Trend Micro : 2023 Q1 Financial Report Data

May 11, 2023

			Report of Earning Results (Consolidated)
			for the First Quarter of the Fiscal Year
			Ending December 31, 2023
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") : May 12, 2023

1. Financial Highlights for the Three Months Ended March 31, 2023

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	%
Three Months Ended	58,704	16.4		9,548	(14.1)			8,979	(20.3)	6,374	(25.3)
March 31, 2023
Three Months Ended	50,427	13.1		11,115	(9.1)			11,265	(7.1)	8,531	(3.1)
March 31, 2022
(Note) Comprehensive Income:		8,469million yen （53.5）% as of March 31, 2023
(18,194million yen 14.1% as of March 31, 2022)
			Net Income per share		Net Income per share
			(basic)						(diluted)
			Yen						Yen
Three Months Ended		45.84						45.82
March 31, 2023
Three Months Ended		61.11						61.10
March 31, 2022
(2) Consolidated Financial Position
			Total Assets				Net Assets				Equity Ratio
As of			Million yen				Million yen				%
March 31, 2023		450,224			207,873					45.7
December 31, 2022		470,799			228,679					48.2

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

: 205,750million yen as of March 31, 2023 (226,776million yen as of December 31, 2022)

(4) Number of shares issued (common shares)

① Number of shares issued (including treasury stocks):

140,819,104 shares as of March 31, 2023

140,804,104 shares as of December 31, 2022

②Number of treasury stocks :

2,983,040 shares as of March 31, 2023

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

③Average number of shares outstanding :

139,072,005 shares three months ended March,2023

139,616,814 shares three months ended March,2022

* 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, 2022	－	0.0	－		151.0		151.0
December 31, 2023	－
Projection for FY 2023		0.0	－		－		－
(Note)	Revision of the projection of dividend for the first quarter of FY 2023	:	No
(Note)	The dividend projection for FY2023 annual end has not been determined yet.

3. Forecasts of consolidated financial results for FY 2023

(January 1, 2023 through December 31, 2023)

(Note) For the forecast of FY 2023, 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 2023

								Net Income
	Net Sales		Operating Income	Ordinary Income	Attributable to	Net Income
								Owners of the Parent	per share (basic)
FY2023	Million yen		%	Million yen	%	Million yen	%	Million yen	%	Yen
(January 1, 2023
through December	248,500		11.0	34,800	11.0	34,900	2.2	25,100	(15.9)	180.38
31, 2023)

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 ----------------------------------------------------------------------------------------------------	4
(1)	Movement of Significant Subsidiaries -------------------------------------------------------------	4
(2) Application of Simplified or Special Accounting Procedures ----------------------------------	4
3.	Consolidated Financial Statements ------------------------------------------------------------------	5
(1)	Consolidated Balance Sheets ------------------------------------------------------------------------	5
(2)	Consolidated Statements of Income ----------------------------------------------------------------	7
		Consolidated Statements of Comprehensive Income ---------------------------------------------	8
(3)	Consolidated Statements of Cash Flows -----------------------------------------------------------	9
(4)	Footnotes on Consolidated Financial Statements -------------------------------------------------	10
	(Footnote on Going Concern) ------------------------------------------------------------------------	10
	(Notes on Significant Changes in Shareholders' Equity) -----------------------------------------	10
	(Changes in Accounting Policies) -------------------------------------------------------------------	10
	(Additional information) ------------------------------------------------------------------------------	10
	(Segment Information) --------------------------------------------------------------------------------	11
	(Business combination) -------------------------------------------------------------------------------	13

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1 Qualitative Information and Financial Statements

(1) Qualitative Information on the Consolidated Business Results

			(Unit: million yen)
		Net Sales
	The First Quarter	The First Quarter
	of	of	Rate of Change
	FY2023	FY2022
Japan Reg.	20,914	20,258	3.2%
Americas Reg.	13,446	11,358	18.4%
Europe Reg.	11,012	8,841	24.6%
Asia and Pacific Reg.	13,330	9,970	33.7%
Total	58,704	50,427	16.4%

During this term of fiscal year 2023, from January 1 to March 31, despite the world economy shows movements of picking up undergoing through recovery gradually from a severe situation due to COVID-19 pandemic, there are unpredictable situations by the possibility of fresh outbreaks as the COVID-19 variant spreads in some regions, the progress of global inflation, and the Russian- Ukrainian crisis, etc. The worldwide economic outlook has been concerned.

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 5.5% to $4.6 trillion in 2023. Although there are concerns about global inflation and companies are cautious about spending, enterprise software growth ratio will be expected to double digit mainly due to software-driven transformation with priority invest to increase productivity and automation by enterprise for gaining a competitive advantage.

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. Especially in ransomware, threats in targeted attacks that implemented the 'double extortion' technique by revealing stolen and sensitive information stood out. 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. In the future, as the use of interactive artificial intelligence (AI) expands, new security risks are becoming a concern.

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

With regards to sales in Japan region, the enterprise business overall performance was solid. Cloud operation security made a big contribution. In addition, IT infra operation security, which is mainly composed by traditional security, etc. also shows growth. In consumer business has been also going well continuously under the sustained good sales in mobile channel shop, etc. As a result, net sales for this period in Japan region amounted to 20,914 million yen (3.2% increase from the same period in the previous year) increase to.

For Americas region, despite weak in cloud operation security in enterprise business sales, SOC operations security performed well besides on demands for Trend Micro Vision One ("Vision One" which is a security operation at the center of the Trend Micro cybersecurity platform) and Managed Services security has been growing. In addition, there were an adjustment for sales that were understated in previous years and a weak yen impact, net sales in this region were 13,446 million yen (18.4% increases from the same period in previous year) increase in double-digit growth rate.

In Europe region sales, in the enterprise business, SOC operations security made a big contribution, Managed Services security and have been growing. In addition, there was a weak yen impact, net sales in this region were 11,012 million yen (24.6% increase from the same period in the previous year) in a double-digit growth rate.

In the Asia Pacific region, Especially IT infra operation security showed a significant growth, and both Managed Services security and cloud operation security have been performed well. Locally, Australia, Middle East, and Taiwan area led this region sales. In

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