This is a summary for Q2. Net sales down by 3%, and total OpEx down by 6%, a 9% increase on operating income. To be honest, this is more or less in line with our expectation. There are two factors. One, Kevin-san will talk about this later, but uncertainty is still continuing in terms of macroeconomics. Sales cycle is getting longer. The expected sales was not achieved and also stronger yen. Without FX impact, growth would have been plus 1%. If the yen gets stronger, denominated sales become smaller, minus 29% in ordinary income. This is [inaudible] loss of FX. FX assets evaluation based on stronger yen becomes weaker, about a JPY5 billion exchange valuation loss was posted. Pre-GAAP was minus 6%. This is a little bit lower than our expectation. Now, for enterprise and consumer, on the right-hand side, you can see consumer. We see a bigger decline in sales. This was actually anticipated, as we explained in Q1. Overseas [inaudible] company was bankrupt and also, from the difference between three- and one-year contracts, there is a decline in the revenues. For enterprise, this is minus 1%. As I said before, the macroeconomic impact and the sales cycle lengthening is the biggest factor. Pre-GAAP sales. Net sales in Q4 last year, this was higher. We saw a flat transition. Multiyear contracts existed. In Q4, a lot of those were posted, and this is why Q1 looks weaker. ARR, pre-GAAP, we believe that ARR is more accurate in terms of what is happening with the enterprise market. In Q1 and Q2, you can see the numbers are flat. Number-wise, it looks flat. If you look at the breakdown, one positive factor for us is that the cloud-type subscription is shifting to Vision One. Even though the total is the same, the quality of sales is improving. I’m sure that this will be explained later. Overall, the numbers look flat. Good things are happening. Cash flow, nothing to comment on this slide. Headcount, this is flat. There was a steady but a small decline over time in the past, but AI-related technical or engineering hiring is ongoing. We are improving the productivity using AI as well. This is basically impacting that. In H2, we believe that the trend will be the same. Cost-wise, in Q4, the sales was up. Variable remuneration was included. After that, the numbers are flat. Stronger yen is contributed. About JPY200 million is supported by stronger yen. Cloud cost is dollar denominated. Of course, we are making efforts to improve the efficiency of the use of cloud internally, but dollar-denominated expenses tend to shrink because of the stronger yen. Also, the yellow part, this is about salaries. The variable remuneration, if the sales and profit targets are not met, then the bonus will not be paid to the employees. That is reflected for H1. That’s another reason why the cost is down. The highlights. For the Japanese enterprise business, we have a strong growth. Omikawa-san will explain later. Double-digit growth, 12%. Enterprise sales. Last year, sales was not very strong, but this fiscal year, we are seeing a good recovery. Improvement of operating margin. We thought we could do a little bit better than this, but still compared to 12 months ago, it’s at 18%, turning to 20% in Q2. Forecast. In terms of environment, we have to think of certain things. The macro environment uncertainty for H2 is the biggest factor. We don’t necessarily know better than other experts. This may continue, and FX will change. Based on that, we have modified our outlook for the year. Nonoperating has an FX valuation loss component. Otherwise, we do not expect any big one-off items. These are the numbers. A 6% increase in net sales was expected in the initial plan, but now, at JPY274 billion, this is going to stay flat. Operating profit will only increase by 11%, minus 15% ordinary losses. Most of the underperformance in H1 will be carried over in H2. Excluding FX impact, we expect to achieve the plan. This forecast is based on that assumption. Without FX impact, 1% growth compared to the 6% growth plan previously. That’s all for me. We would like to respond to your questions later. Thank you very much.

