Trend Micro Stock

[Interpreted] Thank you. This is Negi speaking. And I would like to start the earnings results summary for Q2, 13% growth in net sales, but cost actually grew by 29%. So operating income was minus 54%. At the bottom of the slide, we can see the numbers at a constant currency basis, net sales growing at 3% and ARR growing at 6%, which is an improvement. The biggest point is a decline in income. What has happened? Well, Eva Chen will be providing detailed explanation later on. But the biggest focus here is cloud-related expenses. Why has it increased so much?

Well, rather than paying out a lot of dividends, investors have told me in the past many times that we should be investing into the future. And based on that, we have exactly done that, investing into the future. It's not simple CapEx. Our investment directly affects the P&L. This is one big factor behind this number, but Eva Chen will give you more explanation later on.

ARR progression. This is an important point. Rather than net sales, we are using ARR to explain the future of the company. So ARR for the enterprise customers, this is improving from 4% from the previous quarter to 6%. In the second half, we expect further improvement in this number.

ARR by region denominated in U.S. dollars and therefore, no currency impact. Americas stands out. It is struggling somewhat, but Europe and EMEA are growing quite well. Japan is growing only at 3%. And Kevin Simzer will be providing you more explanation. Considering the geopolitical situation, there are headwinds and tailwinds. And in North America, we have some headwinds. This is the cash flow. There is no comment. This is connected to the operating income.

Number of employees headcount is basically flat. But in the background, we are requiring new types of skills. So there are some turnovers. But in total, the headcount is basically flat. And we believe the situation will be very similar to this in the second half as well. This is cost, and I'm sure this is something that you're more interested in. Cloud-related expenses stands out. And as I said before, this is investment for the future.

Selling and marketing, the portion has also increased quite a lot. For TrendAI and Trend brand, we launched the 2 new brands. So we have related expenses and related events-related expenses. And headcount cost is increasing, one because of FX. And the other reason is we have internal bonus payments. And we are looking at both operating income and ARR growth. And operating income was negative, so there is no bonus reduced. But ARR, well, you may think that the 6% is not enough, but that actually achieved the internal target. So some bonuses have been paid based on ARR. And the Q2 highlights, highest ever quarterly net sales, and also, as I mentioned before, ARR growth continues to improve.

Moving on to the full year guidance. At this level of minus income, what do we do? Well, sales is on track. So there's no change. But in terms of investment, we don't have any temporary items in the second half. So total cost will continue to be incurred in the second half as well. So we expect that at the same level. And the nonoperating, we don't expect anything major apart from what has already happened in the first half.

FX is still volatile, but our plan is JPY 157 and the current rate is JPY 160, not that different. So we'll keep it the same as well. And the outlook for the full year, same for net sales basically, but for operating income and ordinary income and net income, we have revised them downwards based on the expenses that I've just explained. This is impacted by the investments that we are making, pushing down all these income lines.

And that's all for me. But if you require further explanation, please ask me questions during the Q&A. Thank you.

Thank you for coming to our Q2 financial announcement. I think in my 38 years of IT industry, these few quarters are the most dynamic and the speed of change in the whole industry is the fastest. But as an AI-native cybersecurity company, our transformation is also speeding on, and we must. So let's first look at what is the major change happening in the whole IT industry right now. I think the most important thing, of course, is AI. And in the past 2 months, how many new frontier AI models have been released? There's so many of them.

And the most interesting thing for the cybersecurity is every new frontier model whenever they release, they talk about, oh my God, our own model, we cannot control it. It was doing things out of our expectation. It was doing all these hackings into the other infrastructure. So cybersecurity is the center of these problems that's happening.

But I think also hackers is already realizing that is really happening that AI-native ransomware already happened and is invading into consumer organizations that is using AI agent and the speed of how this ransomware customize itself into the specific attack is just fascinating 31 seconds. 31 seconds, it will change its way dynamics and attacks the customers. So with this type of speed of the threat changing, Trend Micro need to invest in how we transition into a real native AI operation to keep up with the speed of the transformation.

But actually, about 2 months ago, even before all this frontier model started, we already thinking about this cybersecurity problem in the AI era. And I describe it as like this. The problem on the left-hand side is like if you have thousands, millions of thousands of questions and prompt into a big model, then it's like all the different colors all mixed together. I have a palette. So and all the color mix together, it becomes what color? Black. It means that all the prompt go into a black hole and it will be very difficult. No wonder all this frontier models themselves are saying that, oh, our model was out of our expectation, we don't know why you do this, how you do this all this attack because it's a black hole.

And therefore, about 4 months ago, we Trend Micro already thinking about for security, for AI, the better architecture is actually smaller SLM, which is all tuned to expertise, different expertise, different customer segment to fit their own needs and it's like the color is separated and the control is controlling that color, but each of those models will be collaborating with each other. That's what we imagined 4 months ago.

And also this is actually the chart that when I talk to NVIDIA, I sent to NVIDIA I said, we are going to invest in this type of new model, and we want to use your Nemotron to do all this customized solution for our cybersecurity needs and immediately, actually, Jensen Huang himself immediately reply and said, yes, that's the right direction. Let's go.

So starting at that time, we accelerated our investment on all the open source and how to tune and perform this type of new architecture. That is the architecture that we draw out and we believe that 3 layers of AI security stack. Layer 1 is all on board on all the machine, or the server or the AI appliances. Layer 2 is to protect the AI usage. Those 2 need to rely on what we call edge AI model or local AI model because all is happening in the AI local model. And then the Layer 3 is the trust layer that would dynamically choose the right model to submit if there is a more complicated problem to be solved. Those are the 3 layers and Trend Micro are investing in this type of architecture.

So as you can see, just last month, NVIDIA announced their open weight and open source project. TrendAI, which is our enterprise division is one of the inauguration partner in this initiative because we believe the future needs will need both closed and open frontier AI models. And that is why Trend Micro are investing so much into the future AI infrastructure. If we think about this whole information advantage to decision, before IT industry is mainly focused on information. [indiscernible] is the king. Information is the king, whoever can get more information is a winner. But now with AI, information is cheap. It's very easy. You can gather all of this information.

But what makes the difference is your decision advantage because your decision is based on your own priority, your own environment, your own needs for the decision. So the difference is we need to switch to gathering more information to understand customers' problem better, understand customers' priority and help them solve their cybersecurity, make their better cybersecurity decision. That will be the cybersecurity companies most understand customer more.

So if you look at the security debt, we call it, if you look at the red line, that's the vulnerability. That's the information. Nowadays, you can find whatever vulnerability very fast using the frontier model and those are very cheap. Now you can find, but it's piling up so much of that. However, the customers' decision is depends on the yellow line, which is the remediation capacity.

Those vulnerability are there. But for your organization, do you need to patch it now? Where do you need to patch it? How do you want to apply your patches? Those are the real decision quality that will affect the cybersecurity. And that's why Trend Micro believe that we need to invest more, not in just collecting all those vulnerability, but understand that customers' environment.

Same time, our customer, we're seeing that customers are realizing this. And they say, we cannot just rely on frontier model. Look, when U.S. government shut down Opus, everybody suddenly alert if my company's operation is relying on those big model, how am I going to operate my company?

And therefore, more and more, they are investing in sovereign AI. They want to make sure that decision and those intelligence, they can own by themselves. So sovereign AI is the most important part. To enable sovereign AI, you must need sovereign cybersecurity, and that's why Trend Micro is investing on AI-native operation. That is our platform, our engineer software development life cycle process and our business operation all need to be AI ready and it's AI edge of the speed and implementation. That's why Trend Micro are doing all this investment, I'd say actually in 2025, when we were talking about our Road to 2028, we already indicated 2026 will be our transformation year, and we want to accelerate our AI solution.

But in the last 4 months we actually accelerate our acceleration and invest more into the AI solution because we believe that is the future and that is what Trend Micro need to do to become the native AI cybersecurity leader.

So what do we do and where do we spend all those money? I think this chart is the most telling. You can see we categorize all the spending into 3 big categories. So first one, internal AI transformation. In 2024, first half, we actually our cost I mean in that time, internal AI transformation, our cost is only $0.2 million. This internal transformation means that we need to invest for our employees to train and use AI is the internal transformation.

If you remember, Trend Micro used to do our AI contest in 2018, we are already doing this internal AI contest. And every contest, we spend about $2 million or $4 million to make sure we have all the engineers that go in and learning about how to do AI. And in the past 6 months, with all this new frontier model and with all this agentic AI, we accelerate those investment in the training, and therefore, there's Internal AI Transformation, it grew 6,000%, which is $12 million. But that is the preparation of the foundation. It's not going to continue to spend that much. It's just initial boost up and make sure all the employees need to get this AI-ready training. So those are $12.6 million spend in the first half of 2026 that compared with last year, of course, is a big huge increase.

The second part of the cost, which is the largest part, Customer AI and Cloud Consumption. I'll go to save that part at the last because this is the most important and the biggest portion. So next one is Infrastructure Expansion and Transition Cost. What does that mean? Infrastructure expansion is that because customers are focusing on AI sovereignty and therefore, they will require all our data need to be located in their country. And that means our nationwide, for instance, our platform and collecting customer data, we need to be stored in the local country zone, even if it's in AWS in cloud, but there's certain zone country zone or area zone that we need to expand.

So establish those zone is costly initially. But we need to establish those sovereignty zones so that we can expand our business for those countries. So this is the infrastructure expansion, $6.5 million from 0. Last year, there's no such expansion cost, but this year, that's where we spend. But it's -- once you set up, you set up, but it's just onetime cost for setting it up.

The second one is Transition. Transition means that we actually are rewriting some of our core modules such as our XDR data lake. We are rewriting those code on to GPU code. Originally CPU, GPU is much more efficient and faster. However, during this quarter or this half year, we need to run it in dual site both in CPU and GPU so that we make sure the transition and transformation is complete. But that is the double cost of our data lake. However, those double costs, once we make sure that it is already stable, it will go away. So that's USD 7.2 million.

Now the rest, the biggest portion that is Customers' AI and Cloud Consumption, which means customers are using our AI-driven technology or platform such as Vision One. That's why whenever our customers using more Vision One, of course, our cloud consumption and AI consumption will be higher. However, we carefully monitor this cost. We are not just blindly and means that Vision One is not making money. We are investing and cost consciously monitoring it. So the indicator we use to monitor it is we call it cost per SaaS money, which is the gray bar that you can see in there.

For SaaS ARR money, how much do we need to spend on cloud or AI cost? In first half of 2024, that is USD 0.19. That's per $1 of ARR we spent $0.19 of it get on to the cloud and AI cost. But in the first half of 2025, we actually already consumed and we optimize it. So it reduced down to $0.13 per SaaS ARR money. So we control the cost. But this half year it slightly increased to $0.14 per cost per SaaS ARR. Why? Because we recently launched a lot of new services such as agentic AI or virtual red team or digital twin or IT security, all of these are new services that we initially need to set up the infrastructure ready, but our customer number is not that much yet.

This great momentum going to increase, but currently in the first half because all of the new model -- new modules has less customer and therefore, per customer's ARR cost to ARR is not scaled out yet. But we believe in the future, it will be scaled out and then our cost per ARR money will come down.

So these are some of the evidence that we are investing for the future, but not blindly. We carefully monitor what is the ROI of it. For instance, our internal training, internal deployment of all of this, we already see 2x employees using all this AI. We already get all our employees ready for AI. But most importantly, when they do this, we automated the customer therefore delivery in 50% less time.

So customer can get all this. We can service our customers much faster. AI simulation also deliver become days versus months. Simulation is that we simulate customers' environment and very easy to get the tabletop cyber simulation for our customers. These are all getting much better customer services and support for our customers.

And also our R&D are delivered more and faster with the software development life cycle AI. We already see 2x more [indiscernible] request and also all of this actually, for instance, agentic SIEM, it required to develop all those different connectors before AI, before this age, then it would take months, even year to develop those connections. That's why SIEM Trend Micro never entered SIEM market.

But now we enter and we improve all of this, not only shorten the days, and now every 3 hours, we can develop any new connectors adapter within 2 hours -- just 3 hours. And threat hunting, which is most important for our customer, we shorten those from hours to seconds for customer and issue reporting and resolution is 5x faster than before. All of this is we are providing much better, faster security outcome for our customers. So that's that part.

And infrastructure expansion, as you can see, no matter all these countries, Japan, India, UAE, Germany, Australia is already we set up all of this new zone they are focusing on, and we are already seeing the sign of all this sovereign AI security requirements coming, and we have deal that is processing now already. And there are new that we're just starting to set up in 2026 for Brazil, for South Africa, Indonesia, Canada, U.K., these are the new area that we are setting. But this is we investing in sovereign AI infrastructure to unlock the future monetization.

So as you can see, our momentum is already there. Vision One ARR Y-o-Y growth, 49% continue seeing customers getting on to use more of those modules and the net retention revenue is 122%. Not only that, with our existing customers that have Vision One Attached grew to 35% and Trend ARR now already 45% come from Vision One ARR. That means that our business and revenue stream is on the new AI-driven model and is much more healthy than those big deal, multi-year deal is much more healthy than before. And that's why we believe all of this investment is really paying off. We already also see the pipeline. And if we continue for this investment, then our trajectory of the ARR growth will continue to grow. That's why we invest.

So in conclusion, I want to say, yes, we are investing, but we are investing with management action in place to drive for economic outcome. We are not just saying, oh, we're investing in AI, we will lay off people. No. We're investing because we believe that's what customers need and we will grow our whole revenue stream. And that's why Internal AI Transformation, we believe we put in already they have full adoption. And now with governance and measurable productivity threshold, we can make sure that AI efficiency will be much better, and we have the operating leverage.

Customer AI and Cloud Consumption, we will improve our unit economy. And then Infrastructure Expansion, as I say, once we scale out is set up, then it's unlocking the future monetization. And then Transition Costs, it will die down once we move on to the right computing [indiscernible] platform [indiscernible] GPU is much more efficient than before. So the transition cost will die down after this quarter. So that's Trend Micro, what we are doing, transforming into AI-native cybersecurity company. And I believe Trend Micro has the best opportunity and will be the leader in AI-native cybersecurity field. Thank you.

Hi, everyone. My name is Kevin Simzer, and I'm the Chief Operating Officer for Trend Micro. I'm here to give you a Q2 2026 Business Update. If I could for a second, just take you back to December of 2025, we hosted our Annual Investor Conference at that time. And during that conference, we talked about what it would take in order to transform ourselves into an AI-native operations company.

We felt like we needed to have clearer business units in place with clear demarcation. We felt like it was important for us to move fast, be agile, and have consistency across the globe. So global execution was really, really important. We felt like the time was ripe for us to invest for sustainable growth in the future. And we said that we would hold ourselves accountable using ARR as our measurement to track progress.

Well, here we are in Q2, you've already heard from Mahendra, and overall top line performance is very strong. ARR is up 5% year-over-year. In Q1, we were 3%. So we've managed to increase it. TrendAI is up 6% year-over-year in ARR growth. In Q1, it was up 4%. So we've managed to increase it largely on the back of the success we're seeing with our unified cybersecurity platform called Vision One.

TrendLife, up 4% year-over-year. In Q1, it was minus 1%. So a big swing for TrendLife positively, and that is with the success we're seeing around Digital Life Protection, ARR growth up 52%. And then in Incubation, the ARR is not material enough for us to actually really disclose it in any detail right now. However, we're seeing the early indicators of success in both of those business, and we'll talk more about that in a second.

Overall, total company up $1.7 billion in ARR. That's up 5% year-over-year. And we achieved this growth with some investments that we started to make in 2025. Actually, we've been making investments in AI for many years, but really concertedly in 2025 as we rolled out AI to every one of our Trenders 2025 and 2026. So we're seeing more -- we're seeing the engineering team, of course, leveraging it heavily, but not just engineering. We're seeing functions across the globe adopt AI and really get some incredible productivity improvement.

