Trend Micro (4704) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales grew 13% year-over-year to ¥68,603M, with operating income up 42% to ¥12,308M and operating margin reaching 18% from 14% YoY.

• Achieved record net sales and operating income for the first half of FY2024, with net sales at ¥134,534M (+12.5% YoY) and operating income at ¥24,436M (+34.4% YoY).

• Enterprise net sales rose 16% YoY, while consumer net sales increased 2%, with growth across all regions, especially APAC/MEA and Europe.

• Net income attributable to owners of the parent surged 50.9% to ¥17,895M, reflecting higher sales and gains on change in equity.

• Highest ever net revenues and operating income recorded for the first half of the year.

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 grew 17% to $831M.

• Gross profit for the first half was ¥102,026M, up from ¥90,032M a year earlier.

• Cash and cash equivalents at quarter-end: ¥144,282M, down ¥9,921M from Mar 2024.

Outlook and guidance

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

• Excluding FX impact, net sales expected to grow 6% YoY.

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

• Management expects to meet annual revenue and margin targets if current trends continue.