Welcome to the H1 analyst meeting of Trend Micro. I think in H1, the most significant marks is world uncertainty. The whole world, because of the tariff war, because of the geopolitical conflicts, there’s just so much uncertainty. We feel that many of our customers hesitated and were not eager to start new projects. As you can see from the financial report, our H1 reflects a significant slowdown and deals being delayed. In all of this uncertainty, there’s one thing that is certain, very certain. That is, the whole world is continuing investments in AI. IDC forecasts a USD623 billion spending in 2028, and a 29% growth annually, from 2024 to 2028. It’s all about AI. Within trend, we also all focus on a project that I call it trend AI-nize. From our product or solution, our go-to-market, our revenue, we all focus on how we attach to the AI project. In our analysis, we focused on ARR and NRR. Most importantly, we are focusing on the V1 native and cyber service, which are both powered by AI and also made for AI security. You can see the four types of the ARR in Trend Micro. In Q2, we grew to USD1.6 billion, and these are all composed by the four types of ARR. First, the blue line, non-V1 is perpetual license, the orange line non-V1 is SaaS subscription, and then the pink line is consumer. The green line is where we need to focus our growth, which is V1 native and cyber services. These are direct customers who are buying our vision, one native package. This line, let me compose more of this. Why are we so focused on this, and why do we believe this is the right move? I think if you look at the green lines, NRR is over 140%, and that’s why we need to move all our revenue onto the V1 native and cyber services. When I decompose this V1 attached, get rid of just don’t talk about consumer, we focus on the commercial part. There are two parts of the commercial revenue, which is large enterprise. On the large enterprise, above 500 seats, large enterprise, you can see in Q2, the ARR grew 94% YoY. This is the first time the V1 native and cyber service growth passed all the other two types of direct ARR we have. Also, we continue to see this NRR is strong and maintaining above 140%. Also, just last quarter, we announced the V1 for MSS, which is port for the MSP. That is focused on the under 500 seats smaller business. That green line here, the V1 native, we think in just two quarters, it grew 148%. Its NRR also grew above 120% already. I think this is how we are transforming Trend Micro’s revenue, and we focus on the NRR and ARR for the Vision One native. Because of this, we also launched our project, which is, we try to convert all our non-Vision One SaaS platform customer all on to the Vision One platform. We launched this just starting last quarter. We did it in Europe as a test run. The first part, actually, the first part, Stage 0, for H1 globally, we already stopped selling all the non-Vision One attached SaaS SKU. Also, in Europe, we’re starting Stage 1, which is our SaaS console retirement, which means that we force our customers to upgrade to Vision One. Our progress has been very good. We will continue this globally. Also, by the end of this year, we will move to Stage 2, which means renewing the legacy. SaaS SKU will be end of sales also. Next year, it will be Stage 3. Legacy SaaS will end, EOL. This will complete our whole transformation from a non-Vision One SaaS platform to a Vision One SaaS platform. That is a much better business, much easier to expand, and getting much better customer satisfaction. Other than that, I think a very important thing is security in AI. How do we transform our solution to be proactive security and powered by AI, also made for AI? This part, I’m very proud too. The whole company is preparing for this, and we are launching a special package, security for AI. This whole package is all made for AI. Because in the AI world, if you think about it, the data that’s being processed is much huge, much, much faster, and much more new data will be generated and used by the enterprise. How to secure this massive amount of data transferred in the AI environment? It requires a totally new approach. All this computing needs to be GPU-accelerated. Otherwise, you cannot catch up, and you need to process a lot more alerts and consolidate all of those alerts, then correlate them so that we can provide true AI security. This is the package, security for AI. We are launching on August, which includes Agentic AI SIEM, Zero Trust Secure Access, and Container Security, AI model security for all layers of security in one package. Why is this so important to AI security? Because we believe we need to attach our security solution to the AI budget and the AI build-out process. That’s also why last quarter, we signed a deal with Dell and NVIDIA’s endorsement that we will provide the AI factory security for all the customers. We will continue to do this go-to-market momentum with the new AI factory ecosystem. Technically, this is a big project, and we are very proud that Trend can do this. This is not just AI wash, say I use some ChatGPT to do it. Actually, it’s the whole revamp of the Vision One platform, from the data layer, intelligent layer, and finally, on the agentic layer. The data layer part is the huge, very important thing because you need to be able to see all of this data in an intelligent way, understand each data, the cyber assets, the account, the ID, and the information content that is flowing between all of this entity so that it can compose something we call a Galaxy view of your digital world. Sometimes, we nickname it as the information flow digital twin. It shows how your company’s information is flowing and how your company actually operates in the digital platform. By doing this, we can see the whole company’s security in a brand-new way. You can see the data flow view. You can see the system service view. You can see the geography view. A very simple example of how this can be done and how it can accelerate security, for instance, the red team and blue team. People do the pen test. Usually, this pen test can be done just pure logically and has been done in a certain control environment, not in the real operation environment. With this Galaxy view, with this, we call digital twin of your information view, then you can run all this virtual attack and then show what the blue team and red team would and should do and enable the enterprise to do proactive cybersecurity. They can patch the important places they need to patch. They can now spend their resources at the most critical assets. That’s how we do this digital twin implementation. Also, we are launching a Gen X SIEM. SIEM is a big market. If you think about SIEM in handling today’s environment, especially after AI, the alert will be humongous. There will be a lot more application that you need to watch out for all of this new data flow. Therefore, this agentic SIEM needs to be GPU-accelerated, and it needs to be able to handle all types of different security logs. Trend Micro’s security Agentic SIEM, we have been supported 900 more data sources since August 1, plus all the new security log sources, we guarantee within three days. When a customer gives us a security new log, we can have the adapter ready in three days. Very soon, it will actually shorten the time to three hours. We do this because we are now porting and having our alert correlation engine, all on a GPU-accelerated platform. These are just very true and very different Agentic SIEM experiences. Before, if you want to analyze cases, just one sweep of all your alerts and all your security logs. Before, if you use CPU, it takes two hours per sweep. After we do this, we shorten the time to three seconds. Finally, we can catch up with the speed of all those hackers’ attacks. This is the Agentic SIEM experience that we are launching. We believe that will be an industry-changing solution for the EIC. Not only our product, our revenue is also doing all of this AI project. Most importantly, Trend, the whole Trend. We call it Trend AI-nize. The whole Trend Micro operation are now all running with the AI. For instance, all our coding is accelerated. 55% of the fresh code is powered by AI, using all these AI tools. We have a lot of people worried about the so-called technical debt. Trend Micro, over 35 years, we have so much code, but now, we transform all those 20-plus years of complex code into simple, visual logic by AI. Much easier, much faster to resolve all that technical debt now. Also, we can see we do this AI-enhanced customer support. In the consumer cases, more than 60% of the total case are deflected. The commercial cases are more complicated, but 43% of the total cases are deflection that we can achieve. That’s the efficiency of our technical group’s operation. Not only that, even our back office, I think AI can actually not only change the Company’s operation, but it will need to change the Company’s culture, which requires breaking the data silo. You need to break the organization silo. Utilizing AI and the similar information flow technology that I was talking about, we are transforming our organization into a truly AI-enabled organization. We are showing more collaboration and transparency, and we are increasing our technical contribution and are becoming a more open feedback culture by utilizing AI technology. I think in H1, even though the world is uncertain, we are very certain. Trend Micro AI-nize. We are successfully marching into this AI era. We believe we will become the cybersecurity king in the AI era. Thank you.

