Trend Micro (4704) AI Stock Analysis

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Trend Micro

(OTC:4704)

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Outperform 75 (OpenAI - 4o)

Rating:75Outperform

Price Target:―

Trend Micro's strong financial performance is a key driver of its overall score, supported by robust revenue growth, profitability, and balance sheet stability. The earnings call provided positive insights into strategic growth areas but also highlighted challenges in the consumer segment. Valuation appears high, which could limit upside potential. Technical indicators suggest some caution in the short term, contributing to a balanced but positive outlook.

Trend Micro (4704) vs. iShares MSCI Japan ETF (EWJ)

Market Cap

$1.10T

Dividend Yield2.19%

Average Volume (3M)766.40K

Price to Earnings (P/E)35.9

Beta (1Y)0.60

Revenue Growth3.16%

EPS Growth88.15%

CountryJP

Employees6,869

SectorTechnology

Sector Strength88

IndustrySoftware - Infrastructure

Share Statistics

EPS (TTM)41.68

Shares Outstanding140,901,610

10 Day Avg. Volume996,940

30 Day Avg. Volume766,400

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)N/A

P/FCF RatioN/A

Enterprise Value/Market Cap1.01

Enterprise Value/Revenue4.09

Enterprise Value/Gross Profit5.36

Enterprise Value/Ebitda15.38

Forecast

1Y Price Target

$8,842.46

Price Target Upside5.27% Upside

Rating ConsensusHold

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:Aug 07, 2025

(Q2-2025)

% Change Since: |

Next Earnings Date:Nov 06, 2025

Earnings Call Sentiment Neutral

The earnings call reflects a company navigating through significant macroeconomic challenges, including currency impacts and elongated sales cycles, while making strategic moves towards AI integration and platform consolidation. Despite the net sales decline and consumer segment challenges, the focus on AI and the Vision One platform indicates a positive strategic direction.

Q2-2025 Updates

Positive Updates

Japanese Enterprise Business Growth

The Japanese enterprise business experienced a strong growth, with a double-digit increase of 12% year-over-year. This growth was driven by an increasing number of multiyear comprehensive contracts and a strong performance in the Trend Vision One platform.

AI-Focused Transformation

Trend Micro is heavily investing in AI, with the launch of 'Trend AI-nize' projects. This includes the introduction of new AI-powered cybersecurity solutions and a strategic partnership with NVIDIA and Dell for AI factory security. The company emphasizes AI as a key factor in driving future growth.

Vision One Platform Performance

ARR for the V1 native and cyber services grew 94% year-over-year. The Vision One platform is becoming a central part of Trend Micro's strategy, with a focus on increasing the attachment rate of existing customers to this platform.

Successful AI Integration in Operations

Trend Micro has integrated AI into its operations, resulting in increased productivity. Examples include a 43% deflection rate in commercial customer support cases and improved coding efficiency.

Consumer Business Beyond Device Protection Growth

The consumer business experienced a 55% year-over-year growth in sales related to beyond device protection, particularly in anti-scam solutions.

Negative Updates

Net Sales Decline

Net sales decreased by 3% year-over-year, influenced by macroeconomic uncertainties and a stronger yen, which impacted the company's foreign exchange evaluation.

Consumer Segment Challenges

The consumer segment faced a decline, particularly due to a 10% decrease year-over-year. Challenges included transitioning credit card processing partners and ongoing issues with PayPal transactions.

Impact of Macroeconomic Uncertainties

The company experienced elongated sales cycles and delayed projects due to global macroeconomic uncertainties, affecting both enterprise and government sectors.

FX Valuation Losses

The company reported a JPY5 billion foreign exchange valuation loss, contributing to a 29% decrease in ordinary income.

Geographical Performance Disparities

While Japan showed strong performance, other regions, particularly Europe and the Americas, faced challenges due to macroeconomic uncertainties and government budget restrictions.

