Trend Micro : 2021 Q4 Financial Report Data

February 17, 2022

			Report of Earning Results (Consolidated)
				for Fiscal Year
			Ending December 31, 2021
Company :		Trend Micro Incorporated		Tokyo Stock Exchange 1st Section
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 annual shareholders meeting : March 29, 2022

Expected date of the delivery of dividends : March 30, 2022

Expected date of the submission of annual security reports ("Yuka Shoken Hokokusho") : March 29, 2022

1. Financial Highlights for FY2021 (January 1, 2021 through December 31, 2021)

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	%
FY 2021	190,359	9.4	43,641	10.6		44,501	11.7			38,367	42.6
FY 2020	174,061	5.4	39,464	4.7		39,854	1.8			26,904	(3.7)
(Note) Comprehensive Income : 49,226 million yen	114.3% as of December 31, 2021
	22,972 million yen	(13.0%) as of December 31, 2020
	Net income per		Net income per	Return on		Return on assets	Operating profit on
	share (basic)		share (diluted)	shareholders' equity		sales
	Yen			Yen	%				%			%
FY 2021	275.20			275.06			18.9				11.2		22.9
FY 2020	193.39			192.87			14.4				10.8		22.7

(Note)	Equity in earnings of affiliated companies : 110 million yen loss as of December 31, 2021
		104 million yen loss as of December 31, 2020
(2) Consolidated Financial Position
		Total assets		Net Assets		Net Assets ratio	Net Assets per share
	As of	Million yen		Million yen		%	Yen
December 31, 2021	420,457		221,434		52.1	1,568.52
December 31, 2020	376,701		189,360		49.7	1,346.03
(Note)	Net assets after deduction of Share acquisition rights and Minority interest :
	219,084 million yen as of December 31, 2021
	187,310 million yen as of December 31, 2020

(3) Consolidated Cash Flows

	Cash flows from	Cash flows from	Cash flows from	Ending balance of cash
	operating activities	investing activities	financing activities	and cash equivalents
	Million yen	Million yen	Million yen	Million yen
FY 2021	55,267	2,575	(16,445)	225,681
FY 2020	54,310	(5,777)	(21,142)	174,162

2. Dividend of Surplus

						Aggregate	Dividends	Dividends on
		Cash dividends per share		amount of	shareholders'
			payout ratio
			dividend	equity
						(Consolidated)
						annual	(consolidated)
As of	The first	The second	The third	Annual end	Total	Total	Total	Total
quarter end	quarter end	quarter end
	Yen	Yen	Yen	Yen	Yen	million yen	%	%
December 31, 2020	－	－	－	153.00	153.00	21,291	79.1	11.4
December 31, 2021	－	－	－	195.00	195.00	27,236	70.9	13.4
Projection for FY 2022	－	－	－	－	－		－

(Note) Dividend for FY2022 Annual end is not yet projected.

3. Forecasts of Consolidated Financial Results for FY 2022

(January 1, 2022 through December 31, 2022)

			Operating		Ordinary		Net income	Net income
	Net Sales				attributable to owners
		Income		Income		per share (basic)
							of the parent
Annual	Million Yen		Million Yen		Million Yen		Million Yen	Yen
208,900	9.7	42,000	(3.8)	42,100	(5.4)	30,300	(21.0)	216.93

4. Others

(1)	Movement of significant subsidiary	: No
(2)	Changes in accounting principles, accounting estimates and restatements
①	Changes under the revision of Accounting Standards	： No
②	Changes in Accounting Principles other than ①	： No
③	Changes in Accounting Estimates		： No
④	Restatements		： No

1. Number of shares issued (common shares)

• Number of shares issued (including treasury stocks): 140,744,104 shares as of December 31, 2021 140,629,204 shares as of December 31, 2020

• Number of treasury stocks :

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

1,471,155 shares as of December 31, 2020

• Average number of shares outstanding : 139,415,408 shares as of December 31, 2021 139,118,324 shares as of December 31, 2020

Results of the non-consolidated operations

1. Financial Highlights for FY2021 (January 1, 2021 through December 31, 2021)

1. Results of operations

	Net Sales		Operating Income	Ordinary Income	Net Income
	Million yen	%	Million yen	%	Million yen	%	Million yen	%
FY 2021	76,628	6.5		23,046	(2.2)	22,221	(21.6)	21,384	2.2
FY 2020	71,945	8.1		23,562	18.6	28,345	(6.4)	20,930	(12.9)
	Net income per share (basic)	Net income per share
		(diluted)
	Yen			Yen
FY 2021		153.39			153.31
FY 2020		150.45			150.04
(2) Financial Position
	Total assets		Net Assets	Net Assets ratio	Net Assets per share
As of	Millions of yen		Millions of yen	%		Yen
December 31, 2021		175,480			83,609			46.8		587.72
December 31, 2020		177,911			80,756			44.7		571.55

(Note) Net Assets after deduction of Share acquisition rights

• • 82,090 million yen (79,536 million yen as of December 31, 2020)
• Statement relating to the status of the annual audit procedures

This report is not subject to the annual audit procedures, which are based on the Financial Instruments and Exchange Law. However, the audit procedures for annual consolidated accounts have not finished at the point of the disclosure of the annual financial results.

