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Trend Micro Incorporated (ADR) (TMICY)
OTHER OTC:TMICY
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Trend Micro
(OTC:TMICY)
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Rating:71Outperform
Price Target:
$36.00
▼(-12.75% Downside)
Action:UpgradedDate:02/23/26
Score is driven primarily by strong financial quality (high margins, no debt, improving recent profitability/FCF). This is partially offset by weak current technicals (below major moving averages, negative MACD) and a moderate valuation, while the latest call adds support via platform momentum and shareholder returns but flags near-term profit pressure and slowed ARR growth.
Positive Factors
Conservative balance sheet — zero debt
Zero reported debt materially reduces financial risk and preserves strategic optionality. This allows the company to fund R&D, M&A or buybacks without refinancing pressure, supports steady dividend policy, and provides resilience through cyclical or macro shocks over the next 2–6 months.
High gross margins and software-like profitability
Sustained high gross and operating margins reflect scalable software economics and pricing power. Durable margin profile supports cash generation and reinvestment for product development and go-to-market, underpinning long-term profitability even if revenue growth is uneven year-to-year.
Strong Vision One platform traction; NRR ~130%
High NRR and rising Vision One adoption indicate strong upsell and multi-solution attach within the installed base. Larger per-customer ARR and expanding solution counts create durable recurring revenue expansion, improving lifetime value and reducing reliance on new customer acquisition over the medium term.
Negative Factors
ARR growth decelerated to 2% in Q4
A marked ARR slowdown signals weakening installed-base expansion and may constrain recurring revenue compounding. Management plans initiatives to lift ARR, but a sustained deceleration would impair forward revenue momentum and make meeting multi-quarter ARR targets more challenging without stronger transitions to platform sales.
Planned AI/start‑up investments to depress operating profit
Management is intentionally prioritizing ARR and product investments over short-term margins. While strategic, these investments (including expected early losses from Magna AI/VicOne) will reduce operating income and margin durability in the near-to-medium term and raise execution risk around ROI and cash burn.
Choppy free cash flow and inconsistent cash conversion
Volatile FCF and inconsistent operating cash conversion increase uncertainty around the company’s ability to consistently fund dividends, buybacks, and growth investments. Even with a TTM rebound, prior negative periods suggest sensitivity to cost swings (cloud expenses, startup losses) that could reappear.
Trend Micro (TMICY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.37B
Dividend Yield2.23%
Average Volume (3M)539.00
Price to Earnings (P/E)19.0
Beta (1Y)0.58
Revenue Growth2.73%
EPS Growth46.30%
CountryUS
Employees6,869
SectorTechnology
Sector Strength88
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)0.37
Shares Outstanding140,901,610
10 Day Avg. Volume0
30 Day Avg. Volume539
Financial Highlights & Ratios
PEG Ratio3.94
Price to Book (P/B)6.51
Price to Sales (P/S)2.94
P/FCF Ratio12.78
Enterprise Value/Market Cap107.55
Enterprise Value/Revenue1.69
Enterprise Value/Gross Profit2.19
Enterprise Value/Ebitda5.36
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)1.86
Revenue Forecast (FY)$1.87B
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 cybersecurity software and services. The company generates revenue from licensing its products, which are available for both individual consumers and enterprise clients. Enterprise solutions often involve subscription-based models, where customers pay regular fees for continued access to Trend Micro's security services and updates. Additionally, the company offers managed security services, which provide organizations with outsourced monitoring and management of their security systems. Key revenue streams include endpoint security, hybrid cloud security, and network defense. Trend Micro also engages in strategic partnerships with other technology companies and cloud service providers, which help expand its market reach and enhance its service offerings.
Trend Micro Earnings Call Summary
Earnings Call Date:Feb 18, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 07, 2026
Earnings Call Sentiment Positive
The call conveyed solid platform-driven momentum: record full-year results, stronger enterprise recurring revenue, high Vision One adoption and robust NRR (130%). Management acknowledges a near-term trade-off as they invest in TrendAI, Magna AI and VicOne, which will depress operating income slightly in 2026 and has contributed to a temporary ARR slowdown (Q4 ARR at 2%). Regional headwinds, prior consumer disruption and rising cloud/start-up costs are notable risks, but the company provided clear go-to-market changes, growing platform attach rates, and targets for ARR and revenue growth. Overall the positives around platform traction, recurring revenue and product repositioning outweigh the near-term challenges tied to investments and macro noise.Q4-2025 Updates
Positive Updates
Quarterly Revenue Growth
Q4 net sales increased 5% year-over-year; company reported record-high net sales for the fourth quarter.
