This is Negi speaking. This is the actual results for the fourth quarter.

I am having difficulty with presentation. I'm sorry for the delay this is the actual results.

We have 4% increase in net sales and minus 1% for operating income. And you may think this is less than what we expected.

However if you look at the pre-GAAP net sales, and you can see that there is a 9% growth and for the first time we are over ¥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 have been better than anticipated. This is our results and proposed to the annual forecast.

And you can see it's 98% progress forecast. And 99% progress are forecast in terms of operating income.

And if there were no fluctuations in the exchange rate than we should have been able to have 100% attainment. But anyway these are the results of the yen denominated results.

And then this is the dollar denominated results. For net sales growth by region excluding FX then you can see that where we seen growth it's minus 4% in North America.

But for pre-GAAP we will see that the numbers have been positive. And in light of this slide, this is in comparison to the past numbers.

And if we have constant currency and this is the growth rate. We've been explaining about this but there is a peak there.

This is the acquisition of TippingPoint 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 and we have the consumer and the enterprise both combined here and both show positive growth and there's, it seems like it's negative numbers for North America, but we'll be explaining about this later on and you'll see that the results have been positive here as well as for enterprise deals 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 a growth because with the cloud security on Office 365, we have 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.

We exceeded 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 a 12% growth 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.

That's for the outlook of 2020. Overall, we believe that it will be flat, but for the enterprise business, there'll be negative results.

There'll be increased in the enterprise business, but the 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 that the major impact here is as already mentioned.

The enterprise sales have been good. And if it concentrates in December then the deferred revenue area became large.

Although this was not posted on the balance sheets, this number has increased. And this is the deferred revenue by region in line for the expenses.

You can see that the biggest element is the salaries. The reason why this is increased is because in regard to salaries, this is the sales before deferred revenues and so there's the 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 is increased because there have 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 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. Although 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 reasons why the salary have increased is because the pre-GAAP increased that we see here that's very cash flow. The reason why this is a negative is because of the uncollected accounts receivables, and this is resolved with the turn of the year and we have increased by 153%.

There was the Cloud Conformity, cloud company that was acquired in October this accounted for 50%, and also research and development, as well as for the customer facing area we have increased the personnel. And we hit the highlights and lowlights.

As per Q4 highlights, as already mentioned, the enterprise business has been double-digit growth. And in North America, we have seen pre-GAAP year-over-year growth turn positive.

And furthermore in the consumer business in Japan focusing on mobile, we have seen growth. Lowlight negative for 1% of operating income.

And the sales is deferred but cost is not really deferred and that is impacting negatively the operating income. First backend cost is increasing, as I mentioned before on 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 you speak to our investors, we say that we don't know what's going to happen tomorrow. Sometimes investors feel some concerns but this is going back all the way to 2005 constant exchange rate.

The revenue is an increasing steady over time. Although we don't know exactly what would happen tomorrow.

Our business model is very stable and this is a dividend, payout ratio is the same at the 70% of net income and after tax negative impacts of tipping related position is added, ¥160 per share. Pending approval at the shareholders meeting, this is prior to dividend.

This is lower by 2% compared to the previous term. Last year it was 163 and this is due to loss on exchange rate and Yen based dividend is a 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, buy back every year. But if there is excess cash, we do consider share buy back.

And if you combine share buybacks and dividends, as you can see we are returning the high level of cash to our shareholders. So FY20 this is the outlook.

5% growth is expected in Japan and the flat growth in North America and Europe and the ¥118 to ¥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 either we'll talk about SaaS and our focus on SaaS which means that the SaaS backend cost to further increase.

So cost will increase due to salary increase and the 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 flat growth in operating income due to increased expenses.

The reason we have minus 2% for ordinary income is because of interest income is expected to reduce according to [indiscernible] expectations there maybe some changes in the financial instruments and we expect negative growth of 3% ordinary income. That's all from me.

Thank you.

I'm really sorry that I cannot be there in person for this meeting because of the corona virus. So try my, but many other company we restricted the air travel and things.

So I decided not to fly or confined to the company policy. So excuse me for making this presentation from the [indiscernible] this time.

So I like to talk about trend micro strategy. How are we going to grow?

We believe our growth opportunities come from a strategy we call it cloud excellence. And what is cloud excellence and what is the current situation in the digital transformation.

