Trend Micro : 2023 Q2 Financial Report Data

August 8, 2023

			Report of Earning Results (Consolidated)
			for the Second 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") : August 9, 2023

1. Financial Highlights for the Six Months Ended June 30, 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	%
Six Months Ended	119,536	13.5		18,188	(2.5)			18,449	(10.5)	11,856	(20.8)
June 30, 2023
Six Months Ended	105,302	15.3		18,657	(15.6)			20,609	(9.4)	14,962	(9.3)
June 30, 2022
(Note) Comprehensive Income:		27,041million yen （27.8）% as of June 30, 2023
(37,453million yen 55.2% as of June 30, 2022)
			Net Income per share		Net Income per share
			(basic)						(diluted)
			Yen						Yen
Six Months Ended		85.86						85.80
June 30, 2023
Six Months Ended		107.11						107.03
June 30, 2022
(2) Consolidated Financial Position
			Total Assets				Net Assets				Equity Ratio
As of			Million yen				Million yen				%
June 30, 2023		464,768			212,860					45.3
December 31, 2022		470,799			228,679					48.2

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

: 210,565million yen as of June 30, 2023 (226,776million yen as of December 31, 2022)

(4) Number of shares issued (common shares)

① Number of shares issued (including treasury stocks):

140,826,604 shares as of June 30, 2023

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

②Number of treasury stocks :

5,065,840 shares as of June 30, 2023

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

③Average number of shares outstanding :

138,088,336 shares six months ended June 30,2023

139,687,113 shares six months ended June 30,2022

* 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	－	0.0
Projection for FY 2023			－		－		－
(Note)	Revision of the projection of dividend for the second 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 ----------------------------------------------------------------------------------------------------	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) ------------------------------------------------------------------------------	11
	(Segment Information) --------------------------------------------------------------------------------	12
	(Business combination) -------------------------------------------------------------------------------	13

1

1 Qualitative Information and Financial Statements

(1) Qualitative Information on the Consolidated Business Results

			(Unit: million yen)
		Net Sales
	The First Half	The First Half
	of	of	Rate of Change
	FY2023	FY2022
Japan Reg.	41,603	40,559	2.6%
Americas Reg.	27,511	24,396	12.8%
Europe Reg.	23,453	18,941	23.8%
Asia and Pacific Reg.	26,968	21,403	26.0%
Total	119,536	105,302	13.5%

During this term of fiscal year 2023, from January 1 to June 30, despite the world economy is recovering at a moderate pace from a 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, in the enterprise business, cloud operation security made a big contribution. In addition, SOC operations security showed substantial growth 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. IT infra operation security, which is mainly composed of traditional security, etc. also shows growth. In consumer business has been also going well continuously under the sustained good sales in mobile channel shops, etc. As a result, net sales for this period in Japan region amounted to 41,603 million yen (2.6% increase from the same period in the previous year) increase to.

For Americas region, in the enterprise business, SOC operations security performed well, and also Managed Services security has been growing. On the other hand, cloud operation security and IT infra operation security were weak. 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 27,511 million yen (12.8% increase from the same period in the previous year) increase in double-digit growth rate.

In Europe region sales, the enterprise business overall showed growth. In the enterprise business, mainly SOC operations security and IT infra operation security contributed, moreover, SOC operations security and Managed Services security have also been growing. In addition, there was a weak yen impact, net sales in this region were 23,453 million yen (23.8% increase from the same period in the previous year) in a double-digit growth rate.

In the Asia Pacific region, also the enterprise business overall showed growth. Especially both IT infra operation security and cloud

2