I'd like to get started with this, my presentation about this Q2 results. So this is a summary slide. Sales, 13% growth, net sales, and operating income 42% +. And compared to last year, the operating income margin is 42% +, at 18%. And so Non-GAAP , 12% +, and the Non-GAAP based operating income + 36%. So last year, there were accounting standard changes. There were a lot of changes. However, this year, things are rather straightforward. So this is the result of this quarter. And looking at these numbers, this is the progress to date against the annual expectation or forecast.
The blue is the actual, so far, and at the right top, we have the revenue forecast, the target, and we're steadily working and moving towards that. So I think if things continue as is, I will be able to reach the target. And Non-GAAP, this is the trend that we see. Now, one of the key points this year is the improvement of the margin. As was mentioned earlier, this year, Non-GAAP margin. So actually, operating income is improving, and the margin as well. And another key point is, with regard to the subscription business, enterprise ARR is shown here. Perpetual license renewals, that's the top part, and then the subscription ARR at the bottom, the dark blue, and if you add them together, 7% growth is shown.
Perpetual license.
Perpetual license, compared to, well, it is negative 8%, while the perpetual, or rather the subscription is increasing by 17%. There will be more details in Kevin's presentation later, so please wait until he gives more details. Cash flow. Last year, versus this year. So compared to last year, because of deferred revenue and so forth, there is some negative numbers here, but cash flow-wise, this is rather healthy this year. This is headcount. In the first quarter, there was this one time changes. We had some changes in the Americas. And then, so there was a headcount reduction in the first quarter as well as in the second quarter.
Technical support and sales and marketing are the areas where we see this reduction. If you ask me if this has been intentional, it's rather about adoption of technology to enhance our efficiency and productivity. For example, generative AI, among others, being increased, and that leads to inefficiency gains, and therefore, sales and profits is still can be maintained with less people, and therefore, we have a further reduction in our headcount. That's what happened. Next is cost trends. Last year, cost was increasing at a higher rate than revenue, and therefore, we are controlling costs better this year. And so you see the results there, especially cloud-related costs, which is shown in green. This has been rather flat this year.
One of the reasons is the engineers have done a good job of enhancing efficiency. So these are some of the contributors. The yellow part is labor cost. The total headcount has come down slightly, and therefore, the labor cost has not increased that much either. But because of the yen-denominated figures, you might think that this has increased, but still, that is the current status. The highlights for Q2 is we had the highest ever net revenues and highest ever operating income for the first quarter. This is between January and June. So both the net revenue and also operating income for the first half have been the highest ever, and operating margin improvement is continuing.
That concludes my presentation, but if you have further questions, we have Q&A session scheduled later, so please do ask questions later. Thank you.
Hello, everybody. I am presenting from Black Hat in Las Vegas, and Black Hat is the cybersecurity field industry's biggest event every year, all the security, cybersecurity vendor get together. And this year, of course, the biggest topic is not another threat, but it was CrowdStrike's outage causing the global IT outage. And since Trend Micro is the longest-standing cybersecurity company. And I am the longest standing, the most veteran in the cybersecurity industry. So I share my experience and talking about the balance between IT operation and security operation. Actually, I think the transforming IT infrastructure in the past 35 years, we've seen from the desktop and connecting to local area LAN and then going to internet, transforming to cloud, and now transforming into AI-centric IT operation.
And during this time, we actually seen the changing of cybersecurity, or especially host-based desktop security changing, organization. Originally, all of this operation was when we started, desktop security was managed by the IT, IT team. We always talk to the IT managers. And then it moved to server, and we're starting to talk to the server, but still it's the IT operation team. Until when internet come out, gradually we're seeing, oh, there's network operation team also in the picture because of, firewall and IPS, all of this come together. But always, we were working alongside and manage a lot of time, cybersecurity are managed by the IT operation side. Until about 2010, we're starting to see this, security operation center. People are setting up a special organization to manage cybersecurity because of ransomware, because cybersecurity become the center stage.