I think in past 10 years we've been talking about where these cloud, big data, AI and there's a lot of transformation happens in digital world where it's smart actually smart, smart car are starting to boom but unfortunately this type of digital transformation also introduced a lot more risk, higher risk for the overall company enterprise organization operation. Actually 73% of the organization has been reach in the last year.

Look like we still need 5G in the future. So I think most of the risk is because of lack of visibility and connectivity across environment, because company operate in different organization and therefore they don't have their overall visibility or a company cyber security sizes.

And therefore we believe strategy is by securing a connected work who, while we call cloud excellence. Cloud excellence has two fold.

The first one means that we want to enable our customers, empower them to have security delivered application from the cloud in a multi-cloud environment we would talk about multi-cloud environment later. Then the second fold of these excellence means that Trend Micro ourselves, we need to be able to deliver more agile, more scalable solution for our customer, which is following up, operating and deliver constantly the innovation to our customers.

That Trend Micro ourselves needs to be cloud excellence. 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 cloud-native application deployment is what our customer are facing right now.

They might be using Microsoft Office on cloud, but they have a lot of marketing server, web server running on AWS for instance, and therefore they have multi-cloud environment any they continue to deploy for this cloud native applications. And therefore, as we can see the number by 2020 90% of the software development is going to be following at better environment, better process which means it constantly updates in the cloud.

And therefore, by 2023 at least 99% of their security fault is customers fault. What do we mean by customers fault?

Misconfiguration, multi cloud and very complicated environment caused miscommunication, mis-configuration and user behavior that you cannot foresee and also by the lack of total visibility. So, that's why we introduced two major products of audience.

The first one is what we call him Cloud 1. Cloud 1 is security service platform for all of the cloud builder.

They are putting their cloud application and therefore they need a best cybersecurity, cloud-security platform. And that is going to be from Trend Micro.

Trend Micro has been delivering workload security, content security and end last year, we introduced a application, cloud application security through our application of menu and this year we continue to introduce high storage security conformity which is cloud configuration management and cloud scanning. That is through our application with 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 cloud migration, cloud native application deployment and cloud operation excellence. And all of this is through our Trend Micro excellence because this whole Cloud 1 platform.

It's all cloud native. It's cloud-based platform and is the most expensive service, cloud security service.

And very often, customers or people might ask, this security solution that we offer by cloud infrastructure provider, but you can see in the middle of this cloud, there's Microsoft Azure, VMWare Google Cloud, AWS. Trend Micro's advantage over the cloud infrastructural providers is multi-cloud.

Multi-cloud solution. Customer always have different application in different cloud but they need to have a overall cyber security visibility and control and that what Trend Micro cloud 1 can provide for all customers multi-cloud solution.

So that's why we are very exciting about first solution sets cloud one, next and actually you can see Trend Micro is just that server, the cloud workload, security, we are the most advanced and it's the highest score by Forrester Research, and also we already own the largest market share for cloud security workload, it's especially this margin is a growing margin almost 40% year-over-year growth. And I believe, with all these complete cloud one platform.

Not only we covered just the cloud workload market but also called cloud security, cloud conformity all these different area. So we believe that our strategy on cloud one can draw Trend Micro into the real cloud security number one company in the world.

So next, we're talking about the other set of solution. Once customers' application are already in the cloud, they provided all these solution for their employee and for their customer that means that the service moving to the cloud, the user become more mobile.

You cannot lock your user behind a firewall anymore, plus the extended network because of smart cars, smart factories, smart hospitals, smart banking, all of this there's lot more operation is outside of the IT environment and therefore it does make the future enterprise or our future organization facing the challenge of the visibility. How are we going to do the visibility and stability?

We see that the rapid expansion of is 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 organization will increase their spending on a detection and response in the next 18 months to address cost layer visibility… I like to especially mentioned core layer visibility because in the customer environment today we cannot just focus on end point in the server.

If you want to have overall visibility you need to have cost layer detection. And Trend Micro is the only cyber security company that has all the solutions from cloud, network, IOT service, endpoint, e-mail.

We have not only the sensor but also the solution and we can connect them all together correlate all this inflammation and give customer a total visibility that's the power of Trend Micro FDR. So Trend Micro, the FDR, we can enable customer 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 cache respond whenever they have an instance that's Trend Micro, and Trend Micro are they [indiscernible] through our cloud excellence, we have to [indiscernible] we have that experts security analysis, AI engine in the cloud and the global threat intelligence and all these solution are stock based and can support the on premise. I specially want to mention this; in this space actually 50% of the customers are still totally on prem.

