Trend Micro Q2 FY2026: Sales up 11%, operating profit down 23%

Trend Micro posted first-half revenue of 148,596 million yen, up 11.0% year on year. Enterprise business TrendAI generated 119,444 million yen, up 11.9%, while consumer business TrendLife brought in 29,151 million yen, up 7.2%.

Operating profit fell 23.5% to 21,792 million yen, as combined cost of revenue and SG&A jumped 20.3% to 126,803 million yen. The increase was driven by AI token costs and other cloud-related expenses, yen weakness lifting labor costs, and spending to promote new business brands.

Ordinary profit rose 15.6% to 24,824 million yen, helped by a swing from a large foreign exchange loss a year earlier to a foreign exchange gain. Net income attributable to owners of the parent rose 6.2% to 15,230 million yen.

The result was rising revenue but an operating profit decline on higher costs, prompting the company to cut its full-year operating profit forecast by 12,000 million yen.

Revenue by region:

The enterprise TrendAI business grew in every region, led by Asia-Pacific at +20.1% and Europe at +16.6%. Annual recurring revenue for the Vision One security platform expanded strongly as customers migrate from standalone SaaS products.

Consumer TrendLife revenue also rose, with the impact of the e-commerce business partner transition outside Japan largely resolved and successful efforts to reduce discounts and steer customers toward higher-priced products. Japan, which accounts for more than half of the segment, grew 1.7%, while Asia-Pacific surged 57.1%.

Overall, Asia-Pacific led growth, Japan was roughly flat, and Europe was solid.

Total assets at the end of the period stood at 405,188 million yen, down 17,049 million yen from the prior fiscal year-end, mainly due to a sharp decline in notes and accounts receivable and contract assets. Cash and deposits were 219,902 million yen, roughly flat from the prior year-end.

Liabilities declined 5,070 million yen to 286,041 million yen, helped by lower deferred revenue and a decrease in share-based compensation provisions. Net assets fell 11,979 million yen to 119,147 million yen, reflecting dividend payments and increased treasury share purchases.

For dividends, Trend Micro paid an annual dividend of 185.00 yen for fiscal 2025. For fiscal 2026, the interim dividend is 0 yen and the year-end dividend is undecided. The company bought back 4,999 million yen of its own shares during the half.

Operating cash flow was a solid 35,541 million yen, but investing and financing activities, mainly time deposits, intangible asset purchases, dividends, and buybacks, left cash and cash equivalents at 214,195 million yen.

Trend Micro cited the following main risks:

• Geopolitical risk: uncertainty in the Middle East and U.S. trade policy could pressure the global economy.
• Currency swings: a weak yen lifts costs, while foreign exchange gains and losses remain highly volatile.
• AI security risk: new threats tied to wider AI adoption are emerging and competition is intensifying.
• Cloud cost growth: cloud-related expenses, including AI token costs, are expanding more than initially expected.
• Product migration risk: annual recurring revenue growth could slow during the transition from standalone SaaS products to Vision One.

In particular, rising cloud costs are pressuring full-year profit, making the balance between investment and profitability a key focus going forward.

For the full fiscal 2026, Trend Micro kept its revenue forecast at 301,500 million yen but cut operating profit guidance by 12,000 million yen to 44,400 million yen, from a previous forecast of 56,400 million yen. Ordinary profit is now expected at 46,000 million yen (previously 55,100 million yen), and net income attributable to owners of the parent at 30,700 million yen (previously 36,600 million yen).

The downward revision mainly reflects faster-than-expected growth in cloud-related costs, including AI token expenses, along with a broader review of other expenses. The operating margin is expected to decline sharply from the prior year.

Foreign exchange assumptions are unchanged at 156 yen per dollar and 183 yen per euro.