And with this moving into IT operation, moving into security operation, that was great that people starting to focus on cybersecurity and set up a special organization to manage it. However, the balance between security operation and IT operation is now tilted too much, a little bit too much. And the problem is because in IT operation, what we see is it's a very conservative, and its impacts on performance is always business continuity. And it's 99.999, the downtime is the most important thing that IT operation will manage. While in security, mainly focusing on the index called mean time to detect, mean time to protect, mean time to respond, all of this is rising. And a lot of times, security operations people, their mind is just looking at the attacker and forgot their main operation.
Security is for ensure the business continuity, not just stopping the attack. So I think there's a need to rebalance the security operation and IT operation, and also understand the cyber risk management. Not only the cyber attack risk management, but also how do you deploy and manage the cybersecurity products? Personally, I think of CrowdStrike, they're originally coming from the risk detection and response, EDR, EDR build. When you see the sign and you just let the traffic go through, if you manage it and want to have a very fast detection, it does not impact the IT operation. But when they're moving into the protection, endpoint protection side, when you need to stop the traffic, you need to protect the operation.
That part, I think the mentality need to be adjusted, tilted back to the IT operation part. Trend Micro, we have come from the IT operation part, and we have a lot of practice that was doing the EPP, the endpoint protection part. We have all those, like, the ring deployment and the very strict update management, all of those. I think, this time, our customer and we, we as security vendor, we all need to reflect on how we manage our own cybersecurity operation. Especially at this time, because we believe, Trend Micro believe that AI, when customer are now implementing AI, AI will great, greatly impacting the business operation and therefore changing the IT operation.
So this whole formula, we call it the cybersecurity formula, customers' cybersecurity problem X equal to infrastructure change, plus user behavior change, minus threat actors change. These are the formula, and when customer are implementing, initiating an AI project, all three of these will be impacted. Already we see the threat actors are using AI. There's more scam, more spear phishing and more deepfake. These are the threat actor. They are changing, and they are getting faster. But at the same time, customers, when implementing AI, they need to set up new data access and authorization, and their management of the AI application will be changed. For instance, we're seeing that AI accelerating the need for a balanced act at this time.
If I take a simple, a real example, when you deploy any company, when they deploy, Copilot or any, AI, GenAI application, they will find that there originally, their data was controlled by each of the different applications, such as HR application control HR data, finance application control finance data, or sales and marketing applications, CRMs control the customer data. So when you apply using GenAI, and you want to, want to utilize all this data to generate the business index that help your operation, then you need to break this data silo.
You need to let AI application able to consume all this data, so that if you ask the AI and say, "Hey, how do I improve the company performance by reducing 1%, increase 1% of the profit margin?" It would look through all this data, and it will generate the answer. But this create a big problem.
A lot of people starting to find out that when they deploy the GenAI application, they will find that, "Hey, how come my junior engineer was able to see all the financial data which shouldn't be, and my salespeople was able to see all the company's salary structure or the engineers' salary?" These are the big problem of AI that is impacting the cybersecurity, and therefore, there is a need to relook into the AI application, how it will impact the IT operation, and therefore, design the new cybersecurity practice alongside with the AI. That's why Trend Micro has been focusing a lot recently and announcing new product to address this type of new risk.
For instance, the employee that was using, no matter it's outside OpenAI, the public AI service, or the company's own application, AI application, there is a risk that the workforce misuse those AI services, such as the example of Samsung's engineer posting all of the source code onto OpenAI to ask for advice, and that will leak the information. So this is one of the problem. First, the employee workforce will have the AI misuse, and customer were starting to set up the data center, AI data center. Within this type of AI data center, customer care a lot about AI sovereignty, and they need to make sure all this domain knowledge are under their control. Therefore, we are working with a lot of company like AI Foundry.
