Trend Micro Inc.

Equity Research 24 August 2026 | 3:41PM JST

Trend Micro Inc. (4704.T) Large GSe/TP cuts on higher cloud/AI token costs; we expect higher demand in 2H but have concerns over ability to control costs; Neutral

4704.T 12m Price Target: ¥5,900 Price: ¥5,472 Upside: 7.8% NEUTRAL Chikai Tanaka, CFA We update our earnings estimates based primarily on 1H/2Q | Goldman Sachs Japan Co., Ltd. (Apr-Jun) FY12/26 results (see our 2Q results report). We lower our Yuki Sato FY12/26-28 operating profit estimates by 21%/19%/17% to reflect | Goldman Sachs Japan Co., Ltd. a larger-than-expected increase in cloud costs, centered on AI token costs, and lower our 12m target price from ¥6,600 to ¥5,900 (implies a FY12/27E P/E of 23.0X). Taking into account lower medium-term profit growth and what we see as the company’s lower capacity to control costs, we apply a higher discount of 30% Key Data _____________________________________ Market cap: ¥715.1bn / $4.5bn (20% previously) to the sector average P/E in our calculation of the Enterprise value: ¥492.6bn / $3.1bn 3m ADTV: ¥6.5bn / $40.4mn fundamental value portion of our target price. Japan Japan IT Services & Telcos We expect a slight miss vs FY12/26 OP guidance. We think M&A Rank: 1 Leases incl. in net debt & EV?: No revenue will exceed guidance owing to a weaker-than-expected yen, GS Forecast __________________________________ but to miss guidance on a constant currency (CC) basis, mainly in the 12/25 12/26E 12/27E 12/28E

Americas, mainly in view of the competitive environment. With Revenue (¥ bn) Op. profit (¥ bn) New Trend Micro not having articulated any policy around controlling Op. profit (¥ bn) Old Op. profit CoE (¥ bn) -- 44.4 -- -- costs in order to meet its profit guidance, and considering the EPS (¥) New current pace of growth in cloud and labor costs, we model for EPS (¥) Old P/E (X) operating expenses to slightly exceed the company’s expectations. P/B (X) 9.1 5.4 5.3 5.2

We forecast a double-digit % yoy decline in operating profits in CROCI (%) NM NM NM NM

3Q (Jul-Sep), and a larger decline in 4Q than in 3Q assuming the 3/26 6/26 9/26E 12/26E

profit upside from yen weakness will largely drop out. EPS (¥)

GS Factor Profile ______________________________ Based on industry trends, we believe the demand environment Growth

will improve gradually from 3Q, and Trend Micro’s revenue Financial Returns

growth (CC, yoy) will accelerate, albeit modestly. We also look Multiple for growth in the company’s AI token costs to moderate vs. 2Q as Trend Micro places certain limits on internal AI usage. As a Integrated

result, we model a return to growth for FY12/27 operating Percentile 20th 40th 60th 80th 100th profits, led by Japan and APAC/MEA regions. Without meaningful steps to improve costs, however, we think a 4704.T relative to Japan Coverage 4704.T relative to Japan IT Services & Telcos considerable amount of time will be needed—potentially until around 2030—for the company’s profits to get to a new record Source: Company data, Goldman Sachs Research estimates. See disclosures for details. high (surpassing the ¥57.8 bn posted in FY12/25).

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.

Goldman Sachs Trend Micro Inc. (4704.T)

Trend Micro Inc. (4704.T) Income Statement (¥ bn) ___________________________________ NEUTRAL Rating since Sep 2, 2024 12/25 12/26E 12/27E 12/28E Total revenue Cost of goods sold ( ) SG&A ( ) Ratios & Valuation __________________________________________ R&D -- -- -- -- 12/25 12/26E 12/27E 12/28E Other operating inc./(exp.) -- -- -- -- P/E (X) EBITDA P/B (X) 9.1 5.4 5.3 5.2 Depreciation & amortization ( ) FCF yield (%) 3.5 4.7 5.0 5.4 EBIT EV/EBITDAR (X) Net interest inc./(exp.) 3.5 -- -- -- EV/EBITDA (excl.…