Trend Micro shares fall on weak outlook, analyst downgrade

Shares of Trend Micro Inc. declined on Friday after the cybersecurity company reported weaker-than-expected earnings and lowered its full-year guidance, prompting a downgrade from an analyst.

The Tokyo-based firm, which provides enterprise cybersecurity solutions, posted a 12% year-over-year decline in net income for the second quarter, missing market expectations. Revenue fell 3% to ¥38.2 billion ($268 million), reflecting softer demand in key markets.

Trend Micro revised its full-year revenue guidance downward, citing slower enterprise IT spending and prolonged deal cycles. The company now expects annual revenue growth of 2-4%, down from its prior forecast of 5-7%. Operating margin is also expected to compress to 18-20%, below the previous guidance of 20-22%.

Analysts at Barclays downgraded Trend Micro to "underweight" from "equal weight," citing concerns over margin pressure and competitive pricing in the cybersecurity sector. The bank also trimmed its price target to ¥4,200 from ¥4,800, signaling limited near-term upside.

The stock, which had gained 8% in the year to date prior to the report, fell as much as 5% in Tokyo trading before paring losses. Trend Micro’s shares have underperformed the broader Japanese tech sector this quarter, with peers such as NTT Data and Fujitsu posting modest gains.

The company attributed the softness to macroeconomic headwinds, including higher interest rates and cautious corporate spending. Trend Micro’s enterprise customers, particularly in North America and Europe, have delayed software purchases amid budget constraints.

Despite the downgrade, Trend Micro reaffirmed its commitment to R&D investment, emphasizing long-term growth in areas such as AI-driven security solutions. The firm plans to maintain its dividend payout ratio at 30-40% of net income.

Investors will monitor the company’s ability to stabilize margins and regain revenue momentum in the second half of the fiscal year.