They were helping enterprise customer train the data, train the AI model, and at the same time, when they train those model, they need to be able to implement the good RAG, which is a way to filter the data and regulate the data usage, enhance the data. And those are where Trend Micro will implement our sovereign, our own cybersecurity special trained LLM to be used by all these enterprise and AI Foundry ecosystem usage. So Trend Micro, now we have all this four area that we want to secure AI-powered enterprise with Trend Micro. Securing the AI workforce, safeguarding the enterprise AI LLM, such as we work with NVIDIA, and NVIDIA was publishing their NIM service, their micro service to enable enterprise to build their own enterprise AI.
And while they were building that enterprise AI, Trend Micro will have, will have our own, cybersecurity AI that can be built into their enterprise AI. And so this is safeguarding enterprise AI LLM, and also we have all this, AI gateway that we can secure the next generation AI data center, where when they deploy those AI services, they're using the container, Llama 3, and we were able to secure that type of new generation AI data center. And lastly, we also use AI to address the new type of threats. So for instance, recently we published a new service that is a deepfake detector, that we can detect those deepfake video conference. Those three are real.
We also are building, we call it the linguistic threat detection, because nowadays consumers, their biggest problem is no longer just the virus, the malicious code. It's someone that was using language, no matter it's a text message, an email, or a phone call, or a video conference call, that trick them to do something, that type of a scam. I think we launched that type of a anti-scam service that we utilize large language model to defend against this type of scam very effectively. So these are all of the Trend Micro securing AI-powered enterprise. With that, we of course need to work very closely with the infrastructure builder, which is NVIDIA. Not only are we utilizing their GPU speed, the best speed, their computing power.
We need to better utilize their computing power so that we can, through all those, detection and building up the cybersecurity model that deal with the new threats much more faster. But also, cybersecurity, we ourselves, actually is a big, big data problem. We need to, like, finding the needle from the big hay, and therefore we need to consume a lot of computing power to do that. And I think with the new AI and utilizing NVIDIA's GPU, we will be better handle all this big data and generate solving new customer problems such as the SIEM and SOAR and the compliances problem, that they need to collect all those security log and find out all this information. So we also will be able to work with NVIDIA closely.
We always go together to talk to the enterprise customer while they were setting up their AI application, and we can at the same time do the reference design when they were designing their AI application. So that's how we were working with NVIDIA. And just yesterday, together with NVIDIA, we were keynote speaking at the AI Summit at the Black Hat. And yesterday, we also have a joint press release about Trend Micro and NVIDIA together. We are working on the enterprise AI and the government's they call it AI sovereignty problem.
What I was fresh from the platform ourselves, we launched this Zero Trust Secure Access AI Gateway, and just on August 1, and we already have several of these customers that they were using, and they pay for these AI services. We're very happy that we're starting to see our investment, our research that we come out with the securing the AI solution was getting very positive feedback. I believe Trend Micro this wave is leading the wave, because in Black Hat, we Trend Micro the thought leader and all the customers are saying that your solution is really addressing our AI application problem, and I could say, Trend Micro currently is the leading one in the AI security field.
That's all. That's our-- The last one is our Trend Micro's slogan everywhere in Las Vegas now. It's called: Imagine with AI, secure with Trend. That's our strategy for AI. Thank you.
Thanks, Eva and Mahendra. Hi, everyone. My name is Kevin Simzer, and I'm the Chief Operating Officer for Trend Micro. I'm here to give an update on our Q2 2024 performance from a business perspective. If you've been following us, you've seen probably quite a bit of awareness building around us as a cybersecurity vendor, focused in on using AI in our security offering, but also quite uniquely by protecting AI infrastructure for our customers, and I'll tell you how we've been doing. From a Q2 standpoint, we were very pleased with our overall Q2 performance. We did beat our internal plan numbers in both net sales and operating margin, and that's with a backdrop of, in Q2, of a continued weakening yen.
That actually has a fairly big impact on our overall operating margins, and we were very happy to actually finish just above our internal plan numbers. So nice performance overall. The growth and the performance continue to come from our enterprise part of our business. Enterprise net sales up 16% year-over-year, which was great to see. We just issued a press release talking about we now have 10,000 Vision One customers, so very, very strong adoption of our market-leading cybersecurity next-gen AI platform.
