Slowing Revenues and Declining Income at Trend Micro Helping Kaspersky in Efforts to Reach Number Three

In the paid desktop antivirus and internet security world, Symantec and McAfee have generally been recognized as the 800-pound gorillas with Trend Micro trailing at number three.  Kaspersky founder Eugene Kaspersky has expressed a strong  desire to catch up to Trend Micro.  In fact, Moscow based Kaspersky was listed   as one of only 5 global security companies in the “Leaders” portion of the Gartner 2012 Magic Quadrant for Endpoint Protection Platforms.

Disappointing  Q3 Results for Trend

Trend Micro did not have a great Q3.  First, the good news.  On the non-financial front - The company was issued over a dozen patents in Q3.  They announced   new mobile solutions.  They rolled out their 2013 Internet Security product line.  They     announced their latest iteration of their cloud-based security infrastructure, the Smart Protection Network,

Now for the bad - Year over year sales were down 2%  (Q3) , and net income, down 25%. The  drop in net sales was due to declines in both North America and Europe. Not good signs when given that the economies have been improving in these markets.   Japan had 3% growth.

On a revenue basis, (Pre GAAP before adjusting for deferred revenue) – North America  revenue declined 10% and Europe 8%.  Japan grew by 10%. (Q3 year over year)

Unlike the other major vendors, Trend Micro is heavily dependent on Japan for their revenue.  This grew to 51% in Q3 2012.  North America and Europe had 20% and 16% shares, respectively.  Sales were down in both the enterprise and consumer segments. 

Q4 is unlikely to help Trend.  Net sales are projected to be flat and net income down 41%.

This isn’t a pretty trend for Trend.  Since Kaspersky  has decided to remain a private company, there aren’t many publically available financial numbers for them, but they have to be pleased. If these trends continue, Kaspersky may be able to reach number three in 2013.

Despite their financial miscues, Trend Micro continues to be innovating. There are the patents mentioned above.   This week, Trend Micro announced their  free   Online Security Assessment Tools for Cloud, Cyber & Mobile Security.  These tools are designed to   provide customers with an assessment of their current business' security posture with respect to cloud adoption, consumerization, and targeted cyber attacks.  

Trend Micro hasn’t participated in Virus Bulletin (www.virusbtn.com ) testing since 2008.  They finished second in the AV-comparatives (www.av-comparatives.com ) "September 2012 Antivirus File Detection Test of Malicious software", however.

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