20% of their customer right now is all cloud and in the middle there is 30% of people that were using a 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 stay on prem and some of the security already also.

And that is what Trend Micro advantage is, because our competitor in on print, Symantec, McAfee, they don't have SaaS solution and our another new generation competitors like CrowdStrike, Silence, 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, all the experience of supporting 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 to hybrid on to the SaaS solution.

So that's our FCR. 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 accounts in the past few years but this will be my last year that talks about these customers. New customers account in different product sets because we were moved to a more consolidated solution and therefore our number 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're launching in 2019, our line across the on premise customer and we continue to grow our stock based customers. Why is stock based customers so important.

We do find that, first each customer we introduced the SaaS solution, we have higher win rate and we have faster time to close the deal. Customer easier to deploy the solution, easier to test the product and once they are on cloud, they actually are much more sticky.

They can be carrier revenue stream. And also most importantly, personally, I feel is because our, employee would have immediate, we can see the immediate feedback, immediate problem that customer is facing and quickly deploy the new solution for our customers and solve their security problems.

So I think this is the best solution that ultimately we win by customers using our product to successfully solve their cyber security problem. So internally we actually track and change our employees incentive program looking at how SaaS deployment instance growth because we believe the more customer deployed on the cloud and we can faster track the customer's feedback, we can better innovate and continue to provide the best cloud security for our customer.

So that's our cloud excellence strategy. Thank you.

I would like to talk about the status of our business in the fourth quarter. In FY19 in the Japanese market we declared our plan and according to the plan we would like to provide this report.

I'll begin with the 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 gross sales over time. The numbers are a little bit small but it should give you an idea about the numbers and there are some highlights and lowlights that I would like to share with you.

As Mr. Negi mentioned, HIP is growing fast outside of Japan and the, in Japan it's showing a 24% growth year-on-year and [indiscernible] revenue its growth of 44% due to maturity and tipping point sales are pretty good for Japan.

And if you could turn to the graph on the right hand side you can tell that positioning or size of Japan based on the numbers that was given to you during the financial presentation, especially for security as Eva Chen mentioned, SaaS business growth sales, year-on-year growth is 30% specifically mix sized company's meeting business with the employees of us somewhere between 100 and 500 employees. In this segment Deep SaaS -- or the SaaS security is growing very strongly.

Number of customers of course it's increasing year-on-year by 25% there are some lowlights as well, probably cloud just 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 at tax rate when the product is used internally it's difficult for us to estimate, but looking out to AWS alone, deep security and attrition is a single digit, it's still very low. This means that on the cloud security, how important, how [indiscernible] it is.

It has to be really explained to our customers and partners and the visit somewhere, visit is a place where we can do a better job. Tipping point in Q4 of course, we had a big deal or big deals at the end -- and 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 the tipping point, just about three digits.

In other words, tipping points sales was not very strong in the past and it was then handed over to Japan. Compared to their Western countries diminished rate of a tipping point to production is still very low.

Further sales reinforcement is needed for tipping point IDS. The discovery is growing showing positive growth, but it is not growing as fast as we had expected.

So discovery how it can be utilized should be told as 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 this slide, these are 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 negative growth over time. So this is 5% growth year on year in terms of gross sales and 16% growth in new customer growth sales.

For endpoint user protection we have something different across the system and authenticity and digital control security product. For example, micro station 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 [Indiscernible] purpose for small and medium sized enterprises or business security is showing positive growth steadily 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-over-year in terms of number of customers especially seeing a very strong growth in small customers with less than 100 employees. We have a big market and showing 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.

Content is also growing. And we're working with them both [Indiscernible] as well NTT East and West.

We need to find more big partners. And this is where efforts have been made to identify more partners.

As you know, cash called up security for Office 365 we're capturing more and more customers. But Office 365 does have a big number of users, but our tax 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 tax 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 a growing on a continued 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 total maybe tens of millions of uses at a global level.

There is no promotion being done, the customers definitely registering. And we would like to figure out better promotions in FY20 to further expand the sales.

Lowlights include the fact that in the mobile phone distributors. The price for device and services are separated and we could not really capture as many customers or users as we wanted, so this is one of those 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 box plus OEM router, this is a Home Network Security business, and as you can see compared to the previous fiscal year, we are seeing a big growth picture.

It's a good trend. I'd like to close off by explaining about IoT.