From an R&D perspective, we can measure it quite acutely because we can see the amount of innovation that we're doing has really increased, up 2x the number of updates that we're making into the source code control system. But it's not just about source code development. We're using it in our platform. We're leveraging it in all different functions. It is being used heavily across the company. That investment has come with some costs associated with it. And Eva already described this in quite a bit of detail, but I wanted to provide my own color along the way.

If you look at the 4 categories that were laid out, internally, yes, we have rolled it out. But we feel like there are some improvements that we will be making as a result of us adopting this global governance policy that we have in place. We will be able to make sure that we're leveraging the right model for the right task at hand. And we see productivity improvements still being driven. However, some operating leverage and costs will also be improved.

We also see from a customer standpoint that our platform definitely leverages AI heavily. And we see that we can do some things around optimizing the architecture over time. We've done this before. You saw it in our cloud costs as we've done -- as we've managed them closely in the past. And we feel like there's some optimizations that we can do. But there's also with respect to making sure that, that value is being appreciated by our customers, we think there's some pricing and credit economics that we can also drive where the customer actually helps us along the way.

The last 2 are related to some infrastructure expansion that we've done, where we've actually deployed in it 5 additional points of presence. Each one of those points of presence across the globe has some fixed costs associated with it. But we did that quite consciously because we see sovereign private cloud is a big topic right now, and we want to be in a position where we can, in fact, be able to deliver on those use cases for customers. So we need to have a local presence. So we think that, that will end up translating into real business for us moving forward and the unit economics will improve.

And then finally, from a transition cost standpoint, we are consolidating some workloads from 1 hyperscaler to another. And during that period of time, we actually have 2 instances running. So as we actually complete that transition, you'll see those costs roll off. So we see the cloud costs coming down over time.

From an overall Trend Micro management P&L standpoint, you can see the top line, and it's well within the guidance that we set, and we're really pleased with the overall top line performance. Our COGS did increase, and we talked about from a cloud perspective, that's the area that it increased specifically. And we have some areas around cloud and AI where we do see that the unit economics will kick in over time, and we will see those gross margins start to improve.

The other area was from a sales and marketing standpoint. As we created these global -- these clear demarcations between our businesses, we said we would invest in some branding. We said we would lean into those to get those established. So those 2 are temporary investments that we made. So we see those falling off over time. Our North Star remains in place. We think we can drive up to double-digit growth while maintaining incredibly healthy operating margins.

Okay. Let's dive into each one of the businesses real quick. From a TrendAI perspective, it's all about Vision One and our 11 solutions that are built into that. We're doing a really nice job of growing it. Vision One, $615 million, up 49% year-over-year. So tremendous growth. And you can see the bottom red there, that's what we're driving towards. That represents a 45% attachment.

NRR is solid, market-leading with 122% NRR. That is consistent with the number we produced in Q1. However, in GRR, we actually improved our overall GRR. In Q1, it was 85%. And in Q2, it's up to 87%. So we're starting to see the benefits of getting this platform and multiple solutions deployed. Actually, we had participation across the globe from all 4 regions in terms of growing our Vision One platform success. Really, really nice growth in each one of the regions.

And the chart on the right, the box on the right shows it's ranked by order. The largest ARR is in the U.S., and that is up 39%. Actually, that's even higher than what it was in Q1, where it was up 38%. So not only is the number getting bigger, but we're actually finding ways to accelerate the growth in the U.S. specifically. And not surprisingly, Vision One adoption is big across our top 3 countries.

In the Small Enterprise segment, we have around 6,600 MSP partners, and we continue to actually work through and methodically get them. We're up to 325 of them now that are transacting with Vision One. ARR growth is exceptional once they start doing that, and we're seeing the adoption grow dramatically.

From a services standpoint, we don't talk too much about this, but one of the sales motions that the team has in place is once a customer gets a certain amount of adoption within the platform, then it's very logical for us to try to attach services, managed detection and response, incident response services. And we're seeing really nice success with this. We're up now over 2,200 customers now, $81 million. That's up 27%. But the cool thing about this is once services is deployed, we actually see the number of solutions increase by 50%. So they go from an average of 4 modules to an average of 6. So some really nice success.

And you know this chart, you've seen it before. Once we get more solutions deployed, our ARR goes up, but so too does our retention rate. And that's why we're seeing the GRR start to improve. We're sitting at an average of 4.2 solutions per customer on Vision One right now.

Not only that, we're seeing it in terms of all the marketing investments that we've been making and success with the platform. We're seeing our pipeline grow, so very healthy. And we can already see the leading indicators for the second half that our ARR will continue to accelerate beyond what we've typically seen. The dotted line on the bottom shows if we had not made the investments. So we're starting to see that pay off.

And specifically, from a customer standpoint, we are seeing it in -- right across the globe. We're seeing about 41% of our deals are driven by consolidation. We're seeing the AI SOC, the agentic SIEM customers. We're replacing vulnerability -- legacy vulnerability management systems. So a lot of good success. In our traditional verticals, we do have a lot going on in terms of vertical marketing and specifically around health care, substantial increase with 94% year-over-year. So really good success leaning into those verticals.

Next up is TrendLife. And like I said, a really powerful quarter, doing everything that we've said that they -- that we wanted them to do. So really nice growth in terms of overall, up plus 4% year-over-year in ARR. Also, it's coming from the area that we're looking for, which is this Digital Life Protection, and that's increasing our ARPU, up 2% year-over-year. So really doing a nice job.

And then finally, rounding it out, from a VicOne perspective, that business is focused in on automotive, but also robotics, cybersecurity. And we're now up to 45 customers protecting a lot of real vehicles that are out there, and we're seeing that business start to grow as it starts to embrace robotics. And in Magna, that's the AI systems integration and consulting. We have 15 pilots underway. We've signed a number of MOUs and we actually have a deal that we're working on. So our first opportunity we're looking to close in the second half. So we've actually got some really, really good early indicators that we're on to something.

So overall, I feel like we're in a really good spot. We've got our transformation into an AI-native operations company. We have our sort of 3 key areas with TrendAI, TrendLife, and Incubation, all focused in on their areas being best-in-class in what they do and winning and trying to accelerate that top line. We feel like over time, we will be able to drive and get the leverage out of these investments that we're making.

Look forward to the questions. Thank you.

[Interpreted] SMBC Nikko Securities. My name is Kikuchi. I have 2 questions. First question about [indiscernible] investment was going to increase, and this is bigger than we expected. But I understand that there's going to be return on this investment later on. I understand the direction. But unit economics, so the revenue as it increases, the investment will be absorbed. I understand that as well. But when will this happen? When will the net sales start to increase?

ARR growth in the U.S. is still weak. So my question is when can we see the net sales increase enough to absorb this investment? Should we expect that next year? I would guess so, but is that the beginning of the year or the latter half of the year? So when do you think net sales will start to increase? And also what will be the breakdown in terms of types of products and also region? That's my first question.

Maybe you can answer.

Sure. I can start and Mahendra or Eva can also jump in. The way we think about it is that our net sales, a leading indicator for the net sales is going to be ARR. And those 2 numbers are going to get closer and closer together over time. And one of the things that we described in both Eva's presentation and mine and Mahendra's is that we're really fixated on growing Vision One.

So our Vision One platform is now half of our, approximately half of our, pretty close to half of our ARR in total on TrendAI. And that's really the focus is to continue to grow Vision One in the Americas and in the U.S., in particular, that's why I highlighted the fact that the U.S. is doing so well at growing Vision One, and that is the priority. And over time, in Q3, we see the ARR increasing. In Q4, we'll see the ARR increasing. So as the ARR increases, we will see that translate into some net sales improvement over time.

[Interpreted] I would like to add Kikuchi-san. Legacy SaaS is slowing us down. That is a type of cloud security that sold a lot several years ago, but it will start to disappear. And then Vision One sales will increase or accelerate the pace of return on investment.

[Interpreted] What about the specific timing though? Are we talking about next year? According to the situation right now, I cannot really see the ARR growing that fast. But do you think you will hopefully breakeven in next year, but when do you think it will happen? I want to know the timing.

I think...

[Interpreted] And the second question, sorry, yes, please respond to the question first, if that's okay.

Sorry. I think you already see that we're showing the momentum of the second half, and we expect that Q3, Q4, our revenue continue to grow and our investment will be slowing down or say, already starting to pay off starting the second half. But how much is enough to absorb the whole or how much improvement of the unit cost economy is very hard to say. All I can tell you is that starting second half, we definitely will be seeing improvement on those unit cost economy already.

[Interpreted] My second question is also about cost. Customers use your Vision One and that increases the cost. And I understand that the cost will continue to increase in line with the net sales growth. But there are also other costs that are increasing. And I believe that those other costs are controllable. And if that is true, Kevin, you showed a 2028 target and AI cost, controllable costs, I'm sure will be controlled by the company. Is that the correct assumption? That's the question.

Well, 2028 is 2 years down the line, but it's going to come very quickly, I'm sure. And do you still have the same target in terms of performance target? And is it actually possible to continue to reduce the AI costs that are controllable.

[Interpreted] I would like to explain first, and I'm sure that Kevin has some additional comments.

As Eva's slide showed today, so when the customer uses something, then it pushes up the AI cost and cloud cost. But for SaaS, $1, it's $0.14 or $0.13, which means that we are still making a lot of profit from there. And the reason that income is declining is, for example, there's duplication and also internal education. And those costs can be flat or can be reduced over time, so that can be effective. And we don't think the headcount cost will increase that much either. That's what I wanted to say.

The other thing. We do have a 3-year plan. And at the end of today's event, I will talk about the, people talk about the IR Day event. And in the IR Day event, we will provide more explanation about our future outlook. Right. So Kevin, can I ask you about the target, 2028 target? What is the current status of progress against the target in 2028? Kevin?

Yes. Like we've been talking about through Eva's presentation, Mahendra and mine, we don't see any change to the Road to 2028. That continues to be our North Star business model that we were moving towards. There were 2 areas, our cost of goods sold and our sales and marketing expense, both did increase. And we've talked about both of those in terms of we see that as temporary and that those will gradually become more aligned with what we expect from a Road to 2028.

The only thing I would add in addition to what Mahendra said around the unit economics. I like that calculation a lot. And one of the things I don't know if everyone picked up on it, but our Vision One platform grew 49%, and our cloud costs grew substantially less. So while we will make improvements in our overall cloud utilization, and we will get leverage from some of these investments, but the top line growth of the platform is much greater than the cost increase.

So I would like to move on to the next person.

[Interpreted] This is Sato from Jefferies. Can you hear me?

Yes, we are hearing you.

[Interpreted] I have one question. This is just to check once again. This fiscal year, ARR 15% -- 15% ARR, I believe that, that is your full year guidance. So can I confirm that there's no change to that target?

[Interpreted] So our full year ARR target, what we are saying is that we would like to aim for double digit. But our expectation we are just give -- saying that we are planning to increase ARR, but we cannot say whether it's going to be 15% or not. So 15% is the number that Kevin has mentioned when we announced our quarter 4 results. Kevin?

So yes, formally, we do not guide on ARR. We guide on our net sales and our net income. So formally, that's, and that comes from Mahendra. I tried to give you an idea of what our objectives are and from an internal standpoint and where the business is headed. And yes, we are targeting to continue to increase as this ARR momentum continues to build, we see it over time that it will hit double digits. So that's what we are moving towards.

[Interpreted] Then so it has improved to 5%, about 6% at the moment. So your second half scenario is that there will be some gradual increase towards the end of the year. So there's no change to that thought process. I'm not sure whether it is going to be 10% or 15%, but can I understand that this growth is going to be [indiscernible]?

[Interpreted] Yes, exactly. So 10%, 15%. So those numbers, we don't give you officially. However, going forward, our idea is to aiming for the growth.

Yes, double digit?

Yes.

Moving on to the next question.

[Interpreted] JPMorgan. I Henderson, I have 2 questions. The first question somewhat overlaps with an earlier question about the outlook revision. Cost increase includes the factor related to cloud. But I also understand that there is transition cost, infrastructure expansion cost and some other one-off costs for the second half as well.

So can you please explain how much you have increased against the original plan in the second half in terms of cost? And for next fiscal year and beyond, what is your outlook on cloud cost is it going to be higher than what you had expected in the original plan? So can you please give us some information about the outlook of the expenses costs, including what will happen in next fiscal year?

[Interpreted] Well, for next fiscal year, please wait until we start talking about next year's expenses. But the SaaS sales, if that increases, cost also increases for cloud. Eva's slide showed that. So there's a relationship between the 2. And there is also duplication and also investment for education. Those will decrease over time.

Eva, do you have anything to add?

Yes. I think AI internal transformation costs $12 million originally was not in the plan, but because we see the need and therefore, we, that the whole company starting to all use AI. But I want to indicate one thing that I'm very confident that, that will go down because Mahendra mentioned about we have this cash performance bonus scheme, which is linked directly to the company's net income. And that is the incentive that all the employees, including major spending of the tokens, our engineers, they're all looking into that.

So it's like an automatic cost control. Once they see that token cost is too much and then it will affect the cash performance bonus, they're starting to control it. And we already see that at first, you probably want to use the easiest one, the coldest one. And once we realize that those token cost is too high, we're already starting to see engineers have much smarter way which module, which type of question you use one type of a smaller model or bigger model when you only use it when you really need it. So I'm very confident on this type of self cost control by our whole employee and whole organization.

[Interpreted] All right. I have a question about headcount. From Q1, well, against Q4, Q1, we saw an increase. But now we are seeing a decrease. The company is investing a lot into the product, which is very good. But what about sales capabilities or expanding partnerships or acquiring new customers? Maybe you're not investing as much into people or headcount. Should we focusing on headcount to think about that?

Kevin, you want to answer that?

Yes. I think one of the comments that Eva had made upfront was that we are making a number of people changes across many functions, including sales and marketing in order to become much more AI native and AI literate and leveraging AI. So that comment applied to all functions, including sales and marketing.

We are making investments in both TrendAI and TrendLife in sales and marketing specifically. There's investments from a branding perspective. There's investments from a vertical marketing perspective. There are investments from a channel, we're really working very, very hard on reigniting the channel ecosystem, and we are making sure that we have the right people in the right job. So there's a lot of go-to-market transformation going on right now. We feel very good at the changes that have been made and the changes that are planned.

And just make sure that we are confident and therefore, we will not give up any opportunity to invest in increasing our ARR and our revenue. And as you can see in this quarter, Mahendra's number shows our increase in sales and marketing, not necessarily in people headcount, but we are increasing our spending or investment in sales and marketing because of our confidence in we can solve the right problem for our customer.

[Interpreted] Yes, I do trust in your product. So I'm looking forward to accelerated ARR growth.

So I'll move on to the next questioner. Is there anyone who would like to ask a question? Can you wait for a while?

[Interpreted] So my name is Tanaka from BofA Securities. There's one question. 2028 target, the net sales growth CAGR 8% to 10% against this number, if with a constant currency, it's a 3% growth for the first and second quarter. So taking a look at this table, you are showing with the changes in currencies. And you mentioned that your target is on track. So I don't understand your explanation. Can you talk about that?

[Interpreted] So I would like to first give you an explanation about this year. No changes to the full year forecast. Excluding the currency changes, it's 60%. So net sales growth itself is going to be growing in the second half. And for the 3-year forecast there might be some comment, but 8%, 10%. So this year is a transformation year. So if we refresh it, then this growth will go up. So the 3-year forecast remains the same. Kevin?

Yes. I would just echo what Mahendra said and maybe tie it back to a comment I made earlier, and that is that we are very fixated on ARR. And we feel like as that ARR momentum continues to build, it will get closer and closer to that net sales number. So that's why we're using that as our leading indicator, ARR momentum.

Any other questions?

[Interpreted] Mitsui Sumitomo. My name is Watanabe. Can you hear me?

Yes.

