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[Interpreted] I would like to get started over Trend Micro's Q1 results for FY 2024. So today, we have Mahendra Negi, CFO and Representative Director; and Kevin Simzer, COO; and Akihiko Omikawa, Director and EVP.
Kevin will be speaking through the video. And at the end of the session, I would like to kindly ask you to fill out some questionnaires. As some of the question we would like to get your feedback on the IR day that we scheduled to hold this year. So without further ado, I'd like to hand over to Mahendra Negi to go through our Q1 results.
[Interpreted] Please share the screen. Yes, thank you. Can you see the presentation? So just a summary of the Q1 results. Our revenue grew by 12% [ OP ] grew by 27%. We were able to achieve double-digit growth for revenue and profit. Later, Kevin will offer you more details. And I will just give you the highlights.
As looking at the sales growth, the enterprise revenue improved last year. In Q4, the growth rate slowed down. So there were some concerns around that. But from this fiscal year, we have started to see some improvement. And also for the North American business, the enterprise business is growing by double digit.
And looking at operating profit, the operating margin has improved by 2 percentage points. So now in Q1, the OPM was 18%. And as you can see this year, our target is the improvement in the operating margin. So on that note, we were able to make a good start towards that goal. The ordinary income growth rate was higher, and this is because we had a revaluation gain of JPY 2 billion on the affiliate stocks, and that's why the ordinary income grew by 52%.
Then looking at this quarter, the revenue and also the ordinary income achieved record high levels. And at the bottom you can see the pre-GAAP numbers, the pre-GAAP revenue grew by 13% a pre-GAAP OP grew by 32%. And the operating margin on a pre-GAAP basis was 18% at improved from last year's 15%. [indiscernible] there are some competitions to these numbers, but I think also that was the case in the past. But in Q1, I think we were able to see a very clear path. And this is the progress toward the full year guidance.
On revenue progress was 24%. For operating profit, the progress, it was 23%, which were both in line with our plans. The pre-GAAP sales and the pre-GAAP profit are shown here. Compared to a year, the operating margin improved from 15% to 18%. For the enterprise business, this is the ARR for the enterprise business. As previously, we were showing the subscription ARR, which is in the red [ here ].
And in terms of the dollar, the subscription ARR was 810 million, growing by 18%. And on top of that, with the darker brownish color, we have the perpetual ARR. And if you combine those two, we get the ARR for the enterprise. We use the word hybrid ARR. And we are combining this to ARR as enterprise ARR. Also from this year, we are changing the way we disclose data. And we are now going to disclose this hybrid ARR. And Kevin will offer you more details later.
And the recent cash flow. I think special to comment on this slide. And I think this is a slide that you may have interest about. In January, we reduced the head count and there was a news release on that. So this quarter, they can't decrease by 249 people. On the written side, if you look at the pie chart, the reduction is mostly coming from sales and marketing and also tech support. This is not for cost reduction, but we would like to improve productivity by using technology. So that's why we're using generative AI to improve the productivity of the business.
And also below, you can see the geographical breakdown. The big impact of Latin Americas is shown in blue and also EMEA. That's where we saw a big count reduction. And this is the trend of the cost. As you can see in the right box, the cost increased by JPY 4.6 billion year-on-year, but most of that was due to foreign exchange. Without the foreign exchange impact, the cost was relatively flat over the last year.
Nothing special to add on the slide. And I would like to quickly go through or summarize the Q1 highlights. As I said earlier, we were able to achieve the highest ever net revenue and ordinary income. And also in the U.S., we achieved double-digit growth in the Enterprise business, and we were able to achieve improvement in the operating margin. And as for the guidance, we have not changed the full year guidance. As I said earlier, this fiscal year, the big goal is to improve the operating margin.
And we thought we would also like to achieve revenue growth and profit growth. And this is the guidance for the fiscal year. That's all for me. Thank you very much. Kevin, I believe. Thank you so much. Next, Kevin Simzer would like to take his presentation, please.
