Hi, can you hear me. First of all, we would like to go to the fourth slide.

And on Page 4, you can see the summary of the quarter. You can see 4% increase in net sales, and we have also shown 11% increase in operating income, and we're seeing this in terms of year-over-year growth.

As for goodwill, amortization, you can see that there is an increased by 12% on a non-GAAP basis, and in a pre-GAAP end demand denominated basis is plus 1% and 3% on a non-GAAP basis. And also if we exclude currency exchange rate fluctuations there is an increase by 7%.

And so, for the first time, we were not able to visit our customers, but in terms of net sales as well as operating income, we have been able to generate results. So, this is a major highlight of this quarter.

In regard to our progression against the plan, if you look at this, we're looking at this in terms of last year's results, and in blue, we are showing the results of this fiscal year. You can see that in terms of operating income.

In regards to the situation here, we'll be explaining about why we have this particular situation, but in terms of the business trips, and so on there had been certain types of expenses that had been planned, that had not been used, and so therefore, this has impacted our operating income. But as things normalize during the second half, we believe that it will come closer to plans.

And here this is the numbers for dollar denominated basis. On a yen denominated basis, we're looking at net sales growth by region.

And then Page 8, you can see net sales growth by region and it's a minus 1% for North America, but for other regions we're seeing growth. As for North America, in regard to what happened, there will be materials to explain this, but the first point is that there has been a decrease in the consumer sales and there was also the network security tipping point impact for the second quarter.

If you look at Page 10, this is on a constant currency basis revenue growth. And if we exclude the acquisition of tipping point, there had been a 6% to 7% growth rate, and we have 7% impact.

If we exclude the exchange rates, for this particular quarter and we're seeing this intact here. If you move to Page 11, this is the sales by segment and in Japan for both consumer and enterprise we're seeing growth, especially in the enterprise market, because people are working at home, and we are seeing very good growth in Virus Buster sales.

As for the – there's been a network related sales for the enterprise market, but then it's a negative number for North America for the consumer market, as well as the enterprise market. This is because of our sales channel in North America.

And there is a decrease in overall sales in the North American market. And there's also the tipping point impact.

The reason why the revenues for tipping point has been going down is because there is a certain amount of share that is being taken away from us and we have this impact for firewall and IPS that is switching to next generation. Next, for the enterprise market, hybrid infrastructure protection and user protection, we are looking forward to double digit growth in sales.

In user protection, we're seeing negative results. But overall, it has been an 8% increase.

In user protection, it's minus 3% year-over-year basis. We had not anticipated high growth rates, but on a year-over-year basis we have these negative numbers.

Next, this is something that we have been disclosing starting this fiscal year for the sun SaaS Deployed Instance Growth and once we entered June, we're seeing things flat compared to the previous month, but there's been a switchover to these kind of products, and compared to the previous month, it may seem that things are flat, and we have not disclosed yet, but for July we see that once again, we're seeing increases. So, we're just seeing a temporary phenomenon here in June.

There may be some cases where there are decline in the numbers. We do believe that there may be some decline that can be anticipated for this particular year.

This is the percentage of share by region and then pre-GAAP sales is shown here. This is shown on Slide number 16.

And if you look at Slide number 16, you can see the revenue before adjusting deferred revenue. So, it's on a cash base terms, if currency exchange rates is used for 2019, or applied for 2020, then we can see that we've seen a slight growth in Japan.

It's, you know, flat in North America, and plus 6% for APEC, Middle East, and Africa. And we had to look forward to growth in Japan and EMEA.

So, we're following our plans accordingly. This is Page 17, looking at the growth of revenue and pre-GAAP numbers.

In terms of enterprise versus consumer in this quarter, work from home demand has made great contributions. So, pre-GAAP consumer revenue net sales is quite high.

[Virus with] the sales from Japan is a major contributor. Moving on to Page 18, deferred revenue, there is nothing special to comment.

Moving on to Page 21, this is cost structure. Compared to the first quarter, which was the previous quarter, the second one from the top, stock options, acquisition related costs have increased in the second quarter by about 600 million Yen.

Major factors include stock price changes. When the stock price goes up, there are some stock price related compensations and also administration costs.

This is actually down by about 1.7 billion compared to the previous quarter. Due to lack of travel, this was not a planned reduction, but compared to the first quarter, more people are working from home and customer visits are banned.

And therefore, we are seeing some savings there. Below that, you can see the green line cloud 2.2 billion, and this is 70% growth compared to the previous year.

SaaS [agent] again, is growing at 70%. So, SaaS business growth is causing the expenses to go up.