From a consumer standpoint, the other part of our business, net sales were within our plan numbers at +2%, and what we said was we were gonna really focus in on driving more profitability within the business, and that has been our focus, increasing the ARPU, which we saw in Q2, very focused in on the efficiencies of the channel. So overall, just a nice quarter for us. From a regional standpoint, Japan finished right on its number, so that was by design, based on renewals. Growth continued to come from the EMEA and the Americas region, which was great to see. And probably the only surprise for the quarter was in Europe, where we did see, a market dynamic, where we saw a protracted slowdown, in particular in public sector transactions.
We don't foresee that to be a long-standing one, but we did see a slowdown in Europe that we did not anticipate. From a total business recurring revenue standpoint, sitting at $1.65 billion now, we've been really focused in on building up that recurring revenue stream, and some nice, nice growth. But you can see where that growth has been coming from, and that has been the large enterprise part of our business. We still really like the small enterprise and consumer part, and we're optimistic in the second half that we will start to see some lift there. In small enterprise, we just announced that we're taking our market-leading Vision One platform and making that available to MSP partners that are servicing small enterprises. So we think that that's actually going to be very helpful for giving us some lift.
And then in the consumer space, with the things that we're doing from a product innovation standpoint, we'll continue to actually focus in on ARPU expansion. However, we also think that AI PC will actually cause an increase in PC shipments, and that will cause us to lift as well. If we drill into the enterprise part of our business, $1.25 billion, 7% year-over-year growth. But where that's coming from is in our subscription part of our business. Again, we're really trying to move to this more ratable, subscription-oriented type business, up 17% with $831 million. And you can see the decline in the perpetual, and that's by design, for the most part.
Actually, 50% of that decline is actually movement from perpetual licenses into subscriptions, so we're going through that transformation. So it seems to be unfolding exactly what we had thought. We're very fixated on the large enterprise part of our enterprise business. We have 28,000 existing customers today, and we're focused on expanding those customers with the additional modules that we have. We have 11 modules in our platform and getting that expansion motion going. From a large enterprise recurring revenue standpoint, this is one of the ways we measure how we're doing from a platform perspective. So we saw really, really good attachment of our Vision One connected ARR, but we're also seeing our on-premise business move more and more in getting attached to this part of our SaaS part of our business.
It's up 45% quarter-over-quarter, and even when you look at that 10% decline, actually 87% of the movement that's happening there is actually customers that are moving and adopting the Vision One platform overall. From a large enterprise recurring revenue standpoint, this is the largest, those 28,000 enterprise customers that we have. When we look at that, it's $1 billion growing at 9% year-over-year, with a great compounded annual growth rate. So some really nice growth over the years, but still continues in Q2 here. But in particular, you can see where it's coming from. From the biggest growth area that we have is our AI-powered next gen SOC. That's up 26% year-over-year. And the second biggest category that we have is email security.
That's built into our platform, and a lot of customers are now taking us up. They're trying to consolidate vendors and have fewer cybersecurity vendors that they're keeping track of, and it's a nice, easy add-on module for us. The number one sales motion we have, though, is to go out to the 28,000 customers that we do have and make sure that we're getting Vision One attached. And as I said earlier, we have 10,000 now that have that attached. That's a 36% attach rate, so we still have a lot of runway to go within our own installed base. We added 500 customers up to $ 236 million in next gen SOC-specific ARR. That's up 26%, and the NRR is quite strong in that platform because that's where our module expansion is happening, 114%.
We know that as we add modules, both the retention rate and the ARR impact is much greater, and we have 56% of our customers with 1 module, so a lot of green space for us to go after. Here's 3 customer examples. The first one is in the U.S., a mega cap, healthcare company in the U.S. This was an existing customer of Microsoft. They ended up replacing Microsoft with us. They loved our AI-powered platform. They loved the visibility and the protection that they can get. But fundamentally, they wanted to consolidate security vendors, and they were looking for endpoint, email, and cloud all consolidated within that single view, that single console. The middle one is from EMEA.
