Trend Micro (4704) Q1 2025 earnings summary

Executive summary

• Net sales for Q1 2025 rose 2.4% year-over-year to ¥67.5B, with operating income up 24% to ¥15.0B and operating margin at a record 22%, driven by growth in Japan, Europe, and Asia Pacific, but offset by a decline in Americas.

• Adjusted for stock-linked remuneration, operating profit increased by 34%.

• Net income attributable to owners fell 17.6% to ¥8.9B, mainly due to the absence of prior year one-time gains and foreign exchange losses.

• Recurring/ordinary profit declined by 9–10% due to foreign exchange translation losses from a weaker dollar and stronger yen.

• Vision One platform adoption accelerated, with 10.6K customers and 73% of large enterprise ARR now attached.

Financial highlights

• Gross margin for Q1 2025 was 75.7%, with gross profit of ¥51.1B on net sales of ¥67.5B.

• Operating expenses decreased 2–4.5% year-over-year, supporting the rise in operating income.

• Cash flow from operating activities increased 15% year-over-year to ¥18.8B; cash and equivalents at quarter-end were ¥165.9B.

• Deferred revenue at quarter-end was ¥210.6B, down from ¥221.4B at year-end.

• Stock option costs rose significantly due to a sharp increase in share price, impacting reported operating income.

Outlook and guidance

• FY2025 guidance maintained: net sales of ¥288.6B (+5.9% YoY), operating income of ¥60.3B (+25.3%), net income attributable to owners of ¥38.9B (+13.2%), and EPS of ¥296.28.

• Q2-2025 outlook expects consumer business to rebound (+33% YoY gross sales ROW), and enterprise renewal growth of +11% YoY.

• Pipeline for new business is healthy, with Q2 metrics within the expected range.

• Guidance for the year is maintained, with expectations of normalization after a strong Q4 and weaker Q1.

• Assumed exchange rates for FY2025: 1 USD = 154 yen, 1 EUR = 161 yen.