Company Guidance

During the Q2 2025 earnings call, Trend Micro provided guidance amidst ongoing macroeconomic uncertainties, highlighting a 3% decline in net sales, with a 6% reduction in total operating expenses leading to a 9% increase in operating income. The stronger yen impacted revenues, with ordinary income down by 29%. Despite this, enterprise sales saw a 12% year-over-year growth in Japan. The company emphasized the strategic shift towards AI-driven solutions, reporting an annual recurring revenue (ARR) of USD 1.6 billion, with a notable 94% year-over-year growth in their Vision One platform. The focus on AI security and the Vision One platform is expected to drive future growth, with a 140% net revenue retention rate on the Vision One platform. Operating margins were maintained around 20%, despite adjustments due to currency fluctuations. The company also announced initiatives to transition all customers to their Vision One SaaS platform by the end of 2025, underscoring their commitment to AI-enhanced cybersecurity solutions.

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

Very Positive

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.

Balance Sheet

Very Positive

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.

Cash Flow

Very Positive

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.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	272.01B	272.64B	248.69B	223.79B	190.36B	174.06B
Gross Profit	207.60B	207.66B	185.03B	169.50B	148.34B	135.90B
EBITDA	72.34B	77.03B	60.30B	67.13B	73.28B	62.14B
Net Income	30.80B	34.36B	10.73B	29.84B	38.37B	26.90B
Balance Sheet
Total Assets	375.13B	400.32B	492.63B	470.80B	420.46B	376.70B
Cash, Cash Equivalents and Short-Term Investments	211.54B	210.90B	299.03B	242.85B	256.80B	212.27B
Total Debt	0.00	0.00	0.00	0.00	0.00	0.00
Total Liabilities	262.45B	280.87B	278.21B	242.12B	199.03B	187.34B
Stockholders Equity	112.01B	119.44B	214.39B	228.66B	220.64B	188.53B
Cash Flow
Free Cash Flow	52.98B	45.56B	30.87B	35.92B	36.48B	42.47B
Operating Cash Flow	54.13B	46.78B	57.23B	56.90B	55.27B	54.31B
Investing Cash Flow	-2.90B	5.04B	31.00B	-67.72B	2.58B	-5.78B
Financing Cash Flow	-14.99B	-130.90B	-43.43B	-30.44B	-16.45B	-21.14B

Trend Micro Technical Analysis

Technical Analysis Sentiment

Negative

Last Price8400.00

Price Trends

50DMA

8567.66

Negative

100DMA

9490.57

Negative

200DMA

9457.20

Negative

Market Momentum

MACD

-24.04

Negative

RSI

54.75

Neutral

STOCH

82.87

Negative

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 8400 is above the 20-day moving average (MA) of 8053.25, below the 50-day MA of 8567.66, and below the 200-day MA of 9457.20, indicating a neutral trend. The MACD of -24.04 indicates Negative momentum. The RSI at 54.75 is Neutral, neither overbought nor oversold. The STOCH value of 82.87 is Negative, 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 (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
2327	76 Outperform	680.74B	25.42	10.36%	1.96%	7.99%	4.61%
4704	75 Outperform	$1.10T	35.93	29.23%	2.19%	3.16%	88.15%
4768	75 Outperform	1.19T	19.65	16.09%	3.82%	20.18%	23.93%
4709	75 Outperform	37.88B	15.62	17.63%	2.60%	12.33%	48.96%
4812	73 Outperform	435.32B	27.99	16.58%	1.67%	7.93%	7.51%
9719	70 Neutral	1.42T	28.92	16.96%	1.56%	33.00%	21.00%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

* Technology Sector Average

Performance Comparison

JP:4704

Trend Micro

8,400.00

-221.79

-2.57%

SYKKF

Soliton Systems KK

9.88

2.82

39.94%

JP:3778

SAKURA Internet Inc.

3,575.00

-1,105.22

-23.61%

JP:3914

JIG-SAW INC.

2,551.00

-2,379.00

-48.26%

JP:4417

Global Security Experts Inc.

3,285.00

222.42

7.26%

JP:4493

Cyber Security Cloud, Inc.

1,853.00

-76.81

-3.98%

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.Date of analysis: Apr 25, 2025