But it's not a negative factor for us. Trend Micro’s customers and products, shifting more towards SaaS.

So, from the investor's perspective, you can see how much cost increase is related to this particular segment of the business. Other than that, I have nothing to comment on this slide.

Moving on to Page 23, cash flow, 41% year-on-year growth from the operating cash flow bring to this. Major factor is accounts receivable collection, but even when we exclude that, we are seeing a double digit growth.

For this quarter that just ended, there’s been some negative impact on the economy in general, but our cash flow seems to be quite solid. Page 24 shows the headcount status.

In the previous quarter, there was a minor decline, but we didn't really hold any hiring’s. We want to continue to hire as planned, but it is difficult to conduct interviews.

And the hiring managers cannot really see the candidates face-to-face. So, it's a challenging for them to hire those people.

So, we have increased the headcount by 90, but we are still recruiting many positions. In the second half hour, we'll continue to see the increase in headcounts.

Mostly in sales and marketing, because we are covering a bigger product portfolio, we want to strengthen our sales force, so that our customers will use Trend Micro products. Secondly, SaaS product and next generation products, we're really focusing on those.

So, we are trying to increase the research people there. Now, summary of this quarter, operating income is up, but ordinary income is down.

This is mostly down to the exchange loss. In the first quarter, we had exchange profit of about the same amount.

So, 10% net income growth is maintained for the first half. So, although we have a negative ordinary income for this particular quarter for the six month period, this is going to be offset by the exchange game that we had.

Moving on to Page 27, this is a Q2 highlight. Despite the fact that there were no customer visits, both revenue and operating income grew, which is the first time for Trend Micro.

The consumer business in Japan is growing very fast, and the operating cash flow, was very strong. Page 28 shows the lowlights.

Again, it's the same thing. When we cannot visit customers, it is extremely challenging for us to acquire new customers.

We have to sell additional products to existing customers. We already have established relationships, so it's easy to talk to existing customers, but new customers means that we have to win them over from our competition.

So, simple online communication will not suffice. It's very much limited.

So, without some actual physical visits, it's very difficult to acquire new customers. That's a negative factor and tipping point sales has declined in the second quarter.

Moving on to the six month period, Page 30, 5% increase in net sales and 7% increase in ordinary income because of the offset of the exchange loss and operating income 10% up and net income is 20% up. Non-operating items don't influence these numbers very much.

I'll skip some slides and jump to the projection, the annual projection on Page 36. This remains unchanged.

Three months ago, we said it remains unchanged, but the factors behind this is different. COVID-19 had a major impact from March and their long-term outlook was completely invisible.

Environment was very uncertain. So, if we want to change the projection, we have to work into the assumption, so we decided not to change the projection.

This time around the reason is different. As you could see from the previous slide, we could maintain increased sales and gross profit even in this quarter, which means in the second quarter, excuse me, second half of the year, we are expecting environment to improve somewhat compared to the second quarter.

It may not recover very quickly, but slowly we are beginning to get in touch with our customers. So, we are expecting our projection to play out as we had expected.

And that's all from me. And if there are any questions, I'd be happy to provide more details.

Thank you very much.

This is Eva Chen. I’m CEO of Trend Micro.

I'm here to talk to you about how to enable resilience in a changing world. No doubt we are in a changing world, and cybersecurity is an ever changing industry.

I think when you choose a cybersecurity solution, you're not just buying a product, you're choosing a partner that’s traveling with you through this changing world. And therefore, you're probably not just want to know what technology you have or if I point out to [you to field], you probably want to know about who is Trend Micro?

Who is this company that I'm going to travel together? So, I'd like to take this chance to talk about who is Trend Micro, and why you can trust Trend Micro as your cybersecurity partner.

Trend Micro has existed for 30 more years. 30 years ago, I co-founded this company, and we were very simple focused.

We want to help provide peace of mind computing to all the PC users. Along the way, for 30 more years, we kept that simple mind security.

We only do the security for 30 years. And I like to think those 30 years is a like a Symphony, the same thing, but we have different chapters.

Every time when there's infrastructure change, when there's user behavior change, when there is a threat, landscape change, we need to change our solution to adapt to the new changing world. So, 20 years ago, we come up with Your Internet Virus Wall when the internet just come to exist.

And 10 years ago, we were the first one to provide the cloud security and we want to secure the customer's journey to the cloud and now, in this super hyper connected world, we are – our mission is to secure your connected world. So, Trend Micro with a 30 more years, we have built to be a strong resilient company that can be always here for you for cybersecurity.

