increased expenses. The reason we have minus 3% for order income is because of interest income is expected to reduce according to (inaudible) expectations, there may be some changes in the financial instruments, and that we expect a negative growth of 3% for ordinary income. That's all from me. Thank you.

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Eva Chen, Trend Micro Incorporated - Co-Founder, Group CEO & Representative Director [3]

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I'm really sorry that I cannot be there in person for this meeting because of the Corona virus. So (inaudible), many other companies will restrict the air travel and since that so I decided not to fly, or so complying to the company policy. So excuse me for making this presentation from [Macau] this time. So I'd like to talk about Trend Micro's strategy, how are we going to grow? We believe our growth opportunity comes from a strategy we call it Cloud Accidents. Let me clear what is Cloud Accidents? And what is the current situation in the digital transformation? I think in past 10 years, we've been talking about all this cloud, big data, AI, and there's a lot of transformation happened in digital world where smart factory, smart car are starting to boom, but unfortunately, this type of digital transformation also introduced a lot more risk, higher risk for the over or (inaudible) enterprise organization operation. Actually, 73% of the organization has better reach than last year.

(technical difficulty)

So -- sorry, I don't know where the connection broke, but we were talking about... hello?

Are we back?

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Operator [4]

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Yes.

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Eva Chen, Trend Micro Incorporated - Co-Founder, Group CEO & Representative Director [5]

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Okay. I'm sorry. I don't know where we broke, look like we still need 5G in the future.

So I think most of this risk related because of lack of visibility and connectivity across environment because cutting operating different organization, and therefore, they don't have the overall visibility of company's cyber security standards.

And therefore, we believe our strategy is by securing connective work through what we call Cloud Accidents. Cloud Accidents has twofold. The first one, instead, we want to enable our customers, empower them to have securely delivered application from the cloud in a multi cloud environment. We will talk about multi-cloud environment later.

And the second fold of this Cloud Accidents means that Trend Micro ourselves, we need to be able to deliver more [agile], more scalable solution for our customers, which is following a (inaudible) operation and deliver constantly innovation to our customer. That's Trend Micro, ourselves, need to be Cloud Accidents. So with this strategy, I'm very excited to introduce that Trend Micro's, new product portfolio that we are going to introduce and focus on in 2020. We look at the current environment, multi-cloud migration and new call native application improvement, is what our customers are facing right now.

They might be using Microsoft Office, that's one cloud, but they have a lot of server. Marketing, server, web server, running on AWS, for instance. And therefore, they have multi cloud environment. (inaudible) continue to deploy over this cloud native applications. And therefore, as we can see the number, by 2020, 90% of the software development is going to be following a DevOp environment, DevOp process, which means it constantly updates in the cloud. And therefore, by 2023, at the least, 99% of the security's fault is customer's fault. What do we mean by customer's fault? Misconfiguration, multi cloud and very complicated environment caused miscommunication -- misconfiguration and user behavior that you cannot foresee and also by the lack of total visibility. So that's why we introduced 2 major product portfolio. The first one is what we call Cloud One. Cloud One is a security service platform for all the cloud builder. They are building their cloud application, and therefore, they need a best cyber security, cloud security platform, and that is going to be from Trend Micro.

Trend Micro has been delivering workload security, container security and last year -- end of last year, we introduced application, cloud application security through our acquisition of Immunio. And this year, we continue to introduce 5 storage security: Conformity, which is cloud configuration management and cloud compliance scanning. That is through our acquisition with the Cloud Conformity company and lastly, we also innovate from our TippingPoint solution, and we move our IPS to cloud IPS. We are introducing cloud IPS solution. So overall, Trend Micro has the most complete cloud security portfolio, and we integrated it to enable customers cloud migration, cloud native application deployment and cloud operation excellence. And all of this is through our Trend Micro's Accidents because this whole Cloud One platform is all cloud native, is a SaaS-based platform, and is the most effective (inaudible) cloud security service. And very often customer -- or people might ask, this security solution will be offered by the cloud infrastructure provider, but as you can see in the middle of this cloud there's Microsoft as well, VMware, Google, Google Cloud, AWS.

Trend Micro's advantage over the cloud infrastructure provider is multi-cloud -- multi-cloud solution. Customers always have different applications in different clouds, but they need to have a overall cybersecurity visibility and control. And that's what Trend Micro's Cloud One can provide for our customers, multi-cloud solution. So that's why we are very excited about our first solution steps, Cloud One. Next on -- and actually, you can see Trend Micro's just the server, the cloud workload security, we are the most advanced, and it's the high scorer by Forrester research. And also, we already own the largest market share for cloud security, work alone, but and especially, this market is a growing market, almost 40% year-on-year growth margins. And I believe with all this complete, Cloud One platform not only we cover just the cloud workload market but also cloud security, Cloud Conformity, all this different area. So we believe our strategy of Cloud One can bring Trend Micro into the real cloud security #1 company in the world.