Thanks, Mahendra. Hi, everyone. My name is Kevin Simzer, and I'm the Chief Operating Officer for Trend. Mahendra did a great job of providing a summary of how we did in Q1. And I wanted to do something similar where I talk about Q1 in the context of where we're going, our plans for 2024 and our road to 2027. So let's get started.
I presented this before, but as a reminder, we really have, I think, a solid business strategy in place. We're working feverishly at growing our overall sustainable recurring revenue. We believe that, that's going to be much, much more predictable. We think we can do that while driving higher operating margins, and you'll see evidence of that this quarter.
Ultimately, it comes down to driving customers onto our hybrid platform. We believe we have the market-leading unified cybersecurity hybrid platform on the planet. So getting customers on to that. If we do all of that, that will give us better predictable revenue growth and ultimately increase shareholder value.
In terms of Q1, Mahendra already gave you the highlights, but I wanted you to know that from an internal plan perspective, we actually beat our top line and bottom line post-GAAP revenue performance objectives that we accept for ourselves. The team is very focused. We're executing really well. And this is on the backdrop of the restructuring that we did in Q1, moving our manufacturing facility for our network appliances rolling out a transformational level of go-to-market and how we actually have our sellers focused in on our installed base.
Lots of change going on, and I'm really proud of the trend team where we dug in and figured out how to execute through all of that and produce above-plan performance. Where that performance came from was from an enterprise business standpoint. Net sales was up plus 15% year-over-year. And interestingly, it was powered by exceptional performance in the U.S., and I'll talk about that in a second.
Within the Enterprise Group, it was all about our AI-powered platform growth, our next-generation SOC grew 27%. It's really what we have the team fixated on attaching that to our installed base accounts and using that as our foothold to expand.
Now I wanted to show this because I know there's often questions in around our regional performance. This is a pre-GAAP revenue chart, and it's using a constant currency. So you can get an idea of truly how the different are 4 regions, how they performed across the globe. So let me 0 in on the Asia Pacific, Middle East and Africa region, plus 14%. You, if you followed us, you know that, that's been a consistently growing region for us, and we continue that in Q1.
What might surprise you is the performance in the Americas at plus 12% year-over-year growth. And in particular, in the U.S. at plus 14%. So a fantastic performance above plan in and around the Americas. Then you might look at Japan and Europe and ask, well, what were the dynamics there? And quite honestly, actually, Japan and Europe really executed very close to in and around their plan numbers. As you might be aware, a part of our business is based on renewals of perpetual license transactions.
And in both of Japan and Europe's case, the addressable renewal list was smaller for this quarter than it was the same time last year. So actually, the dynamics were as expected. From a recurring revenue standpoint, this is total recurring revenue. I said this was one of our fundamental objectives to drive more and more recurring revenue. You can see us sitting here across consumer large and small enterprise at $1.63 billion, up 6% year-over-year. And I broke it down by those 3 segments.
So you can see where that growth came from. The large enterprise at plus 9, the smaller enterprise at minus 1 and consumer flat. I can tell you on the small enterprise, we do have plans in the second half of the year where we're going to be taking our market-leading platform that's been so successful on the enterprise side. And we're going to be pointing that and positioning it much better in the small enterprise space, and we think that's going to -- we believe strongly that's going to give us some good lift in small enterprise. So we have a plan for that in the second half.
And then around consumer, we've been working tirelessly at adding alternate channels. Our mobile channel performed really well. We're starting to grow in terms of our BE to B to C channel. So we're making some progress. At the end of the day, we all know it's an attachment to personal computers. And with some planning, we think that these initiatives that are brewing with a number of the PC manufacturers around AI PCs that, that could give that whole industry some lift. If that industry lifts, so too will we.
Like I said, it's about enterprise today, and it's all about this AI-powered cybersecurity platform. It's market leading. It's got the broadest set of capabilities of anybody on the planet. It's hybrid and that it's supported in both SaaS and an on-premise mode, we can even operate in an air gap environment. So we believe we've got all the capabilities that we need, and we're going to continue to innovate.