What kind of company Trend Micro is? First of all, people.

Trend Micro people are very passionate about security, and very passionate about people, because security is about protecting people. You want Trend there should be the people who care about people.

I think we can show that during this pandemic time, I really am proud of Trend Micro’s employee. Not only they were protecting, we make sure they are safe, they work on home, but we, Trenders worldwide using our global infrastructure we donate, we sourcing the necessary food, PPE, and donate to all the organization that is in need and helping other industry that is in need.

So, [people]. And these are the people that realize that we need to always put customer first, not just our solution first.

When Trenders continue and trained salespeople come to you, you might find that they are not pushing our solution so aggressively against competitors. Because in Trend Micro’s people's mind, we are helping customer to build a safe, secure environment, and our only competitor is hackers.

We want to collaborate with all the other security vendors so that we can together provide our customers successful cybersecurity. And lastly, Trend Micro is very – financially very strong.

We have a 5.5 billion in revenue in 2019, and we have been profitable ever since we go IPO. Why is this important?

Because when the world is changing, we have the financial stability to keep our experienced researcher. Together we trend and continue to build our knowledge, then, during those bad times we have the money to invest in R&D and continue to provide new solution for our customer.

So, with these people, customer minded – customer first mindset and financially strong from [indiscernible] Trend Micro will be able to help customer to using new technology. And together we can transform our cybersecurity adapt to this connected world.

What is this connected world? I think we all see this new technology, cloud IoT, big data, AI automation, 5G is coming also; all of this new technology, certainly bring new things and good things [indiscernible] (0:21:33) he says he can prevent up to 95% of the adverse drug events, you will enable the mobile payments and of course, you will transform our new lifestyle, for instance, especially in this pandemic world, or shopping, behavior has change and switch to online shopping.

And in the factory also, still we can see the smart factory, it will reduce the plant outage by 50%. So, work is on great things, but unfortunately, all of this also means that we are even more relying on digital information, digital infrastructure, and therefore this type of transformation has introduced [indiscernible].

Cybersecurity become even harder and hacker have become even more malicious and determined. We saw that 73% of organization had at least one breach last year, and 21% seven or more.

So, experienced breach is almost now like who will experience breach at this point and are these risk [within salary] is as a challenge in light of COVID-19 in the pandemic world, because of more work from home, and therefore the shift in additional infrastructure needed to support a remote working needed for greater agility and flexibility. And the hackers we’re seeing that 220 times more increase in spend from February to March, and 260% increase in malicious URL hits from February to March.

Every hit means a risk introduced into an organization to have the breach to be happening. And therefore, we think in this era of digital transportation, we need to – we believe to have organization must be resilient, resilient to attach, resistant to outage, resilient to breach so that we can keep the organization to prepare for [indiscernible] a rapidly recover from cyber threats.

So that can be free to go further into more. That's why a Trend Micro, we believe, all this transformative – digital transformation that customers are experiencing, such as money crowd migration, and new crowd native application.

These are the important transformation. We also see the services moving to the cloud, more and more organizations are adopting the SaaS solution and users are welcome home and more mobile and the manufacturer, the extended network and operational technology will enable more this automation in all the different type of industry.

So, in this transformation, cybersecurity is very difficult to detect and respond, because we are experiencing all the different type of security tools, and even though we have all the things and technology, but there's alert overload and silos of visibility, that make threat hunting as skilled – the threat experts hard to perform their jobs. So, Trend Micro is solution, we introduced, hence we believe that we need to have an impactful to enable our customer to have total visibility and detection and response coming from all the different infrastructure, including hybrid cloud, including user and [indiscernible], and in the network defense.

So this year, we introduced cybersecurity the Trend Micro Cloud One platform for security services platform for Cloud builders. So, when you're transforming your infrastructure to cloud or you're building the new patent platform new application on the cloud, you can use this platform for compliances for scanning and for secure the workflow, all of them are integrated into Trend Micro Cloud One platform.

And on the user side, we can detach a response from endpoint, from email, from network, from server, from cloud integrate all of this solution, you have the total visibility to see, for instance, this – where it come from and hardware prevent and recover fast from this type of [indiscernible]. And on the network defense, we expand our solution to not only for the traditional [TCP IP] or work – office work, we expand to IIoT, IoT solution for small factory for connected consumer and connected cars.

All of this solution is delivered with our cloud excellence. Cloud excellence means that we fully leverage the power and agility of the cloud.

