Gen Digital Inc. · NASDAQ:GEN
Gen Digital — Q4 FY2023 Earnings Presentation
29 slides from Gen Digital's earnings presentation, May 11, 2023
Slide 1: FY23 Q4 Earnings
FY23 Q4 Earnings May 11, 2023 Copyright © 2023 Gen Digital Inc. All rights reserved.
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
Slide 3: Purpose and Mission: Powering Digital Freedom
Purpose Powering Digital Freedom Mission We create technology solutions for people to take full advantage of the digital world, safely, privately, and confidently – so together, we can build a better tomorrow. Copyright © 2022 Gen Digital Inc. All rights reserved. 3
Slide 4: Gen and Its Trusted Consumer Brands Received Top Ratings
Gen and Its Trusted Consumer Awarded “Best 2023 Home Anti-Malware” Awarded 10 awards across 4 brands (Norton, (Norton) and “Best of 2023 Free Anti- Avast, Avira, AVG) in annual rankings Malware” (Avast) Brands Received EDITORS’ 53 TIME Top Ratings WINNER CHOICE Norton remains the “Most Awards Consum
Slide 5: Product Portfolio Highlights
Product Portfolio Highlights Copyright © 2023 Gen Digital Inc. All rights reserved. 5
Slide 6: Introducing Avast One Platinum
Introducing Avast One Platinum Avast One Platinum is an all-in-one personal guardian that always has your back. It includes comprehensive identity monitoring and up to $2 million reimbursement, our team of specialists to help resolve issues 24/7, plus our powerful protection to safeguard your online
Slide 7: Expanded Capabilities in Identity Protection
Expanded Capabilities in Identity Protection Lock and Freeze Center: Expansion of Freezes and Alerts Guided child freezes: guides you through the steps of freezing your child's credit to help prevent identity thieves from applying for credit and taking out loans in the child's name. Employment freez
Slide 8: Cyber Crime Coverage Launched in Employee Benefits
Cyber Crime Coverage Launched in Employee Benefits Cyber Crime Coverage Cyber threats have evolved beyond stolen identity. Cyber crime coverage aims to be an extension of our 3 Million Dollar Protection Program, going beyond to cover financial loss, data loss, and trauma associated with a wider rang
Slide 9: FY23 Full Year & Q4 Results
FY23 Full Year & Q4 Results Copyright © 2023 Gen Digital Inc. All rights reserved. 9
Slide 10: FY23 Achievements
FY23 Achievements • Delivered 4th consecutive year of organic growth, up mid single digits in Cyber Safety. Bookings crosses $1 billion for first time in Q4. • Identity and Privacy business reached $1.3B run rate and up high single digits; Partnership business delivered its 3rd consecutive year of d
Slide 11: FY23 Snapshot
FY23 Snapshot Core Cyber Safety Metrics Post-Avast Merger Revenue $3.3B+, +23% CC Op Margin 55%, +220 bps EPS $1.81, +10% CC $3.7B+ 65M 38M+ 76% Total Bookings Total Paid Direct Direct Exit Run-Rate Customers Customers Retention $7.24 60% 10+ 40+ Direct Customers New Products & NPS Score Monthly ARP
Slide 12: Consistent Execution
Consistent Execution Q4 Y/Y % Y/Y % FY23 • FY23 Revenue of $3.34B, Cyber Safety up mid-single digits when Non-GAAP P&L FY23 USD USD ($mil), except per share amounts As Reported As Reported including Avast historical results Revenue $948 32% $3,340 19% • 3rd consecutive year of double-digit growth in
Slide 13: Gen Performance Metrics
Gen Performance Metrics REVENUE CYBER SAFETY METRICS Y/Y % Y/Y % Q2 Q3 Q4 USD Pro-Forma Q2 Q3 Q4 FY23 FY23 FY23 As Reported Incl. Avast FY23 FY23 FY23 historical Direct Customers (ending) 38.6M 38.4M 38.2M Direct (1) $660 $818 $831 32% 3% (Q/Q change) (252K) (219K) (183K) + Partners $74 $95 $100 35%
Slide 14: Accelerated Cost Synergies Drive Margin Expansion
