Trend Micro Reports Solid First Quarter 2019 Results

Continued double-digit growth at constant currency in hybrid
infrastructure protection drives company’s results

TOKYO–(BUSINESS WIRE)–Trend
Micro Incorporated (TYO:
4704; TSE:
4704), a global leader in cybersecurity solutions, today announced
earnings results for the first quarter of fiscal year 2019, ending March
31, 2019.

In Q1 2019, Trend Micro grew net revenue of its enterprise business by 7
percent year-over-year at constant currency, fueled by strategic growth
of its hybrid infrastructure protection business at 10 percent gross
sales growth rate at constant currency. This further solidifies the
company’s leading position in securing organizations across the globe.

“Our continual innovation and consistent growth in securing hybrid
infrastructure environments aligns with the rapid adoption of cloud
platforms and more agile development processes that we are seeing across
organizations today,” said Eva Chen, chief executive officer for Trend
Micro. “Not only are IT infrastructures shifting to the cloud, but
networks are extending to encompass operational technology (OT). We are
developing solutions and partnerships to capture the tremendous
opportunity related to securing these critical, highly connected
environments.”

For the first quarter, Trend Micro posted consolidated net sales of
39,472 million Yen (or US $357 million, 110.26 JPY = 1 USD). The company
posted operating income of 9,308 million Yen (or US $84 million) and net
income attributable to owners of the parent of 6,899 million Yen (or US
$62 million) for the quarter.

The company will not revise expected consolidated results for the full
fiscal year ending December 31, 2019 (released on February 14, 2019).
Based on information currently available to the company, consolidated
net sales for the year ending December 31, 2019 is expected to be
168,600 million Yen (or US $1,532 million, based on an exchange rate of
110 JPY = 1 USD). Operating income and net income are expected to be
38,000 million Yen (or US $345 million) and 28,700 million Yen (or US
$260 million), respectively.

Growth rate figures are calculated from Japanese Yen results. Some
discrepancy may therefore be noted in US Dollar comparisons owing to
fluctuations in currency conversion rates.

Relevant business updates in Q1

New solutions to secure the connected world:

For businesses, securing today’s world extends beyond the connected
devices being added to corporate environments to the hybrid cloud
environments at the core of corporate IT infrastructure. Trend Micro is
proud that its telecom IoT security solution, Virtual Network Function
Suite (VNFS), has been certified as VMware Ready. This designation
verifies the compatibility of the Trend Micro solution to secure modern
networks that are built to support 5G and IoT.

Over half a million customers around the world rely on Trend Micro’s
solutions and its comprehensive threat intelligence. In Q1 2019, Trend
Micro released its IoT Security 2.0 solution to enhance end user
protection, as well as support device makers. The Internet of Things
(IoT) market continues to grow, making built-in security increasingly
important. Trend Micro’s IoT Security 2.0 helps manufacturers and
managed service providers improve the security of their products to
better secure the connected world.

Trend Micro Consumer Connect enables telecom providers to add a layer of
security across their networks to help stop threats before they
compromise a smart home or mobile device. The comprehensive security
suite is designed to protect customers’ entire digital life against both
known and unknown threats by providing a virtual security layer across
devices.

Expanding partnerships to solidify position in IoT security:

Trend Micro views partnerships as one of the critical means to securing
the world’s digital information, especially in today’s IoT world. This
past quarter, Trend Micro announced several partnerships to complement
its cybersecurity solutions. Those partnerships include:

Trend Forward Capital hosted the second pitch-off competition for
startups during the 2019 Consumer Electronics Show. The competition
awarded $60,000 USD total to six start-up organizations that proved to
be the most promising and innovative.

Furthering its IoT security offerings, Trend Micro partnered with
Chunghwa Telecom (CHT) to launch a mobile IoT information security
service. The service leverages the real-time detection and information
of CHT combined with Trend Micro’s VNFS to detect suspicious connections
and attempted attacks on CHT’s mobile network.

Trend Micro also joined forces with the Japanese National Centre of
Incident Readiness and Strategy for Cybersecurity (NISC), signing a
collaboration agreement for global threat intelligence sharing. Trend
Micro will provide threat information to the NISC until December 31,
2020 to support the global eradication of cybercrime.

To make the digital world safer for everyone, Trend Micro encourages
better awareness of cybersecurity and online privacy issues. One way
this is done is through the company’s Internet Safety For Kids And
Families (ISKF) program, which launched the annual What’s Your Story
video contest, offering $10,000 to students who answer one question –
“If you had one special power to make life online better, what would it
be?” Interested participants work to answer this question in a creative
video, with the chance of winning one of several prizes.

