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Trend Micro Incorporated (JP:4704)
:4704
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Trend Micro
(OTC:4704)
Rating:75Outperform
Price Target:―
Trend Micro (4704) vs. iShares MSCI Japan ETF (EWJ)
Market Cap
$1.23T
Dividend Yield1.94%
Average Volume (3M)559.23K
Price to Earnings (P/E)38.1
Beta (1Y)0.68
Revenue Growth9.63%
EPS Growth233.82%
CountryJP
Employees6,869
SectorTechnology
Sector Strength95
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)67.46
Shares Outstanding140,901,610
10 Day Avg. Volume472,970
30 Day Avg. Volume559,226
Financial Highlights & Ratios
PEG Ratio-8.31
Price to Book (P/B)12.01
Price to Sales (P/S)0.00
P/FCF Ratio29.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$11,800.60Price Target Upside25.46% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Trend Micro Business Overview & Revenue Model
Company DescriptionTrend Micro Incorporated develops and sells security-related software for computers and the Internet primarily in Japan. The company offers hybrid cloud security solutions, such conformity, workload, container, file storage, application, network, and open-source security products. It also provides intrusion prevention, threat protection, industrial and mobile network security products, as well as offers email, mobile, web, and industrial endpoint security products. In addition, the company offers cloud migration, cloud-native app development, cloud operational, data center security, and SaaS application solutions. Further, it provides ICS/OT, connected car, and 5G security solutions, as well as offers ransomware, end-of-support systems, compliance, detection, and response solutions. It serves oil and gas, healthcare, manufacturing, and electric utility industries. The company was incorporated in 1965 and is headquartered in Tokyo, Japan.
How the Company Makes MoneyTrend Micro makes money primarily through the sale of its security software and services. The company generates revenue from licensing its software products to a wide range of customers, including individuals, small to medium businesses, and large enterprises. Its key revenue streams include subscription fees for its software as a service (SaaS) offerings, which provide ongoing protection and threat intelligence updates. Additionally, Trend Micro partners with major technology companies to integrate its security solutions into their platforms, expanding its reach and customer base. Professional services, such as cybersecurity consulting and support, also contribute to its revenue. The company's strategic partnerships and continuous innovation in threat detection and response technologies are significant factors that enhance its earnings potential.
Trend Micro Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q1-2025)
| % Change Since: -6.27%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture with significant achievements in operating profit and enterprise growth, particularly in the Vision One platform and Japan's enterprise sector. However, these were counterbalanced by challenges in the consumer division, U.S. market uncertainties, and negative impacts on pre-GAAP and recurring profit. While the company is optimistic about overcoming these challenges, the sentiment reflects both positive strides and notable hurdles.Q1-2025 Updates
Positive Updates
Record Operating Profit and Margin Growth
Achieved a record high quarter operating profit, with a 24% increase, and improved operating profit margin. Adjusted for stock price-related remuneration, the increase was 34%.
Enterprise Division Growth
Enterprise net sales increased by 5% year-over-year, with strong performance in the large enterprise segment driving recurring revenue to USD 1.3 billion.
Vision One Platform Success
The Vision One platform saw significant adoption, with 10,600 enterprise customers transacting and 4.8 average modules deployed. The ARR for customers using Vision One was substantially higher.
Strong Japan Enterprise Performance
Japan's enterprise business saw a 305% increase in Trend Vision One net sales from new business, and a 36% year-on-year growth in customers.
Improved Cash Flow and Cost Management
Cash flow is growing nicely, and there has been a decrease in cloud costs due to more efficient usage.
Negative Updates
Consumer Division Revenue Decline
Consumer division experienced an 8% decline in net sales year-over-year due to issues with an e-commerce platform vendor going bankrupt, impacting credit card transactions.
Recurring Profit and Pre-GAAP Decline
Recurring profit decreased by 9% mainly due to exchange rate translation losses, and pre-GAAP was down 8%.
Challenges in U.S. Market
Faced headwinds in the U.S. due to government budget constraints and paused or canceled projects, impacting both government and enterprise business.
Enterprise Pipeline Concerns
Pipeline for new business is within typical metrics, but there is concern about maintaining growth amid economic uncertainties.
Impact of Multiyear Deals on Consumer Business
Reduction in multiyear deals in the consumer business aimed to improve top-line and profitability, but affected pre-GAAP results.