At their Q4 IoT, we have for the ICS or OT network solutions that have been announced and from the top we have prevention and detection and persistence. Prevention and detection, we have our conventional products, and also for persistent, we have a [indiscernible] and portable security from the past but we also have edge IDS, Edge Fire, and OT defense console, which we built together with TX one networks and we have announced the sales support efforts here.

We've announced in Q4, we had carried out PLCs before that, and in Q4, we have been able to get an order from one company, and now from here onwards we'll expand this so that in the factory area, in the industrial controls 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 are a lot of android deployments in factories, and we have this version to experience IIoT, it's the IIOT.

We have a quite a lot of implementations of IIOT solutions taking place. There's also the logo of a Trend Micro IOT security ready and there are seven companies that have already registered here and with logos the products are being shipped and if there's any vulnerabilities they are going to be patches applied to protect and they're also hands on seminars that we're moving forward with.

Recently with the Tokyo electron devices there was the TX1 solutions included in 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's going to be efforts made in the area of 5G and we have the DoCoMo open innovation cloud and we will have A301 real time remote surveillance in the opening innovation crowd.

We have the VNFS, the virtual network functions 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.

Exactly, 1000 units. Thank you very much.

Thank you very much for the explanation. My name is Tanaka of a Mitsubishi UFJ Morgan Stanley Securities.

There are four points that I'd like to ask first, can you like the cloud conformity? What is impact?

I think on page 32, page 33 of your reports, 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 a several billion yen of Goodwill and the acquisition took place in October, so it's about ¥900 million. Please let me explain in, Q4 the cloud conformity impact has been seen in two late places.

One is Goodwill. There's about ¥200 million impact.

And there was a delinquency in the loans for the acquisition of a clone conformity so that there was a total ¥400 million impact in Q4. As per fiscal 2020 in PLO, there should not be a major impact.

The biggest aspect will be the depreciation of Goodwill, and it should be about 1.2 billion per year impact that will be observed. For example, on page 33 if we look at the point number seven, there was the mention about sales of 300 million, and there was mention about an impact of ¥1.65 billion.

What about for the new fiscal year's net sales, but when you consider costs and so on, besides goodwill, is there going to be a ¥1.6 billion or ¥1.7 billion impact or do we consider that this could be ignored?

The biggest impact will be Goodwill and there's other than that it would be salaries and it's a 50 employee company and then you go to page 33 it says about negative 1.65 billion cause it the various fixed costs and so on. And also there were expenses incurred during the acquisition and for running costs it should not be that great.

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

The second point that I'd like to add is about the very good results in pre-GAAP gap.

What about the sustainability of this after a year was it because it was going to be explained that that was because of one time big deal. So what about the sustainability of this kind of pre gap results?

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'll 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 in Q4.

Well, if there's 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.

Yes. In 2018 in the fourth quarter we had this situation and whether we can get big deals or not as difficult to anticipate in terms of timing.

And so if it's delayed, then this may inconvenience people. So like big deals there are things in the pipeline, but we don't know when they can achieved.

And so on a selective basis, we may assume that we'll get three deals out of 10 deals in the pipeline. So, we're not going to anticipate that we'll get all the deals pending.

Third point Eva san explained about the cloud IPS solutions. When it comes to the tipping point, there was the IPS.

Yeah.

Do you believe that there will be steady growth here for investors? It seems like the other vendors have a large-top line growth compared to Trend Micro, but can Trend Micro secure the numbers?

If we look at just the IPS market, there's a double digit growth from TippingPoint acquisition. We didn't believe that we would just grow with IPS.

There is IPS, but there's also Q1 and next generation technologies. Meanwhile, when it comes to the IPS in the cloud, in the case of TippingPoint, we have IPS, but for the inline forecast processing, Trend Micro did not have a strength there.

But when it comes to the cloud, there are dedicated chips and on the cloud side, for the massive amount of data to be processed. When it comes to cloud IPS, we believe that, we can grow our market share.

So with Cloud One, we intend to focus on our sales efforts. So, in just hardware, we don't believe that TippingPoint sales will increase, but we're looking forward to what we can grow in sales on the cloud.

Finally, on page 39, of the report. We understand that Mr.

[Wai] is leaving the company. It is because of the difficulties in the North America market that led him to resign or was there some background that you can explain for his retirement from the company?

Well, that's fantastic. You read up to page 39.

There's no such case. [Wai] has left, but, two years ago, we made an announcement about the venture investment and there's also the next generation MSP, and in the MSP area we wanted to enter, because when we talk about the exterior, in terms of kicking custody of the data and putting out solutions, we wouldn't need to know what is happening.