So next, we're talking about the other sets of solution. Once customers application are all in the cloud, they provided all this solution for their employees and for their customer. That means that the service moving to the cloud, the user become more mobile. You cannot lock your user behind the firewall anymore. Plus, the extended network because of smart cars, smart factories, smart hospital, smart banking all of this, there's a lot more operation is outside of the IT environment.

And therefore, this makes the future enterprise or future organization facing the challenge of the visibility. How are we going to do the visibility and security? We see that the rapid expansion of this, the central visibility and detection and response is the strong demand, strong request for the customers because too many tools, alert and too long to detect, and therefore, 88% of organizations will increase their spending on detection and response in the next 18 months to address cross layer visibility gap.

I'd like to especially mentioned cross layer visibility gap because in the customer environment today, we cannot just focus on endpoint in the server. If you want to have overall visibility, you need to have cross layered action and Trend Micro is the only cybersecurity company that have all the solutions from cloud, network, IoT servers, endpoint e-mail, we have not only a sensor, but also the solution, and we can connect them altogether, correlate all this information and give customer a total visibility. That's the power of Trend Micro's XDR. So Trend Micro, the XDR, we can enable customers to have a unified visibility, detection and investigation. And what they see is not just millions of log, it's actionable. It can be prioritized and customer will have fast response whenever they have an incident. That's Trend Micro. And Trend Micro are delivering this through our Cloud Accidents. We have the data lake, we have the expert security analysis, the AI engine in the cloud, and the global threat intelligence, and all this solution are SaaS-based and can support on-the-premises. I especially want to mention this, in this space actually, about 50% of the customer are still totally on-prem. 20% of the customer right now is all SaaS. And in the middle, there's 30% of people that was using hybrid.

When the customer wants to move from on-prem to Saas. Usually, they need to move through the hybrid environment, which means some of operations still on Prem and some of the security already on SaaS. And that is what Trend Micro's advantage is, because our competitor in -- on prem, Symantec, Macafee, they don't have SaaS solution. And our another new generation competitor like Qualtrics, Cylance they don't have any on prem solution. Trend Micro is the only company that can provide both on prem. We have all the knowledge or the experience of supporting the on-prem environment. And we have the best SaaS-based cloud solution. And therefore, we can be the best one to help our customer move from on-prem through hybrid onto the SaaS solution. So that's our XDR another -- I would call, the advantage, the hybrid environment that Trend Micro can provide. So, I think, I've been talking about all this customer count in the past few years, but this will be my last year that I talk about this customer -- new customer count in different product sets because we will move to a more consolidated solution. And therefore, our numbers that we will be watching is, how can we help our customer move from on-prem to SaaS. And this line of the SaaS customer action is what we are watching, and as you can see, in 2019, our line across the on premise customer, and we continue to grow our SaaS-based customer. Why is SaaS-based customer is so important? We do find that: first, each customer, we introduced the SaaS solution, we have higher win rates. And we have faster time to close the deal. Customer easier to deploy the solution, easier to pass the product. And once they are on SaaS, they actually are much more sticky. They can be a steadier revenue stream. And also, most importantly, personal appeal, is because our employee would have immediate -- we can see that immediate feedback immediate problem that customer is facing and quickly deploy a new solution for our customers and some of their security. So I think this is the best solution. And ultimately, we win by customer using our products to successfully solve their cyber related problem. So internally, we actually track and change our own employees incentive program to looking at how SaaS deployment instance growth because we believe the more customers deploy on the cloud and we can faster track the customers' feedback, we can better innovate and continue to provide the best cloud security for our customers. So that's our cloud excellence strategy. Thank you.

