Gen Digital Inc. · NASDAQ:GEN

Gen Digital — NortonLifeLock — Q1 2023 Earnings Presentation

27 slides from Gen Digital's earnings presentation, Aug 4, 2022

  1. Slide 1: FY 2023 Q1 Earnings

    AUG 4, 2022 FY 2023 Q1 Earnings Copyright Copyright © 2022 © 2022 NortonLifeLock NortonLifeLock Inc. Inc. All All rights rights reserved. reserved.

  2. Slide 2: Forward-Looking Statements

    Forward-Looking Statements This presentation contains statements which may be considered forward-looking within the meaning of the U.S. federal securities laws. In some cases, you can identify these forward-looking statements by the use of terms such as “expect,” “will,” “continue,” or similar expre

  3. Slide 3: Our vision is to protect and empower people to live their digital lives safely

    Our vision is to protect and empower people to live their digital lives safely Q1 Fiscal 2023 Total Users Direct Customers ~80M 23.3M+ Copyright © 2022 NortonLifeLock Inc. All rights reserved. 3

  4. Slide 4: Acquisition of Avast Provisionally Approved

    Acquisition of Avast Provisionally Approved + Anticipated to Close the Acquisition Mid-September to Early October 2022 Transaction Details: NLOK’s IR website Copyright © 2022 NortonLifeLock Inc. All rights reserved. 4

  5. Slide 5: Q1 Non-GAAP Business Highlights

    Q1 Non-GAAP Business Highlights • 12th consecutive quarter of Bookings growth, up 5% Y/Y in CC; Revenue up 6% Y/Y in CC • Operating margin up 250 bps Y/Y and EPS up 7% Y/Y • Retention remains strong at 85%; Direct customer count up 210K Y/Y and down 216K Q/Q Bookings Revenue Op. Margin EPS +5% Y/Y i

  6. Slide 6: Q1 Results Reflect Discipline and Strong Profitability

    Q1 Results Reflect Discipline and Strong Profitability Non-GAAP P&L Q1 Q4 Q1 As Reported Q1 Dollars in millions, except per share amounts FY22 FY22 FY23 $708M Y/Y REVENUE Revenue $691 $717 $708 2% Up 2% Y/Y in USD & up 6% in CC Y/Y (CC%) 11% 8% 6% Gross Profit 599 624 612 2% Includes $27M of unfavor

  7. Slide 7: Healthy Customer Base of 23.3M+ with 85%+ Retention and Strong ARPU

    Healthy Customer Base of 23.3M+ with 85%+ Retention and Strong ARPU Consumer Metrics Q1 Q4 Q1 Dollars in millions, except ARPU in dollars Growth Growth (Non-GAAP, Y/Y % and Q/Q % in USD) FY22 FY22 FY23 Y/Y Q/Q Revenue $691 $717 $708 2% (1%) Direct Customer Count Y/Y +210K Direct Customer Revenue (1)

  8. Slide 8: Continued Strength in Margin Expansion

    Continued Strength in Margin Expansion Q1 Trended Operating Margin Non-GAAP 53.7% OPERATING MARGIN Up 250 bps Y/Y 53.7% Operating leverage driven by top-line 54.5% growth, G&A efficiencies and disciplined investments 52.8% 52.2% 51.2% 50% % of revenue: 86% Gross Margin 21% Sales & Marketing 8% Resea

  9. Slide 9: Robust Balance Sheet and Cash Flow Generation

    Robust Balance Sheet and Cash Flow Generation $1.3B Strong total liquidity position CASH ON HAND Includes repayment of $400M in 3.95% senior unsecured notes (June 2022 maturity) and Key Balance Sheet, Q1 Q4 Q1 $300M share buyback Cash Flow & Other Metrics FY22 FY22 FY23 Dollars in millions Balance S

  10. Slide 10: Q2 Fiscal Year 2023 Non-GAAP Guidance

    Q2 Fiscal Year 2023 Non-GAAP Guidance REVENUE EPS $695M - $705M $0.44 - $0.46 Up Mid-Single Digits Y/Y (CC) Includes $0.03 from FX headwind Y/Y Includes 4+ pts of FX headwind or approximately $30M Assumes Avast closes early October 2022 Note: All numbers presented are non-GAAP unless otherwise indic

  11. Slide 11: Appendix

    Appendix investor.nortonlifelock.com Copyright © 2022 NortonLifeLock Inc. All rights reserved. 11

  12. Slide 12: Foreign Currency Update and Revenue Mix by Currency

    Foreign Currency Update Revenue Mix by Currency Non-GAAP, Q1 FY23 Actuals (USD) Other 4% Q1 Q2 Q1 Jul Japanese Euro Weighted Avg. FY22 1.21 FY22 1.18 FY23 1.06 FY23 1.02 Yen 7% U.S. Dollar Euro €/$ End of Period 1.18 1.16 1.04 1.02 Euro Japanese Yen 17% Other U.S. Dollar Q1 Q2 Q1 Jul 72% Yen Weighte

  13. Slide 13: Trended Non-GAAP Quarterly Results

    Trended Non-GAAP Quarterly Results Non-GAAP P&L Q1 Q2 Q3 Q4 Q1 FY22 Dollars in millions, except per share amounts FY22 FY22 FY22 FY22 FY23 Total Revenue $691 $695 $704 $717 $2,807 $708 Gross Profit 599 607 610 624 2,440 612 Gross Margin 86.7% 87.3% 86.6% 87.0% 86.9% 86.4% Sales & Marketing 150 148 1