Thanks, Eva, Mahendra. Hi, everyone. My name is Kevin Simzer, and I’m the Chief Operating Officer for Trend, here to give you a Q2 business performance update. If you’ve been following us in the media, you’ll see that it’s all things AI, baskets of releases, telegraphing all the things that we’ve been doing to get broader and deeper with our partnership around with NVIDIA, but also burgeoning partnerships that we have with both Dell on their AI factory and Google GCP. This is us at Computex, one of the largest trade shows on the planet. It has really transformed into an AI show. This shows our presence alongside NVIDIA, just to emphasize the point of how serious we are taking all things AI. From a Q2 business results standpoint, there’s a lot of stuff going on around currency. You already heard that from Mahendra, and I felt like it was important to show the numbers in terms of a constant currency. Overall, the Company is up 1% YoY, with the enterprise at plus 4% and consumer at minus 10%. Now, as Mahendra and Eva already talked about, we’re definitely seeing some slowdown happen overall globally. In particular, on the enterprise side, we’ve definitely seen examples where either projects are being postponed or sales cycles are elongated. We’re definitely seeing examples in government where there’s just a lot of uncertainty around where budgets are coming from for new projects in particular. That said, we did a really nice job of driving growth in and around our Vision One unified cybersecurity platform. On the consumer side, we really had a couple of things going on. One is relaunching our credit card transacting engine with a new partner after the bankruptcy of Digital River. We fully switched out that merchant of record, and credit card transactions are now being processed. We still have some work to do and thought it would be done in Q2 around PayPal transactions. That was not done. We’re working through it with PayPal, and we expect that to be done in Q3. Overall, that second motion that we have of staying focused in on beyond device protection. Of course, we continue to do endpoint protection, but how can we actually help customers with this most recent pain point they have around [inaudible]. We’re getting some good, good traction in and around that. Overall, annual recurring revenue up over USD1.6 billion, plus 1%, and large enterprise, in particular, at USD1.1 billion, up plus 3%. On the Road to 2027, this is our North Star business model that we have in place. We did a really nice job on the expense side, improved the overall gross margins, and kept a watchful eye on all the operating expenses. The work we need to do is to get this net sales number growing faster. That’s definitely our priority. It starts with this unified cybersecurity platform. This is our flagship platform. It’s where we emphasize how you can really get a lot more value out of a single platform. It’s got 11 modules with lots of capabilities, and it really offers up a powerful suite of capabilities that enterprises love to leverage. It’s not just us saying great things about our platform. It’s also these world-recognized industry analyst firms. Two new things, one from IDC around cloud-native application protection. This is our Vision One cloud security, recognized as a leader. Then, from Omdia around vulnerability disclosure. This is the 20th year of our Zero Day initiative program. Yes, it was nice to be recognized with 73% of all those zero days. Yes, they were sourced and found by Trend. That is what we do for a living. Across the globe, if you look at it from a regional standpoint, this is net sales. It gives you an idea of the performance, 4% YoY. In AMEA and Japan, some good growth. Europe and Americas, less so. Starting to see that annual recurring revenue kick in. But really, the story is around the pre-GAAP side. What is going on here? Mahindra and Eva both talked about it. This is where we are seeing those macroeconomic uncertainties prevail in the Americas, Europe, and AMEA. Super pleased with our performance of all the things that we’ve been working on in Japan to rebuild and refocus that team. It was a fantastic win to be able to get double-digit growth in Japan. It’s been a long time, and that came from both the small enterprise and the large enterprise segment. Really nice to see, across the board in Japan enterprise, fantastic performance. We saw weakness in all three of the other geographies. The macroeconomics, which I spoke to. Global government, that’s one of our largest verticals, and we definitely saw some weakness in global government, as those budgets for new projects remain somewhat uncertain and definitely longer sales cycles. From an enterprise recurring revenue standpoint, sitting at USD1.3 billion, plus 3% YoY growth and growth in both small and large enterprise. On a small enterprise standpoint, remember, we’ve been saying that one of the things we’re doing is we’re introducing our flagship platform into those strategic managed service providers. I was really happy to see that we’re starting to see some growth and get some lift off with that strategy. Actually, from a gross sales perspective, I know we don’t talk about gross sales, but from a gross sales perspective, the small enterprise actually grew 5%, and it’s on the back of this strategy of introducing Vision One into those MSPs. Doing a nice job of that. On the