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Akihiko Omikawa, Trend Micro Incorporated - Executive VP, GM of Japan, Global Consumer Business & IoT Business Promotion and Director [6]

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I would like to talk about the status of our business in the fourth quarter. In FY '19 in the Japanese market, we declared our plan. And according to the plan, we would like to provide this report. I'll begin with a domestic enterprise and the domestic overseas consumer business. Hybrid infrastructure protection, HIP. On the right-hand side of the slide, you can see the actual growth sales over time. The numbers are a little bit small, but this should give you an idea about the numbers, and there are some highlights and low lights that I would like to share with you. As Mr. Negi mentioned, HIP is growing fast outside of Japan, and in Japan it's showing a 24% growth year-on-year. And in terms of a new user, it's a growth of 44%. Deep Security and TippingPoint sales are pretty good for Japan. And if you could turn to the graph on the right-hand side, you can tell the positioning of size of Japan based on the numbers that was given to you during the financial presentation. Especially for Deep Security, as Eva Chen mentioned, SaaS business gross sales year-on-year growth is 30%. Specifically, mid-sized companies, medium business with employees of somewhere between 100 and 500 employees. In this segment, Deep SaaS, IT security or the SaaS-type security is growing very strongly. Number of customers, of course, is increasing year-on-year by 25%. There are some low lights as well. Public cloud, to security, yes, this is selling, and it's solid, but still, including AWS, although the numbers are not really published within the public cloud maybe it's less than 30% or 20% Deep security attach rate. When the product is used internally, it's difficult for us to estimate but looking at AWS alone, Deep security penetration is single digit. It's still very low. This means that on the cloud security, how important is how rare it is, it has to be really explained to our customers and partners. And this is somewhere -- this is a place where we can do a better job. TippingPoint in Q4, of course, we had a big deal or big deals, IBM proventia end of support, switch. This is happening over time, step by step. So these customers are migrating to TippingPoint. We have created a very good migration tool, which was well received, and we have gained some big business there. However, when it comes to the number of customers for TippingPoint, it's just about 3 digits. In other words, tipping point, sales was not very strong in the past. And it was handed over to Japan compared to the western countries, the penetration rate of a tipping point products is still very low. Further, sales reinforcement is needed for the TipppingPoint, IBS. Deep discovery is growing, showing positive growth, but it is not growing as fast as we had expected. So this discovery, how it can be utilized should be told as a marketing story in a better way. So that's one of the lowlights. Moving on to user protection. As you can see on the right-hand side of the slide, these are the numbers gross sales for user protection in total. This is a big market in Japan, and the growth is quite slow, but steady. We have not seen a negative growth over time. So this is 5% growth year-on-year in terms of gross sales and 16% growth in new customer gross sales. For endpoint, user protection, we have something a little bit different. Store cost system and off-line PC, industrial control, security products. For example, Trend Micro's Safe Lock and portable security, we have been selling them for more than 10 years now. And the sales of these products have picked up by several millions of -- several hundreds of millions of Yen. So this is a new endpoint segment for us. And the cloud-type security services for small and medium-sized enterprises, whereas Batobus security is showing positive growth steady on a quarter-to-quarter basis and it's 90% growth year-on-year. And again, customer is also increasing every quarter. Cloud Edge, increasing 61% year-on-year in terms of number of customers, especially showing a very strong growth in small customers with less than 100 employees. We have a big market, and we're showing a strong growth. But when it comes to MB, employees between 100 and 500, this is where the competition is quite tough. So our market penetration or market share is quite low in the MB segment. We need to strengthen our efforts in terms of how we approach MB and how we select the right partners. Cloud Edge is also growing. And we're working with Otsuka as well as entity, east and west. We need to find more big partners. And this is where efforts are being made to identify more partners. Gmail security for Office 365, we are capturing more and more customers, but Office 365 does have a big number of users, but our touch rate forecast is only about 5% or 6%. We need to approach our customers more and continue to work closely with our customers so that we can increase the attach rate from the current 5% to 6% to a bigger number. This is another challenge that we're facing. Moving on to consumer, global and Japan. The highlights have been already covered. Windows 7, EOS is a major factor in Q4. PC sales increased in Japan as well. So the performance was better than expected, and the sales through mobile phone agencies is growing on a continual basis, as you can see to the right. Every year, our sales -- gross sales through mobile phone device agencies is growing. Home network security is sold by Amazon in the U.S. and over the several months we captured several tens of millions of users at the global level. There is no promotion being done. The customer's definitely registering. And we would like to figure out a better promotion in FY '20 to further expand the sales. Lowlights include the fact that in the mobile phone distributors, the price for device and services were separated, and we could not really capture as many customers or users as we wanted. So this is one of the lowlights. And for the global business, we need to do a better job of selling the home network security-related products. As you can see on the bottom right, our box plus OEM route. This is a home network security business. And as you can see, compared to the previous fiscal year, we are seeing a big growth, big jump, it's a good trend.

