Trend Micro : 2022 Q3 Financial Report Data

November 10, 2022

			Report of Earning Results (Consolidated)
			for the Third Quarter of the Fiscal Year
			Ending December 31, 2022
Company :		Trend Micro Incorporated	Tokyo Stock Exchange, Prime Market
Code :	4704		Location :	Tokyo
URL :		http://www.trendmicro.com
Representative:	Title	Representative Director
	Name	Eva Chen
Contact:	Title	Representative Director
	Name	Mahendra Negi
	TEL	[phone]

Expected date of the submission of quarterly security reports ("Shihanki Hokokusho") : November 11, 2022

1. Financial Highlights for the Nine Months Ended September 30, 2022

1. Consolidated Results of Operations

			Net Sales				Operating Income		Ordinary Income	Net Income Attributable
							to Owners of the Parent
			Million yen	%			Million yen	%			Million yen	%	Million yen	%
Nine Months Ended	162,100	16.5		25,870	(25.3)			30,408	(14.2)	28,492	11.0
September 30, 2022
Nine Months Ended	139,180	9.6		34,622	25.7			35,423	28.8	25,670	35.2
September 30, 2021
(Note) Comprehensive Income:		55,540million yen 65.5 % as of September 30, 2022
(33,552million yen 114.4% as of September 30, 2021)
			Net Income per share		Net Income per share
			(basic)						(diluted)
			Yen						Yen
Nine Months Ended		203.89						203.54
September 30, 2022
Nine Months Ended		184.22						184.09
September 30, 2021
(2) Consolidated Financial Position
			Total Assets				Net Assets				Equity Ratio
As of			Million yen				Million yen				%
September 30, 2022		470,322			240,662					50.7
December 31, 2021		420,457			221,434					52.1

(Note) Net Assets after deduction of Share acquisition rights and Non-controlling interest

: 238,601million yen as of September 30, 2022 (219,084million yen as of December 31, 2021)

(4) Number of shares issued (common shares)

① Number of shares issued (including treasury stocks):

140,796,604 shares as of September 30, 2022

140,744,104 shares as of December 31, 2021

②Number of treasury stocks :

850,220 shares as of September 30, 2022

1,068,790 shares as of December 31, 2021

③Average number of shares outstanding :

139,744,340 shares nine months ended September,2022

139,348,017 shares nine months ended September,2021

* Statement relating to the status of the quarterly review procedures

This quarterly report is not subject to the quarterly review procedures, which are based on the Financial Instruments and Exchange Law. The review procedures for quarterly consolidated accounts have not finished at the point of the announcement of the quarterly financial results.

* Explanation for the proper use of projection and other notes

Any forward-lookingstatement in this report including forecast results, are based on certain assumptions that were deemed rational as well as information currently available to the Company. However, various factors could cause actual results to differ materially. Please refer to (3) Qualitative Information on the Consolidated Earnings Forecast on page 3 of the attachment for conditions serving as assumptions for forecast results.

2. Dividend of Surplus

			Cash dividends per share
	As of	The first	The second	The third		Annual end		Total
	quarter end	quarter end	quarter end
		Yen	Yen	Yen		Yen		Yen
December 31, 2021	－	0.0	－		195.0		195.0
December 31, 2022	－	0.0	－
Projection for FY 2022					－		－
(Note)	Revision of the projection of dividend for the first quarter of FY 2022	:	No
(Note)	The dividend projection for FY2022 annual end has not been determined yet.

3. Forecasts of consolidated financial results for FY 2022

(January 1, 2022 through December 31, 2022)

(Note) For the forecast of FY 2022, please refer to next page.

4. Others

(1) Change in the basis of consolidation and application of equity method	:	No
(2) Application of simplified or specified accounting procedures		:	Yes
(3) Changes in accounting principles, accounting estimates and restatement
① Changes under the revision of Accounting Standards	:	Yes
②Changes in Accounting Principles other than ①	:	No
③Changes in Accounting Estimates	:	No
④Restatements	:	No

Forecasts of consolidated financial results for FY 2022

								Net Income
	Net Sales		Operating Income	Ordinary Income	Attributable to	Net Income
								Owners of the Parent	per share (basic)
FY2022	Million yen		%	Million yen	%	Million yen	%	Million yen	%	Yen
(January 1, 2022
through December	225,900		18.7	37,000	(15.2)	37,100	(16.6)	31,900	(16.9)	228.39
31, 2022)

Appendix contents:

