Trend Micro : 2022 Q4 Financial Report Data

February 16, 2023

			Report of Earning Results (Consolidated)
				for Fiscal Year
			Ending December 31, 2022
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 28, 2023

Expected date of the delivery of dividends : March 29, 2023

Expected date of the submission of annual security reports ("Yuka Shoken Hokokusho") : March 28, 2023

1. Financial Highlights for FY2022 (January 1, 2022 through December 31, 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	%
FY 2022		223,795	17.6	31,340	(28.2)		34,162	(23.2)			29,843	(22.2)
FY 2021		190,359	9.4	43,641	10.6		44,501	11.7			38,367	42.6
(Note) Comprehensive Income : 48,947 million yen	△0.6% as of December 31, 2022
	49,226 million yen		114.3% as of December 31, 2021
		Net income per		Net income per	Return on		Return on assets	Operating profit on
		share (basic)		share (diluted)	shareholders' equity		sales
		Yen			Yen	%				%				%
FY 2022		213.59			213.22			13.4				7.7		14.0
FY 2021		275.20			275.06			18.9				11.2		22.9
(Note) Equity in earnings of affiliated companies : 456 million yen loss as of December 31, 2022
		110 million yen loss as of December 31, 2021
(2) Consolidated Financial Position
		Total assets			Net Assets		Net Assets ratio		Net Assets per share
As of		Million yen			Million yen				%				Yen
December 31, 2022		470,799		228,679					48.2				1,629.67
December 31, 2021		420,457		221,434					52.1				1,568.52

(Note) Net assets after deduction of Share acquisition rights and Minority interest : 226,776 million yen as of December 31, 2022

219,084 million yen as of December 31, 2021

(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 2022	56,903	(67,716)	(30,437)	207,643
FY 2021	55,267	2,575	(16,445)	225,681

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, 2021	－	0.00	－	195.00	195.00	27,236	70.9	13.4
December 31, 2022	－	0.00	－	151.00	151.00	21,012	70.7	9.4
Projection for FY 2023	－	0.00	－	－	－		－

(Note) Dividend for FY2023 Annual end is not yet projected.

3. Forecasts of Consolidated Financial Results for FY 2023

(January 1, 2023 through December 31, 2023)

			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
248,500	11.0	34,800	11.0	34,900	2.2	25,100	(15.9)	180.38

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	： Yes
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): 140,804,104 shares as of December 31, 2022 140,744,104 shares as of December 31, 2021

• Number of treasury stocks :

1,649,820 shares as of December 31, 2022

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

• Average number of shares outstanding : 139,725,093 shares as of December 31, 2022 139,415,408 shares as of December 31, 2021

Results of the non-consolidated operations

1. Financial Highlights for FY2022 (January 1, 2022 through December 31, 2022)

1. Results of operations

	Net Sales		Operating Income	Ordinary Income	Net Income
	Million yen	%	Million yen	%	Million yen	%	Million yen	%
FY 2022	82,132	7.2		12,374	(46.3)	46,272	108.2	41,809	95.5
FY 2021	76,628	6.5		23,046	(2.2)	22,221	(21.6)	21,384	2.2
	Net income per share (basic)	Net income per share
		(diluted)
	Yen			Yen
FY 2022		299.23			298.71
FY 2021		153.39			153.31
(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, 2022		186,816			96,868			50.8		682.57
December 31, 2021		175,480			83,609			46.8		587.72

(Note) Net Assets after deduction of Share acquisition rights

• • 94,982 million yen (82,090 million yen as of December 31, 2021)
• 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
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)	Changes in Accounting Policies---------------------------------------------------------------------	27
(8) Additional Information -------------------------------------------------------------------------------	28
(9)	Notes for Consolidated Financial statements-----------------------------------------------------	29
6.	Others ------------------------------------------------------------------------------------------------------	42
(1)Changes in Directors and Corporate Auditors------------------------------------------------------	42

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
FY2022	223,795	31,340	34,162	41,897	29,843
FY2021	190,359	43,641	44,501	52,371	38,367
Rate of Change (%)	17.6%	-28.2%	-23.2%	-20.0%	-22.2%

			(Unit: million yen)
		Net Sales
	FY2022	FY2021	Rate of Change (%)
Japan	82,087	76,612	7.1%
Americas Reg.	52,953	42,602	24.3%
Europe Reg.	41,460	34,833	19.0%
Asia and Pacific Reg.	47,293	36,309	30.2%
Total	223,795	190,359	17.6%

During this term of fiscal year 2022, from January 1 to December 31, 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 grown due to accelerated demands of remote working, education, DX (digital transformation) under the global affected by the Covid-19 pandemic. Referring to the report by 3rd party forecasts worldwide IT spending to grow 2.4% to $4.9 trillion in 2023. Although there are concerns about global inflation and companies are cautious about spending, enterprise software is expected to have growth of 9.3% mainly due to an increase in cloud usage and SaaS migration on the background of accommodating increasingly complex hybrid work for employees, then.

In the cyber security industry, continuously multitude of cyber attacks that target specific national institutions, etc., leaking damage of sensitive business 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 systems have infested. Especially in ransomware, threats in targeted attacks that implemented the 'double extortion' technique by revealing 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, cloud security made a big contribution, and endpoint security, etc. also show growth, and the enterprise business overall performance was solid. As a result, net sales for this period in Japan region amounted to 82,087 million yen (7.1% increase from the same period in the previous year) increase to.

2