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Unidentified Company Representative, [7]

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I'd like to close off by explaining about IoT after Q4 for IoT we have for the ICs or OT network solutions that have been announced. And from the top, we have prevention and detection & persistence, and for prevention and detection we have our conventional products and also for persistence, we have the Safe Lock and portable security from the past, but we also have Edge IPS, Edge fire and OT defense console, which we built together with TXOne networks and have announced the sales support efforts here. We announced this in Q4. We had carried out POCs before that. And in Q4, we have been able to get an order from 1 company and now from here onwards we'll expand this. So that in the factory area, in the industrial control systems at the very bottom layer, we will be able to have a new area of security covered through these shipments. And second, from last year, we have been involved in a partner program for IoT and IIOT. We're pushing this forward. And we have for Raspberry. There's a lot of Android deployment in factories, and we have this version to experience IIOT. And we have quite a lot of implementations of IIOT solutions taking place. There's also the logo of Trend Micro IoT security ready, and there are 7 companies that have already registered here. And with logos, the products are being shipped. And if there's any vulnerabilities, there were going to be patches applied to protect. And there are also hands on seminars that we're moving forward with. Recently with Tokyo electronic devices, there was the TXOne solutions included an agency network, and we have started shipments here. We're also carrying out a great deal of educational activities, and we have with NTT DOCOMO starting from spring this year. There is going to be efforts made in the area of 5G. And we have the DOCOMO open Innovation Cloud and we will have A 301, real-time remote surveillance and in the open innovation cloud, we have the VNFS, the virtual network function suite to offer a safe and secure environment. These have been announced and commercial operations on these will start from spring this year. That has been the update. Thank you very much.

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Questions and Answers

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Koichi Habara, [1]

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This was actually 1,000 units.

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Hideaki Tanaka, Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., Research Division - Senior Analyst [2]

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Thank you very much for the explanation. My name is Tanaka MetLife, Morgan Stanley securities. There are 4 points that I'd like to ask. First, in regard to cloud conformity, what its impact, I think, on Page 30 to Page 33 of the report, you've described the impact, and at the end of the fiscal period, this came about, but what was the impact here? And when we look at the new fiscal year, for goodwill or the operating loss, what is the kind of impact that is envisioned here? On an annual basis, it should be several billion Yen of goodwill and the acquisition took place in October. So it's about JPY 900 million?

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Unidentified Company Representative, [3]

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Please let me explain. In regard to Q4 the cloud conformity impact has been seen in 2 places. One is goodwill. There's about JPY 200 million impact. And for the -- there were delinquencies in the loans for the acquisition of cloud conformity so that there was a total of JPY 400 million impact in Q4. As for fiscal 2020, in P&L there should not be a major impact. The biggest aspect will be the depreciation of goodwill, and it should be about JPY 1.2 billion per year impact that will be observed.

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Hideaki Tanaka, Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., Research Division - Senior Analyst [4]

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For example, on Page 33, if we look at point #7, there was a mention about sales of JPY 300 million and there was mentioned about an impact of JPY 1.65 billion. What about for the new fiscal year's net sales, when we consider costs and so on, besides goodwill, is there going to be a JPY 1.6 billion or JPY 1.7 billion impact? Or do we consider that this could be good?

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Unidentified Company Representative, [5]

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The biggest impact will be goodwill. And there's -- other than that, it would be salaries. And it's a 50 employee company. And when you go to Page 33, it says about negative JPY 1.65 billion because of the various fixed costs and so on. And also lower expenses incurred during the acquisition. And for running costs, it should not be that great.

In regard to this area, I don't understand everything, but this talks about the numbers when goodwill is included, but if we exclude the goodwill, the PL did not have a major negative result. As already mentioned, it will be the depreciation of goodwill that will have the biggest impact.

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Unidentified Analyst, [6]

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I see. The second point that I'd like is about the very good results in pre GAAP. What about the sustainability of this after a year? was it because -- is it going to be explained that it was because of a onetime, big deal. So what about the sustainability of this kind of pre GAAP results?

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Unidentified Company Representative, [7]

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As we said, we had a bitter experience in the past. So in regard to the big deals in Q4, we can't always assume that, that will be the case afterwards. So we're only looking at 5% increase in net sales, we don't believe that double-digit growth will continue.

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Unidentified Analyst, [8]

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In regard to Q4, was there something especially large for the pre-GAAP results there were several big deals. If you're successful, then this will not have a negative impact?

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Unidentified Company Representative, [9]

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Link:
Edited Transcript of 4704.T earnings conference call or presentation 18-Feb-20 7:00am GMT - Yahoo Finance