Trend Micro (4704) Q2 2024 earnings summary

Executive summary

• Q2 2024 achieved record net sales and operating income, with operating margin improving to 18% from 13–14% year-over-year.

• Net sales for the first half rose 12.5%–13% year-over-year to ¥134,534 million, with strong growth across all regions, especially Asia Pacific and Europe.

• Enterprise net sales grew 16% year-over-year, while consumer net sales increased 2%.

• Performance exceeded internal plans despite a weakening yen, driven by enterprise segment growth.

• Growth was observed across all regions, with Americas and APAC/MEA showing the highest increases.

Financial highlights

• Q2 2024 net sales: ¥68,603M (+13% YoY); operating income: ¥12,308M (+42% YoY); net income: ¥7,141M (+30% YoY).

• 6-month net sales: ¥134,534M (+13% YoY); operating income: ¥24,436M (+34% YoY); net income: ¥17,895M (+51% YoY).

• Enterprise ARR reached $1.25B (+7% YoY); large enterprise ARR at $1B (+9% YoY).

• Subscription ARR in enterprise grew 17% to $831 million, while perpetual license revenue declined 8%.

• Cash and cash equivalents at quarter-end: ¥144,282M, down from FY2023 year-end due to higher financing outflows.

Outlook and guidance

• Full-year FY2024 guidance maintained: net sales ¥271,000M (+9% YoY), operating income ¥52,900M (+62% YoY), net income ¥34,600M (+222% YoY).

• Confident in reaching annual revenue targets if current trends persist, with continued growth in enterprise and recurring revenue.

• Main assumed exchange rates for FY2024: 1 USD = ¥147, 1 EUR = ¥157.

• Anticipate recovery in European public sector sales in the second half.

• Operating margin improvement is a key focus, with a target of 18% for 2024, up from 13% in 2023.