Full-Year Revenue and Operating Profit Records
Management stated full-year revenue and operating profit reached record highs; full-year net sales were up 1% year-over-year.
Strong Operating Profit and Margins (Quarter)
Q4 operating profit rose substantially (management cited a 50% increase) with an operating profit margin of 18% in Q4 and a full-year operating margin finishing at ~21%.
Recurring Revenue Base
Total company recurring revenue of $1.7 billion (up 1% YoY); Enterprise recurring revenue $1.3 billion (up 2% YoY).
Vision One Platform Adoption and Expansion
Vision One accounted for ~38% of total revenue (management said) and ~41% of TrendAI ARR early quarter-to-date; average solutions deployed per Vision One customer = 4.9; Vision One ARR 'box' of $467M growing 58%.
High Net Revenue Retention
Vision One net revenue retention (NRR) remains strong at ~130%, indicating healthy expansion within installed base.
Per-Customer ARR Differential
Average ARR for Vision One customers rose from $35,100 to $35,500, while non–Vision One average ARR is $5,400, illustrating higher value of platform-attached customers (~3.6x higher ARR once attached).
Enterprise Segment Performance and Japan Strength
Enterprise net sales up 8% in Q4 (4% for the year); Japan enterprise revenue grew 22% YoY with Trend Vision One revenue up 25% and SME revenue up 16%.
Consumer Business Transition to Digital Life Protection
Digital Life Protection rose to 36% of global consumer sales (reported) and ~45% of TrendLife sales early quarter-to-date; Digital Life Protection ARPU is ~2x traditional antivirus PC revenue.
Shareholder Returns and Dividend Guidance
Company expects year-end dividend of JPY 185 per share (prior JPY 184) and announced a JPY 5 billion share buyback as part of continued shareholder return policy (management referenced 70% dividend + buybacks to approach full-year return target).
Negative Updates
ARR Slowdown in Q4
ARR growth decelerated to 2% in Q4 compared with 7% a year earlier; management acknowledged ARR momentum slowed and plans initiatives to lift ARR during 2026.
Pre-GAAP and Regional Pre-GAAP Weakness
Pre-GAAP global enterprise growth sat at -4% YoY (management highlighted pre-GAAP can look weak due to go-to-market transition and shifting to ARR focus).
Near-Term Operating Income Pressure from Investments
2026 guidance expects revenue +9% (FX-included) but operating income down ~2% as company plans increased investment in TrendAI, VicOne and new start-up Magna AI; management warned operating profit may be prioritized lower than growth.
Consumer Business Disruption in Prior Year
Consumer results were previously impacted by the bankruptcy of e-commerce vendor Digital River; although remediation is largely complete, consumer recovery had depressed performance and contributed to earlier declines (consumer was halved earlier in the year per discussion).
Increased Cloud and Service Costs
Cloud-related service costs are rising (company cited $8.8 billion of cloud expenses in Vision One service denominated in USD), contributing to higher operating expenses.
Early Losses from New Ventures
Magna AI and VicOne are being invested in as in-house start-ups; Magna AI is consolidated and expected to be loss-making initially and therefore will depress operating profit in the near term.
Regional and Macro Headwinds
Americas and Europe faced softer demand (government spend pullbacks and tariff uncertainty cited); currency/foreign-exchange effects remain a factor (prior-year FX loss noted ~JPY 6.2B).
Competitive Pressure in Japan Consumer Market
Mobile carriers (e.g., DOCOMO) are promoting their own security products in Japan, increasing competition for TrendLife consumer offerings despite partnership and public-sector traction.