Attack surface risk management, we added that literally 6 months ago, we went 0 to 3,000 customers running our attack surface, our AI-powered attack service risk management. So that's been a very, very big component, a lot of customers want to assess the risk. They want some visibility across their entire enterprise. So that's been a lot of what has been fueling the growth that we have. But we're not just stopping at AI built into our platform, we're also thinking about customers that want to deploy AI, but they want to be able to do it in a way that they feel like they're not exposing some of their own intellectual property.
So how can they introduce LMs within their environment, but make sure that actually, it's done safely. We've got some capabilities that we added and we're introducing even more going forward. So some really nice additional capabilities, all with AI as the theme. It's not just us bragging about our platform. So Gartner, Forrester, IDC and Canalys. In Q1, all had either quadrants or waves or write-ups also boasting about the performance of our platform. So we feel like we're in a very good spot.
We did talk about it a little bit in the news. We tend to be somewhat of a humble giant, but we do like to talk about certain things. AI is one of them. Threat Intelligence is another very, very big on just trying to vacuum up as much Threat Intelligence as possible, in particular, through our zero-day vulnerability research program. That's one of our flagship programs that we have. lots of initiatives there. And then finally, some really innovative capability, which I don't think anybody else has, but we've been spending quite a bit of time building out an offering in the private 5G, private LTE space.
Well, why not be able to add that telemetry coming from that into our Vision One platform, we did it. So we announced that, that went over very well with the customers that are -- many large infrastructure companies, manufacturers are deploying private 5G or private LTE, and they want to have that visibility in their security operations center.
If we were to look at the recurring revenue, this is the enterprise recurring revenue. We started with the total company's recurring revenue. This is the enterprise recurring revenue, the ARR associated with it. And it sits at $1.24 billion. That's up 7% year-over-year. But I want to point you to the different colors. If you look at the subscription ARR sitting at $810 million, 18% year-over-year growth, that's what we've been primarily leaning into, and we're embracing and trying to connect to our on-premise customers who have those perpetual license and renewal business.
But you can see the decline. We're gradually migrating those customers to the SaaS platform. Not everybody wants to migrate by the way. There's a lot of customers that we have would say, no, for data sovereignty reasons or for whatever they want to continue to run their on-premise gear. That's okay. We can continue to do that, and we can connect them up to our platform [indiscernible] large enterprise growing at 9% [indiscernible] in that direction in the second half.
But if we were to look at that large enterprise recurring revenue business, that's about $1 billion, it actually grew at 9% year-over-year, and we wanted to show you how we're doing at actually connecting up some of our on-premise customers onto that Vision One platform. You can see it here where it's increasing [ at 50% ] [indiscernible] [ $8 ] million. And that's now 43% of the total 1 billion in recurring revenue associated with large enterprise.
So you can see that that's gradually going to be increasing more and more. I thought you might find this interesting, another different view of the world. We have our large enterprise recurring revenue, that $1 billion. Now this is divided up into 4 different categories. The AI-powered next-gen SOC, which is the things that I've been talking about, in particular, the hybrid multi-cloud endpoint security, network security and e-mail security. And you can see where the growth in particular, is coming from.
We actually do very well with a consolidation of vendors use case. And many customers say, "Hey, I'm spending too much on cybersecurity, how can we eliminate the number of cybersecurity vendors that I have in place?" well, when -- with our platform, the fact that we support end point XCR, e-mail security, network security, we can protect your cloud. We have all of that, including a tax service risk management. We have all of that wrapped into the single platform and more, you can really get an idea of why we tend to have a lot of conversations with customers about consolidating.
And you can see it here, a lot of customers growing their e-mail with us and in particular, XDR. In terms of Vision One itself, that platform that I keep bragging about, if we look at the attachment rate, we're really fixated on our installed base accounts. We're sitting at 9,708 Vision One customers today. That's a 35% attachment. That's up 1,373, so 1,373 Vision One customers in the past year. The ARR is growing nicely at plus 27%. And once we land, we know that the ASP is bigger once we attach, but we also -- the expansion potential is much higher. And you can see it in that bottom bullet with 116% NRR.