It's in the oil and gas sector, and I really like this one because it shows both the power of the consolidation story, but also these folks were really obsessed with getting better visibility from an attack surface standpoint, but they also were looking at deploying AI, and they liked our security for AI-based applications. So how we can make sure that their LLMs are protected from LLM poisoning and all the other threats that they have to be thinking of. The last one is in the automotive industry in Europe, a really, really nice expansion. Again, it was the power of our platform, endpoint, email, and cloud, but also our MDR services that we have available. So they wanted us as a second set of eyes.
So that is just all part of our offering that really, really gives customers the confidence in our platform story overall. So switching gears with consumer, actually a nice quarter for consumer. We got some growth. It was right on plan. We've been fixated on getting growth within that mobile channel specifically, and we've been doing that. We saw the ARPU increase. It's been increasing, pretty well, in particular in Q2, so our expansion story with larger packages is working quite well, and that will continue to be our strategy while we are aggressively going after the AI PC. Finally, let me leave you with this road to 2027.
If you recall back to our December conference, IR conference, we had laid out a business model that we were pivoting towards, and I'm so pleased to see that we're executing very, very nicely towards that road to 2027. We're already seeing the dramatic changes in the restructuring that we had done, focusing on getting the top line going, but fundamentally a real focus in on operating margin, and we're seeing that. If we look at 2023 at a 13% operating margin, now sitting at an 18%. So really nice overall movement towards this new model that we put in place. So very pleased overall in how we're executing and feel very poised for the second half, where we will start to see the... I think, the fruits of our labor and the model kicking in even stronger.
With that, thank you very much, everyone, and look forward to the questions after.
This is Omikawa speaking, and I would like to explain the situation of Japan region. Every time I show this slide, enterprise, SMB, and the consumers, these are the three pillars of business in Japan. So this is just a quick recap. This slide shows the situation of our enterprise business. As was explained earlier by Kevin, Japan is lagging behind other countries in terms of Vision One business. Because of that, the penetration rate is a little bit lower than the rest of the world. As you can see on the slide, the Vision One is really driving the growth of ARR, and XDR users are increasing steadily. Vision One started large enterprises, and the current penetration rate is 16.8%, and we are increasing this every quarter. Can we show the slide?
Other countries are reaching 37%. Japan is definitely lagging behind, but our challenge is how to catch up with the rest of the world, how quickly we can catch up. Now, attack surface risk management. This is very unique for Trend Micro, including risk management and XDR for post-event countermeasures at a high level. Starting this year, we have actually accelerated this initiative. In line with this effort, when we look at the managed service provided by our security experts in terms of security operation technical support, we definitely see the demand growing for this service provided. It's already 4.4-fold larger ARR compared to the same quarter last year.
Within Japan, we have expert engineers working for the same company for many years, gaining trust of the customers, and providing this business for many years. Now, looking at the SMB business, sales is growing steadily. Working together with our partners, we are definitely seeing positive growth over many years now. Last year, we introduced XDR in this segment. Especially for this second quarter, just for this quarter, 2,400 companies started using our XDR, and in total, we have more than 7,000 companies as users. At the end of last year, it was several hundred, but now we have more than 700 companies using our XDR services. Supply chain risk is imminent for SMBs, and therefore they need high-level security. Together with our partners, we are providing this service to the customers, and it's definitely growing.
UTM for SMB, new model of a Cloud Edge, has been released, and this has accelerated the sales, which actually grew 1.6-fold compared to the same quarter last year. The ARR is really growing at 14% on a year-on-year basis. Last but not least, personal business. We have the end device security products, which has been our focus in this segment. On the right-hand side, with the bar graph, you can see a big leap, a big jump, because of the product switch and inventory, there was a big peak, but now this has settled down. We have come back to the normal level of our market inventory. 20% of our sales are related to dev, rather than device security, to security products that are related to that. In other words, consumer security environment is becoming more complex.