Company Guidance
For FY2026 management guided net sales to rise 9% (6% on a constant‑currency basis) while operating profit is expected to decline ~2% as the company increases investment in AI/new business and in‑house start‑ups (Magna AI, VicOne); management is prioritizing ARR metrics and targets overall ARR growth of ~13% (TrendAI ARR +15%, TrendLife ARR +6%), with net sales +9% and a modest short‑term hit to operating income. They expect to pay a JPY185 final dividend (prior year JPY184) and have announced a JPY5 billion buyback as part of a shareholder‑return approach that combines a ~70% dividend payout with buybacks toward a stated 100% return; underlying recurring metrics cited include total recurring revenue of $1.7bn, enterprise recurring revenue $1.3bn (small enterprise $229m), Vision One representing ~38% of total revenue (about 41% of TrendAI ARR early quarter), Vision One average ARR per customer up from $35,100 to $35,500 (vs $5,400 for non‑Vision One), Vision One ARR cohort $467m growing 58%, average 4.9 solutions per Vision One customer, NRR ~130% and an estimated $7.3bn incremental ARR opportunity in the installed base — all of which frame the planned hiring, marketing and R&D spend behind the guidance.Trend Micro Financial Statement Overview
Summary
Strong overall fundamentals: high gross margins and solid EBIT/EBITDA margins, a very conservative balance sheet with zero debt, and improved profitability and free-cash-flow in TTM. Score is slightly tempered by prior volatility in net income/ROE (notably 2023) and choppy multi-year free-cash-flow growth/cash conversion.Income Statement
Trend Micro shows strong, software-like profitability with consistently high gross margins (~74%–78%) and solid EBIT/EBITDA margins. Revenue growth is positive over time and accelerates in TTM (Trailing-Twelve-Months) versus 2024, but the growth profile is somewhat uneven year-to-year. Net margins recovered meaningfully after a weak 2023, improving to ~13% in 2024 and TTM (Trailing-Twelve-Months), which supports a strong but not top-tier score given the prior volatility.82
Very Positive
Balance Sheet
The balance sheet is very conservative with zero reported debt across all periods, which materially reduces financial risk and provides flexibility. Equity and assets remain sizable, and return on equity is strong in 2024 and TTM (Trailing-Twelve-Months) (high-20s to ~30%), though it was notably weaker in 2023—suggesting profitability can swing and warrants monitoring despite the low leverage.90
Very Positive
Cash Flow
Cash generation is healthy, with operating cash flow rising in TTM (Trailing-Twelve-Months) and free cash flow rebounding sharply versus 2024; free cash flow is also well-aligned with net income in TTM (Trailing-Twelve-Months). However, free cash flow was choppy in recent years (negative growth in multiple annual periods before the TTM rebound), and the provided operating cash flow coverage measure remains relatively low and inconsistent, pointing to some variability in cash conversion.74
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 289.36B | 272.64B | 248.69B | 223.79B | 190.36B |
| Gross Profit | 222.56B | 207.66B | 185.03B | 169.50B | 148.34B |
| EBITDA | 88.95B | 77.03B | 60.92B | 56.53B | 64.54B |
| Net Income | 36.20B | 34.36B | 10.73B | 29.84B | 38.37B |
Balance Sheet | |||||
| Total Assets | 422.53B | 400.32B | 492.63B | 470.80B | 420.46B |
| Cash, Cash Equivalents and Short-Term Investments | 231.19B | 210.90B | 299.03B | 242.85B | 256.80B |
| Total Debt | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total Liabilities | 291.31B | 280.87B | 278.21B | 242.12B | 199.03B |
| Stockholders Equity | 130.72B | 119.44B | 214.39B | 228.66B | 220.64B |
Cash Flow | |||||
| Free Cash Flow | 66.56B | 21.84B | 30.87B | 35.92B | 36.48B |
| Operating Cash Flow | 67.77B | 46.78B | 57.23B | 56.90B | 55.27B |
| Investing Cash Flow | 3.00B | 5.04B | 31.00B | -67.72B | 2.58B |
| Financing Cash Flow | -31.00B | -130.90B | -43.43B | -30.44B | -16.45B |
Trend Micro Technical Analysis
Negative
41.26
Price Trends
39.53
Negative
44.70
Negative
54.03
Negative
Market Momentum
-1.83
Positive
36.39
Neutral
26.22
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TMICY, the sentiment is Negative. The current price of 41.26 is above the 20-day moving average (MA) of 36.33, above the 50-day MA of 39.53, and below the 200-day MA of 54.03, indicating a bearish trend. The MACD of -1.83 indicates Positive momentum. The RSI at 36.39 is Neutral, neither overbought nor oversold. The STOCH value of 26.22 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TMICY.
Trend Micro Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $22.74B | 21.59 | 30.54% | ― | 11.27% | 4.47% | |
72 Outperform | $58.48B | 32.57 | 135.72% | ― | 14.78% | 22.52% | |
71 Outperform | $4.37B | 19.00 | 29.20% | 2.23% | 2.73% | 46.30% | |
66 Neutral | $23.63B | -344.16 | -3.56% | ― | 23.24% | -8.83% | |
62 Neutral | $93.78B | -294.43 | -8.88% | ― | 22.05% | -341.24% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
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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.