large enterprise, we’re definitely focused in on our installed base but also trying to get some new logos going. From an installed base perspective, we know that, that’s important because we know that the addressable market is really big in our installed base. It actually got bigger now that we’ve introduced a module in our platform in order to be able to deliver SIEM. We now have that capability. Really, really big opportunity in our installed base. Where that all leads is why we’re so fixated on driving customers to our Vision One platform. You can see the orange at the bottom, USD377 million, that’s plus 94% YoY. That is where we are fixated on upgrading our installed base set of accounts onto our Vision One platform. If we look at it, we’re doing a nice job overall. We’re at a 44% attachment of our installed base set of accounts. That’s 11,000-plus enterprises now running our Vision One platform. 1,100 new ones in the last 12 months. We do that because we know that as we get that platform deployed, we have these modules that we can then get the showcase to the customer, and they can consume them. That improves the overall retention rate, and it improves the ARR impact that customer has to us. Module growth is sitting nicely at 4.9 average modules now, deployed and purchased within our customer base. That’s really, really nice. We figured out that one of these modules called the cyber risk exposure management module, this one in particular, is so important for us to start with. This is the on-ramp for our Vision One platform. When we run this and vacuum up that attack surface and figure out where threat actors will ultimately target using our AI predictive attack path technology, this allows CISOs to prioritize where to introduce compensating controls. When a customer gets this module deployed, we always find stuff, and this drives compensating controls or more modules to be consumed. We’re up at 6.4 average modules when this module is deployed. This is a priority. All of this to say, once we get Vision One deployed, we know that our net revenue retention is substantially higher, 143% on our Vision One platform in terms of NRR. We’re going to continue to stay focused on attaching and expanding with Vision One. Here are four examples to give you an idea. We used this nomenclature of land and expanded in a US construction company, not surprising, a small security operations center. It was a new logo. They were running Microsoft. They were not happy with the support that they were getting from Microsoft. We ended up running a POC with Vision One. We actually found ransomware in their environment during that POC. They ended up going with us. A really nice small win, landing a really nice new logo here in the US. An event management company in Europe expanded with us. They were looking for EDR capabilities. They were using EDR from Microsoft, not happy with them. We ended up winning the expansion opportunity because of our broader visibility and the way we could generate our reports. In AMEA, this is landing a new logo, and it was a really nice one. They were using Microsoft from an e-mail security standpoint, and they have been noticing that Microsoft was missing a number of inbound threats. They test drove our Vision One platform with an e-mail security module. We ended up being able to detect the ones that they were missing. They were really happy with that. It was a bake-off against us and Proofpoint, and we ended up winning. A really nice landing of a new logo on Vision One, using e-mail security, and now we can expand to additional modules. Then, finally, in Japan, an air cargo company. They felt like they lack the visibility that they ultimately desired because they had a bunch of siloed tools. Their SOC analysts would have to log out of one tool and into another, and they were not able to leverage a common data lake, a common platform. They were also missing 24/7 support. This is a fourth example of where we replaced Microsoft. A good example where the strength of our platform plus the fact that we actually can stand by our customers and support them, including some cyber services, gave us the leg up when we won this deal in Japan. On the consumer side, I already talked about the minus 10% YoY and the fact that we did a really Herculean effort in order to migrate from one merchant of record over to a new one. That is now working with our credit card transactions. We still have some work to do around PayPal, but that wasn’t the only thing that we accomplished within the quarter. I’ve been staying so focused in on driving growth in this beyond device protection. We are still doing device protection, but how can we actually get out in front of some of these new pain points that consumers are feeling? The number one that they’re feeling right now is all things anti-scam. Some really nice growth, up 55% YoY for the quarter, in terms of gross sales. That’s a nice example of how we’re trying to figure out how to get some expansion in the overall consumer business. Once we get all of this merchant of record behind us, we really feel like we’re on the right path for our consumer business. We’re staying fixated on our North Star business model. That’s not changing, and USD1.7 billion in ARR is the goal for enterprise, USD400 million in ARR in consumer, with a 30% operating margin. I look forward to your questions. Thanks so much.