Starting from August, we have started providing services to solutions to deal with deepfake fraudulent phone calls. Over the last week or so, it is selling very well because of heightened demand. I'm sure that people receive a lot of fraudulent phone calls, and these phone calls can be blocked, and also once this is registered, and if your family member tries to call back, you will get notice about that as well. So this is a very good solution. In AI PC, shipments started in Japanese stores, and we have launched a related product as well, and it is again growing. In terms of the collaboration with official institutions, we have 47 collaborations, more than 20 centers.
30 prefectures out of 47 prefectures are collaborating with us right now in terms of a security education for law enforcement. Through the collaboration with the police, Trend Micro is now becoming more widely used, including our efforts in anti-fraudulent initiatives. That's all from me. Thank you.
Ueno from Daiwa Securities.
Can you hear me?
Yes.
I have one question, a simple one. On page 25, active customers, the numbers there.
... The subscription, that is supporting, cloud, it's not quarter-on-quarter, but on a year-on-year basis, I still see a decline. And Vision One is sold, and additional functions are added, and I think you're trying to improve ARPU, and I think the overall sales has been growing. It's true, I can see that. Now, the subscription customer number declined. How do you view that? And do you expect that, that you can turn around and increase the number of users? Okay, I'd like to answer. This is Negi speaking. So one thing is, among these numbers, there are some overlaps, double counting. In the subscription number, for example, the lower part, perpetual is mentioned there. Both might be used by the same user. And so I think, it skews the picture a bit.
And as was mentioned in the presentation, we are focusing on enterprise, especially the large enterprise, 28,000. They're using, well, with regard to Vision One, and therefore, rather than focusing just on the mere number of the customers, I think, the focus should be how much upside we can have in terms of Vision One deployment, or attachment. So, rather than focusing on, the number of customers, we would like to focus more on, more, potential, or actually, promising customers that we already have. So, XDR for SMBs, for example, these are another focus areas, and so the numbers should come back. Okay, in terms of schedule, when do you expect that to happen?
Maybe the total number of users declines, continues to decline, but Vision One additional functions and features can be added, and you can actually have the same users use more functions, and so go deeper is one approach. But is there gonna be a time in which you will really shift focus to the increase in the number? Well, 420,000 companies altogether. We don't have any particular target number, for example, of 450,000 by next year. We don't have that kind of a numerical target. For sales increase? Yes, we do have a sales increase in other targets, and therefore, in time, we hope that it, things will recover, hopefully. However, it, that in itself is not the objective or target. Okay.
As an example, what is the per customer? Well, I understand that as long as we have more sales from one user, that would be good. So just a rough figure, how much upside do you expect? Is it 30% increase per user that you can expect? As was mentioned in the presentation, the Vision Connected modules, there will be more modules being used, and that translates into more sales. By tenfold, the sales can increase by 10 times. It depends on the customer and the customer timing of doing that or increasing their modules. And in the smaller SMBs, maybe they buy once, and then they don't have other ones to buy. But, we're talking about the 28,000 large enterprise customers that we're focusing on.
I hope this answers your question. 28,000 companies? That's our focus. Therefore, for against or with regard to the 28,000, we are trying to have the sales increase. Okay, thank you. Okay, sales per customer is what I wanted to understand better about. Yes. In the next two, three weeks time in Japan? Actually, in the past two, three weeks, we have carried out large events where end users gathered, and there were user presentations and also managed service partners. And their customers, the SMBs, also presented in such events, and so it was quite nice.
In other words, we have certain focuses, and we have examples, and then the users can spread the word to other users, and partner companies are using our products, and they have positive things to say about us. Therefore, including partners and users, we are visiting them. Of course, the focus is to increase the number of cases that we can reference. And we would like to also, of course, catch up with new users as well. So we're working on both ends. Okay, I understand. Therefore, the sales per customer and its potential, you know, we have no clue as to how much you are expecting as a potential going forward or the upside. So please inform us going forward as well, if you can. Thank you.
Thank you very much. I would like to unmute the next person for the question.[Foreign language] I have just one question. Non-GAAP Europe number. "[Foreign language] Kevin, Negi-san said that Non-GAAP didn't grow in Europe, which was surprised.