[Interpreted] Sales cost, JPY 12 billion for the full year. Specifically, where do you see the increase against Vision One? For cloud, I know that you already had an increase in the first quarter. But JPY 12 billion, which are the specific items that have increased or are increasing? And the second quarter sales cost up by JPY 10 billion by quarter. But for the first half, it's JPY 3.5 billion. Well, for cloud, I understand the token usage was inefficient in the beginning. May be used in areas where it was not supposed to be used because you try to apply this across the company.

But now the profit level actually affects their bonus and the individuals are trying to optimize that. But in that case, you're leaving it up to the employees, and we cannot really see how the management is getting involved in this kind of control. So are you trying to control or have you tried to control the amount of the token usage?

[Interpreted] Well, second half forecast, I'm sure that Habara can explain this further. But it's not that simple. We cannot just look at the bonus and the cost and optimize individually. So yes, the management is overseeing this as well to optimize this. And we knew that the situation continued, we would have to make a downward revision and we accepted that we have decided to go ahead with it.

So Habara-san, can you please talk about the second half? Maybe give us some comments.

Sorry, I do want to comment on this. Yes, we do put in some control of all the token usage and all of those. But a very important thing is that we believe we don't want to suffocate innovation by putting those too strict of the control because we are competing with hackers, the bad guys. We need to make sure that our solution really solve the customer problem. So we do put in the control, but it's not like you trying to suffocate the engineers' innovation and say, you cannot do anything. So please understand, I think that is a very important management principle of our cost control.

[Interpreted] I would like to give you some granularity to your question Watanabe-san. JPY 12 billion, well 80% of the cost increase is cloud related, as already explained. And in terms of breakdown between first half and second half, well, all costs were incurred in the first half. And I said majority of JPY 12 billion is cloud related, and we have already actual cost spent in the first half. In the second half, we will have smaller duplication. Therefore, the cost level should be lower.

So out of the JPY 12 billion, majority is cloud-related and compared to the actual of the first half, second half cost increase will be smaller. We will not see accelerated growth of the cost in the second half. The factors for cost increase was stronger in the first half. I hope that this answers your question.

Thank you.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

I think for any company now, the most important question to ask is what is your AI strategy in this new AI era. So I'd like to take a few minutes to explain how Trend are dealing with AI attack and also how we utilize AI to defense against the new threats.

Next page, please. So last month, when Ethic announced that they have this very powerful model and can find a lot of zero-day vulnerability, it send a stone across all the cybersecurity industry. And people are asking how I'm going to deal with this AI-powered security and also how is -- what is cybersecurity companies want to protect our own business. So I like to say actually, vulnerability, finding vulnerability, of course, is a very important part, but defense against all this vulnerability is not stop at just finding it.

The more important thing is how to help customers mitigate against all of this vulnerability against the hackers, the bad guys attacking it. And as you can see in this chart, the red line is the total vulnerability, all the vulnerability that has been found. But the most alerting part is the yellow line down below there. That is the capability of customer to deploy the patch and mitigate against all this vulnerability.

This gap between the red line and the yellow line is where cybersecurity company need to do. It's not just finding the vulnerability, the process in between finding vulnerability, creating protection before customer can deploy their patch is the most important process in cybersecurity.

Next page, please. So this is between customers, we disclose and they know there's vulnerability and the vendors issue the patches and customers can really apply all these patches onto their environment to defense against these attacks that actually take a long time.

Next, please. Even I think 2 years ago, we talked about this vulnerability called LogRhythm, but until now, LogRhythm and there's patches several times, but until now, there's still millions of servers that cannot be patched because there's so many application develop and so many compatibility problem that cannot be patched.

So this time line show you between the customer applied patch and the real protection is already in place to protect against all these possible attack, there is a need for providing what we call virtual patch. Virtual patch means that cybersecurity company, we analyze all the vulnerability and then we simulate what is the possible attack, attacker will do and then using virtual patch in front of those vulnerable system to protect against all those actual attack. That is what cybersecurity company needs to do.

And that is also why after [indiscernible] immediately come to cybersecurity company like Trend Micro and work with Trend Micro to focus on how do we apply all this process of announcing the vulnerability to the software vendor and develop the simulated exploits, develop the virtual patch and deploy those virtual patch onto the cybersecurity products such as Trend Micro's tipping point or our deep security product, our Vision One endpoint protection or need this virtual patch to defense against the possible attack on the vulnerability.

And in order to do this, you need 2 type of core competence, which first one, understand and develop the possible exploit that rely on the threat knowledge that cybersecurity company especially have. Of course, we are using AI to accelerate all of this development, but the special knowledge is needed to develop this type of virtual patch.

And next page, the second important thing is understand customers' environment because the initial attack usually is attached on the human and organization vulnerability. This table shows that in the past few years, the top 10 most important most impactful security incidents happened in the world none of them the initial from the zero-day vulnerability. It comes from all the organization and human error configuration error.

So all of this vulnerability organization and human vulnerability require the understand of each of the customer environment and where and how they can apply all of this virtual patch or protection engines into their environment. That's what Trend Micro and other cybersecurity company are working on and has all of the capability to help customers really protect their environment.

So one domain knowledge about the threat, how attackers will attack and domain knowledge about specific each of the customers' environment, how -- what is the best way to apply the protection against all the attack path. Those are the 2 important modes of cybersecurity company.

And next page, I think Trend Micro has been in cybersecurity for 38 years, and we have been investing in utilizing AI to protect against all the different threats.

Next page, please. So you can see that Trend Medical in the past few years already invest a lot by utilizing AI to develop, accelerate our virtual patch deployment and helping our customer defense against all of this human and organization vulnerability. That's why we believe the question that customer investors to ask is not how AI will replace cybersecurity. But ask if cybersecurity company has been using AI to defend against all of this new AI-driven attack.

And Trend Micro has been investing here for our digital twin Vision platform are all very advanced in utilizing AI to defense all of this attack. You can see this event is a Trend AI event. And on the stage is Trend Micro's Trend AI Chief Business Officer, Rachel with Anthropic, NVIDIA and AWS. We are on the stage together explaining how this -- in the AI ecosystem, how cybersecurity should act and work with AI infrastructure vendor to help their customer safely, securely deploy their AI application in their organization.

So AI security is an essential part of AI ecosystem, and we are very confident that Trend Micro Trend AI Trend Live already in the forefront of developing all of this AI-driven cybersecurity to protect customers in the generic AI era.

So that's my AI strategy for Trend Micro is utilizing AI and will help customers safely, we call it like a bridge over trouble water, bridge customer moving from the own infrastructure on to the AI infrastructure. That's our AI strategy. Thank you.

So next, I think we will pass to Kevin EDO to explain how we execute in the Q1.

[Interpreted]

This cut is unchanged because of changing the nature of the business. SP999 So how would has changed? Is this something that we could do from last year to Dan and ThinkLive brands have been established. So enterprise business is now shifting to cut and also for concerns, we have additional life market expanding.

In order to cover those 2 aspects, we have established these internal brands and the strategy will be different in different going forward. And machines has shifted the subscription had some gross sales and pre-GAAP sales. We have been discussing this main -- we then consists the second point, not raking in of AI, many new business opportunities will arise. And therefore, to be able to actually mention business and the cabin side will cover some of this in greater details etinosion business, and we're investing for new markets.

And this kind of upfront investment, of course, will impact the consolidated operating profit therefore, we need to provide explain will be stopped and explanation will be focused on iteration investment, what is the size of that impact to show up at the management level. This is no gas numbers that we're talking about. So this means that we'll be focusing ouslyecansign or to the can result 18% and operating income at 4%. Sales and profit was -- and you may think that there is a slight improvement over that. But perhaps -- as you can see in akinesia need for us as 3%. And we do see share prices changed and some of the costs related to share price can impact the P&L. So considering that which is a negative 4% in terms of operating income.

What is happening recently left for DTC, 25% against the total animal sales, so this is the progress. And operating income is at 28% in total, which is higher than the prior year. And as said before, share price has declined and that had impact of about JPY 1.2 billion and company that opening profit was basically net of 4%.

Last year you will just take disclose information of the Enterprise business. But now this is a there are some segments here, 39%. This is the same as we shared before. So typically it's a problem comparing this state to the prior year numbers. And we will continue to present the numbers in this way going forward.

Our growth, it was about 3% at 1 point, but now it's recovering slowly and leading up to the second half of the year, we expect this growth rate to go higher. As in AI, excluding Americas in other regions, we see growth in different factors for Americas. I'm sure that spans you see some improvements competitors still in the negative territory in this quarter.

Cash flow -- gross rate looks high collection in the first quarter -- in the first quarter, it was a big self. So we are collecting. As you can see go forward or slightly increased because we're hiring. We expect headcount to increase somewhat. Now to the changes came is announced 5.8 million cost and about half of that is in [indiscernible] cost is also increasing, as you can see, impacted only by FX using the cynical such is increasing over time. This is not just [indiscernible] factors because we have a platform not be provided and customers not to use many new features. We like I which is that. This is how we can deliver review from Trend Micro, which is used by our customers. So that means that the cloud costs will continue to increase, but this is in of our user base expansion. -- this is the evidence that users is using cloud functions.

So this is a positive factor and this pushes island also if we just onetime has the highest canoeing income and net income -- moving on to the full year forecast, this hasn't changed. We present growth in sales the 2% in operating income. That's all for me. I ask either 1 because there is a topical thing that should be covered.

Thanks, Mahendra. Hi, everyone. My name is Kevin Simzer. I'm the Chief Operating Officer for Trend Micro. I'm here to give you an update on our Q1 2026 business performance. If you happen to have been able to attend or watch the recording of our December Investor Relations strategy meeting that we had last year, we already announced this, but I'm pleased to announce further here that we have fully instantiated all of this. So the overall Trend Micro business structure is in place. We have 5 very focused businesses that are really, really leaning into a very specific area of pain points relative to the market that they're going after.

For Trend AI, it's all about enterprise security, and that's the largest business unit we have inside Trend. Trend Life, the second largest business unit that we have inside Trend. That's all about digital life protection, specifically for consumers.

We recently instantiated an AI security and systems integration company called Magna AI. It's majority owned by us, but we -- it is a joint venture with large AI company called Wistron. The next one up is VicOne. That's all around focusing in on automotive and robotic security. We own the majority of that.

And then finally, TXone, an entity that we've incubated and spun off and we've we've been involved with for a while. That's in the OT security space, and they're really fixated on supplying an AI cybersecurity platform for those semiconductor manufacturers and other manufacturers that need to think about their overall OT environment. Trend AI was formally launched at the RSA Conference in March of this year. So that was nice to get that out and start the branding initiative.

We followed it up shortly thereafter with a strategic alliance with one of the largest large language models on the planet and biggest in the enterprise space, and that's Anthropic. Really pleased that we got that partnership extended. We're going to be working with them on responsible vulnerabilities disclosure and other things. We also further cemented our relationship with NVIDIA.

We announced that we've support for their just recently announced open shell open source runtime capability that allows for autonomous AI agents. We want to make sure that cybersecurity is thought of when enterprises are adopting that. Trend Life, I know I'm cheating a little bit because it was formally announced in April, but we did all the work in Q1, so I included it in here. But Trendlife is formally instantiated as well.

We also signed an agreement with Anthropic as a strategic partner because we need to be leveraging lots and lots of AI capabilities in order to make sure that we can protect this next-generation set of threats that are coming in to the consumer landscape. Endpoint protection is one thing, but we need to think more broadly. And right now, it's around sort of the entire digital life protection and family AI safety that we're seeing as a threat to consumers.

Finally, we were really flattered to be recognized for our Sam check capability, winning an award by one of the leading cybersecurity publications. So yes, a really nice set of announcements for Trend life recently.

Finally, on the incubation side, lots going on in the physical AI security with BIC1. We're really focused in on automotive and all of that, what it involves, plus we've recently expanded into robotics. We've done a nice job of cementing some OEM relationships in the automotive arena, and now we're working at doing that on the robotics side. They tend to have really long product life cycles. So getting the announcements out early and getting the relationships in place early is really important. With Magna, you may have seen a number of press releases that we've done.

We've announced 5 MOUs of various AI projects that we're involved with. We're focused in on the Middle East and Asia because they represent the second third, fourth and fifth largest AI market on the planet. And that's important because they tend to think about data sovereignty, and that's an area of specialty that we're bringing to the table. So that's the reason why we're focused in on that part of the market, and we had some announcements to reflect that.

If we look at the overall Q1 2026 results, you already heard from Mahendra. Net sales up 9% year-over-year, so that was good. Operating margin at 21% was better than what we had planned. So we significantly beat our internal plan that we had set out for ourselves. Trend AI, the largest business, again, net sales up 11% year-over-year, all fueled by our Vision One AI security platform, ARR up 50% year-over-year. Trend Life net sales up 5% with the ARR up 49%, and that's on the back of very, very impressive growth with Digital Life Protection.

So Digital Life Protection ARR growing 49% year-over-year. So that's a testament to sort of this expanded opportunity that we see in the consumer landscape. In incubation, it's not about net sales. The net sales are really immaterial, so we'll see a bump up and down from a growth perspective. It's about making the investments in planting the seeds so that we can harvest those down the road. Q1 investments in incubation were JPY 817 million. It's about a $30 million investment for the year. So it just shows you how serious we're taking these 2 areas in terms of helping us to drive sustainable superior performance going forward.

Speaking of sustainable, superior performance, this is the way we think of any company if you want to have longevity. And you need to be thinking of things in terms of what's delivering today, and that's our 2 boxes on the top. That's our high-growth area around Trend AI and our medium growth area, Trend life, but you need to be making investments in new areas as well. And you also need to be thoughtful and plan out exits. And as we're moving away from product and more towards platform, it made sense for us to exit some of these legacy SaaS offerings. You're going to see us talk more and more about recurring revenue, and we talked about this in December of last year.

We feel like as our business has moved from perpetual license to subscription, as our business has moved from product level sales to platform level sales, this notion of thinking about things in terms of gross sales and pre-GAAP doesn't really make sense. It's not a good indicator of the success of the business and how we're tracking. We believe annual recurring revenue is that metric.

So you're going to see us move more and more towards this. We've already made the changes internally to make sure that MBOs and KPIs and sales compensation plans include ARR as the metric. So that's what we're going to be driving the business towards going forward. Sitting at the end of Q1, $1.7 billion, up 3% year-over-year.

So we're starting to see some momentum building around the ARR. And we think it sets us up nicely for our road to 2028. This is our North Star. This is our 3-year plan that gives you an idea of what we're thinking in terms of where we're headed. We do plan on high single to double-digit growth. That's certainly in our plan. We also plan to try and do that as efficiently as possible by increasing our margin over time. I added in the Q1 actuals column, and you can see relative to what we did in 2025 and how we're shaping up for 2026, 9% on the top line is right within our plan and the guidance that we have.

The operating margin at 21%, quite honestly, is a little bit higher than what we anticipated. We are anticipating that in the first half of this year, we will be making some more investments in order to make sure that our Trend AI and Trend life businesses, in particular, get off the ground in a big way. But it was nice in Q1 to see us finish at 21%. In fact, if you were to back out our incubation, actually, it would have been a 22% operating margin.

So it really is indicative of how serious we are taking that incubation that it has a 1% impact on the operating margin. But the only real issue around the expenses, and it's not even a big issue, it's sort of understood, and that is that our COGS increased ever so slightly, running at 21%. That's as a result of our AI-related cloud costs. So we are investing pretty substantially in cloud and AI right now, in particular with our relationship with Anthropic.

Let's dive into each of the businesses now and just give a panoramic view. From a trend AI perspective, this is our flagship platform. This is the one that we are fixated on landing and expanding with customers. It contains 11 solutions. It contains a lot of capability, and it's really helping us to actually provide more value to those end customers.

When we provide more value, when they end up not only giving us more money for it, but it ends up really helping with our customer retention and it helps with our moat, our ability to expand and stick with a customer for a while. From a Trend AI Q1 2026 ARR perspective, $1.3 billion, that's up 4% year-over-year. So this is for Trend AI specifically. Net sales was up plus 11%, if you want to put that into context.