  14. Slide 14: Reconciliation to Non-GAAP Gross Profit

    Reconciliation to Non-GAAP Gross Profit GAAP to Non-GAAP Gross Profit Q1 Q2 Q3 Q4 Q1 FY22 Dollars in millions FY22 FY22 FY22 FY22 FY23 GAAP Results of Operation Gross profit (GAAP) $584 $592 $597 $615 $2,388 $605 Non-GAAP Gross Profit Adjustments Net revenues Contract liabilities fair value adjustme

  15. Slide 15: Reconciliation to Non-GAAP Operating Income

    Reconciliation to Non-GAAP Operating Income GAAP to Non-GAAP Operating Income Q1 Q2 Q3 Q4 Q1 FY22 Dollars in millions FY22 FY22 FY22 FY22 FY23 GAAP Results of Operation Operating income (GAAP) $287 $287 $302 $129 $1,005 $261 Total Non-GAAP gross profit adjustment 15 15 13 9 52 7 Non-GAAP Operating E

  16. Slide 16: Reconciliation to Non-GAAP Net Income

    Reconciliation to Non-GAAP Net Income GAAP to Non-GAAP Net Income Q1 Q2 Q3 Q4 Q1 FY22 Dollars in millions FY22 FY22 FY22 FY22 FY23 GAAP Results of Operation Net income (GAAP) $181 $333 $202 $120 $836 $200 Total Non-GAAP gross profit adjustment 15 15 13 9 52 7 Total Non-GAAP operating expense adjustm

  17. Slide 17: GAAP to Non-GAAP Reconciliation

    GAAP to Non-GAAP Reconciliation Bridge from GAAP to Non-GAAP EPS Q1 FY23 and Net Income Dollars in millions, except per share amounts EPS Net Income GAAP EPS / Net Income $0.33 $200 Contract liabilities fair value adjustment 0.00 1 Stock Based Compensation 0.04 24 Amortization of Intangible Assets 0

  18. Slide 18: Trended Contract Liabilities and Bookings

    Trended Contract Liabilities and Bookings Contract Liabilities and Bookings Q1 Q2 Q3 Q4 Q1 FY22 Dollars in millions FY22 FY22 FY22 FY22 FY23 Contract Liabilities $1,231 $1,213 $1,257 $1,306 $1,306 $1,220 Y/Y Growth 16% 13% 11% 3% 3% (1%) Bookings $660 $681 $752 $793 $2,885 $663 Y/Y Growth (USD) 12%

  19. Slide 19: Trended Share Count

    Trended Share Count Diluted Share Count Q1 Q2 Q3 Q4 Q1 FY22 Shares in millions FY22 FY22 FY22 FY22 FY23 Basic Share Count Weighted Average 580 582 582 582 581 578 Dilutive Potentially Issuable Shares: From Employee Equity Awards 4 2 3 4 3 4 From Convertible Debt 7 7 6 7 7 22 Diluted Share Count (GAA

  20. Slide 20: Trended Stock Based Compensation

    Trended Stock Based Compensation Stock-Based Compensation Q1 Q3 Q4 Q1 Q2 FY22 FY22 Dollars in millions FY22 FY22 FY22 FY23 Cost of revenues $- $1 $- $1 $2 $1 Sales and marketing 5 3 5 6 19 7 Research and development 6 3 5 5 19 6 General and administrative 9 6 8 7 30 10 Total stock-based compensation

  21. Slide 21: Trended EBITDA (Non-GAAP)

    Trended EBITDA (Non-GAAP) Reported EBITDA (Non-GAAP) (1) Q1 Q2 Q3 Q4 Q1 FY22 Dollars in millions FY22 FY22 FY22 FY22 FY23 Net income $181 $333 $202 $120 $836 $200 Adjustments: Net interest expense 32 31 32 31 126 29 Income tax expense (benefit) 71 100 59 (24) 206 29 Depreciation and amortization 36

  22. Slide 22: Reported EBITDA and Adjusted Debt Covenant EBITDA (Non-GAAP)

    Reported EBITDA and Adjusted Debt Covenant EBITDA (Non-GAAP) Reported EBITDA and Adjusted Debt Covenant EBITDA (Non-GAAP) (1) LTM (3) Dollars in millions Net income $855 Adjustments: Net interest expense 123 Income tax expense (benefit) 164 Depreciation and amortization 133 EBITDA (Non-GAAP) $1,275

  23. Slide 23: Use of GAAP and Non-GAAP Financial Information

    Use of GAAP and Non-GAAP Financial Information We use non-GAAP measures of operating margin, net income and earnings per share, which are adjusted from results based on GAAP and exclude certain expenses, gains and losses. We also provide the non-GAAP metrics of revenues, constant currency revenues,

  24. Slide 24: Explanation of Non-GAAP Measures and Other Items

    Explanation of Non-GAAP Measures and Other Items Bookings: Bookings are defined as customer orders received that are expected to generate net revenues in the future. We present the operational metric of bookings because it reflects customers' demand for our products and services and to assist reader

  25. Slide 25: UK Takeover Code: Profit Forecast disclosures

    UK Takeover Code: Profit Forecast disclosures UK Takeover Code On August 10, 2021, the boards of NortonLifeLock Inc. (“NortonLifeLock”) and Avast plc (“Avast”) announced that they had reached agreement on the terms of a recommended merger of Avast with NortonLifeLock, in the form of a recommended of

  26. Slide 26: UK Takeover Code: Profit Forecast disclosures (Cont'd)

    UK Takeover Code: Profit Forecast disclosures (Cont’d) Factors outside the influence or control of the NortonLifeLock Directors (Cont’d) • There will be no material adverse events that will have a significant impact on the timing and market acceptance of new product releases and upgrades by NortonLi

  27. Slide 27: Copyright © 2022 NortonLifeLock Inc. All rights reserved.

    Copyright © 2022 NortonLifeLock Inc. All rights reserved.

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