And so, therefore when it comes to MSP or the SLC methods, we decided to start a company. Three weeks ago from external venture capital, we have increased capital and we have a holdings of 37% of the shares and we will be focusing there.

So, Wire will be focusing there. He will be a Director there, and it's mainly focused on Trend Micro products.

And so, Wire wanted to focus there and to avoid a conflict of interest, and so therefore he has retired from his position as a Board Director and we'll be focusing in that area.

Any other questions?

Thank you. Jeffrey Securities.

I have three questions. Going back to what Danica san mentioned, pre-GAAP U.S.

fourth quarter and it seems that number has finally bottomed out. And can we really believe that does the number has bottomed out, because you didn't make it twice.

In the first quarter, do we see another negative number? Or is this really bottomed out?

As I mentioned in full year outlook is a positive. And there maybe some ups and downs between different quarters but we believe, we will have a positive results for the U.S.

For TippingPoint not quite. And the other segments are doing better.

TippingPoint next refresh cycle will happen maybe two years down the line. We don't know exactly but looking at the waves of a refresh cycle in 2020, we don't expect that TippingPoint go through the refresh cycle.

So, I'll find up TippingPoint XDR, Deep Security, we'll do the best in 2020.

So hybrid is doing better recently and for endpoint, the numbers have been flat for a long time, but now you're showing 9% growth. Is this mostly from the U.S.?

In terms of user protection, this is a cloud app security large deal in the UK. This is Europe and also large XDR deals from APAC.

So and the use of prediction. For Hybrid Infrastructure, we have deep security deals from the U.S.

as well.

I see. Thank you.

If that is a case guidance for this fiscal year, considering that U.S to put them down. The sales is flat in both the U.S.

and Europe, and only 5% growth in Japan. There is a ventex and also there's virus and the remote access is really booming.

But this year's guidance seems to be very, very weak. It has to be extremely conservative.

Looking at pre-GAAP numbers, I expect the high end number for net sales. And also in the third quarter pre-GAAP was quite weak, and a half of the pre-GAAP was based on SaaS.

And SaaS contracts are usually one year, not multiyear that simply a contract. So my concern was so pre-GAAP you have these numbers may be harmful.

This is coming again from SaaS or is it not the case. Is it coming from something else aside from Saas.

Olympics and virus. When you say virus are you talking about corona virus?

Well, Olympic and hacking and also I'm talking about coronavirus and it's really pushing the apps marketing and the remote access. So the demand should grow, and 5% growth in Japan seems to be too weak.

Well, Eva is probably participating online and she was saying the same thing, are participating online, working from home is becoming more common, which is a positive factor for our business. That's one way of thinking about it.

But looking at what's happening in reality. You were talking about positive factors and they may be real.

But we have to look at our consumer business and also growing business SaaS is increasing that's on-premise is decreasing as Eva mentioned in her presentation and this is something for us to consider. So we cannot really expect the situation to continue from 2018 we don't want to apologize again.

So we believe that this number that we have presented is better.

I understand. Thank you.

My third question questions actually very simple. The more people shift to cloud and SaaS, maybe the smaller your profit will become because you have to pay more cost and the profit will shrink and you have to pay more salary and more for outsourcing.

That's the cost structure of Trend Micro as far as I can see. So this means that the more cloud business you do, the less profitable you've become.

Well this is my question to the analyst actually. There are some SaaS companies that are running deficits with a high market cap, very high market cap.

So do you prefer that as an investor analyst, do you really ignore the profit in that case?

So putting that aside, as I mentioned before in terms of profitability, yes, SaaS business has lower profitability, but we are doing SaaS business not because we want high valuation, but as Eva mentioned, we have look what was happening in the customer's environment and we want to be able to respond quickly to what the customers need. And if there is a security issue, the customers want to have them resolved it very quickly.

I can't be, we have to spend time asking about the pain points. Sometimes our customers cannot explain and sometimes when you say stand, it's like a prescribed medicine as a patient, not really taking the medicine.

But we have been doing a pretty good job so far, but with SaaS we can be more efficient. So we want our customers to migrate to SaaS, not for the valuation, not for the monthly service fee but with SaaS we can provide more fundamental solution to our customer's problems.

And if we're successful in this, we can be profitable too. Deployed instance was shown in the presentation by Eva today.