And we have focused on delivering this solution through SaaS deployment. We are seeing a lot of our new customers and old customer moving to our SaaS solution.

Now up to this year, we already have more than 300,000 customers with SaaS deployment. And Trend Micro with all this solution, we are recognized by the industry leader – as industry leader by industry analyst in all of the different enterprise security layers, excellent protection, email, security, [indiscernible] low security and detection and response.

So, all of this are provided from a central intelligence – threat intelligence Trend Micro Research Group. From this research group, we have 15 research center around the world with cyber security expertise, where we also are the global leader in vulnerability disclosure.

And just last year, we block and detach 54 billion and more threats for our customer worldwide. And we work with a lot of law enforcement.

Not only we using this technology or threat intelligence, we help, we want to help secure the world by beat down the bad guys, as we in the engineer usually say, we beat the bad guys and we work with the [indiscernible], we are a very integral solution with law enforcement for providing a secure, connected world. So, I hope this introduction to you about who is Trend Micro and what we are providing, let you understand why we believe Trend Micro can be your trusted partner and traveling through this changing world and we can be the one that help you achieve your resilience in this ever changing world.

Thank you.

Hello. Now, I would like to begin my presentation.

I am Omikawa. For the FY 2020 Q2, Japan business update will be made.

And first of all, please go to Page 2, in the Japanese market in 2020, we are now looking at customer success in the remote management era. We see that with the shift to the cloud, the situation in our customers is becoming more and more data driven, and customer’s success is something that we are emphasizing our efforts more in.

There are three points. It's necessary to expand cloud security to accelerate digital transformation as Eva Chen has mentioned just now, and so, we will continue our efforts here.

The second point, we will have to accelerate the shift to the SaaS model and we will provide the Trend Micro XDR here in Japan. We have started specific efforts in this area.

The third point is to promote the IoT business. And gradually we are building up a solid mechanism for this.

On Page 3, if you look at the fact that in 2020 originally the Olympics and Paralympics was supposed to be held, and from [indiscernible] there was the DX report about the 2025 problem. In 2025, if you fail to achieve digital transformation it'll be necessary to shift from legacy systems to a world-class system; otherwise Japan is going to be in trouble.

And there was a report on this from [indiscernible] (0:32:10) and remote work and remote management were things that were supposed to be carried out this year, and there was also the 5g and IoT efforts, but because of COVID-19, the corona virus pandemic, we are seeing that there has been a tremendous momentum in shifting to digital transformation throughout the world and this has become even more necessary for Japan. Next, in regards to the commercial business update, we are looking at hybrid infrastructure protection and we are doing overall quite good business with the 32% increase in gross sales in the hybrid infrastructure protection, and we're also seeing an increase, but a 27% in deep security, and for deep discovery, we are getting large deals.

And so, we're seeing great growth in deep discovery. And we also talked about Cloud One.

And in terms of Cloud Security, we have the Cloud One effort. And in the deep security area, we have Cloud One security's supported and deep security has continued to show growth and the gross sales has increased year-over-year by 19%, and the number of customers have increased by 27%, and there has been a 13% increase in new gross sales.

We have been able to get two large deals and there are several large deals, amounting to tens of thousands of millions of yen, and this is the result of our continued efforts in this area. Meanwhile, for the low nights, we talk about this constantly, but deep security is growing.

However, including AWS, and so on, the growth rates are not as high as other areas. So, it's very difficult to achieve the visualization here.

And so therefore, it will be necessary to collaborate more with cloud in integrators, and you must look at the customers that cloud integrators are delivering to. So, by working more closely with cloud integrators and we want to have a greater penetration in this area.

So, we have reflected on this and we're looking at Cloud integrators and how we can strengthen our relationships with them. And we have not been able to carry out a variety of different events, but we want to be able to develop new businesses, but we have not been able to do so because of the current pandemic.

Next, in terms of user protection, the highlight is that in new areas, we have increased our gross sales by 5%. And in terms of a cloud-based security service for small and medium businesses, we have continued growth and we also have cloud management.

In the Cloud Edge, we have a strong partner business and we're seeing increase in the gross sales by 20% and in the number of customers by 50%. And in each quarter, we have been increasing our business here, so that we have been able to increase.

And there's also Apex One SaaS, partners have increased here. We have four or five new partners.

And so in Apex One SaaS for cloud management service, we're making our efforts and as a lowlight, as Mahendra Negi has mentioned, in the SMB area, for our partners like [indiscernible] or NTT, it has been difficult to carry out visits and also we have partners like [Okta], they have not been able to visit customers and so we have not been able to achieve the growth that we had wanted to that it's a lowlight. If you will refer to Page 8, the consumer global and Japan business.