* Explanation for the proper use of projection and other notes

Any forward-looking statement in this report including results forecasts, are based on certain assumptions that were deemed rational as well as information currently available to the Company at this time. However, various factors could cause actual results to differ materially. Please refer to (2) Qualitative Information on the Consolidated Earnings Forecast on page 4 of the attachment for conditions serving as assumptions for results forecasts.

Appendix contents:
1. Qualitative Information and Financial Statements --------------------------------------------------	2
(1)	Qualitative Information on the Consolidated Business Results ---------------------------------	2
(2)	Qualitative Information on the Consolidated Earnings Forecast -------------------------------	4
(3)	Financial condition analysis ------------------------------------------------------------------------	4
(4)	Basic policy of profit sharing ------------------------------------------------------------------------	6
(5)	Risk factors --------------------------------------------------------------------------------------------	6
2. Condition of Corporate group ------------------------------------------------------------------------	12
(1)	Development and sales of anti-virus products ---------------------------------------------------	12
(2)	Other related services -------------------------------------------------------------------------------	13
3. Management policy --------------------------------------------------------------------------------------	14
(1)	Basic policy of management -------------------------------------------------------------------------	14
(2) Target management index ---------------------------------------------------------------------------	14
(3)	Mid-tolong-term business strategy ----------------------------------------------------------------	14
(4)	Issues to deal with -------------------------------------------------------------------------------------	15
4. Basic policy on the selection of accounting standards ----------------------------------------------	16
5. Consolidated financial statements ---------------------------------------------------------------------	17
(1)	Consolidated Balance Sheets ----------------------------------------------------------------------	17
(2)	Consolidated Statements of Income --------------------------------------------------------------	19
	Consolidated Statements of Comprehensive Income -------------------------------------------	20
(3)	Consolidated Statements of Changes in Net Assets ----------------------------------------------	21
(4)	Consolidated Statements of Cash Flows -----------------------------------------------------------	23
(5)	Footnote on going concern ---------------------------------------------------------------------------	25
(6)	Significant Accounting Policies and Practices for Preparing
Consolidated Financial statements ------------------------------------------------------------------	25
(7) Accounting Standard Not Yet Applied--------------------------------------------------------------	27
(8) Additional Information -------------------------------------------------------------------------------	28
(9)	Notes for Consolidated Financial statements-----------------------------------------------------	29

1

1 Qualitative Information and Financial Statements

(1) Qualitative Information on the Consolidated Business Results

					(Unit: million yen)
		Operating		Net income	Net income
	Net Sales	Ordinary Income	attributable to
	Income	before taxes
			owners of the parent
FY2021	190,359	43,641	44,501	52,371	38,367
FY2020	174,061	39,464	39,854	39,854	26,904
Rate of Change (%)	9.4%	10.6%	11.7%	31.4%	42.6%

			(Unit: million yen)
		Net Sales
	FY2021	FY2020	Rate of Change (%)
Japan	76,612	71,945	6.5%
North America Reg.	36,531	35,307	3.5%
Europe Reg.	34,833	30,843	12.9%
Asia and Pacific Reg.	36,309	31,037	17.0%
Latin America Reg.	6,071	4,927	23.2%
Total	190,359	174,061	9.4%

During this term of fiscal year 2021, from January 1 to December 31, the world economy has been going through the entire year under the limited economic activities by COVID-19 pandemic. Under going through the promotion of getting vaccinated, US stock which hit the highest ever record showed active stock markets on the expectation for business recovery by the resumption of economic activity. On the other hand, there are concerns about the future of the economy due to the progress of global inflation and the possibility of fresh outbreaks as the COVID-19 variant spreads.

Though Japanese economy shows movements of picking up recently from the severe situation in the COVID-19 which is gradually easing, it has also been going through in a severe situation under the unpredictable situation and additionally the world economic risks mentioned above.

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 ransomware, threat in targeted attacks, against IoT environment associated with industrial control system operations in smart factory, and among them, especially the threat which implemented the 'double extortion' technique by reveal stolen and sensitive information stood out. In addition, the global epidemic of Covid-19 infection was used by phishing scams, the malware files which abuse remote meeting system have infested, and the cyber attack to vulnerabilities in VPN appliances, etc. 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:

2