And yes, really a nice quarter overall. We were really fixated on stabilizing everything as we pivoted towards setting all these ARR objectives and getting the team, the large go-to-market team that we have fixated on driving healthy ARR growth. And we have that in place. It's been rolled out, and that's what we're running towards. If we look across the globe, this chart shows the total ARR within Trend AI by region. But it also shows, I think, the more important thing, which is all the growth we're getting around Vision One. And this is really because we are so focused in on driving the success of that platform with our existing customers.

We're so focused in on landing new logos with that platform. You can see all 4 regions grew nicely in their Vision One ARR. And we're going to see that continue. So because it's such a focus that we have right now, we're going to see that ARR continue to grow.

On the right-hand side, that table, that represents a sorted list by country of our top countries with Vision One ARR. And you can see not surprising, our 3 biggest countries, U.S., Japan and Germany in our business, they drive the majority of the Vision One ARR. And you can see the type of growth that we're getting across all top 10, really, really high, healthy double-digit growth, also triple digits. So we are fixated on growing our business across the globe with Vision One in Trend AI. From a go-to-market standpoint, no real big change here other than maybe just taking it a lot more seriously.

Managed service partners continue to be a big priority. They're the face to many customers. So getting them to adopt Vision One is important. Value-added channel partners are important because they tend to be the ones that many customers trust and look for an opinion on. But we're really fixated on working with a set of strategic ones that we can go very deep and invest a lot of time and effort and money with in order to drive business.

And then finally, marketplaces, a very big deal for us, having AWS, Azure and Google marketplace support, we continue to drive that in very healthy double-digit growth. So transacting business through those marketplaces is a very important sales motion for us. From a managed services traction perspective, if you wanted to actually see it in terms of numbers, we're up to over 290 managed services partners that have adopted Vision One and are serving that up to their customers. That's really nice.

We're seeing those emphasize the cyber risk exposure management solution. So that's really important because that really gives complete visibility as to the risk posture that the customer is facing. And then we're seeing those partners actually end up with an 8x average ARR increase. So that's the reason why they really want to talk to us because they see the value in the overall platform.

From an enterprise Vision One ARR perspective, we're up at $547 million now across that platform. That's a 50% year-over-year growth in that ARR number. And I think that is a testament to how well we're doing at landing with existing customers and expanding with those existing customers, but also getting new logos adopted with that platform. We're sitting at 13,600 Vision One customers. That represents a 48% attachment rate of our total enterprise set of customers.

Once we get the platform landed, because it's so comprehensive with its 11 solutions, we can really do a nice job of expanding, and that's what we're fixated on is expansion with those existing customers. 123% NRR. It's above industry benchmarks. So we're doing a nice job of expanding. And we're not losing as many. So we're above industry benchmarks with respect to our GRR as well, so at 86%. And that's because when we get that platform deployed, it just becomes much stickier. We see it here quite acutely.

As customers adopt more of our solutions on the platform, the retention rate increases, look at that up to 94%. Of course, the ARR also impact increases, but we are really fixated on expansion in that existing installed base. If you're curious, the top 2 expansion solutions that we have, cyber risk exposure management, so giving that visibility and then also visibility and response is the AI SOC. So that SIEM and SOAR capability that we have that we recently introduced and really disrupting that whole addressable market. We're seeing some nice wins replacing some incumbent legacy SIEM vendors.

We have 4 customer wins to help sync home what we've been up to in Trend AI. Remember, we use this nomenclature of land and expand. And the first one, the first column, America's land. That's in the U.S. It's a large school district, 50,000 students, almost 10,000 employees, 60 campuses. So a really large school district we ended up replacing an incumbent cybersecurity provider, a couple of different tools. They wanted a more streamlined, comprehensive cybersecurity platform. So it was a really nice win for us. $248,000 deal in Europe in transportation. It's actually a parcel service, very large parcel service company. And they have a lot of old systems, and they really needed a broad set of platforms to be supported.

They needed next-generation SIEM and SOC capabilities. They wanted that complete visibility. We won that. And in particular, they transacted it with our new Trend AI Flex credits capability. So that allows them the flexibility to move around and try out different solutions.

In EMEA, a large government organization selected us, and it was a really nice win like many government organizations, we see this time again, limited budget, shortage of talent. So they were looking to streamline and come up with a better way of doing things. They selected our platform to do that. And then finally, in Japan, in the environmental vertical, so a really nice win. They were looking to be much more responsive because they were facing sort of an increased threat risk, and they were looking for positioning themselves with a platform that would allow them to be much more proactive in their overall cybersecurity risk posture.

So 4 nice wins and gives you an idea of the type of deal we do in Trend AI. Let's switch gears now to Trend life. So from a Trend life ARR perspective, $372 million, so sort of a minus 1% year-over-year growth with net sales up 5%. This is officially the last quarter that we have to worry about that merchant of record that we had last year that went bankrupt, and we had to switch over to a new vendor and all the challenges we had with billing current customers. That is all now completely behind us after the end of Q1.

So we will start to see the ARR start to grow again as we continue to expand, specifically with this digital life protection. We're seeing more and more customers see the need to be able to expand into -- they're worried about scam. So endpoint protection is one thing, but they would really like to make sure that they're also protected from the being inundated from these scams that are happening. They're also increasingly adopting AI. So they really want to get a sense for what we can do to protect the entire digital life from an AI standpoint.

Digital life protection, up 49% year-over-year. So that's now sitting at $129 million. So really nice ARR growth on a big number. Overall, the ARPU increased plus 2%. That represents a change from last year as we were working our way through the merchant of record bankruptcy. Now we're starting to see that ARPU increase. We're also starting to see the churn rate recover. So the churn rate is going down, which is a good thing. We've also identified that SoHo, that small -- micro small businesses also represent an opportunity here.

So we've actually moved our cloud edge offering, our small appliance offering into trend life. So you can see that showing up here, and we'll be talking about that more going forward.

Finally, to round it out, really not much from a net sales perspective to talk about just yet, but investing in the areas that really matter. So physical security is a big addressable market. Magna AI focused in on AI consulting and systems integration outside the U.S., we're really fixated on the Middle East right now and Asia. Data sovereignty is a big deal for many customers as they're thinking about AI, and we bring a unique skill set to the table to help them with that. We, of course, bring a skill set of cybersecurity.

We can make sure cybersecurity is built in, and we have a bunch of AI know-how. So we really think we're going to be able to help out with AI projects specifically that hit our sweet spot. So we've signed 5 MOUs, and now we're working at converting those into small bite-sized purchase orders. So overall, we feel like we're positioned well for growth. We have Trend AI, the broadest cybersecurity platform on the planet. great industry partnerships, new go-to-market investments and really driving more and more accelerated adoption of that platform.

In Trend life, focusing in on this digital life protection going beyond what we've traditionally done. And that's important as families are increasingly worried from an AI perspective, how we can actually help them out. And then finally, in incubation, 2 bets, 2 important investments that we're making, one around physical security and one around AI and systems integration and consulting. I look forward to your questions, and I appreciate you taking the time. Thank you so much.

[Interpreted]

I have 2 questions. On what I have in the same that we have a strategic relationship with taking -- that's a founding partner perspective, funding fine project [indiscernible] compute to cross maybe a competitive task what about -- do you have an advantage of some other players because you have a relationship with Anthropic, can you please put your competitive environment?

Maybe I will take the question. On, of course, I don't know what they were doing in the founding member part. But after we joined and work with Anthropic, we've been working with them on our BI organization, talking about finding the vulnerability and how to handle all this software vulnerability process.

I think that is a very important part, I can say when they were developing this model and very powerful in analyzing all the code and one of the functionality in is finding the vulnerability or the box in the code, which is what Glass founding member was focusing on.

I do think that is a technical gap for Trend Micro to catch up because what customers really care about is that security gap that by finding the vulnerability and mitigate the vulnerability that is the part that customers really need and Trend Micro is leading on providing that type of virtual patch and working with starting from finding vulnerability and then virtual patch that is the most important part for our business and our customers. So that's my answer about. I don't think that is a technical gap that in our cybersecurity solution to be ahead. So that's the first answer. And the second question...

[Interpreted]

That was my first question. I haven't asked my second question yet. I would like to start the second question if that's okay.

My impression is that the company performance was pretty good. But if you look at Japan, the domestic business, cybersecurity is very exciting right now. But the enterprise business growth in Japan according to JGAAP is actually minus 9% according to my understanding. Is this the impact on the segment change? Or do we have to be concerned about your lack of competitiveness in this environment?

Yes. Yes, there is a big gap between -- because Japan is the biggest -- Japan is our biggest market for Cloud Edge, which the [indiscernible] business on to thendife,umer business, small business. So I think there is a gap between that because of that move and it only impacts Japan because Cloudgelling Japan.

[Interpreted]

So excluding that segment change, in Japan is actually growing positively. Is that the correct?

Yes. I have some December adjusted or was retrospective adjusted, so this is an apple-to-apple comparison. Another factor is an internal view and expecting them to materialize in the first quarter, but it didn't already in. So we're expecting this to happen in the second quarter. That's another factor understand clearly -- this is a respective just I understand.

Thank you for your questions. Let's move on to the next question.

[Interpreted].

I have 1 question there are various data by region. I don't -- I'm not so clear what was the good news and bad news. So new trend and we look at ARR this excuse me, you assumed is not very clear. I cannot hear you very clearly.

Could you repeat your question?

[Interpreted]

So how to read some of those information by region, if you can comment on each region. So for example, U.S. is it recovering or better than expected? And European number seems strong. But in the previous earnings call, it was not so good. I think it was still weak. So is it improving in Europe? And also I think Middle East is also included. But the number, it seems quite strong. So by region, if you can explain the macroeconomic condition and your business environment. If you can give me the update, that would be very much appreciated.

I can start and others can jump in. So overall, the backdrop is that what I was trying to explain in my video recording is that we've made a fairly dramatic change in our business going forward in 2026, and that is moving away from this focus onGAAP Rel. Historic, we have done a lot of multiyear transactions. And in fact, in some of the regions, it was up substantially the number of multiyear transactions. And we're much more focused on go-to-market teams are fixated on growing ARR, so growing that annual recurring revenue stream.

If we go across the globe, I'll just start at the top, you already mentioned it. In our Asia Pacific, Middle East and Africa business, EMEA, it was up double digits, and it has been historically up double digits. So we continue to drive really, really healthy ARR growth in the Middle East and Southeast Asia, excluding Japan.

In Europe, we were a little bit higher growth than previous quarters. So Europe continued to perform well. In Japan, you already saw the numbers that we were talking about relative to Japan. So even doing the apples-to-apples comparison in the enterprise business, we did actually do good growth and getting the growth in the area that we want, which is for Japan to start really much more aggressively getting our Vision One platform adopted. So that was up.

And then in the Americas, that did decline. And specifically, we did see a small decline in the U.S., if you're asking about the U.S. However, we're still declaring it quite a victory. We did grow ever so slightly quarter-over-quarter in the U.S. So that was nice to see that from Q4 to Q1, and that's the first time that we've been able to actually stabilize the ARR within the U.S.

We were really, really focused in on customer retention. We're really focused in on growing the Vision One base. If you go back and look at that chart, the Vision One ARR within the U.S. It's the highest of all top 10 countries. So it's substantial, and it's growing at 35% plus. So we are really doing a nice job of growing in the right area in the U.S. And that's what we're focused in on and we'll continue to be focused in on.

[Interpreted].

I have a similar question to the ones that have been asked 2 questions. First of all, Americas ARR enterprise turned AI, ARR, [indiscernible] it was so positive. When we see the positive growth.

So from an Americas standpoint, I think we've done a really good job in Q1 of getting things stabilized. It's probably another quarter in order to continue the stabilization effort. But by the second half, we are going to see growth for sure in the Americas and the U.S. in particular.

What are the factors behind that. In the second half, you said that Americas will improve. So what factors will drive that in which segment and in which specific business?

So there's a couple of different things that we invested in at the start of this year in the -- in Trend AI overall, but in particular, in the U.S. The one is our strategy is to be very vertically focused. So we have the team structured to go to market in a very vertically oriented way now. That aligns well with the channel partners that we do most of our business with. So that was an important step, and we've made that step in January.

The second thing that we've done is we've invested substantially in the channel. That had been an area that we have been historically under investing in, and we've identified the strategic channel partners that we feel are going to have the biggest impact on our business in the U.S. And we've made those -- we've increased our headcount and discretionary spend for those channel partners. We started to do that in Q1.

So the reason why I say the second half is because we need time for those investments to start to work. That said, I do want to highlight the Vision One growth that we're getting in the U.S. is substantial. And as that continues to build, we know that the Vision One platform offers a better and easier way for us to expand and add more value and solve more customer pain points.

We also know that the retention rate is higher. So that's why we're really fixated on growing Vision One even more in the U.S., and that will eventually start to give us positive results. We may see it in Q2, but I feel like the second half is when we will start to see total U.S. ARR growth kick in.

I think one of the important factor in Kevin's presentation, it shows that the total ARR in all the countries, actually, U.S. is #1. Vision One ARR is #1, and that is a base. As we can see, once they get on to Vision One, then the expansion rate, retention rate is much better. So based on that capability, the first one, you can see then we believe.

Did you achieve the target in 38 the management will have to go up in 2017. [indiscernible] is that correct understanding.

Yes, your understanding is correct. It's our plan to invest more in the first half of this year in particular. So we will see some softening in the overall operating margin this year, and that's our 19% guidance. Of course, we will provide 2027 guidance at the end of the year -- at the end of this year. But yes, it is our intention to gradually increase the operating margin over time.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[Interpreted] This is Negi speaking. And using this slide, I would like to give you the overview of the fourth quarter and the full year result. And this is a summary of the fourth quarter. And the revenue, we have seen a 5% increase and operating profit has increased by 50% and OP margin is 18%. We are seeing the 2 years in a row of improvement. And this will be talked about later on.

However, pre-GAAP numbers may look low. However, a year ago, in 2024 fourth quarter, the pre-GAAP growth was extremely high, it's at 20%. So in that respect, this is starting from a very high level. And this is the changes from a year ago. Revenue, not changes, but operating income, the blue line, this is the result of the fiscal year 2025 as you can see that there is a very big increase from -- in the operating income. And as I have mentioned earlier, due to the decrease in the stock price, the stock option-related cost has decreased and which pushed up the operating profit.

And this -- and thanks to the yen depreciation, excluding the impact of the currency, the gap is minus 4%. And as mentioned earlier, a year ago, fourth quarter, this was very high. So that's the reason why this year, it was minus 4%. But in Japan, the Windows 10 termination was one of the factor that happened which sort of made people to refrain from making a purchase. And pre-GAAP, as you can see, this is a year ago. Pre-GAAP profit has increased.

This is ARR. Going forward, rather than the pre-GAAP, we are going to be explaining our forecast the results based on ARR. And ARR, this has slowed down a little bit, 2% in the fourth quarter a year ago, it was 7% but it dropped to 2%. But this will be explained in Eva's explanation as how we will be planning to lift this ARR. So please wait until her explanation. And cash flow, this is moving very stably. And employees, not much difference, sideways mostly. And expenses, as you can see $8.8 billion of the cloud expenses in Vision One service has been expanding and the cloud service is being used there. So there -- that is increasing cost. And this is based in U.S. dollars. And if we translate that into Japan, there's some impact.

In yellow, this is the salary and benefit. It looks as if that it has dropped from a year ago. But the major reason is that the fourth quarter 2024, the pre-GAAP growth was extremely high. And in tandem with that, this salary is included here. In ARR, in the post -- profit will be the basis for this variable comprehension -- compensation. And so we are going to be focusing more on ARR. So highlight is that the fourth quarter, we have achieved a record high net sales.

And in the full year terms, we have seen a record high revenue and also the operating profit. And this is the full year number. Maybe you are very much interest in this dividend per share. In the previous year, it was JPY 184 and we are expecting to pay JPY 185 per share. But after this general shareholders' meeting in March, the final number will be determined, but we are expecting to pay out JPY 185.