The highlights are, as already mentioned, for Q2 in the consumer area, on a year-over-year basis, there has been a 29% growth in the consumer area, and so there had been a reluctance of people to buy PCs, but with partnerships with retail stores, we've been able to see increased sales and in online sales in areas like universe cameras, e-Commerce business. We have been seeing very good growth in online store operations.

And online sales has increased tremendously because of the lockdown. And so, we're pursuing this is there.

And also from mobile distributors, there have been smartphone shops that were not operating at full business hours. And so, in this area, because the smartphone shipments have gone down, there has been a tough situation, but we were able to establish very good partnerships.

And as shown on the right hand side, we have been able to solidly increase sales. Because there are more and more focus on security issues.

And users are more aware of this, and so because of this, in terms of mobile, our customers have increased in number. And as for Wi-Fi protection, on a global basis, we are seeing increased sales in this area.

As for the security service through line account, there may be cases just URL or so on that needs to be tested. And so there is the virus buster check that is under testing.

The official delivery hasn't started yet. But there's a QR code that can be used and is possible to take advantage of the virus buster check on a trial basis.

For testing purposes, it's an application that's offered free of charge. So, we hope that people take advantage of this.

As for lowlights, no, there is the Symantec Norton threat, and Symantec has been spending a lot of investment here in Japan, and rebates, and they're attacking the market aggressively. And so, it's necessary for us to take advantage of our sales channel to compete.

Both in Japan and globally, we have a challenge of a home network security. We need to do a better job of communicating this business.

Moving to Page 10, IoT focus areas. This is a quick recap.

We have smart factory, have [indiscernible] local 5G connected cars and connected consumers. And on the next page, Page 11, we can find that some of the important highlights of second quarter.

Industrial control system security product sales has been very solid since the beginning of smart factory, EdgeFire, EdgeIPS, by TXOne. We also have a safe look and portable security from before and you can see the growth numbers here.

EdgeFire is a new segment and one particular company decided to use this as a global standard for their organization. And we have already shipped more than 400 units.

EdgeIPS order was placed for Q3 as well by the same organization. OT and factories need to be connected and protected and the operation can never stop.

There is a heightened demand and the stock is very solid. On the right hand side, you can see 5G and local 5G status.

We don't have a nationwide network and the devices are not really installed in each household. It's not like the factory, but the combo has open innovation crowd to deny [indiscernible].

They talked about security services using our technology. So they made another announcement.

Including local 5G, we want to build specific customer references, and we are working very closely together with Docomo on this. One the next slide on Page 12, you can see the connected car, this will take a long time, but we have published white papers and the international standard for automotive cybersecurity will be established soon.

We have written white paper to help with that effort. We will not see anything specific.

So quickly, but this is going to be a multi-year project, both inside and outside of the vehicle, we want to take advantage of our security operation center and participate in PLCs and demonstrations. [Indiscernible] connected consumer in the second quarter in fact, one consulting company in the construction industry with more than 500 employees, I decided to use Virus Buster for home network for the employees.

The idea is, if the employee has to work from home using the company PC, they had concerned with the security level of the home network. So, this company actually tried and tested our home network protection and we received a huge order all of a sudden, and we were surprised by that.

And we spoke to the customer and the customer said, they wanted to make sure that home network of their employees were secure and then they provided this Virus Buster for home network for the employees. We think that there are other demands like this.

So, including this particular customer, we're working on R&D, so that we can provide even better approach of monitoring for example. We are continuously working with this customer.

Now Page 14 shows future outlook, second half, and the next six months. IT environments, lifestyle work, style are changing because of COVID-19, cloud usage will be promoted even further meaning that we need strong security for cloud implementation and management must be easy.

So, there is an acceleration to the shift to cloud file security. Like sales and partner sales, both will be enhanced strengthened, and the second point is remote working and studying.

[Giga school] introduced and the remote learning are expanding. And although not shown here, remote diagnostics for healthcare is another opportunity that we are looking into, in relation to remote security.

Now, it is difficult to have face-to-face communication, physical communication with our customers, but we are trying to do web seminars and different approaches to communicate better with our customers online, and that is all from me. Thank you very much for your kind attention.

Thank you.

This is SMBC. Can you hear me?

My name is Keith. I have two questions.

