Trend Micro (4704) investor relations material

Executive summary

• Achieved record-high quarterly net sales, operating income, and net income for Q1 FY2026, with net sales up 9.4% year-over-year to 73,856 million yen, operating income up 4% to 15,558 million yen, and net income up 32.9% to 11,775 million yen.

• Strategic shift to focus on AI security for enterprise (TrendAI) and digital life security for consumers (TrendLife), with formal launches in March and April 2026.

• Emphasis on ARR (Annual Recurring Revenue) over pre-GAAP sales, reflecting a subscription-based business model.

• Incubation business launched to invest in new AI-driven market opportunities, impacting consolidated operating profit due to upfront investments.

• Ordinary income surged 42% YoY, driven by the absence of significant FX losses.

Financial highlights

• Net sales: ¥73,856M (+9.4% YoY); Operating income: ¥15,558M (+4% YoY, margin 21%); Net income: ¥11,775M (+32.9% YoY); Ordinary income: ¥17,651M (+42% YoY).

• Gross profit increased to 57,165 million yen; operating expenses rose to 41,606 million yen.

• ARR for TrendAI reached $1.3B (+4% YoY), composing over 99.9% of enterprise ARR.

• Cash and cash equivalents at quarter-end: ¥215,133M (+33% YoY).

• Net income per share (basic) was 90.14 yen, up from 67.46 yen year-over-year.

Outlook and guidance

• FY2026 full-year guidance maintained: net sales of 301,500 million yen (+9.2% YoY), operating income of 56,400 million yen (19% margin, -2.4% YoY), net income of 36,600 million yen (+6.0% YoY), and EPS of 280.07 yen.

• Americas ARR expected to return to growth in the second half, driven by strategic investments and channel focus.

• Operating margin guidance for 2024/2026 is 19%, with plans to gradually increase margins toward a 25%-27% target by 2028.

• Main assumed exchange rates: 1 USD = 156 yen, 1 EUR = 183 yen.