Gen Digital Inc.
CEO : Mr. Vincent Pilette
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2023 Q3 | 33.3% YoY | 25.6% | -25.7% | 2023-02-02 |
Natalie Derse says,
Q3 Results
- The company performed well in Q3 with bookings growth, supported by a resilient customer base, expanding product portfolio, and channel and geographic diversification efforts.
- Q3 non-GAAP revenue was $936 million, up 33% in USD and 38% in constant currency, including Avast historical financials.
- Cyber safety bookings grew 4% year-over-year in constant currency, while cyber safety revenue grew 4% year-over-year in constant currency when including Avast historical revenue.
Cyber Safety Key Operating Metrics
- Direct revenue of $818 million grew 31% in USD and grew 3% when including Avast historical financials.
- Direct monthly average revenue per user or ARPU was $7.9, an expansion of $0.11 quarter-over-quarter.
- Direct customer count ended at 38.4 million, a decline of $219,000 quarter-over-quarter due to a challenged macroeconomic environment.
Synergies and Cost Reductions
- The company has achieved approximately one-third of the annual cost synergy target and is on track to achieve cost synergies of over $300 million as they exit fiscal year 2024.
- Operating income was $526 million, up 41% year-over-year, and the company expanded operating margin to over 56% through cost discipline and synergistic workforce reductions.
Q4 Outlook
- The company expects non-GAAP revenue in the range of $935 million to $945 million with low to mid-single-digit growth in cyber safety expressed in constant currency.
- Q4 non-GAAP EPS is expected to be in the range of $0.44 to $0.46 per share as cost synergies are partially offset by increased interest expense based on current SOFR forward curves.
Capital Deployment
- The company made a $250 million prepayment of their TLB and deployed $500 million of opportunistic share repurchases in Q3.
- They have approximately $870 million remaining in their current buyback program and paid $80 million to shareholders in the form of a regular quarterly dividend of $0.125 per common share.
Vincent Pilette says,
Integration Progress
- Integrated back-end systems and processes
- Deployed unified go-to-market structure
- Identified and eliminated about 700 duplicative jobs or activities
- Deploying new location strategy leading to facility reductions
- Strategically driving the integration of technology and engineering teams to continue delivering innovative products
Q3 Results
- 14th consecutive quarter of growth
- Q3 bookings and revenue were both up 4% in constant currency
- Expanded operating margin by three points year-over-year and four points sequentially
- Direct business grew 3%, supported by strong cross-sell
- Partner business delivered another double-digit growth quarter
Product Innovation
- Launched Norton Executive Benefits Program
- Expanded Identity business internationally with credit monitoring features in the UK market
- Launched Avast Identity Secure and LifeLock Utility Alerts in the US
- Expanded global reach with Norton Privacy Monitor Assistant to Canada
- Strategy to expand value offered to current customers through new product launches and improved user experience
Growth Strategy
- Extending global reach by leveraging our omnichannel strategy
- Increasing value for customers expanding to identity and privacy solutions
- Growing loyalty from customers by improving user experience and retention
- Investing in innovation to have the strongest portfolio that keeps customer fiber sales
Q & A sessions,
Revenue Synergies
- Estimated revenue synergies of $200 million to be realized over the next two years
- Improving customer retention by identifying operational activities, moving customers to membership level, and using the platform functionalities
- Improving retention has been seen nominally, giving confidence of being on the right path to improve over the next few quarters
- Cross-selling opportunities through the launch of new identity features and privacy products
- Confidence in achieving the estimate is there, relying on a mid-single-digit growth rate
Growth Drivers
- Three growth drivers: Revenue per user, retention activities, and total customer adds
- Adoption of products or full portfolio and membership adoption are important driver for revenue from users
- Stable retention across all lines and regions, and slightly growing ARPU from direct customers with a focus on gross adds
- Marketing spend optimization and portfolio innovation are key to driving growth
Capital Allocation Priorities
- Striking the right balance between accelerated debt paydown and opportunistic share buyback
- Deleveraging as a priority as cost of debt is a major hurdle
- Continuing to generate strong cash flow and repatriate international cash for advantageous deployment of capital allocation
- Large amount of outstanding debt with SOFR curve not expected to improve until fiscal year 2025
No bad stock 