Recently, in the announcement of the business results, the impact of the coronavirus was anticipated, and it's most likely that the negative effects would be greater, but can we assume that unlike what Mr. Negi said at that time, there had not been that much of a negative impact or will there be a greater impact negatively appearing soon, and also in regards to tipping points decline in revenues, is it because of the firewall situation and not because of the coronavirus?

Yes. In regards to the first question, in regard to the coronavirus infections, we're still seeing an increase in the number of infections.

So, we don't believe that everything is over. The second quarter has finished, but we believe that things will continue in the second half, and there are still uncertainties.

But on the other hand, there could be further deterioration in the economy, and so therefore, we're not thinking of increasing our outlook. As for the firewall situation, it’s more of the firewall and the IPS situation that impacted tipping point rather than the coronavirus.

I see. In regard to the efforts for firewall, or in regards to this impact, are there some structural issues?

This is not something that's happening for the first time. But I think that Eva Chen can explain more in detail.

But when there's a low network space, there's this aspects of the firewall, but there may be some cases below that when the bandwidth is limited in the case of companies. As for the IPS and more shift to the cloud, perhaps Eva Chen can comment on this.

Yes, I think Trend Micro’s tipping point actually best perform when is totally turned on, on this inspection. A lot of times we win against firewall, our next generation firewall for IPS only when we compete with their IPS function, but if customer want is, they want just not the high speed, but just firewall IPS, everything is all together and they are major buying reason is firewall.

They will go for the next generation firewall. And that's where our tipping point market, especially in the mid-size customers will decline, but our tipping point roadmap, we have been very aggressively pursuing and developing that tipping point in the crowd where we caught the Cloud One network security module, which means that customer has a lot of their that has entered migrated on to the, on to the crowd.

And in front of those crowds data center, they would need very high speed IPS to protect their application behind those cloud workload. And therefore, our tipping point roadmap and we believe the future growth will come from the Cloud One network inspection.

Network security module, which is integrated together with Cloud One. With low Cloud One storage, Cloud One configuration, scanning all of this together.

So, that's where I think we are different from the next generation firewall will fit.

Thank you very much. Thank you very much.

In regard to the second question, you've made a new announcement today. And in a month and a half, you have been moving forward with this kind of effort about the buyback of shares.

And I'd like to ask about what is the purpose of this 5 billion in buyback of shares?

We're looking at the dividend situation. And there's also excess capital that we have and we, on occasion carry out buyback of shares.

And so therefore, we're looking at returning to the shareholder through this.

In your presentation, I may not have heard the detail about this, but there was no comment about this aspect. Why was that the case?

That was a point that you could have emphasized?

Well, in our case, as we've already shared, we are giving priority to dividends to our shareholders. And we have a buyback program, but this is not something that we had ever appealed when we made our financial reports.

If there's a payout ratio, that's something that we decided upon, but then we didn't think that this was a point that needed to be emphasized.

But the stock prices are not going down in your case. It’s at a high level.

So, was there some situation where a large shareholder wanted to sell, or is it just a normal buyback program at the market?

It's just a normal buyback from the market. This is not because of external pressures, or it's not from any pressure from shareholders.

Thank you very much. That concludes my questions.

Mitsubishi UFJ Morgan Stanley Securities, my name is Tanaka. I hope you can hear my voice.

Yes, we can hear.

I have three questions. First question, well, tipping point was just mentioned, on a pre-GAAP basis maybe there is no more room for decline, but in terms of revenue or net sales, it's showing a negative growth.

You didn't disclose this, but on a quarterly basis, what is the revenue size or a net sales size of tipping point?

We do not disclose that information. And as Eva mentioned, we are shifting to cloud and the cost of sales will change accordingly.

Therefore, we don't want to give you specific numbers to mislead you. Please just follow the information and infrastructure.

Our tipping point was the biggest factor. That's all we can say for now.

Thank you.

If we go to tipping point products, as Eva has just explained, how confident are you that it's going to succeed? How much confident do you have?

After the acquisition, tipping point products don't seem to be very successful on an organic basis. So yes, please, please answer the question?

Very confident because of the – moving to the cloud and the cloud migration, new application that is developing on the cloud, and if you want to protect those cloud application, the best way is to inject a layer protection from the cloud and that’s what our Cloud One platform means. And I think the network protection in the Cloud.

IPS content inspection is the key. Trend Micro’s tipping point we have the best [GPI] knows about the vulnerability, database, and fastest engine, which is totally required for a cloud that hasn't insured to be able to use this type of inspection engine.

So, of course, I'm totally very confident that this will be the new me shifting to the cloud.

Thank you very much we answer and yes, I have high expectations too. Thank you.