1. Qualitative Information and Financial Statements -------------------------------------------------	2
(1)	Qualitative Information on the Consolidated Business Results ---------------------------------	2
(2)	Consolidated Financial Positions -------------------------------------------------------------------	3
(3)	Consolidated Earnings Forecast --------------------------------------------------------------------	3
2.	Others ----------------------------------------------------------------------------------------------------	5
(1)	Movement of Significant Subsidiaries -------------------------------------------------------------	5
(2) Application of Simplified or Special Accounting Procedures ----------------------------------	5
3.	Consolidated Financial Statements ------------------------------------------------------------------	6
(1)	Consolidated Balance Sheets ------------------------------------------------------------------------	6
(2)	Consolidated Statements of Income ----------------------------------------------------------------	8
		Consolidated Statements of Comprehensive Income ---------------------------------------------	9
(3)	Consolidated Statements of Cash Flows -----------------------------------------------------------	10
(4)	Footnotes on Consolidated Financial Statements -------------------------------------------------	11
	(Footnote on Going Concern) ------------------------------------------------------------------------	11
	(Notes on Significant Changes in Shareholders' Equity) -----------------------------------------	11
	(Changes in Accounting Policies) -------------------------------------------------------------------	11
	(Additional information) ------------------------------------------------------------------------------	12
	(Segment Information) --------------------------------------------------------------------------------	13
	(Business Combinations, etc.) ------------------------------------------------------------------------	15

1

1 Qualitative Information and Financial Statements

(1) Qualitative Information on the Consolidated Business Results

(Unit: million yen)

		Net Sales
	Nine Months Ending	Nine Months Ending
	Third Quarter	Third Quarter	Rate of Change
	of	of
	FY2022	FY2021
Japan Reg.	60,955	56,936	7.1%
Americas Reg.	37,849	31,244	21.1%
Europe Reg.	29,496	25,173	17.2%
Asia and Pacific Reg.	33,798	25,825	30.9%
Total	162,100	139,180	16.5%

During this term of fiscal year 2022, from January 1 to September 30, the world economy expects to pick up moderately due to the gradual easing of COVID-19 from the severe situation. On the other hand, there are risks mainly associated with the global policy rate tightening, exchange rate fluctuations, worldwide inflation, and steep rise in fuel import prices due to prolonging the Russian- Ukrainian crisis, etc. The worldwide economic outlook has been a concern.

The worldwide Information Technology industry has growth due to accelerated demands of remote working, education, DX (digital transformation) under the global affected by the Covid-19 pandemic. Refer to the report by 3rd party, it forecasts worldwide IT spending to grow 5.1% into $4.5 trillion in 2022. According to accommodating increasingly complex hybrid work for employees, then enterprise software is expected to have growth in 11.0% mainly due to increasing in cloud usage and SaaS migration.

In the cyber security industry, continuously multitude of cyber terrorism that targets specific national institutions, etc., a spate of identity theft in business client information, and targeted attacks including crypto assets drain in specific companies, organizations have been still coming across occasionally. In addition, the global epidemic of Covid-19 infection was used by phishing scams, the malware files which abuse remote meeting system have infested. Especially in ransomware, threat in targeted attacks which implemented the 'double extortion' technique by reveal stolen and sensitive information stood out. In Japan, there was a stoppage incident attracted people's attention by ransomware attacking supply chain vulnerabilities of the large enterprise for its stoppage all factory operations. Against this background, the conventional security measure, with defense of each single terminal and device, and the network segmented into smaller zones, has been changing to no longer desired. The demand is expanding for the solutions including visibility and deep analytics on the premise of intrusion risks. Going through the trend of such threat changes, it has been required showing more rigorous approach to information management to regardless business or individual into new daily life.

Under such environment, our group business conditions are as follows:

With regards to sales in Japan region, consumer business has led this region sales with going well continuously under the sustained good sales in mobile channel shop, etc. In Enterprise business, despite endpoint security performed not well, cloud security and service business are going well. As a result, net sales for this period in Japan region amounted to 60,955 million yen (7.1% increase from the same period in the previous year) increase to.

For Americas region, which integrates the former North American region and Latin American region, despite intensifying endpoint security market competition, SaaS related business has been still kept well and also cloud security besides on demands for Trend Micro Vision One ("Vision One" which is a security operation at the center of the Trend Micro cybersecurity platform) performed well in enterprise business sales. In addition, there was a weak yen impact, net sales in this region were 37,849 million yen (21.1% increases from the same period in previous year) increase in double-digit growth rate.

In Europe region sales, associated with good demands of Vision One which showed growth, mainly cloud security, network security and others were largely growing in entire enterprise business. As a results, net sales in this region were 29,496 million yen (17.2%

2