I don't think it was growing in the first quarter, but in the second quarter, it was same situation. And the public sector, Kevin said, public sector, was it transportation? Maybe you said transportation, I'm not sure. But maybe this will recover. Now, in the second half, do you have a clear vision, visibility into the pipeline? That's the question. And also, I think we're sad because of the absence of this public sector growth. Do you have any visibility into what would happen in the second half in Europe? Thank you. You are correct. Pipeline visibility, we have the visibility. More in summer holidays, so it's not necessarily in the third quarter, but even in the third quarter, I think we can see some recovery.
We expect the quarter to be better.[Foreign language] So the larger projects in the public sector have been shifted to the next quarter. I see. One follow-up question. Regarding the CrowdStrike incident, did that have an impact on you? Are you receiving more inquiries in Japan or in the United States? Maybe some customers want to switch the brand to Trend Micro. Well, because it was a painful experience, their customers are looking for other options, including us. Omikawa, do you have a comment? Yes, we have received many inquiries. But, as you may know, we also had our own experience. But since then, we have improved things.
We have built the Transparency Center, improved the transparency, and we have provided this content immediately. So I think the customers are still at ease. Maybe not an immediate switch, but as Eva has explained, security operation is the overall concept. So what do we do about the operation to begin with? Is the current format really appropriate? This is a great chance for us, opportunity for us to rethink all that. ASRM, company risk, security operation, from that perspective, we can talk about the ideal vision, how things should be because this is how the persons involved in the operation are thinking about this. So we're getting an opportunity to explain about this overall thinking. Thank you. Just one more. System integrator, network integrator, when I look at their earnings announcements, cybersecurity related, the business is doing pretty well.
There is no cover for this disclosure guidance. I know that for Japan, it's a low single digit, that's what you said. But the 1% growth in Japan, this is lackluster. From the system integrator's perspective, everything is accelerating left and right. But for Micro, Japan is missing this wave? Not in Japan, being 1%, but half of this is the consumer sales. Please keep that in mind. Oh, I see. I understand. As I have said, we want to maximize the capability of our partners. So we want to evaluate a different... Well, the company evaluates different operations, including Vision One, and we are looking at the operation together with the customer in terms of data handling and speed. People are recommending, beginning to recommend Trend Micro.
So the answer to your question is, we want more people to understand what is good about Trend Micro. System integrators and network integrators are important partners. We have Deep Discovery and other great solutions. So on these two fronts, we have to make a business case, and we need to make more efforts so that the business would include our solutions. As you have said, system integrators and network integrators, they grow, and together, Trend Micro can grow. So we want to be a de facto component of their growth. We are making efforts to that end. Thank you. That's all from me.
Thank you very much. I'd like to unmute the next person to ask the question.
SMBC Nikko Securities, Kikuchi.
Kikuchi from SMBC Nikko Securities.
My first question is something that I asked in the past. Generally speaking, IT companies, not in the manufacturing, but the IT sector company, when they reduce headcount or do restructuring, well, I think the top line-
... will suffer as a result, because we're talking about services that are sold by people, therefore, the top line will suffer as a result of headcount reduction. But operating margin or profit margin will increase as a result. So I think, well, at least it seems like that is what's happening. Now, restructuring is the decision by the management, and people might say that it was a misjudgment by the management, or maybe it's difficult to calculate everything. Now, what's happening is, top line, is that not the impact of the restructuring or the headcount reduction? If it's not, then, from Q4 to when, first quarter, I think, restructuring has done and headcount reduction happened.
And then, I think nobody will be motivated after a headcount reduction happens, and therefore, I think sales will suffer by a few percentage points. If that's the case, then when you look at your operation after the organizational change, assuming that there has to be some negative impacts, how do you plan on recovering from that stage? Or if you say, "No, that's not happening with us," then maybe it's about your competitiveness. So I need some explanation there. So from your perspective, when you went through this restructuring and also a global restructuring change in the global reporting line structures, and what was the result of those changes, and what is the current status?