Second question. Not for the second quarter alone, but especially in the United States compared to your competition other securities companies, it seems that whether it's pre-GAAP order or net sales, the growth seems to be stagnant.

What do you think is the fundamental reason your business is not growing there? And what are your current initiatives or countermeasures and how are they working out?

Mahendra you want to enter or…

You can go ahead.

I can extend my perspective. Actually from this quarter, I will say, unfortunately, the growth come from usually that just likes Japan.

The work from home and study from home, the growth come from the consumer products. However, in us, our consumer product was not very highly prevalent in the online market is only available through the Best Buy mostly home.

When the shutdown happen people don't go to Best Buy to buy. So, it was unfortunately that part of the world we cannot experience in U.S.

and also because of COVID-19 Trend Micro’s strength in the U.S. part of his own small business small to medium business, that in COVID-19 this time they are the one that got hit most, and therefore, our growth in the SMB segment was spent [indiscernible].

And other than that, I would say, the tipping point of course is one of the factor that is making our [indiscernible] market in y-o-y comparison because in the U.S. market tipping points has a bigger portion and in the other region.

So, to overcome that part even more invest, but in U.S. our hybrid cloud solution has been growing and waiting for the other region in growing in-depth, I would say strategic position.

So, we will continue to focus on growth in the strategic area, which is [indiscernible] in U.S.

Network security part of internet, these are the companies and they have idea CrowdStrike and these are conventional. Well, we have a conventional competition like Symantec and McAfee, and I don't think that they're performing very well.

And I can’t give you an excuse. , but as Eva has just mentioned, we have excellent products, but we are shifting to SaaS and the cloud, and we still have a big portion of the sales coming from the conventional products too.

So that is why the growth is not so high in the United States.

I don't mean to be rude, but Symantec and McAfee they are becoming invisible almost. In other words, it has to compete against the other companies that are really visible in the market.

Yes, I do agree with you, Tanaka, and we have to work harder.

Now other than that, what about marketing? Do you have any specific challenges in terms of marketing and you are so highly effective in Forrester – by Forrester, but that's not translating into good performance.

Why is that?

Well, sales activities need to be strengthened. The U.S.

is a huge market. We only have 150 people in Salesforce.

Palo Alto and other companies have more than 1,000 in sales people working for them. So, in the end, is the question of how active the sales forces and how much the customers would buy.

And yes, COVID-19 impacted SMBs quite a lot. We need to focus on the sales.

Eva, would you like to add anything?

No. I do agree with you.

I think we have even more opening market and we can be more aggressive in doing our marketing. We do want to focus on the new wave of marketing pitches going through that crowd and infrastructure marketing.

So, I think we're still figuring out what we call the flywheel. The flywheel marketing means that you find a positive energy and you start from there.

Make the customer success and the customers success will create [indiscernible] products class from the SaaS platform and then the SaaS – those better product will get even more customers. That's what we are focusing on and I agree with your criticize, then I myself feel like will quote is not enough [indiscernible] need to work hard to make sure or work smarter to make sure growth can be even higher.

But I do also want to say that we don't want to grow in way of just buying the revenue. I think we try to balance between our profit margin, our profit growth, and our revenue growth.

So, that's probably it is a bit different than our competitors in U.S.

Thank you very much. I don't mean to criticize.

I just want to make sure that you work hard and make the shareholders happy. And next question in the summary statement, Page 11, you were talking about slices, your consolidated subsidiary, third brigade Trend Micro, I think we have excessive good people.

And they so consulted company so it's okay, but in the future do you think it will be spun out and it will have a negative impact on Trend Micro? What is the outlook?

With regard to [prices], as Eva has explained, it's not just about products, we need to make sure that we provide the services you know, address the customer's problems. And yes, Trend Micro products can be taken care of by Trend Micro, but the Trend Micro is not the only company that supports the customers.

MSST channel has high potential in the future. So, we need to gain more learning’s and we need to make sure that more Trend products will be used.

So, we are interested in this business. If we turn to do this directly, then there’s a risk that the channel will be a competition.

So, we want to have a separate company. And we own 37% of the share.

And this is the money that is going into this company from venture fund. If we add that it's a 68%, that is why we are consolidating this company, but [prices] has already spun out from Trend Micro.

We're not really participating in the management of a company. So, it's an independent entity, and we want to grow – see the growth in this business.

Oh, I see. So, Trend Micro’s basic solution can be sold by [indiscernible], such as like a partner?

Right. If it's only Trend Micro it's not good.