And this is the 2026 guidance. Yen depreciation is progressing from a year ago. And based on that, this is our guidance, 9% increase in revenue; and operating profit, minus 2%. Reason as -- Eva is going to be talking about this, there are 2 reasons here. One is with the development of AI, the new business expansion opportunity will be there. So we are going to be spending on this business and also the in-house start-up cost, in-house start-up is growing at the moment. So at the very beginning, it will post the negative profit. So this is the factors. And we are expecting to see the 6% increase, excluding in a constant currency basis, 6% increase in revenue.

I think before I dive into the future strategy of Trend Micro, I'd like to spend a little bit time talking about software value in the GenAI era. Since Trend Micro is one of the large software company that originated from Asia, of course, this affects Trend Micro a lot. Software at the end, the value usually generated by doing 3 things. First, collect the data; second, organize the data so that customers can see the data and generate business intelligence for customers.

But in the GenAI era, these all 3 steps will be changed. First, if your data is just very standard external defined data, then certainly, GenAI can do it much better. And also with the unstructured data that can be consumed by GenAI, I think the traditional entering way of collecting data will be obsoleted, of course. The second thing, organize the data. Of course, GenAI with flatten all the data, break all the data silo, connect them all together can generate or organize the intelligence much better than traditional way. And the third layer, if you are just providing the business intelligence, intelligence is not anymore. The most important thing because it can be generated by the AI.

And therefore, I think in the future, the value of a software company really defined by all these 3 things. First, the data you are collecting must be specifically about the customer fit into the customer's special environment and special need, such as for Trend Micro security data. We need to collect all the -- have the sensor and collect all the desktop telemetry, server telemetry, network telemetry. All of these are especially about the customers' special data. Those internal data collection is most important.

And secondly, you need to organize it so that the customer can easily assess it with natural language or natural interface that customer can understand their own data better. And lastly, the most important part is your data, your information is support for the customer to make the best decision. And best decision is different from each of the customer. It's not necessarily there's a universal best decision for all the customer. And therefore, the value of the software is specialized in customers' data collection, data organization and specialize in helping customers to make the best decision for themselves, and that is the value of the future.

As you know, Trend Micro as a cybersecurity company, we actually has been moving to AI security, AI as our platform to develop the best business support decision for cybersecurity. And that, the fundamental of that, as you can see in this page, this is -- we call it the digital twin for cybersecurity. Customers or the sensor collecting all those cybersecurity-related specific data for the customer, organizing into -- can be simulated into a customer's information flow digital twin and customers. Therefore, imagine that when they need to do pen test, they need to know their cybersecurity exposure then they can use this digital twin to simulate the attach and seeing what is the real response on the digital twin, how their cybersecurity posture is and therefore, can proactively provide the best security for their real environment that kept on changing.

And those cybersecurity decision, best decision for finance sector or for manufacturer sector are quite different. And therefore, we believe cybersecurity is going to be dominant and very important software value that is going to be -- exist and even more important in the GenAI area. So that's our view of cybersecurity software value in the GenAI area.

Now I'd like to take a little bit time to talk about more of Trend Micro. Since Trend Micro last year, we already see that need for specialized in different areas to create that specialized customer cybersecurity decision support. That's why we reorganized our company into Enterprise segment that is TrendAI that specialized in enterprise cybersecurity. TrendLife will be specialized in consumer and so forth business. And then we also have [ B1 ], which is specialized in the physical AI security. And lastly, we also work with Winstron to establish a new company called Magna AI that would help customers to establish their AI operation securely and more starting to rewrite their AI application. So I'd like to go into this financial report by all these 3 areas that we are focusing on.

So first of all, TrendAI, I believe the Enterprise business, as I say, our competitive edge is that we can use digital twin for cybersecurity to personalize or customize for the customer environment. And then we use our specialized cybersecurity intelligence to create the Cybertron asset or -- and specialized language model. Together with the agentic AI, we can help customers make the best cybersecurity decision and going forward, can also help them automate and save their efforts on their cybersecurity practice.

So for Trend Micro, I would say we take not only we redesigned our product platform, but also we are reorganizing our GTM, go-to-market strategy. So there's 3 big things that we are doing in our go-to-market. First is our fragmented platform and product need to be organized and because this type of point product sales create a lot of product silo and also very heavy price competition. And therefore, we believe we need to reorganize this into a new go-to-market strategy, which is lead with Vision One as an AI security platform and integrate with agentic SIEM, vulnerability management, exposure management into a unified platform go-to-market strategy. That we will start very focused on executing that starting 2026.

And actually, the platform way of selling, we're already starting. And right now, our Vision One platform sales already about 38% of our total revenue. Into 2026, we believe we will continue to grow our Vision One platform strategy and platforms way of selling. And early quarter-to-date, we've seen that already our Vision One is already about 41% of our total trend AI ARR. So that is the first one. First of all, lead with the Vision One platform way of selling. That's the first change in our GTM.

The second one, in 2025 and before -- I think our biggest challenge is that in our go-to-market organization, our incentive structure is tied to the gross sales. Gross sales means total gross sales or post the whole gross sales margin. And that's why our sales force are diluting their focus on the platform-driven growth. Going into 2026, our go-to-market strategy will change to adjust our incentive to prioritize our annualized year 1 sales and reducing our unnecessary discount and creating more durable revenue and managing core value of the platform.

So the indicator we are using is that we want to make sure that our total multiyear product sales are focusing on the year 1 value because before, because of the gross sales when multiple year deal was supersized the deal, but also taking heavy discount. But now by changing this type of compensation strategy, we believe we will correct our sales behavior. And early quarter today, the progress is that our multiyear impact is starting to decline and now it's at 17%. Before in 2025, that impact is about 38%. But now we're already seeing that we are correcting all of this sales compensation and getting more healthy in our sales behavior. So that's the second one.

The third one is very important is before Trend Micro is selling by license-based pricing. The license pricing is driving deep discount and also have a lot of procurement friction. Customer has -- whenever they want to buy a new module from Vision One, they will need to go through all this procurement again. And therefore, I think it's a very important thing that starting 2026, we totally changed our Vision One. The Vision One product strategy is going into the Flex program, which means that they buy a total amount we call it credits, the credits they can use. And then whenever they want to deploy, they consume all these credits by allocating them to specific products or modules they want to use. This way, we believe TrendAI Flex program will drive predictable spending for customers and scalable consumption and also reduce the procurement friction in customers.

So that is a very important change, and we believe that will help whole Trend Micro's go-to-market much more smooth and have much more predictable spending. So early quarter today, the progress we're seeing that is Vision One average ARR already, we've seen this average ARR continue to grow. And for Vision One, that is our per customer average ARR, before was $35,100 and now already grown to $35,500 in the early this quarter. And compared with non-Vision One, the average ARR is $5,400. As you can see, the difference, customer value is much more different than what before. Those are the 3 very important change, go-to-market change, and we believe we are on the right pace and TrendAI will be using all of this new platform and new platform way of selling to progress and produce more value for our customers. So that's TrendAI.

Moving to consumer, which now we call it TrendLife. TrendLife before, the challenge is that the softening because our original product mainly focused on antivirus for consumer business, but softening in PC sales leading to less security need, and therefore, our value was diminishing. But starting last year and progressing to 2026, we're seeing there's a new need such as customers' Digital Life Protection, including anti-spam, not anti-spam scam, which is a biggest money loss from consumers' business and also the usage of AI and how to use AI safely to help their digital life quality.

I think those are the new area that we -- the TrendLife will be focusing on. Therefore, now we're already seeing that 2025, our Digital Life Protection increased now to 36% of our total sales. So we are starting to migrate our revenue to Digital Life Protection rather than pure antivirus protection. So the ARPU for this Digital Life Protection is 2x higher than the antivirus PC attachment type of revenue. So TrendLife is also early quarter today, the progress we see is that Digital Life Protection continue to grow and now is at about 45% of our total TrendLife sales already. That's TrendLife.

Another TrendLife's go-to-market, a very important thing is that we are moving on to more of the customer -- we try to manage the customer trend and reduce the trend by focusing on Digital Life Protection and increased auto renew, auto renew opt-in. We're starting to see auto renew has 2x the renewal rate than the manual renewal. And therefore, new customer in auto renew is increasing 11% since Q4 2025. So early quarter today, also renewal rate also improving and it's now sitting at 73% of the renewal rate. So on TrendLife, I think all this auto renewal opt-in and also the Digital Life Protection value is going to make TrendLife revenue continue to grow.

Now move to our newest -- the newest start-up, I would call, the one that we cooperate with Winstron and with utilizing a lot of NVIDIA's technology, we established a company called Magna AI. Magna AI is focusing on help countries, government, big enterprise globally when they want to utilize, establish the AI application, and we help them to establish all this AI application, AI infrastructure safely, securely. Because this is a very different sales motion. When customers are setting up this sovereign AI and AI new application, it's not about buying a software and install it like before all this cybersecurity is you need to design your data flow, your architecture, everything securely.

And that's why we're starting to -- we take the chance to work with Winstron, one of the big AI infrastructure provider and working with NVIDIA and other [ NCP ] player to form this Magna AI. Early indicator, we already have several very big MOU that was signed by the -- at Riyadh and at Malaysia. And also, we are working in Taiwan, a lot of this type of a big deal. So those are the big initiative, but Trend Micro is using this chance to make sure that we can provide secure AI infrastructure and secure AI application for our customers. That's Magna AI.

And VicOne is established 3 years ago. And now it's focusing on not just the vehicle security, but also all the robots or the physical AI cybersecurity. We -- in 2023 to 2025, the problem solution fit is the major focus. But in 2026, big one is going to get into growth and expansion. So we're already seeing we have the secure robotic solution and working with all the vehicle company and also the robotic company to provide the embedded cybersecurity into all of these new AI robots and AI-driven car vehicles. That's a big one.

So overall, these are Trend Micro that we are working on. 2025 -- 2026, our growth target for the overall Trend Micro is we want to have ARR, 13% growth; net sales, 9% growth and our operating income will decline by 2%. But as you can see, where do we spend the money? First, in TrendAI because we believe this transition and this is a great growth area. And therefore, we spend more time, more money on to TrendAI enterprise sales. And TrendLife, actually, we are optimizing and we believe we can increase the operation income by 1%, but a lot all those investment and cost increase is mainly on VicOne and Magna AI, where we are investing on new market.

And that's why in 2026, we believe Trend Micro is going into the growth and we will deliver the best cybersecurity value for our overall different type of enterprise, consumer and the new AI infrastructure, sovereign AI and robotic AI, all those security coverage for all our customers. So looking forward to a good year in 2026. Thank you.

Hi, everyone. My name is Kevin Simzer, and I'm the Chief Operating Officer for Trend Micro. I'm here to give you an update on our Q4 and full year 2025 business performance. If you've been following us at all in the media, you will have seen a number of announcements with a common theme of all things AI, whether that's us partnering with NVIDIA in order to introduce new safeguards, guardrails to protect those next-generation AI factories or whether it's Trend leveraging AI in order to incorporate new capabilities into our platform to protect customers enterprises from threat actors.

2025 business performance. Actually, we are quite pleased with the performance of the business as a whole. Net sales totally across the company, up 5% for the quarter, that's 1% for the year, while improving the overall operating margin to finish the year at 21%. The growth in the business certainly came from the enterprise part of the business. Net sales up 8% for Q4, that's 4% for the year. And that is all on the back of customers adopting this Vision One platform. In the consumer business, you're well aware of the issues that we faced early on in the year as a result of the bankruptcy of our e-commerce provider, Digital River. We're pleased to say that we've worked our way through that now, and we're poised to actually start to see that business back to growing in 2026. But during that period, we stayed very focused in on beyond device protection and continue to drive that expanded addressable market that we've been going after in our consumer business.

From a total company recurring revenue standpoint, we sit at a very healthy $1.7 billion. That's up 1% year-over-year. Of course, that growth came from both large and small enterprise. Speaking of enterprise, this is the flagship platform that we're leading with, a single AI security platform, the most comprehensive unified platform on the planet.

Our platform, it's not just us saying great things about our platform. It's these world-recognized industry analysts. And in the last quarter alone, Gartner highlighted us once again for endpoint security, Forrester for a leader in network analytics and visibility, IDC in both extended detection and response and cloud security. And then finally, Omdia, who continues to rank us #1 in public vulnerability disclosure, those zero-day vulnerabilities that gives us a head start on threat actors and what they've discovered.

Now from a regional performance standpoint, global enterprise growth. This is net sales. It's in a constant currency, so you get an idea of the performance across the 4 different regions. And you can see the global enterprise growth of 4%. AMEA and Japan performing quite strong, Europe and the Americas, somewhat less so. But where you really start to see some of the global headwinds that we started to hit was in this chart here. This is our pre-GAAP performance, global enterprise growth sitting at minus 4% year-over-year. You can see that as a result of us finishing the go-to-market transformation in Japan, we're really starting to see the fruits of that labor that we put in, in 2024 and in 2025. And you're going to see us adopt the exact same framework as we go into 2026 for the rest of the regions.

In particular, I wanted to highlight in the Americas and Europe, we definitely saw challenges with global government. Tariff uncertainty has certainly caused a number of enterprises and governments to actually pull back some of their spend. We're also starting to see a movement, and you're going to see as we start to talk about 2026, as we move to much, much more of an ARR model. We really want to drive that first year performance. So you're going to see these pre-GAAP numbers are not going to be the best indicator of the performance of the business. We are going to be moving more and more towards an ARR model.

Enterprise recurring revenue sitting at $1.3 billion, that's up 2%. And I think the highlight here is actually the $229 million in small enterprise. We're starting to see growth coming back in that small enterprise segment. We had had several years of declining performance. And now with small enterprise, we're starting to see that lift off. Well, why is that? Well, that's specifically as a result of us introducing Trend Vision One for MSP partners. That's a category of partners that offer a set of services to small enterprise. We have over 6,000 small -- of those MSP partners, and we now have 190 of them who have adopted Vision One. The nice thing about that is that when they adopt it, they can offer more powerful capabilities for protecting those small enterprises, and they can charge more for that. And we're seeing that, and that's what's starting to fuel our growth.

In the large enterprise segment, this is really the -- it tends to be the priority. We have over 25,000 large enterprise customers today. And we're fixated on making sure that we get the Vision One platform attached to all of these. Once we attach, we know that we can expand based on the breadth of our overall platform. Why are we so fixated on that? When we calculate the addressable market that exists in our installed base, we can see that there's approximately USD 7.3 billion of incremental ARR opportunity just from our existing trend customers. We do that by landing the Vision One platform. And you can see relative to the overall recurring revenue for the Enterprise business, the red box in the bottom right for Q4 2025, $467 million, growing at 58%. So we are fixated on landing more Vision One and expanding more Vision One within our installed base.

Now as we go into 2026, you're going to see actually us start to emphasize quite a bit around new logos. We honestly feel we can -- we now have the strength and the tailwind behind us from a platform perspective that we can start going after new logos. Specifically around existing customers, we're sitting at 11,500 of our existing customers that have adopted Vision One. That's a 48% attachment rate. And like I said, we know that once we get Vision One attached, the average ARR per customer is substantially higher at 3.6x. Now once we get the platform attached, we know that we are focused in on solution adoption. As customers adopt more and more solutions, the retention rate increases and so too does the impact on the ARR where the ARR increases.

Solution growth with Vision One, we now sit at an average of 4.9 solutions deployed in Vision One. So that's a great testament to customers that like the breadth of the portfolio. We know there's one solution in particular, this cyber risk exposure management that's sitting at 4,700 customers today that once this solution is deployed, this solution actually allows an enterprise or a government to get a complete visibility across their enterprise and find out where the exposure is deployed. All that to say, the NRR, the net revenue retention for the Vision One platform still sits at a very market-leading 130%, and we continue to stay focused in on that expansion.