The way we're doing it is we are gradually expanding. We have over 10 modules. And as we -- as you can see in this chart, 54% of our 28,000 enterprise customers have 1 module deployed. So how do we move them to multiple modules? So the addressable market within our installed base accounts is big. We know that once we expand, the retention rate improves, the ARR increases dramatically. So we're very much fixated on expansion within our installed base.
Here's 3 examples just to give you the types of deals that we end up doing. The first is in the U.S., a large energy infrastructure company. It's a Fortune 500, actually 8 of the 10, 8 of top 10 Fortune 500 customers are actually -- companies or actually our customers. So we do very well in these larger enterprises. This is one of them. They've been with us a while. They have a lot of our gear deployed. And they were looking for our AI powered attack surface risk management. So it was a very nice expansion opportunity for us within this account when we won.
This next one in EMEA was in the retail space. This is a customer that's been with us for a while as well. They have quite a bit of [indiscernible] they were interested in [indiscernible] this a lot of our capabilities but also included why we won, it was a lot of our MDR services capability. In all of these, we tend to see CrowdStrike and Microsoft, and we beat them in all of these cases. So some really nice wins. Let me finish with we feel like we're well positioned. We've laid out our road to 2027 with some long-term objectives, 2.7 billion in sales, 30% margins, 1.7 billion in enterprise hybrid ARR with and the 60% Vision One attach.
And then for this year, as a step along the way, we have our milestones set up, and we feel like Q1 were set up well in order to meet those. Thank you so much for taking the time with me. I look forward to any questions that you might have during the Q&A. Thank you.
Next Mr. Omikawa will talk about the Japanese business environment. So please.
[Interpreted] I'm Omikawa. I will be talking about the Japan region business situation. One moment. So first, so in this year. From our side, 3 points, 3 focus areas that we have been talking to the enterprise business, personal business and in the middle, we put together small to medium business. So 3 pillars that we will be speaking about moving forward. First, enterprise business is as Kevin also mentioned to us, cybersecurity area and AI-powered is added on. So the customer value continues value has been provided.
The recent economic security area, enterprise infrastructure and supply chain risk needs to be taken into account the SOC area. [Foreign Language] pipeline is also coming about this managed services partner, MSP. And together with MSP to manage security remotely. So the service type of security expansion and provision will be strengthened moving forward as well as this is moving smoothly for us.
And for personal business, the beyond device security is what we are doing. Number one, enterprise business, enterprise ARR growth, global -- same as global, Japan, plus 7% year-over-year. Especially Trend Vision One has been permeated. We are using the existing customer base. Vision One platform has been and we are doing more than double than same time last year. Allow the customers they are improving as a result of using our products.
Well, the value proposition to our customers are also working. And number three, compared to the Western countries, the regulation is still by industry, the government regulation is not very strong yet. We were behind. Gradually, despite also is increasing compared to the region, we may be 3 years behind. Japan needs to do much better.
So this is an area we are catching up. Patient 1 compared to [ 309% ] is now 25%, 30%. Similarly, we're about 15. So this percentage we're making up, we think, in a speed of manner. And customer implementation feedback. It's been quite good that they like it once they start using it. So we are getting a lot of good customer voice. Managed services, Vision One related technical support, this support 2.6x. So customer is asking for expertise and our expertise is being appreciated and we can see the benefit and numbers.
Number two, the SMB-related enterprise, XDR demand is strengthening. Supply chain risk included by industry, we see a lot of things coming down. We need to be in sync otherwise, we will not be part of the supply chain. So this is a must for many of our customers. Our SaaS type of MSP partner. Further, they can do manage XDR services. Many partners are starting this up, especially year-end last year, we see announcements, NTT East and NTT West included.