[Indiscernible] will be dealing with other security products as well outside of Trend Micro’s product portfolio so that they can provide security services to the end customers.

That's very clear. Thank you very much.

That's all from me.

Yeah, first question on my side, and it is in regard to SaaS in pre-GAAP, but was negative numbers for U.S. and I think that the SaaS effort has started, but in this transition is there is some gap, I think there's a one month free trial that is being offered in the United States.

And is that impacting thing or is it purely because of the pre-GAAP negative results? Could you give us the background for this?

There is the SaaS aspect, but that's not a major factor. The major point is the declining tipping point sales and also …

[Indiscernible] multi-year renew, what about the SaaS?

Yes. The customers may be preparing for us and perhaps one year ahead they may shift to SaaS.

Hence you’ve launched in the United States, but in Japan and Europe, has there been a full launch? And also in regards to the one-month free trial, is that going to be carried out?

Yes, this will be carried out. Mr.

Omikawa?

Yes, for APEC SaaS this has been launched, and there will not be any trial period. There's many existing customers and so we're doing business as normal.

Quite aggressive here.

I see. Thank you very much.

That concludes my question.

Thank you. [Indiscernible] I have two questions.

First question is about [indiscernible] Negi you said that it may go back to the normal level after the second quarter, when you look at your employees, well I think that is very quite reasonable, and looking for [indiscernible] has increased in the fourth quarter, I don’t think it is a simple question [indiscernible] but I think there is some continuity as well. [Indiscernible] You may start seeing customers and expenses might go up again, or like in the first quarter expenses may continue to decline over time, so can you please explain some of these different factor?

From my perspective, I don't think everything would go back to the way it was. The virus is still out there, that's the environment, and buying behavior of the customers is changing, so customer visits will not account for everything.

So, the expense will go up from the second quarter level, but 3 billion yen, or maybe less is my expectation. Omikawa, would you like to comment?

Thank you for your question. We would never go back to the way it was.

And our sales people feel that customers sometimes tell you to visit them just for education or greetings, but we try to minimize the number of people who visit, and we will bring some devices and the engineers would join online. So, it's a mixture of a physical visit and online visit.

And in terms of marketing expenses, number of entertainments would of course reduce. Online exchange will increase.

As far as marketing is concerned, online events may increase and physical events will decrease, maybe we will have more mixed events. And the question is how can we sustain that.

We are more focused on those online events. We will be using different approaches compared to how we used to do things before.

We will never go back the way it was. And I think the way we work will be more efficient.

Thank you.

I just want to mention about this. A lot of these costs are actually external events was canceled.

For instance, before it was Mobile World Congress that we need to fly a lot of people to spend or attend that or that just past the [indiscernible], it was lots of people who will fly in to join this – that those type of big events, but this time, this year, all this event was canceled, And therefore, the cost of course goes down, but in the future, we don't know. Maybe one-year, two-year the change or this big event come back and we will be joining all these events.

So, it's not just our own people face-to-face meeting its customer at all these big events was cancelled.

Thank you. My second question is to you, Omikawa, in your presentation you talked about the [indiscernible] business at Japan and global, [indiscernible] aggressive in terms of products [indiscernible], now in the past especially for the Japanese market, I think there were some loan when they got really aggressive sales activity, but never lasted, and if they are not successful [indiscernible] restore quickly, that’s what we see in the past.

Do you think [indiscernible] or well in Japan [indiscernible] but do you think it will subside after first quarter or do you think you have to be really careful because it is different from before?

Thank you for your question. Let me talk about the Japanese market first.

We are trying to – through the situation we are looking at the data every week, we know where the date is going. And when they see the date, of course, there is a lot of activity that happens in that area.

But we look at the store shipment data and the data is not really moving very much. It's only an increase of single digit percentage, and that goes back down again.

So after the fiscal year is over, I'm sure that the budget is being controlled by APEC. And APEC would probably abandon this current project.

So, we just have to withstand this. We should look at this from the customer's perspective and the partner’s perspective and really think about how to fulfill customer's requirements and focus on online activities.

And that's exactly what we're doing right now. So, overall, the competition is [indiscernible] money into their activities.

We are convinced that they cannot beat us. Australia and New Zealand, we have markets there as well.

And we have not experienced any big impact so far. I know the competitors get very active on a seasonal basis, but the efforts never last because they cannot maintain strong trusted relationship.

But in our case, it's the same people, same faces supporting the same customers for many years. This is our strength, this is our continuity.

So, we will not repeat [indiscernible] in Australia or New Zealand, either. Thank you.

[Ends Abruptly]