Company Guidance
During the first quarter of the fiscal year 2025, the company reported a 2% increase in revenue and a notably higher 24% rise in operating profit, with an operating margin reaching 22%. Despite these positive indicators, the recurring profit decreased by 9%, primarily due to a translation loss from unfavorable exchange rates. The pre-GAAP figures showed an 8% decline, attributed mainly to a 27% drop in consumer business revenue, which was impacted by issues with the e-commerce platform. The enterprise division experienced a 5% growth, while the consumer division faced an 8% decline. The enterprise segment's annual recurring revenue (ARR) saw a double-digit increase, with a substantial focus on expanding the Vision One platform. The company also highlighted a slight reduction in headcount, aiming for a more efficient and flat organizational structure. Despite macroeconomic uncertainties, the cash flow was reported to be growing, and the company's overall performance was described as in line with expectations for the full year, with a continued focus on strategic partnerships and technological advancements.Trend Micro Financial Statement Overview
Summary
Trend Micro exhibits strong financial performance with consistent revenue and profit growth. The company's healthy profit margins and solid balance sheet with no debt underscore its financial stability. Strong cash flow management further enhances its growth potential, though there is room for improvement in net profit margins.Income Statement
Trend Micro demonstrates strong financial performance with consistent revenue growth, evident from a 9.64% increase in 2024 compared to 2023. The company maintains healthy profit margins, with a gross profit margin of 76.18% and a net profit margin of 12.60% for 2024. The EBIT margin stands at 17.65%, indicating efficient operational management. These metrics highlight the company's robust profitability and growth trajectory, although the net profit margin suggests room for improvement in cost management.85
Very Positive
Balance Sheet
The company maintains a solid balance sheet with no debt, showcasing financial discipline and stability. The equity ratio of 29.84% indicates a strong equity base relative to total assets. Return on Equity (ROE) is healthy at 28.76%, reflecting efficient use of shareholders' equity to generate profits. The absence of debt reduces financial risk, providing a stable foundation for future growth.90
Very Positive
Cash Flow
Trend Micro has strong cash flow generation capabilities, with a free cash flow increase of 47.63% from 2023 to 2024, highlighting effective cash management and potential for reinvestment. The operating cash flow to net income ratio of 1.36 suggests robust cash flow relative to reported earnings. The company's ability to generate free cash flow consistently reinforces its financial flexibility and operational efficiency.88
Very Positive
| Breakdown | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 272.64B | 248.69B | 223.79B | 190.36B | 174.06B |
| Gross Profit | 207.66B | 185.03B | 169.50B | 148.34B | 135.90B |
| EBITDA | 77.03B | 60.30B | 56.53B | 64.54B | 62.14B |
| Net Income | 34.36B | 10.73B | 29.84B | 38.37B | 26.90B |
Balance Sheet | |||||
| Total Assets | 400.32B | 492.63B | 470.80B | 420.46B | 376.70B |
| Cash, Cash Equivalents and Short-Term Investments | 210.90B | 299.03B | 242.85B | 256.80B | 212.27B |
| Total Debt | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total Liabilities | 280.87B | 278.21B | 242.12B | 199.03B | 187.34B |
| Stockholders Equity | 119.44B | 214.39B | 228.66B | 220.64B | 188.53B |
Cash Flow | |||||
| Free Cash Flow | 45.56B | 30.87B | 35.92B | 36.48B | 42.47B |
| Operating Cash Flow | 46.78B | 57.23B | 56.90B | 55.27B | 54.31B |
| Investing Cash Flow | 5.04B | 31.00B | -67.72B | 2.58B | -5.78B |
| Financing Cash Flow | -130.90B | -43.43B | -30.44B | -16.45B | -21.14B |
Trend Micro Technical Analysis
Negative
9406.00
Price Trends
10319.48
Negative
10217.90
Negative
9370.99
Positive
Market Momentum
-248.09
Negative
32.20
Neutral
40.60
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4704, the sentiment is Negative. The current price of 9406 is below the 20-day moving average (MA) of 9654.85, below the 50-day MA of 10319.48, and above the 200-day MA of 9370.99, indicating a neutral trend. The MACD of -248.09 indicates Negative momentum. The RSI at 32.20 is Neutral, neither overbought nor oversold. The STOCH value of 40.60 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:4704.
Trend Micro Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $1.23T | 38.07 | 29.09% | 1.94% | 9.63% | 233.82% | |
63 Neutral | $34.60B | 5.43 | -11.67% | 1.84% | 5.30% | -18.55% | |
| ― | $165.05M | 14.59 | 14.77% | 3.88% | ― | ― | |
71 Outperform | ¥43.00B | 41.81 | 0.74% | 25.69% | 28.41% | ||
67 Neutral | ¥16.56B | 30.16 | 0.18% | 24.15% | -7.80% | ||
65 Neutral | ¥17.53B | 43.98 | ― | 5.32% | -19.27% | ||
60 Neutral | ¥146.32B | 48.65 | 0.11% | 43.92% | 302.88% |
* Technology Sector Average
Performance Comparison
JP:4704
Trend Micro
9,406.00
2,357.76
33.45%
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.