Of course, if there is no such, you know, impact, then how do you explain the top line? Because that top line might suggest that your competitiveness is lower now. Okay. So the first part, profit margin. Well, it's not because of that, that we reduce headcount. Of course, we want to improve margin now. Headcount reduction, we just wanted to enhance our efficiency. And so actually, the profile of the people needed will be changed as a result, and therefore, for example, with this change, maybe support personnel will not be needed in larger number as in the past. And so it's not just about the mere volume or number, but rather the value that each person, employee can bring about.
So I think, the thinking here is that we're enhancing the productivity and efficiency of individual employees that we have. I hope this is in sync with what you are thinking. Well, yeah, the number of users, customers are being reduced, and if it's because of the reduced number of workers, employees, that's understandable. But if that's not the case, there has to be something else, and that might be the competitiveness that is getting less. And if it's a one-time thing, but if it's not a one-time thing and you see a decline in the total number of customers and you're not growing in Europe, I'm trying to understand why. Is it because the person in charge changed, as a result, a temporary delay in order placements? Is that happening?
I'm trying to understand the mismatch, so to speak, between the numbers and what you say is happening. I think there's a confusion in the minds of many people. You've went through this major transformation or reform, and as a result, the top line was actually sacrificed temporarily, but you will stabilize things, and then you expect the top line to grow again. That would be a convincing debate explanation. Well, the sales with enterprise is increasing. The total number of enterprise customers is declining. We have 400,000 or more customers, but we are focusing really on the 280,000 companies. 200,000, rather, companies. So sales and increasing and the profit margin increasing.
We are growing in the sales as well as the margin, and so we are really focused on the enterprise segment. Okay, so we shouldn't really pay too much attention to sales for a while. It's not a temporary factor that is causing this sales being rather stagnant. And well, enterprise is growing, you say, but I understand. I guess it is a fact, or is it? Subscription is growing. But still, I see this mismatch, at least in my view, it's a mismatch, and maybe that is affecting the share price as well. Because we're restructuring, has there not been any operation-related impact? And reporting line has been restructured as well. And of course, sales could suffer as a result, but it's not related to what you did with these, you know, changes.
Again, you don't have any confusion in your organization? No, we don't have any confusion. As I mentioned, in the second half, our sales is going to be increased, and also the profit margin will increase. So, these are not possible with any confusion organizationally, and at the end of the day, well, you, you might say that the number hasn't increased, but, we say otherwise. We think that in the second half, it will increase. Okay, I think, in the second half, you, you come out of this confusion. You have, restructuring done, and, sales increase is not seen. That's rather, something that you, don't expect. I was just wondering that, organizational confusion might have, may have, caused this, stagnation in sales.
That's understandable, but if you say that's not the case, then I don't understand exactly how that came to be. Well, maybe it might, I have a misunderstanding, but in any case, the past few periods have been rather disappointing, the quarters. Yes. We have this plan that we have established, and of course, we will see how we can realize the plans. And we of course will try to reach the plan. And we believe that we can enhance productivity so that we don't need to depend on that many people, in terms of numbers, that is. And so, of course, it's up to the investors to make the final judgment or decision. Okay, I may be repeating myself, so I really think and hope that things will improve.
Otherwise, something is wrong. I have a second question. In the IR conference last year in December, there was cost reduction, and based on this, what to do in the next fiscal year? Is the cost being suppressed, and you can do the business this way, or do you have to increase the cost in areas where it's necessary?
I don't think I got a clear answer about that. I understood that operating margin would be improved, but looking at the current operation, now we're in August, only more than half of the year has passed. Into next fiscal year, are you sure that you don't have to increase the headcount? And if you have to increase the headcount, the sales has now been pushed up by FX, but on annual basis...
Well, FX is difficult to predict, but, I don't think the sales is increasing. So if I increase the cost, then operating margin will not improve. So what about operation cost strategy for next year? Do you think to increase the headcount or not? Autumn is actually a higher season for new graduates. So how do you intend to deal with headcount and cost control next, next year?
Thank you. First of all, like I said before, sales is not-