This is the Q2 2025 Japan Regions business update. First, this page is showing what we are going to do in the enterprise segment in 2025. This just gives a highlight of the focus points, and then I will be going into the details. The first one, the enterprise business. Let me give you the highlight. We have been hearing many things, but here in Japan, the enterprise business has grown by 12% YoY. The major reason is that we have seen an increasing number of multiyear comprehensive contracts in place. By having a commitment in a multiyear down the road, there is a mention about NRR, but we will be introducing new functions down the road and be able to add on. This is kind of a commitment from the customer that they will be accepting such kind of add-on functions. The second point is the Trend Vision One. This is growing very nicely as well. Especially so-called credit, the usage fee kind of thing has been penetrating the Japanese market, and customers have become familiar with this, which led to the growth in this business. Another one is CREM. Here in Japan, due to the virus environment, at last, Japanese customers have started to realize that they need to do this preventive protection. That’s the reason why we are seeing the surge in this CREM business. The Trend Vision One customer number has been growing fast, which has grown by 33% YoY. However, the low light, as Kevin mentioned, the Vision One attach rate is relatively low compared with the peers in the other parts of the world. We do have a basis in Japan. The existing customers we currently have, the Vision One service, and AI-enhanced services. Let the customer know about these functions and how we can move the customers over to the Vision One business fast. That’s the key. This is a small business, enterprise business. This, too, has seen a growth of 12% YoY. The major reason is the big surge in UTM business, especially in Q2. In the number of customers, it has been growing constantly. Similarly, for the small businesses, how can we grow this spend per customer? That’s what we are working on with our partners. Partners, too, are working with us in this managed service provider. We are seeing a robust growth in XDR services. The revenue coming from one single customer, we are trying to move this up, and that is happening. However, the low light, smaller businesses, for the last few years, we are slightly weak in the partnership with the local partners. To this end, Tokyo, Osaka, as well as Sendai, Nagoya, and Fukuoka, we are trying to find those partners who can do this kind of business. We are trying to rebuild the ecosystem to connect these dots. For the regional small amount businesses, just like what we had experienced in the past, we are trying to grow this. This is something that we have started working on. Next is consumer business. This is the guideline for 2025. For example, we’d like to increase beyond device security and increase unified security. To this end, in Q2, what we have achieved is that beyond device security, as you can see on the graph on the right-hand side, it is growing nicely, with a growth of 33%. Especially the anti-fraud solution, the number of the customers taking up this solution has been increasing. Also, there is a unified security. If you go to the PC shop, on top of the virus wheels buster, you have this function on top of it, but its sales ratio has grown to 27%. Including the anti-fraud measures, the non-virus demand is growing because this fraud has become the big issue. Windows 10 support will end on October 4. The PC shipment is growing, and the attachment rate is increasing as well. The third one is the security enlightenment activities. There is a global event, the global anti-scam alliance was held in collaboration with Google. JC3, national police agencies, and the Ministry of Internal Affairs, many different people were invited to discuss about what we can do with this anti-fraud measures in Japan. In this context, Trend Micro’s presence was recognized as very significant. For the national police agencies, we currently have a relationship with 43 perpetual governments. Local governments and corporate alliances, well, this week, I went over to Fukuoka City, and it has become [inaudible]. In the low light, [inaudible] number of downloads. It is growing, yet that online download switching over to the fee business, that conversion rate is still low. How we can further push it up is the issue that we need to tackle. This ends my update. Thank you.