We have very strong partners who is being -- doing the managed XDR services. So this is Q1, just in Q1, 3,700 companies be increased by in 1 quarter. So we were able to do 3,700 in just 1 quarter suddenly. And some side of endpoint security, so package type of on-prem to SMB also. SaaS type. We're switching to a managed services, demand is strengthening. So this is the big change. The marketplace service security, AWS marketplace too. We are seeing the sales are growing. [Foreign Language] So 20% revenue going up. Device security area, PC shipment also in this Q1.
January was minus 23% Y-o-Y minus 9% in March. It was plus 7%. So PC shipment also is returning. So going forward, AI PC, this new demand is going to be strong. We think this will be a new solution that we can be moving into the space. AI related, gen AI-related chat support test. We started operation. Using this, we can rush up and reduce support cost. And further, customers can also improve.
Also, security and lightened activity working with public 47 pre-fixtures like police, institutions, law enforcement, we are doing security and lighten activities as well as its within for local municipalities, safe and secure digital usage promotion well-being alignment agreement has been signed with these local municipalities, which we are trying to see to make sure that they are supported. That's all I had for you. Thank you so much.
[Interpreted] We'd like to move on to the
Q&A session. [Operator Instructions]
[Interpreted] I have one question of the -- I'm sorry, the audio is very bad. It's inaudible and translation cannot be provided. So now we saw a big improvement in your North American business. What is the reason behind that?
Maybe I can jump in, Mahendra? So we did see some incredible improvement in the performance of the business. And quite honestly, it's about a couple of different things. One is have the team very, very focused in on our Vision One expansion. That is just something that is really resonating in the U.S. market, in particular. There's a lot of demand for XDR for the cape and [ poles ] that it provides. So we're very fixated on that expansion potential.
We did get a little bit of tailwind with the deal that had pushed from Q4. But even without the deal that had pushed from Q4 into Q1, we still grew really, really nicely based on that expansion sales motion focused on our installed base accounts.
[Interpreted] Do you think this is sustainable?
Can you translate that again, sorry?
This trend in the U.S. be sustainable?
Yes, we believe so. We believe it is sustainable. We completed the restructuring, as Mahendra said, in January. And part of the rationale for the restructuring was to actually make the business actually much simpler and more straightforward and everybody with clear objectives and much more accountable. So with -- with that as the backdrop with the sales motion of focusing on our installed base accounts and landing our Vision One platform, we feel like we're in a really good spot to be able to continue the growth this year.
Also, with all of the new capabilities we have, we're really, really set up well. When I talk to customers, there's really a couple of different things that come to mind. One is their environments, they feel like they have too many security vendors, and it's not very effective for them in their security operations center to have so many security vendors. So they want to consolidate vendors.
The second thing is during -- with these economic times, the second thing they talk about is cost and how I can get a better return on my investment in cybersecurity. And we address both of those things. So I think we're very well positioned.
[Operator Instructions]
[Interpreted] SMBC Nikko Securities, Kikuchi is my name. By region, ARR trend -- the trend of the ARR by region and the forecast going forward for each region. Overall 7% increase. Japan, 7% plus, sustainable progress growth, overall 7%. Is that correct? By region, Japan is 7%? Japan's revenue today. And compared to pre cap, it seems to be very strong. But the other region trend I'd like to know, outside of Japan, and how are you going to increase your revenue? What are the things that you're going to do?
[indiscernible] Some Kevin and some can explain. One would be by region, Trend by region, ARR we don't disclose because, as Kevin said, global company revenue and those who use, there is a difference. So by region details, the numbers to be disclosed. We want to give you an overall picture that Kevin gave you is the intent. Next, expectation, Kevin can talk about that.
Yes. Thank you for clarifying on the ARR, Mahendra. And what I would add is I think of the world in terms of pre-GAAP revenue and I like to use constant currency. And I shared the chart in my part of the presentation where I shared how we did from a regional performance perspective. And we saw double-digit growth from the EMEA region and from the Americas region, and we do have plans to continue that.