Trend Micro Research fuels global threat intelligence:

Trend Micro prides itself on having the world’s most advanced global
threat intelligence. The company’s research is focused on helping
customers and the industry anticipate and analyze potential threats
across global enterprises. Trend Micro approaches research with a clear
view of the changing infrastructure and threat landscape and, as
importantly, changing user behaviors. This past quarter we shared the
following research insights:

Trend Micro’s Zero Day Initiative (ZDI) held its annual Pwn2Own
competition in Vancouver. The event welcomes the world’s leading
vulnerability researchers to demonstrate their skills by exploiting
leading enterprise software and applications. This year’s contest
expanded into new territory with an automotive category. In total,
$545,000 USD was awarded to researchers for their research in Apple
Safari, Microsoft Edge and Windows, VMware Workstation, Mozilla Firefox,
and automotive category.

Trend Micro Researchers uncovered security risks facing connected
industrial machinery, specifically those using radio frequency (RF)
remote controllers. The team disclosed new vulnerabilities via the ZDI
and demonstrated how these vulnerabilities can be exploited to take
control of industrial machines, including cranes.

Through a commissioned survey, Trend Micro discovered that one third of
cybersecurity staff members across multiple countries feel isolated from
their overall business. This is partly due to the challenge of
effectively communicating security threats and needs internally and at
the board level.

The survey also shows that nearly 50 percent of organizations surveyed
lack the necessary talent to maintain security measures. To deal with
the skills shortage, 69 percent of organizations agree that automating
cybersecurity tasks using Artificial Intelligence (AI) would reduce the
impact from the lack of security talent.

Additionally, a separate commissioned survey found that 80 percent of
U.S. businesses expect a critical breach this year. This survey drives
the company’s Cyber Risk Index, which determines the overall cyber risk
of organizations based on the discrepancy between perceived and actual
cyber risk, as well as what risks are of highest concern for companies.

The company’s annual security roundup report for 2018 revealed that
changes in the threat landscape are forcing businesses to reprioritize
their security measures to remain effective. The growth of
cryptocurrency mining and continued increase in phishing attacks are the
biggest indicators of how the threat arena is changing. Companies must
adjust defenses to ensure they are protected against today’s greatest
threats.

Digging deeper into phishing and other high-risk email threats, Trend
Micro looked at everything blocked by its Cloud App Security tool. In
2018, the tool blocked nearly 9 million high-risk emails. The high
volume of email threats blocked highlights the importance of investing
in multi-layered protection for online platforms like Office 365.

Trend Micro Research also released a report detailing the serious
business risks that stem from smart buildings. In Complex IoT
Environments, automation platforms are introducing new opportunities for
both physical and digital compromise. This research, along with a deep
dive into cyber risks in agriculture, were both presented at the 2019
RSA Conference.

Patents

Trend Micro was awarded the following patents in Q1 2019:

Notice Regarding Forward-Looking Statements

Certain statements that are made in this release are forward-looking
statements. These forward-looking statements are based on management’s
current assumptions and beliefs in light of the information currently
available, but involve known and unknown risks and uncertainties. Many
important factors could cause actual results to differ materially from
those expressed in forward-looking statements. These factors include:

• Difficulties in addressing new threats and other computer security
  problems
• Timing of new product introductions and lack of market acceptance for
  new products
• The level of continuing demand for, and timing of sales of, existing
  products
• Rapid technological change within the security software industry
• Changes in customer needs for security software
• Existing products and new product introductions by competitors and
  pricing of those products
• Declining prices for products and services
• The effect of future acquisitions on our financial condition and
  results of operations
• The effect of adverse economic trends on principal markets
• The effect of foreign exchange fluctuations on our results of
  operations
• An increase in the incidence of product returns
• The potential lack of attractive investment targets and
• Difficulties in successfully executing our investment strategy
• New and potentially unforeseen risks and liabilities associated with
  the internet of things, the use of artificial intelligence in our
  products and services, and other emerging technologies

About Trend Micro

Trend Micro Incorporated, a global leader in cybersecurity solutions,
helps to make the world safe for exchanging digital information. Our
innovative solutions for consumers, businesses, and governments provide
layered security for data centers, cloud environments, networks, and
endpoints. All our products work together to seamlessly share threat
intelligence and provide a connected threat defense with centralized
visibility and control, enabling better, faster protection. With more
than 6,000 employees in over 50 countries and the world’s most advanced
global threat intelligence, Trend Micro secures your connected world.
For more information, visit www.trendmicro.com.

All product and company names herein may be trademarks of their
registered owners.

Contacts

Investor Relations Contact:
ir@trendmicro.co.jp
+81-3-5334-4899

Media Contact:
Kateri Daniels
media_relations@trendmicro.com
+1
817-522-7911