This isJP Morgan, Henderson, I have two questions. My first question is you mentioned macro environment. CrowdStrike, Check Point, I have seen the earnings announcement of those companies. It seems that the performance of midsized companies, the demand environment is now pressured because of the macroeconomics, especially Check Point, for example. Pressure on the demand and pressure on the margins. That’s what I see. CrowdStrike was not affected that much. That’s my impression. I want to understand the macro environment. Large enterprises versus midsize, who is being squeezed more? Also, what is the competitive landscape in terms of pricing? Is it getting harsher? Can you please talk about the recent environment?

Kevin, you can deal with that.

Yes, I can start and others can chime in. Two good questions. One is your comment around the different segments. From a trend perspective, we have over 500,000 enterprise customers globally, of which 25,000 are considered large enterprise. Those are sort of broad categories. I think we would share Check Point’s view that as a result of the uncertainty around tariffs and what’s going on there, we’ve seen those midsized enterprises. The midsized enterprises, in particular, feel the squeeze and the uncertainty. We’ve definitely seen that in midsized enterprises. That said, and I commented on it in my video, central government is one of our largest verticals. We saw it as a result of many governments having these programs that are really scrutinizing the expenses that governments are putting in place and creating some uncertainty. We saw it in the US government. We see it in the Canadian government. We have a deal that we have been told that we won in Europe, as an example, one of the central governments there. We were told in Q1 that we won it, but they still don’t have budgets lined up because they’re waiting for all of the NATO commitments to be put in place. Government is the other area that we’re definitely seeing signs in the US. Now that the US policy and bill has been passed, we are seeing signs that money will start to flow. We’ve got some early indications in Q3 that US government money projects are starting to be awarded. We feel like it’s not a question of whether cybersecurity is still needed. It’s just a question of when this uncertainty lifts, and we’re starting to see signs of that. The second question around pricing pressures. One of the things that we track is our win rates, and win rates, you have to factor in a lot of different components. That’s related to how your platform is differentiated against the competition, et cetera, et cetera, but also pricing. In Europe, for example, we’ve actually seen our win rates improve. We’re actually getting better at winning deals in Europe overall over the last couple of quarters. In the Americas, in the US, in particular, as you might expect, it is quite a competitive market. Every cybersecurity company is here. We definitely see competition is quite heavy, but also pricing pressure is quite severe.

There was no mention about the buyback at the earnings call. My understanding is that because of this instability in the macro environment, you do have some concern over the pressure on the earnings result. There might be a possibility that you may do the buyback when that happens. Based on this earnings result, why did you not announce any buyback plan?