Within both Europe and Japan, we will also see those increase as the year progresses. So we feel like the dynamics that we had in Q1 were specifically related to how our renewal business was lining up. We also have a number of very exciting things going on in Japan, in particular, how we're very focused on the enterprise business right now and our ability to expand there. So yes, we will see those 2 regions on a pre-GAAP basis increase as the year goes on.
[Interpreted] Just to confirm, Japan is 7% and likely, APAC, Europe is like a much stronger number seems to be the views and trend. U.S. 7%, for U.S. maybe too low. And for Japan, the increase in revenue, ARR, 7% increase seems strong. The revenue going forward, is it going to get close to 7% and then is it going to continue to grow for Japan? So those are the questions from me.
[Interpreted] So 2 parts, one for me. Kevin can get that global. Japan ARR 7% yes. ARR subscription business, Japan is perpetual license and renewal business we have in Japan. So the revenue growth is not just 7%. Does that answer your question?
[Interpreted] Also, I'd like to add 1 point. Earlier, Mr. Omikawa, enterprise, large enterprise, if we limit it to large enterprise, the discussion in Japan. Large and SMB composition is like 50-50. SMB, we have a lot also. Large enterprise, we said 7% increase is what we presented. Also going forward, outside of enterprise, Japan, we said we are coming from behind, a customer environment compared to Western countries were behind also our internal structure.
We said we are doing organizational change and lead an organization change in Japan so that to existing customers, we want to copy the success cases from the Western countries and make it so to our organizations. For large enterprises, ARR improvement is going higher. You have you one solution. We give them another solution, a multi one. So that kind of best practice is now being deployed in Japan. For enterprise, we are able to provide one customer improvement in a big way, we think we can grow per customer for large enterprises.
The only thing I would add because your question was specifically around ARR. Globally, total ARR, our total consumer plus small enterprise plus large enterprise total ARR across the company was 6%. Within the enterprise space total at the end of Q1 was 7%. And for large enterprise, specifically, which is the largest number, it was 9%. We continue to see a lot of the growth coming from the large enterprise, and we will continue to see globally those numbers increase slightly.
[Interpreted] So you did the restructuring and going forward, I guess you will not be increasing the headcount. But previously, I think you made a comment that to grow the revenue. So in the future, maybe next year and beyond, you might be increasing the number of people increasing our headcount. I think that was a comment from Kevin.
And given the current situation, this year, we start increasing the head count. Would you be able to achieve the revenue target you uphold today? And also for next fiscal year and the years beyond, is there a possibility to increase the headcount? And if so, at which point would you be increasing the head count? Because without the increase in headcount, the cost will not increase materially, including the marketing cost.
Also, I want to understand the hiring plans for this year and beyond. So that's my second question.
Okay. Maybe I'll start, Mahendra, and then you can jump in if you want. So during our investor conference in December of last year, we announced that we would perform restructuring. The restructuring was based on the fact that we felt like there were technological improvements, some process improvements that we could implement in order to improve our overall productivity.
We identified around USD 50 million of savings. And I'm pleased that we ended up executing on that in Q1. We got that all behind us. Actually, it was a little bit more than even the $50 million that we had targeted, but we accomplished what we wanted to accomplish. That said, I feel like the innovation internally is going to continue. We're using a lot of AI internally, and we're going to continue to see that.
And I think we might see the mix change ever so slightly. So for example, I fully expect that we will be needing to hire more quota-carrying salespeople in the second half of the year as we build out towards getting ready for 2025 as an example. But we don't see an increase net in overall head count happening. Did that answer your question?
[Interpreted] No further questions? We have no one raising their hands. So we'd like to close the Q&A. If you'd like to inquire through telephone, please look at the number on the screen 4588-8572, 03 4588-8572 will be the number you should contact. Also after the closure, we are asking for you to fill the survey. Also give us your request for our IR day 2024.
So this concludes the Trend Micro 2024 Q1 presentation. So I know you are busy with other presentations, and thank you for taking time in your busy schedule to be with us.
[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]