If you look across the globe, here's the 4 major regions, all with 4 expansion opportunities that we've won in Q4 across verticals like multimedia, technology, insurance and food services. And you can see a common theme across all of these, which is customers are looking for a platform, and that's how we're winning this business.

Switching gears to consumer. From a consumer standpoint, as I mentioned earlier, we now have this e-commerce vendor, Digital River behind us. We've completely replaced all of that technology and gone over to a different set of vendors now with a backup. And we've stayed focused in on driving the business forward around beyond device protection. $32 million, up 11% year-over-year. So that's going to continue to be a common theme here.

Yes, we're still doing endpoint protection for consumers, but we are expanding our addressable market beyond that. In fact, it was really nice to be recognized in this broader portfolio in consumer Digital Life Protection by IDC, where we hit the leaders quadrant. So truly getting the recognition of our broader platform targeting those consumers.

Now we've been using this terminology called Road to for some time now. And this is kind of our internal North Star to give you an idea. And you can see that out in 2028, we are fixated on driving sort of healthy high single digits to double-digit growth. That is our plan. We want to do that while improving the margin. And in 2025, we did get some growth, and we did, in fact, improve the margin quite substantially by 3 percentage points. So we did accomplish what we had set out to do at the start of the year.

That said, we are going to be pressing more heavily on growth. And we've divided the business up into these 4 different categories. In order to have a good, healthy business, you need to be thinking about things holistically. So we've got things in a hypergrowth category with 2 companies that we are incubating, one around automotive and robotic security and the other around IT consulting and systems integration. And we see those as hyper growth, small, require investment right now, but those definitely are areas for hyper growth.

TrendAI, that is our Enterprise business. We are fixated on a compounded annual growth rate of around 8%. And then in the medium growth category, TrendLife, our consumer business, up 5%, sort of healthy single digits. But like any healthy business, you also need to be exiting things, and we will be exiting our legacy SaaS offerings. And that is what is creating some of the downward pressure on our overall performance.

However, if we look at 2026 growth targets, now this is our internal management P&L, just to give you some insight across these different areas. We are fixated on growing ARR double digits. And we do see that growth largely coming from our Enterprise business, TrendAI. We are targeting 15% year-over-year growth in ARR for 2026. In TrendLife, our consumer business, we are targeting 6% ARR growth for 2026. And in our hypergrowth area, these are quite small from an ARR perspective, but we're looking at substantial increases in overall ARR, but this will require some investment. In fact, all of these are going to require some investment.

And that's why you're seeing that our operating income for 2026 will decline ever so slightly. We see that as a short-term thing that we need to do in order to get the top line growth fueled and in particular, to put the go-to-market changes in place that we need and to fuel this growth. Finally, we think that we're structured well for growth. We have all of our businesses completely focused in on this AI market opportunity. We're either finished or in flight with our transformed go-to-market strategies, and we're investing a little bit in order to drive that top line growth, but in particular, with ARR. Thank you, everyone.

[Interpreted] So now I would like to give you an overview of the fourth quarter full year 2025 Japan region business update. So first, the domestic Enterprise business, fourth quarter results highlight. First, the overall revenue for the Enterprise business has grown by 22% year-on-year, especially the public business and the multiyear comprehensive contracts.

The new large-scale business, we have had many of them. And this has grown by [ 24% ] year-on-year. This is driving this good result. And the Trend Vision One revenue has increased by 25%, especially Trend Vision One endpoint security revenue has surged. And the Trend Vision One a number of customers, it has surged as well. And continuing, especially CREM customer numbers are growing fast. So the customers are trying to put the proactive risk management measures in place, and we are seeing increasing number of such customers.

So when it comes to the lowlight, Japan has a very big customer basis via partners. So overall, relatively speaking versus the global, the Vision One attach rate is low. But -- just focusing on where the global is focusing, it is almost on par with the global. And next is the domestic SME business. The revenue has grown by 16% year-on-year, especially the UTM solution sales has increased rapidly. And number of customers every quarter, it is growing. So it's growing constantly. And the SaaS type endpoint security customer numbers are growing steadily as well.

But on the other hand, as was being talked about, this managed service provider partner, the ARR result via the managed service provider partners are growing as well. And the lowlight, we are covering quite a wide range of the market in Japan. So the partners around the nation, their sales with the small-sized businesses has been decreasing from the past. And for the full year, I hope that you would take a look at this at the leisure time. And for the next fiscal year, everyone already has touched upon this, so I'm going to skip this as well.

And 2025 fourth quarter progress of the consumer business. Highlight is the beyond device security sales ratio has increased to 35%. And the Fraud Buster download, it's not growing robustly, but on a quarter-on-quarter basis, we have seen 85,000 to 86,000 downloads. So the number is growing. So as I have been saying, the issue is how we can upgrade them to the full fee services. In the global, there was a mention about the third party evaluation of the global basis. But here in Japan, we've been assessed that we have this strength of providing security technology in both enterprise and consumers.

And also at the same time, the U.K.'s fraud prevention service, Cifas, we have started collaborating with them. And they have this mobile app called JustMe, and we have started to provide our functionalities there. And at least in quarter 4, we were able to complete covering the 47 prefectures. We have been expanding the collaboration with the police agencies. And now we are collaborating with all the 47 prefectural police authorities, and of which 70 of the fraud prevention promotion leaflets, our [ logo ] names are mentioned there.

So in other words, if the company or the people are thinking of doing something, they are sort of putting our names as a recommendation and they are sort of promoting to download our products. And regional governments, we partner with 12 municipalities. And for their citizens, the Fraud Buster is being recommended to those citizens as well. In a new initiative, we are currently trying to solicit the monitors. But together with Japan Post, we are participating as the anti-scam specific companies in this new post office visit service for seniors. And for the lowlight, DOCOMO and other mobile carriers, they have started to promote their own security products. So sometimes they are they are competing directly with our products. But by demonstrating our value add per customers' spend has been increasing.

And this is the full year. So I'm going to skip this. And this is IDC MarketScape's evaluation, we are selected as a leader in 4 areas. So we are the only company in the world that caters -- that has security technology for both consumers and enterprises. So this ends my presentation. Thank you.

[Interpreted] JPMorgan, my name is Henderson. I have 3 questions. First of all, consumer performance guidance, sales growth 9%. My impression is that you are quite bullish, but ARR growth is expected at 13%. Q4 increase was only 2%, which was quite slow. Based on that understanding, from the first quarter to the fourth quarter of 2026, what will be the pace of growth or acceleration that you're expecting? That's my first question.

[Interpreted] I would like to respond to this question. For ARR, unfortunately, we do not provide outlook on a quarter-by-quarter basis. And Kevin's slides numbers is basically the management's numbers. This is our idea or what we're thinking about. So this is not directly translated into the GAAP numbers that I present. I cannot really give you that number. Now ARR and also the net sales for accounting, I will be explaining that in the future, but this 13% does not necessarily directly translate to the 13% for the full year.

[Interpreted] I see. A follow-up question. Full year landing performance, absence for the remuneration for last year, I understand that. But if the sales doesn't grow according to guidance, if it's slower, in that case, would you try to save the cost so that the full year operating profit can be committed to? So if the scenario goes negatively, how would you respond? What is your plan?

[Interpreted] We want to focus on the sales growth. As Eva has explained, we have many opportunities in front of us. So we will be taking some risks. And OPM improvement, we have been making efforts in the last 2 years. And this year, we want to prioritize sales growth.

[Interpreted] I see. And one last question. Well, it's not really a question, but more like a proposal advice. Now IT shares have been sold off because of AI concerns. And in next year, PER, 20x or less, in that case, if the shareholder return is 100%, is 70%, I think the investors will provide a stronger support to your company. So JPY 5 billion buyback was announced. And also in the second half, you may have planned to execute the rest of the share buyback. So what are your thoughts on this?

[Interpreted] 70%, this is a payout ratio. And 100% of the interest is returned to the shareholders. We have already declared that. We didn't have time today, but my presentation material actually includes information about the 100% return. 70% dividend plus share buyback. And also we have another year as well. So the remaining amount will be returned as well. So 100% shareholder return.

[Interpreted] I see. I understand. So payout ratio, you don't have a plan to increase it to 100%?

Well, that's 70% dividend and the rest is share buyback. And according to the shareholders, they'd rather receive this not 100% in dividend, but split between dividend and the share buyback. So that's what we do.

[Interpreted] So once again, we go back to that original who raised the hand at the very beginning. Kikuchi-san, are you ready? Seems like we are not getting Kikuchi-san's voice. Can everyone else hear Kikuchi-san's voice? Maybe not. Kikuchi-san may have some problem with the PC. Is it possible for Kikuchi-san to send the question in text? It seems like he or she is going to exit from this meeting once and then coming back.

[Interpreted] Yes. This is Kikuchi speaking. Can you hear me?

Yes. Now I can hear.

So pre-GAAP ARR, I have a question in this area. And I have 2 extra questions. The fourth quarter, pre-GAAP last year was very good. So I was expecting to see the somewhat tough number in the fourth quarter. So -- but at the end of the day, it was better than expected. So fourth quarter Y-o-Y, 2% increase. But last year, I think this was declining quarter-on-quarter.

So quarter-based ARR, you mentioned that you're not going to provide us with a breakdown. But already ARR is already showing the momentum for the growth. But put aside the numbers, but second and third quarters, last year, it was declining quarter-to-quarter. But this year, can we expect that this ARR will grow from the fourth quarter last year and grow going forward until the end of the year? That's my question.

[Interpreted] Yes, yes, that's right. In the first quarter, we are not expecting to see ARR to jump up. We are expecting to see the gradual increase over the course of the year.

[Interpreted] So breakdown by region, U.S., it seems like you're a little bit cautious, but which area are you expecting to see the growth?

[Interpreted] So if you take a look at this in the full year, that is in accordance with our guidance. But Europe, Asia, we expect those regions to grow first and then later catch up by the U.S.

[Interpreted] So according to your guidance page, Americas and Europe, 2% [ place ] within you, is your guidance. And Americas in the second half, are you expecting to see that it will recover sharply in the second half?

[Interpreted] Yes, because last year, it was declining. So we are expecting to see a higher growth rate this year.

[Interpreted] And last year, the consumer has halved and it was a very big impact. But by recovery in the consumer, are you expecting to see the increase in revenue?

[Interpreted] Exactly. That's my scenario.

[Interpreted] And my second question, nonoperating profit and loss and also the impact of the Magna is my question. So Magna, it will start with loss, but how much of the loss are you expecting? And also for the nonoperating, Magna is not relevant. But nonoperating items, there was the loss from the currency. And there is [ uptick ] across in the recurring profit.

So if there is a loss from the exchange was not there, then you must have enjoyed the positives. But what is the mix this time around for the nonoperating? So it seems like you're not expecting to see the loss from the currency, but it seems like this number here is somewhat small. Any special reason for this?

[Interpreted] Magna is 100% subsidiary. So it's not -- is included in the expenses. So your question, Kikuchi-san, is not the fourth quarter, but our projection, right?

[Interpreted] Yes.

[Interpreted] So as Negi-san mentioned, Magna AI is our subsidiary. So it is included in the operating profit and loss line. So it will not affect to the nonoperating items. So what is included here is that equity method company, TXOne, it still is making a loss. So the loss of to be recovered requires a slight time. So that's the reason why this is included. And the cash and others, we already have returned to the shareholders, so it doesn't have much cash left. So the interest income is very small. So nonoperating loss and the profit is almost 0. So the only thing that we factor in here is the loss from the investment.

[Interpreted] So the previous year, the loss from the exchange, you had JPY 6.2 billion. About interest income is JPY 3.5 billion. It has increased by JPY 100 million from the previous year. So it sounds like you incur some of that, but you're not expecting that to happen?

[Interpreted] So we cannot expect that to happen because this loss from the exchange this year, we didn't expect much. But even if there is some interest income, it may sort of cancel off this loss from the foreign exchange. That's what we think. And the last year, nonoperating line was very rough.

[Interpreted] So equity method comparing it against the last year and the year before that, so the loss has dropped from JPY 2.6 billion to JPY 1 billion. Are you expecting to see that loss to grow?

[Interpreted] Well, so it still is going to be loss, but this magnitude of loss will be reduced because the book value of this equity method is -- has come down.

[Interpreted] So if the book price comes down, then it is almost 0. So the loss is continuing. But in terms of the book value, it will not make any changes. So if there isn't any foreign exchange loss, it seems like it is going to be flat, right?

[Interpreted] Yes.

[Interpreted] This is Ueno, Daiwa Securities. Can you hear me?

[Interpreted] Yes, we can.

[Interpreted] Going back to the proposal made earlier, well, short-term share buyback, I think, is a waste. And we see shift they hurried and the share buyback, but it only impacts demand and supply. It doesn't really affect the share price. Now AI share prices are coming down, as you can see in the newspaper. Because AI will be taking away replacing all the software work or SaaS-related tasks. But TrendAI is trying to utilize AI with agentic AI, still cybersecurity is a very unique domain.

So if it's database or platform SaaS or security SaaS, I think you will be one of the companies that will be providing such security using AI. That's how I see the future. So I think you should explain logically how you can gain advantage from AI. That would help push up the share prices.

[Interpreted] And of course, I will try to explain this in my report for the investors. But anyway, I just wanted to share this thought with you.

[Interpreted] Now next, I have a question. In the briefing material by the CEO, Page 12, there's a mention about TrendAI. And I'm sorry, I don't have a full understanding of this. License-based pricing and the big discount, is this discount on the purchasing price? Is that a correct understanding?

[Interpreted] You're talking about Eva's presentation material, right? Yes, Page 12. Well, Eva is here. So of course, she can respond, but the intention of this is that when we sell single product, point product, we have to provide bigger discount. And salespeople are only focused on increasing sales and single point product, multiple year contract has the highest discount rate. But if we try to sell in a different way, we can apply a different perspective. If we try to sell multiple products to one customer, we try to discount too much.

[Interpreted] I see. So sales approach, there's going to be a volume discount if point products are sold in large volume?

[Interpreted] Yes, that's correct.

Right. And just like you suggested, because Vision One now is using agentic AI to provide cybersecurity, which is a big differentiator. And therefore, we can utilizing our platform way of selling and have a better control of our price.

[Interpreted] This is Watanabe speaking, DS Asset. I have a question about employees. 400 people were going to be hired for the year that just concluded, but there is a slight decrease. So what is the hiring plan and the headcount plan to the end of the fiscal year? JPY 1.5 billion of extraordinary loss was also incurred for the retirement benefits. Can you please explain that as well?

And you are trying to drive a sales increase and you needed to hire people. That is why you wanted to increase the headcount. But in order to make sure that you can increase sales for this coming fiscal year, how important is headcount? Well, in the fiscal year that was just concluded, you didn't have to increase the headcount, but there is maybe a net increase. Can you please comment?

[Interpreted] Well, I'll try to comment 50% and the rest will be responded by Eva. Retirement benefit payment. Well, platform sales requires a completely different skill sets. This is why we need to refresh the skill sets of employees, which means that the old approach. Well, employees who have the old approach maybe will graduate from the company and the new people will be joining us and we will be actively hiring. So this is one point.

Eva, would you like to add?

Yes, that's exactly why we are talking about the go-to-market transformation in TrendAI because in selling platform and Vision One type of products, we cannot continue to use the old license or SaaS license selling way. That's why last year, we did have a big refresh of our sales and marketing personnel. So you see some people left, but we didn't increase the headcount. That is because we're refreshing.

Going into 2026, once we have this new go-to-market foundation firm, we know what type of new people we need to hire, and we have better training program to make sure that our onboarding of the new capability people and we will start to hire more people gradually, not too much, but we will increase our salespeople, especially in U.S., U.S. and Europe, we do have a few countries that we need to increase our sales personnel.

[Interpreted] I'm from BofA Securities. My name is Tanaka. I have 2 questions. So the first one is that this fiscal year's guidance on operating expenses, you are expecting to see about JPY 27 billion increase. What are the items that you are expecting to increase and decrease? Can you give me the specific items?