Thank you very much. Let me answer this question. As you have pointed out, our company considers dividend. We’re not going to do the retained earnings. The remaining surplus will be returned to the shareholders. This policy hasn’t changed, but it’s a matter of the timing. We do have four months to go. Even if we did not announce today, we might announce and execute the share buyback down the road.

TheH2 forecast is based on the currency?

It all depends upon how much of a surplus that we can get. We do not have any plan of announcing it.

In terms of possibility, the one that you did not do the previous year, do you have any plan of doing the share buyback for the two years’ worth?

Well, we do pay the dividend. How much are there left? We calculate that. Then, what will be the size of the share buyback that we can do? We do have a plan of executing that down the road, sometime.

The next person Nikko Securities, Kikuchi-san.

This is Kikuchi speaking. I also have two questions. The first question is about continued uncertainty. There are some signs of recovery, as you have explained. For Q3, if we look at the pipeline and also the current environment, it seems that we cannot really have a high expectation. Is that the correct understanding? You have not really changed the plan for H2. Do you think that there is an opportunity for improvement or recovery? I would like to understand which way you’re looking at Q3. Pre-GAAP wise, what would it look like? How does it impact ARR?

Internally, from a plan perspective, we have maintained our internal plan, what we were always targeting. That continues to be the objectives that the entire company is striving towards. We continue to work that. We made the decision to adjust the guidance based on our H1 performance, but we’re continuing to actually drive the business, based on what we had already designed at the start of the year. We do see, like I mentioned earlier, signs that some of this uncertainty, some of the tariff uncertainty, in particular, is starting to get clearer as to what the real impact is and how people can start managing their businesses again. We are starting to see that and hope that it will help with some of this uncertainty. That’s what we’re driving towards. We absolutely are fixated on driving more net sales growth. The other one that I would point out is we feel like both Omakawa-san and I alluded to, we did a lot of work to actually migrate our merchant of record in the consumer business. The majority of our business is credit card transactions, and that is now fully functional. We feel pretty good that the PayPal portion of our electronic commerce business will be resolved in Q3. We’re going to start to see the evidence that the consumer business can get back to growing again because we are doing a really nice job in this beyond device. On the enterprise side, it’s all about Vision One and continuing to focus in on that. We definitely see plans in our future where we will drive ARR growth higher.

This is a follow-up to the first question. NRR. I understand this is a kind of retention and the persistence rate, but the fact that it is improving without seeing the growth in the pre-GAAP because discontinuation rate improves, if that’s the case, then NRR will improve as well. This positive impact, can we expect ourselves to see that? Will it be shown in the Q3 and Q4 results? Structurally, that should be happening. However, you are not certain that that will appear in the numbers in Q3 and Q4. Can I have your insight on that?

Yes. It’s a very insightful question, and it is quite complicated because there’s a number of different things in play. Number one is that you have the multiyear deal effect. We’ve been doing a substantially higher number of multiyear deals. Our goal was to cement ourselves further in terms of multiyear deals. Obviously, it’s only the first year of that multiyear deal, which has an impact on the ARR and the NRR. Multiyear deals definitely affect the overall performance. You might see it in pre-GAAP numbers, but not necessarily see the full effect in the ARR just yet. That’s one dynamic. The second dynamic, Eva talked about it. She actually laid out the plan that we already started at the beginning of this year. That plan is for us to end of sale a number of our legacy SaaS products. We’ve already started that, and we’ve been gradually removing those. We have a lot of customer success initiatives inside the Company to work with our customers to upgrade them on to Vision One. That’s going to continue right until December 31. As we do that, we will see strong NRR growth because that actually share shift is driving net revenue retention. It’s driving some of the net revenue retention. In fact, probably 20 points of that net revenue retention. That share shift is, in fact, moving that number in that direction.

Second question, focusing on margin, this attitude will remain. Is that the correct understanding? The environment is uncertain, unclear. The government budget is maybe facing some problems. If you increase the sales cost, I don’t think that will push up the net sales so much. Profitability improvement approach, the policy, I think, will be maintained. In the past, when top line was weak, Trend Micro tended to increase the marketing cost. That’s what you used to do. What about now? What is your current approach about margin maintenance?