We have been using the word customer success for the last couple of years because if the customers use this then as that is better for us as KPI. If the product is used by the customer and the problem can be solved, it all leads to increasing revenue and the customer is satisfied and they use more profit will increase.

So we're not trying to figure out how to achieve higher profitability, right. We have really focusing on customer success first and therefore SaaS.

We have a number of resources deployed as shown on the slide today. Pre-GAAP profit was the basis for the bonus payment, the full, but we have changed up KPI too because as you have mentioned, if the SaaS business is successful, the employees get bonus, smaller bonus.

That is not good, that just like stepping on the accelerator pedal and the break but at the same time. It doesn't work.

So in the beginning you may have to sacrifice some profitability but the customers continued to use more and more of a product, a profitable outcome. So profit may be generated later, but we're not expecting to run deficits forever.

Thank you. One last question about the salaries.

Wondering if service fee head count increased and half of them came from the acquisition. So hiring is about 50, I think it's coming from Trend Micros headquarter.

Japanese engineers were offered with a early retirement options of programs I think it was called next job, something well it wasn't called early retirement. Right?

Some kind of encouragement package. I think that was the name.

So has there be some kind of a replacement, a cycle of employees in Japan in the last 12 months. So did you get better or more suitable engineers and the sales reps?

Our intention was not to offer early retirement program. Maybe some of employees wanted to do something that is not related to Trend Micro.

And we also have a welcome back program as well. So if the employee leaves the company and they want to come back or we can offer a position.

So in order to increase the mobility of our employees, this is what we did. When we hire people, are we doing a good job of that?

That's another question or a problem. And it's true in Japan it's more difficult, population is declining.

and fewer people are studying computer science, which means that we have to think about hiring more from developing countries. We have some formal internship program in San Paolo, Brazil and Bangalore in India as well so this program is successful we want to send people, many people from these programs to various countries.

If the hiring is difficult in developed nations, we will start hiring from other countries and doing terms of internship in Japan we are getting people from Taiwan and China as well.

Thank you. Well it seems like you like this type of question.

When did you like early retirement plan? I think that's not a good system.

It's an option and this is something that the employees have as an option. I personally think that it's a very good system we have available and you may feel that it's a negative thing, but I think that actually it's a good system.

Are there any other questions?

My name is Nicole, and I'd like to ask about now hiring? And we got your policy, it seems that hiring had slowed down at one point and once again it seems to be more active.

Is that the impression or is the same pace maintained? I think the things are at the same page pace for this particular period and there was the intern system that increases people, but the salaries are not that high.

Perhaps you're worried about the salaries becoming too high impacting profits. There is fluctuations, but we don't believe that the salaries will suddenly increase very rapidly?

The second half of the previous fiscal year there was an increase, but what about the next fiscal year's first half? It's not going to impact things that greatly because in the past, if we see pre-GAAP growth then hiring increased, and then things got tougher later on so that the hiring slowed down.

Normally, we should avoid that situation. But sometimes we may have that cycle happening to us.

But when it comes to salaries, related human resources that we have to secure there's also the cases of the security operation center where we have to prepare PPO. But recently, from the past two, three years.

We have big deals that we've been getting. And there are more cases where we have larger buyers dealing with us, because people are now aware of what Trend Micro can do.

So that means we have to increase more people to access that areas and we believe that that kind of investment is warranted.

Thank you very much. I'd like to ask about dividends.

On page 37 of the report there is ideas about goodwill that is explained. And apparently goodwill increased slightly.

But when it comes to that goodwill, when the system for a goodwill started, this was because of the increase due to TippingPoint. And looking at the report, it seems to be limited just to the subject of TippingPoint or what is the case now?

When it comes to depreciation of goodwill, in the case of tipping point, there was the cash flow generated and why do we have to depreciate a goodwill we decided to work on the cash flow. Meanwhile in the case of cloud conformity the cash flow was negative.

So, we cannot use the same method as in TippingPoint. And so, since the cash is not flowing in for the case of the depreciation of the goodwill of cloud conformity and the reason why we're doing the depreciation of goodwill here is because, for the Japan accounting association purposes.

In the case of TippingPoint we had a different situation for cloud conformity they are generating losses. There are risks but we believe that it was acquired and an appropriate valuation.

So you may be wondering about the depreciation, but if there is cash flow generated in the future and there is a depreciation of the goodwill that undermines profits and we may apply the same method as tipping point. But the goodwill situation is different [Abrupt End]