[Interpreted] Operating expenses, so it is JPY 24 billion, JPY 25.1 billion.

[Interpreted] In cloud, how much of the cloud are you expecting to have in stock option expenses, if you had any assumption, we would like -- I would like to know that. And about the variable compensation, you are basing your sales to pre-GAAP operating profit? But you mentioned that you're going to be changing it to ARR. Then the 13% increase ARR, I know this is internal number. And if this is a gradual increase, and then I'm expecting that the personnel costs may come down as well. So can you give me the idea what are the operating expenses?

[Interpreted] Habara-san, do we disclose any such items? So as you can see here, this time, we are expecting to see the decrease in profit. And so cost side, we tend to describe in detail than usual. So what Tanaka-san mentioned -- excuse me, to address Takaka-san's question, we are not planning to give you the breakdown of the details. So we would like to see the increase in the sales personnel. So R&D as well as sales and marketing department, we expect increase in number of headcounts and personnel costs.

And TrendAI and TrendLife in the consumer business, we have done the rebranding and starting from this year. So including rebranding expense, that's marketing cost and also to acquire more of the regional customers. This is on our Enterprise business side. So to do so, we are planning to do the various events and do the activities to acquire the companies. So the marketing cost will increase there as well. So the personnel costs and the marketing costs are the major ticket items. And there might be some increase in decrease in the smaller items, but those are the 2 major items.

I think we do disclose that in our new start-up like Magna AI, we just started, and therefore, we will hire both R&D, sales and marketing people. So those are the increased costs included in this forecast.

[Interpreted] If possible, when you have a new start-up company like this, we would like to know its performance. So if you could show us numerically how much it's grown, that's going to be very helpful for us.

[Interpreted] Moving on to the next question.

[Interpreted] This is Hori, Mizuho Securities. I have 2 simple questions. One, about your thinking for share buyback. There was no announcement in the first half last year until November, there was no announcement. And I think you mentioned that including cash repatriation from subsidiaries, you don't really know until the midpoint has passed. So share buyback announcements tend to happen during the second half. Well, that was my understanding anyway, my interpretation that you have announced JPY 5 billion of share buyback.

Now -- maybe your concept has changed, maybe you have a better idea about the cash position and you don't have to wait for the midpoint for the fiscal year. And in the press release, there's no mention about the share price, but maybe the share price is low and you can do JPY 5 billion right now, and that is why you're doing this. I just want to understand whether your policy has changed?

[Interpreted] The policy has not changed. But JPY 5 billion, considering how much profit we can for the fiscal year, this is doable. And also thinking about the current market environment, we will be excluded from BCI Index and also software companies impacted by AI. There are some uncertainties in the market. So for now, as a shareholder return, we can do this share buyback. We heard [ Kawa-san's ] opinion today, but we believe that this is an appropriate timing to do share buyback. Basic policy has not changed, 100% return and also to what extent can we do this. So we try to split it into 2 we don't necessarily split into 2. That's not part of the policy.

[Interpreted] I see. Second question is about legacy SaaS unwinding. And once that's completed, what about the new acquisition? What is the current status of progress? And when can we see the momentum really change? What is the recent status? What can you share with us?

[Interpreted] Kevin, do you have any comments on this?

I think on that part, in my presentation, I already disclosed talking about this indicator of the non-Vision One sales as the percentage and the Vision One sales as a percentage. And it's at the end of Q4 last year, it was sitting at -- Vision One was sitting at 38% but up until now is progressing to 41% of the ARR contributed by Trend Vision One. And we will continue to monitor this, and this is the indicator that we will be announcing and tracking.

And I would just add that the other thing that we did to encourage this to accelerate is at the end of 2025, we have end-of-life the ability to purchase those specific licenses. So customers when the renewal comes up, will have to renew on to the new platform. So we will see a great deal of movement in 2026.

And since the new platform has a lot of greater capability to deal with today's threat landscape, I think the upgrading rate should be quite significant because they will need this new technology to deal with the new threats.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[Interpreted] This is [indiscernible] speaking. This is the Q3 results [indiscernible] and the total operating expenses down by [ 1% ] and the result in operating income was up by [ 8% ]. Well, Operating expenses was down which can be explained by a major factor, which will explain later. [indiscernible] prices resulted in lower cost related to stock options that [indiscernible]. Operating income was down by about 1%, [indiscernible] and then total net income is [indiscernible] of FX loss in the third quarter of [indiscernible] and FX gain. And net income grew by 48%, [indiscernible] operating income was up by 31%. [indiscernible] As you may remember consumer [indiscernible] excluding FX impact [indiscernible] there's a big difference.

[indiscernible] As you remember, consumer was a minus 6% this is precap, and we're excluding FX impact compared to 6% in the business [indiscernible] there's a big difference which can explain by digital consumer, digital settlement outsourcing company in the United States [indiscernible] this year. [indiscernible] also had to be postponed in the first and second quarter so they have much impact. But now we have reached different landowners. And we see increasing revenues because the vehicles that could not take place in the first and second quarters.

In Japan [indiscernible] high impact in higher level of [indiscernible] sales. So when the retail [indiscernible], we have a higher net revenue. [indiscernible] this was negative, but now we have a positive number. I have just explained on sheet prices resulted in lower related costs. And if you can exclude this adjustment, and you can see that the operating income of the adjustment is minus 1%. This is a progress [indiscernible] which is [indiscernible]. This is [ JPY 274 billion ] [indiscernible] income looking better than the plan. We still have another quarter to go, but we believe that this is going to [indiscernible] to the expectation, [indiscernible]

In this fiscal year, you can see that the precap revenue and profit were priced down because of the impact of the consumer business, but now we have made a recovery. [indiscernible] by some of the investors, this slide, we look like a concern. Enterprise AR growth is slowing down. Kevin Simzer will talk about more details later related to this [indiscernible] and the cloud was SaaS. These important products and solutions are now seeing a lower sales. We the customers to switch to [indiscernible] and as we continue to get revenues from [ Vision 1 ] growth is expected to recover.

This is the cash flow. We have seen a major improvement against the prior year. Headcounts, headcounts is basically [indiscernible] slightly [indiscernible]. As I said in the previous quarter, AI technology has been produced and it improves the productivity and efficiency of the company. [indiscernible] sales have been increasing without hiring to many people.

This is cost side, I don't have anything specific to comment. The second from the top, this is also contemplated. As you can see, this is a JPY 600 million on average is about JPY 2 billion so this time because of lower stock prices, this is much smaller.

Q3 highlights. [indiscernible] operating income quarter and high stock ordinary income as well. '25 guidance has not changed we expect to achieve these targets.

That's all from me. I would like to provide some explanation later on during Q&A.

Thanks, Mahendra. Hi, everyone. My name is Kevin Simzer, and I'm the Chief Operating Officer for Trend Micro. I'm here to give you a Q3 2025 business update.

If you've been following us all in the media, you will have seen a lot of things around us building momentum in and around AI whether it's in the enterprise business with us announcing this new fundamentally innovative capability to create a digital twin environment of your IT infrastructure. We'll be showcasing that in Q4 with Trend Micro as the Patient Zero as the first customer running on that. We announced an expansion to our addressable market into the SIEM space with our Agentic SIEM capabilities, super excited already won some very impressive wins with that or whether it's in our consumer business, where we've taken AI technology and really attack this issue around deep fakes. And we partnered recently with a U.K. consortium in order to combat identity fraud online or perhaps it's in our physical security business unit called VicOne, which specializes in all things security around the automotive industry and robotics, where we partnered with a very big OEM partner that will be incorporating our technology and making that available into smart vehicles.

So lots of stuff in and around AI, and that's been our theme. From a Q3 performance standpoint, the enterprise business grew at 4% year-over-year on the back of some very nice growth with customers adopting our Vision One platform, which has been our strategy. In the consumer business for Q3, we declined at minus 9% year-over-year. We've telegraphed this that this has been something that we're working our way through and as of Q3, we have worked our way through this issue that we had with our e-commerce vendor, Digital River that went bankrupt, and we needed to switch over to a new merchant of record, and we've now done that. We finished up the final piece of work in Q3 with now our PayPal transactions are now flowing through this new merchant of record. So we should have this issue behind us.

But really, the star of the show has been our continued focus in and around making sure that we're driving our operating margin up and really nice to see it up at 23% year-over-year. Yes, we did get some tailwind as a result of our share price. But fundamentally, we've been doing a really, really nice job of keeping track of those operating expenses.

From a recurring revenue standpoint, the largest chunk of our recurring revenue exists in large enterprise, and that grew by 3% year-over-year. In small enterprise, we're starting to get some lift off from the strategy of getting MSP partners to adopt our Vision One platform. So that's really nice to see. And then consumer, not surprisingly, declined by 5% as a result of this working our way through the Digital River bankruptcy issues.

From a road to 2027 standpoint, I just wanted to highlight, if you look at from a gross margin perspective, we're doing a nice job of keeping our COGS in line. Our operating expenses are performing better than 2024 in terms of how much we spend and the operating margin being plus 3% year-over-year year-to-date with an increase of 13% operating income year-to-date. So it's sort of demonstrating that we are really doing a nice job of managing the bottom line as we transform the business.

We're transforming the business all around our Vision One platform. This is our big priority to get as many of our customers as possible running on this unified cybersecurity platform with AI built in. It's not just us saying great things about us. It's actually world-leading industry analysts. Gartner recently recognized us for the 20th year in a row as a leader in endpoint protection. Forrester recently published a network analysis and visibility wave. And this was the first time, and we appeared in it in the leaders quadrant, attack surface management from Forrester. Also new is from an IDC perspective, extended detection and response, the fact that we were in the leaders quadrant from a cloud security standpoint, leader. And definitely, what we're really known for is our threat detection capability. So the fact that [ Omdia ] recognized us as the #1 ranked company around vulnerability disclosures at 73%. That's up from the 60%. So we are the dominant force in terms of companies that are finding these zero-day vulnerabilities.

From a regional standpoint, this is net sales in a common currency across the regions. And you can see it was kind of -- and you'll see it in the pre-GAAP numbers as well. It's kind of an East and West dynamic going on. Japan and the EMEA region continue to perform very well. And we faced some headwind in the West around Americas and Europe. You can see it even more acutely in the pre-GAAP numbers where Japan, as a result of our restructuring that we did in Japan at the start of the year, we're really seeing this as a couple of quarters in a row of high single-digit and double-digit growth. So Japan, we seem to have really righted things and in a good spot. EMEA has been a strong double-digit grower for many quarters in a row, and it continues to perform well.

And in the Americas and Europe, in particular, our largest vertical is government, and we continue to see slowdowns and slow procurements happening in and around governments. We are not seeing losses. We are seeing just governments trying to figure out how to make procurements happen. We also sell a lot to midsized enterprise. And in the Americas, in particular, we were seeing some slowdown in midsized enterprises. So you see that the Americas and Europe declining from a pre-GAAP perspective.

From an enterprise recurring revenue standpoint, large enterprise at 1.1 billion, up 3% and small enterprise at $227 million, up 1% year-over-year. In the small enterprise, I alluded to this earlier, and we are really fixated on -- we have around 6,200 MSP partners today. We've identified the most strategic of those MSP partners, and we're fixated on getting them to migrate from the current offering that they're running over to our Vision One platform, which now supports MSPs. We have over 140 of them now running. And that's really nice because we know that once they start running the Vision One platform, they get a lot more value and they can offer a lot more value to their end customers, including cyber risk exposure management, and that drives the ARR per partner and per customer up substantially. So we're really fixated on that, and that's something where we will continue to see our small enterprise business get traction and grow.

The largest chunk of our enterprise business is large enterprise, and that's these 25,000 large enterprise customers that we have. We're going out to each one of those 25,000 and identifying them as are they ripe and ready for an attachment of our Vision One platform and it's 11 modules and how we can get it attached. The reason why we're fixated on it is whenever we calculate the addressable market, it's sitting at $7.3 billion of addressable market inside our own existing accounts today. That's up fairly significantly now that we've added the SIEM cybersecurity addressable market into our portfolio. So that actually makes even more opportunity addressable inside our installed base set of accounts.

From a large enterprise recurring revenue standpoint, one of the dynamics that has been -- that we've been working our way through quite nicely, but it's been a journey that we've been on is to move many of our customers away from these perpetual licenses and on to subscription and moving them off of some of our legacy offerings and on to our flagship Vision One platform. That is the bright red at the bottom, $412 million, up 74% year-over-year. That's the primary financial motivation that we have is to drive customers to adopt Vision One. We're sitting at around 11,200 Vision One customers right now. So of the 25,000 large enterprise customers that we have today, we have 11,200 that are running Vision One, that's a 46% attach rate. We're actually running even better than the KPIs that we have set for ourselves. So we're doing a nice job of attaching. And we're attaching for the right reasons. We deliver more value, more value means the customers are willing to adopt even more and more of our platform.

When they adopt more of our platform, they consume more of our modules, and we know that the retention rate increases and the ARR also increases. We're sitting at 4.9 average modules deployed on all those Vision One customers that we have. So we're doing a nice job of just gradually increasing the average number of modules that customers are consuming. We've identified one module in particular, which is really exciting, and that's this cyber risk exposure management module. This module is unique in that it contains a lot of our incredible AI technology. We vacuum up the entire attack surface. We sprinkle over top of it our threat intelligence. We run our AI attack path prediction technology. And we serve up for customers what are the assets that they should care about the most and what compensating controls should you put in place. And when this module is deployed, we know that we actually drive more consumption of the platform. In fact, up from 4.9 average modules to 6.4. So we're very fixated on attaching Vision One and getting this module in particular, adopted.

All that nets out to an NRR, a net revenue retention of 136%. That's why we are so fixated on getting Vision One adopted, and that's been our mission and continues to be our mission, and we continue to find more aggressive ways of getting customers to realize how incredible our Vision One platform is. Here's 4 quick examples in the Americas, a really nice win where we replaced [ Sumo Logic ]. This is a SIEM win. So we replaced a SIEM. They realized the power of our platform and how we can offer incredible value. So we ended up winning that.

In the second one, it's a European win and a landing of a brand-new logo. This was one that was currently being serviced by [ SecureWorks and Sophos ]. We ended up winning that because the MSP -- MSSP SecureWorks wanted them to deploy Sophos and the customer said, no, they want trend. So we ended up winning the business.

This next one is in the AMEA region. It's an expansion and a really nice win. We replaced Microsoft and typical of what we end up seeing where it's a consolidation story and a lot of need for automation and compliance and making sure that we're responsive to a very small team of professionals in the technology vertical.

And then finally, in Japan, in food services, a really nice win Palo Alto Networks had a very big issue with their cloud security offering. The customer was very upset. They ended up evaluating alternatives, and we ended up winning that cloud security offering. So several examples of us landing and expanding.

In the consumer business, like I said, you can't judge a book by the cover. We have been working our way through the Digital River bankruptcy, and we've done that now. In Q2, we migrated the credit card transactions. In Q3, we finished up with the PayPal transactions. But what we've been -- we have not been distracted. We've been focused in on this beyond device protection. Yes, we do endpoint protection of consumer devices. But we've been looking more and more about this increasing threat that consumers are facing in and around scams and deep fakes and what we can do to help them. And you can see that we've been growing that dramatically, up 38% year-over-year to $32 million. So we've been really expanding our addressable market outside the more traditional cybersecurity budgets and really addressing a pain point that customers have today. It's not just us saying great things about it, it's IDC.

This is actually recently published. So this is like hot off the press, Trend Micro recognized as a leader in the entire consumer digital life protection. This is evidence that we are doing good things beyond traditional endpoint protection.

Finally, I want to use this as an opportunity as a public service announcement. We've got our Investor Day coming up. We will be talking at length about our strategy for 2026 and beyond and giving you an update on where we're headed relative to our road to 2028 and beyond. So I just put this out there, and please make sure you get an opportunity to get this on your calendar so that you can attend.