I would like to answer the first half and then Kevin can answer. Productivity improvement for the Company, if we introduce AI, maybe marketing cost effectiveness will be higher. This is something that we consider. In order to increase the sales, we will also execute necessary investments. Why we do that, and why is the profit declining? Of course, we will explain that. For H2, as Kevin said, we kept the initial plan. We’re keeping the initial plan for now. Kevin, do you want to add anything to that?

Yes. I would just emphasize the point that Mahendra made around our plan is to drive growth as well as operating margin. Nothing has changed in our strategy there. It really is about productivity. You can see in terms of the hiring that we’re doing, we are, in fact, hiring a lot of people, but we’re hiring in certain areas, for example, in quota-carrying salespeople. We’ve been hiring a lot of quota-carrying salespeople. We have actually felt like we’ve got some productivity improvements in other areas of the business. You’re not seeing our total headcount increase, but the mix of employees and the roles that we have is definitely changing. That’s as a result of AI, productivity, and some of the other things that we’ve done inside the Company to drive that.

Yes, I’d like to chime in for this productivity. In my presentation, I showed that AI-nize actually helps us increase our productivity, both in the product development side and on the customer support side. We are getting a lot of productivity. If we use those, we can invest more on the sales side, trying to improve our go-to-market and revenue generation machine.

I’d like to add, with this revision, you just talked about margin. The original guidance was 21%. Against that, we have corrected this. Still, the outlook is 20% margin. It’s lower by 100 basis points, but it is more or less maintained at the same level. It means that we are paying close attention to margin, and that remains unchanged. You can see that from this revised number. Also, I know that the SoftBank Group earnings call is beginning. Many of you are leaving this call soon. Eva didn’t actually mention, Eva’s presentation was actually done by AI. She was speaking in Japanese, but it was actually Eva’s avatar that was speaking. She didn’t talk about that. I just wanted to tell you the secret.

I was aware of that as I was listening because it was so fluent, so smooth, and there were no corrections. The quality, the voice, the pitch of the voice is also very close to Eva. We were surprised to listen to that as well. Thank you.

I just want to use that video to show the example and the possibility of AI-nize. See, I cannot speak in English. As a global company, communication is a very important part for Trend Micro. Utilizing AI, it enabled our whole global communication much faster. For instance, our marketing material before, we wrote it in English, and we translated into Japanese. It took months to produce all those local language marketing material. Now, at the same time, our white paper, our video conferencing explanation, all of those are [inaudible] at the same time launched. I think that shows the productivity and the efficiency that can be done utilizing AI.

Any other questions?

This is Henderson once again. I have an additional question. Changes from Q1. In Q1, I believe that you won some of the government business. In Q2, did you win any government because the US is about to resolve. Do we not have to worry about any reduction in the existing project that you have won?

Yes, we did win. In Q2, we did win the US government business. What I was trying to emphasize is the US government and actually many governments, what they were really carefully evaluating was new projects. They had pressed the pause button on new projects, but renewal of existing projects were generally flowing through the system. Yes, we did win business in Q2. Like I said, in the US, in particular, with the bill now passing, we’re starting to see money free up. We’re feeling more confident about H2.

We have another question. This AI-related products strength that you have, you explained about that briefly, but I believe that other peers, too, are implementing the AI functions just like your company. Compared with your peers, do you have any competitive advantage in your products? Are there any challenges that you are having? For example, the cybersecurity companies that are partnering with NVIDIA, it seems like you’re not the only one. Can you elaborate on that as well?

Thinking about AI-related things, everything is about speed. You need to execute your plan and deliver your solution and go to market with speed. That’s what I think everybody is competing. I cannot stop my competitor from using AI. I can only compete in a way that I use AI better and faster than my competitor. I think that is just the example of our determination and our focus on delivering the security for AI. It shows that Trend Micro is ahead because we are the first one to announce this type of solution. It’s [inaudible] AI platform that we can provide to our customers.

I would just add only because I’m in Las Vegas right now at the Cybersecurity Black Hat Conference, which is the largest cybersecurity conference in the world. Another couple of firsts is our cybersecurity LLM that Eva talked about. The second observation is that several of our competitors have announced acquisitions in the AI space of small start-ups. What that tells me is that they did not start as aggressively and quickly, to Eva’s point, as we did. We really have been quite aggressive at moving in this direction. They are having to supplement it with acquisitions, very pricey acquisitions. We’re not. We’re doing it organically.