Thank you, everyone.

[Interpreted] Now I would like to give you an update on the Japan -- wages business update for the third quarter of fiscal year 2025. I'm having a little bit of difficulty in moving on to the next page. So this first slide is what we have been sharing all the time. So we are going to be doing the Vision One is something that I have been repeating a number of times. So let me give you an update on this.

And the first point is about this, the domestic enterprise business. So the highlight of this business segment is that the overall enterprise revenue has increased 7% year-on-year. And what is notable here is that multiyear comprehensive contract, a large-sized deal has been growing. This is grown -- increased by 112%. Now we are seeing the increasing number of such kind of big deal like Amazon and AWS usage. There are number of customers for having this multiple year comprehensive contract. This is a good trend for us. Using our product for multiple years, they are actually committing to that. And underneath that, if we are seeing increasing use of the Vision One and then we will be able to continue proposing how to use our products.

So as I mentioned earlier, we can actually grow our product offering from one to multiple. There is opportunity for that when the customer has this multiple year contract with us. And also the ASP, the spend by customer can increase during this contracted period. So this is a good thing.

And the second point, the revenue of the Trend Vision One, it has grown by 51% year-on-year. So we call it the legacy of the existing users. We are seeing the accelerated rate of migration from the existing customers' legacy product to the new one. And from next year and onward, we are expecting to see that further acceleration speed up to happen. And there is a trend of Vision credit. This is the new scheme that we have from selling a product one by one, but we are going to be counting with a service usage. So this is more like a consumption kind of a thing. And this is growing nicely as well. And to buy a certain product and then to consume them. And that kind of users are growing by 66% from the previous year and this is going to be a revenue for the future.

And the number of the customers of the Trend Vision One, number is growing as well, up by 30% from the last year. And CREM customer numbers is growing also. So visual operation, those mindset has increased. And so this customer number has grown by 107% from the previous year.

On the other hand, [indiscernible] is sluggish. I mean here is that against the global market, Japan looks slow. However, we are having a lot of customers on an enterprise basis through our partners. So large-sized companies implement global Japan market has such kind of customers. So the migration of that part of the customer is still low, they will be coming over and migrating. It's not as if that we are losing customers, but we are expecting to see that attach rate to go up in the future.

And next is domestic SMEs. The highlight here is that overall revenue has grown by 11% from the last year partners are growing their business and [indiscernible] are growing too. So with alone, are seeing the 50% growth from the previous year. In our large partners, they are leading the business and the number of customers has grown [indiscernible] too. It is consist type of endpoint security customer number has grown by 5%, too. And the managed service provider partners XDR service customer numbers, this business has started from 2 years ago, but it is growing nicely, and it has increased by 105% from the previous year. And the number of [indiscernible] partners is growing too, grown by 15% from the previous year.

And [ low light ] so the small amount of business deal, what I mean here is below JPY 500,000. In Japan, this kind of a smaller size deal is quite a lot in Japan but we have to make sure that our relationship with the partners to recover so that we will be able to catch up on this small amount of businesses. So we have seen a slight decline from the previous year. So we would like to make sure that we can increase our base customers. And so we consider this to be low light.

And lastly, this is a consumer business. In 2025. And as a result of that, the third quarter results is device security area. As Kevin mentioned earlier, we are following the global trend. We have seen the sales ratio of the [indiscernible] device rate to be 32%. And we are seeing an increasing number of the customers for using the anti-fraud measures in the number of customers have has a [ 1.3x ] of the previous quarter. And this broad faster, the number of downloads is growing too.

And about what type of the [indiscernible] case a short story of the drama available on YouTube. We are recreating the actual work cases that happened in this driver, and we are distributing this on YouTube. And there are it's quite an amount of young people for watching this.

And as mentioned by [ Nissan ] there is end of life for the Windows 10. And with that, we have started to see the increase in asset in accordance with that, the other products of ours that is selling together with the [indiscernible] has a increase of 65% from the previous year. And this will contribute to that anti approach product as well. But have been doing this enlightenment activities on security. So out of the 47 professions in Japan we already have collaborated with 46 perpetual policies.

So we think that we'll be able to cover all the 47 [indiscernible] by end of the year. And notable thing is that is a as 6 cases which they do not tend not meant a number of other companies but just assume that people need to use on a lot against the fraud -- after that, we will not prevent the people to be for a victim of these cases. And so what that has been doing is at the allowing us to have this trial coupon for the Trend Micro's fraud buster. And in [ Fugro ], city in its application they are introducing Mr. Trend Micro's for Buster and they are distributing this trial coupon. And collaboration with [ JCB ], we announced that using and using the [ ACV ] application, our products, I think, has been used to identify the fraudelent messages to the coming in via mail and SNS.

So many of the people recognize this for [indiscernible] and they are trying to promote that together with us. So the low light, the number of the downloads has increased. However, the conversion to paid business is still low. And so how will be able to let the people to become the paid user is the key. So we would like to communicate the value of using this fraud antiproduct. So our challenge is to increase the conversion rate.

And the smartphone carriers, proprietary security. [ NTT DOCOMO and AUT ] they d have the security products of their own, and they are trying to sell their own products and promoting their agencies to sell their products. So against this backdrop how can we sell our valuable products? We try to communicate the true value of our products so that [indiscernible] of our products so that the user will be willing to purchase our products.

So this is a right for us. So that concludes my presentation on update on the Japanese market.

[Interpreted] Vision One is growing strongly, as you have explained total ARR is flat as the enterprise. Why is this happening? Vision One [indiscernible] existing costumers such in to get an algorithm business is that a quite conclusion. Do you have any specific numbers you can share with us? So about [indiscernible] versus existing customers for Vision Onehow many of them are switching from existing customers? Or how many are brand new customers coming on to Vision One? That's my first question.

Yes. Yes. Thanks. I'll start and perhaps Mahendra or [ Oman Helson ] will also jump in and add color. From a strategy perspective, we already laid out, and I hope you're seeing it, but maybe I'm not doing a good job. The entire company is rallying around our Vision One platform. And it's not just us saying good things about it. It's all these industry analysts. So we think we have something very special in this platform, and we are fixated on driving both new business but also upgrading existing customers on to the Vision One platform. We're seeing the results with 74% year-over-year growth, so it continues to grow at very high double-digit levels. And we're doing it for the right reasons, not only because our customers get more value out of the platform, but the NRR is substantially higher at 136%. The [ GRR ] on the [indiscernible] platform is several percentage points better.

So for all those reasons, that's why we have the strategy in place but in order to get a customer to upgrade, sometimes we have to do certain things around making the deal size acceptable to customers. So we are offering up in some cases, some aggressive discounts. We are encouraging multiyear transactions. Our multiyear transaction count is up very substantially. So we are, in fact, doing things in order to get customers there that are not helping with our ARR. So we're taking the long-term approach, and we think that this is the right thing for us to be doing for our customers is to get them upgraded onto the Vision One platform with all different means possible.

Another one that we didn't talk about on this call, but we did talk about on the previous call is on the Q2 call, is that we've even been so bold as we are end of sale been so bold as we are end of sale, the CPs, the licenses for our Vision SaaS offering. So another mechanism that we put those end of that end of sale happens on December 31 of this year, and that is another mechanism that we're using in order to convince customers that they ought to be moving to this flagship unified cybersecurity platform with AI built in. So we have a number of different things that we're doing.

You're not disclosing the number for the new logo space, you're getting new logos seperate.

The most important for us right now is to make sure that the [indiscernible] to have smaller numbers for new logos [indiscernible]. Can you already share some examples, as you could see. [indiscernible] overservice of the discontinued in the [indiscernible] at the end of December. So we see a trend in January and February to see over some of the conventional customers will not switch out to the competitor just go to Vision One.

So I would like to load the next person to ask questions.

[indiscernible] m SMBC Securities. My name is [indiscernible]. I have 2 questions. But if come government shutdown impact how significant was it? So you may be put identify directly how much the impact was from the cost of impact if you could share that, let me then will be appreciated and how is that going to be going forward? So right now, it cycle government is about to reopen. But how do you see this. This is my first question.

And also the global consumer [indiscernible] . I think that you have completed this work but they get is going what you have mentioned, but from when do you think that is outpost again will grow.

Kevin, can you take the first question?

Yes. Yes. So yes, you specifically mentioned U.S. government, but overall, I was highlighting that we've seen government procurements in the West overall. We've seen sales cycles extended. We've seen just precureents, just taking a lot longer. And the reasons are the ones you cite it. We've seen the impact at the start of the year from DODGE. The U.S. still does not have a CISO, there's just so many open and people changes that has made procurements just that much slower across the U.S. government. We've seen the impact of tariffs as a result of that. And then more recently, with the shutdown, it's too early to tell what the impact is of the shutdown specifically. We have our fingers crossed that in fact, open up and things resume fairly quickly within Q4, the U.S. government overall within our business is within the Americas, it's around 10%, so it's not a huge amount. But if it does go on in a protracted way, where we can't, in fact, do any U.S. government business and we'll see, but we're not envisioning that.

Your second question [indiscernible] the cost we would that be reflected? I think that is your question. So this is 100% deferred. So the [indiscernible] even if it grows, it's not going to [indiscernible] next year. So the order of quarter who will be recovered. So a gradual impact understood about what is recovering is only [indiscernible] so also the fourth quarter and next fiscal year, the [indiscernible].

Can I expect that we can overcome back in the consumer business?

Well, for the consumer business. Well, in the first half, [indiscernible] should be [indiscernible] because of this destruction it was postponed and ld be deferred and it will happen in the fourth quarter. The first regular one, business in case of Japan, understand in the life benefit is what the Japan is experiencing, but it will not continue forever. So remain in [indiscernible] I mentioned earlier. Therefore, last year, [indiscernible] for us to further increase the new business.

So what I would like to check with you that when it going to be coming back? So I was also thinking that even if the decrease in consumer will not affect your overall business, but if that decreased by 30%, 15%, it is not going to be negligible. That's what I have learned from this time. If it's not as the number of the customers have grown then I'm sure that the special impact is happening in the one Japanese area. So when will that come back?

So in case of Japan, the population is decreasing, and the number of [indiscernible] is decreasing because of that. market, that is a fold market, if we can capture the business here, then we will be able to once again see the rebound in the number of [indiscernible].

[indiscernible] is an opportunity as was mentioned, Kevin that we are within U.K. consulting to tackle this for -- there is a possibility for that. So I think it is possible to increase [indiscernible] in case of Japan, because of the demographic situation we need to put a further effort in trying to increase the number of the customers.

And the second question is for you, [ Nisan ], about the cost. So when you revised plan the other day, you mentioned that there's a very big impact from the foreign exchange but it has come back this time. On the cost side, I was expecting not to be is degree, a number that you showed with the third quarter. How was invest, again, what I have anticipated. [indiscernible] the stock option and thinking that the cost is not that necessary benefit will grow because of seasonability with this earnings results if that the bonus will not grow as what we have seen in last year. And is there any cost side in that is going to grow from the third quarter in fourth quarter?

So you mentioned that it is as expected. But on the cost side, is there any special cost items that may see increase in the fourth quarter?

One is the personnel cost estimate on the full year. So that's onething. And the second thing is that about the cloud cost as Kevin mentioned, but we see increase in the number of additional users. And if that realized then the cost may go on. [ Kikuchi-san ] mentioned that we may not pay owners. But it also, we would like to remunerate our staff with less if the performance is up to that level. But or the ARR growth will determine the amount of the bonus. If we have paid the bond there must be some increase in revenue. To the third quarter period, you really have to work extremely hard in the fourth quarter. Otherwise, the [indiscernible].

I have 2 questions. First one I have announced [indiscernible]. And you made this announcement in the third quarter. [indiscernible] why this timing. Think the calamitous is before the end of the year anyway in at announcement. And my question is that usually do the buyback in the beginning of the fiscal year. So how does it affect the timing of share buyback of next fiscal year? -- and is different this year? And do you have an impact is an shareholder.

[indiscernible] because we have already communicated, we have a policy and results of a policy. So this has not really changed. And it will be the same next fiscal year as well. As far as time is concerned like we try to respond to the share price between this year and what is the profit for the fiscal year. We need to take a look at those numbers. I believe that provide pain the second half of the year rather than the first. After the March, June dividend will be paid out.

Considering that, I think it's to be better to separate them.

Second question in Q2 [indiscernible] services got to new combat continued in September for your sales and also the renewal would be turned in December and I think you're committed to with the customers and also lenders about this -- how are they rest the customers responding, especially the users and vendors will be in Japan. Are they responding differently from overseas users and us. And are the takeover you be surprised? Are you resisting to this change so the fit plan that you announced in the second quarter, how are customers and is responding can right now. Can you please share that information with us.

Kevin that's for you, I think.

From a platform perspective, the -- it's actually quite a nice story that we get to tell to customers whenever we approach them about upgrading onto the Vision Oneplatform. Our Vision One platform actually has all of the same functionality that the non Vision One platform has and a lot more. So it's an easy story for us to be able to tell. So it really comes down to a question of on a customer-by-customer basis, whether they have the bandwidth to go through the upgrade process. We've automated the upgrade process in a very innovative ways. So we make it quite easy for them, but it's still something that a customer will have to go through and some tuning on the new platform.

But so far, the customers that we get to engage with, they have really embraced it. And you see that in the ARR growth numbers. So customers are, in fact, upgrading onto the platform. We're sitting at a 46% attachment rate of our 25,000. So the fact that we have that many we have a plan that we're methodically walking through each one of those non Vision One customers and our customer success teams are working them through that upgrade process.

Enterprise, can I ask a follow-up question? If you can say on this is successful in [indiscernible] but we understand there is a very strong demand for security. That's true. But system integrators are implementing basically is there can be single services for a customer. I think this is still a strong practice in Japan. The and more the platform adoption is different from one region to another, maybe solutions lagging behind and some maybe lean terms of adoption. So true -- because if I listen to Japanese system integrators, the don't implement a lot of platforms is still doing best breed collection of different products and services. So where is the consensus of that platform adoption?

Yes. We definitely see different geographies have different levels of platform and option. That's a true statement. Perhaps in the West, it's much higher we're having a lot of success in Japan itself. And I wouldn't want you to just believe me, but you can just listen to the latest Gartner 2026. So industry analyst firm, Gartner, they have their 2026 technology road map laid out for CISOs. And one of the top things that they talk about is costumers being advised to adopt a platform approach. So it is happening. We're having a lot of success. We're seeing the success in the Japan market specifically. We had a bit of a slow start, but it's really coming on quite strong right now. And that's really what has been helping us drive the higher growth rates that we've been getting in the Japan market and enterprise.

I'll add one footnote just -- and I don't want to speak global systems integrators are big partners of ours. So we are working with sort of the top 10, 2 of them being Japanese global SIs and they're definitely doing projects with our Vision One platform. So yes, we are seeing success across the globe and in Japan about adopting our platform.

[indiscernible] size of the customer and also in strong industry and strong interest in CRM. [indiscernible] have POC projects that are going on right now. I would ever have in the environment, we need to be able to use on site monitor to look at everything as and also approximately understand the risks this is what we can provide and may appreciate.

So we have unique features on the platform and that can be incorporated into leading and the system integrators actually Vision One is being sold to meet sized companies as well. onsets strong in the midsize segment. And in this case, you know that it's not efficient implement the platform rather than trying to do combination of different services. So we begin to see new partners pushing for the platform approach.

[indiscernible] there are supply risk that can be evaluated and there's some guidance coming from the top [indiscernible] actually trying to fit our proposal to that situation as well.

From beginning on the type of the customer, the top partner that is strong in the segment is different for [indiscernible] market. I hope only find it easier to make a platform proposal. And loosening to have a bigger portfolio offering. So how can they use our platform to increase efficiency of the services that would be the interest.

So the way a solution is used is different from one segment to another. But anyway, it's appreciated in various ways, and we are seeing growth. That's a fact.

Thanks you very much. That's very clear. That's all from me.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]