Accelerated Cost Synergies Drive Margin Expansion Q2 Q3 Q4 Future (2) (1) % of FY23 FY23 FY23 with 100% ● Annual cost synergies run rate identified: $300M+ Revenue Before Synergies Reported Reported Synergies ● Latest expected one-off costs to achieve synergies: COGS 13% 13% 14% 10 - 12% ~0.5x annua
Slide 15: Balance Sheet & Cash Flow
Balance Sheet & Cash Flow Key Balance Sheet, FY23 ANNUAL SUMMARY Q4 Q3 Q4 Cash Flow, & Other Metrics FY22 FY23 FY23 Dollars in millions Balance Sheet $751M $1.2B+ Cash, Cash Equivalents and STI $1,891 $812 $750 Free Cash Flow (1) Capital Returned Contract Liabilities $1,306 $1,729 $1,788 to Sharehol
Slide 16: Q1 FY24 & Long-Term Non-GAAP Guidance
Q1 FY24 & Long-Term Non-GAAP Guidance LONG-TERM Q1 REVENUE Q1 EPS $3 Annualized EPS Exiting FY25 $940M - $950M $0.45 - $0.47 Key Assumptions: Low single digit growth Cost synergies partially offset by in Cyber Safety increased interest expense • Cyber Safety mid-single digits growth (in CC, adjusted
Slide 17: Supplemental Information
Supplemental Information Copyright © 2023 Gen Digital Inc. All rights reserved. 17
Slide 18: Go Forward Capital Structure
As of April 28, 2023 Facility Principal ($ mil) Maturity Coupon Go Forward Capital Structure Revolver (RCF) – undrawn at Q4 qtr-end $1,500 2027 If drawn: SOFR+CSA+1.75% Debt Maturities in $mil (Initial Principal Amounts) Term Loan A (TLA) $3,861 2027 SOFR+CSA+1.75% As of April 28, 2023 Term Loan B (
Slide 19: Trended Non-GAAP Quarterly Results
Trended Non-GAAP Quarterly Results Non-GAAP P&L FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 FY23 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 ($M), except per share amounts Direct Customer Revenues 615 619 624 630 2,488 624 660 818 831 2,933 Partner Revenues 63 64 68 74 269 72 74 95 100 341 TOTAL CYBER SAFETY REVENUE $
Slide 20: Reconciliation to Non-GAAP Gross Profit
Reconciliation to Non-GAAP Gross Profit GAAP to Non-GAAP Gross Profit ($M) Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 FY22 Q1 FY23 Q2 FY23 Q3 FY23 QQ4 FY23 FY23 GAAP Results of Operation Gross profit (GAAP) $584 $592 $597 $615 $2,388 $605 $629 $758 $757 $2,749 Non-GAAP Gross Profit Adjustments Net revenues • C
Slide 21: Reconciliation to Non-GAAP Operating Income
Reconciliation to Non-GAAP Operating Income GAAP to Non-GAAP Operating Income FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 FY23 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 ($M) GAAP Results of Operation Operating income (GAAP) $287 $287 $302 $129 $1,005 $261 $241 $368 $357 $1,227 Total Non-GAAP gross profit 15 15 13 9
Slide 22: Reconciliation to Non-GAAP Net Income
Reconciliation to Non-GAAP Net Income GAAP to Non-GAAP Net Income ($M) Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 FY23 GAAP Results of Operation Net income (GAAP) $181 $333 $202 $120 $836 $200 $69 $165 $915 $1,349 Total Non-GAAP gross profit adjustment 15 15 13 9 52 7 17 58
Slide 23: Reconciliation to Non-GAAP EPS and Net Income
Reconciliation to Non-GAAP EPS and Net Income Q4 FY23 GAAP to Non-GAAP EPS and Net Income (1) ($M), except per share amounts EPS Net Income GAAP EPS / Net Income $1.42 $915 • Stock based compensation 0.06 36 • Amortization of intangible assets 0.18 119 • Restructuring and other costs 0.02 14 • Acqui
Slide 24: Reconciliation to Non-GAAP Unlevered Free Cash Flow
Reconciliation to Non-GAAP Unlevered Free Cash Flow Unlevered Free Cash Flow Reconciliation ($M) FY23 Net Cash Flow from Operating Activities $757 Adjustments: • Capital Expenditures (6) Free Cash Flow 751 Adjustments: • Cash paid for interest expense 389 Unlevered Free Cash Flow $1,140 Copyright ©
Slide 25: Trended Share Count and Stock-Based Compensation
Trended Share Count Diluted Share Count FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 FY23 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Shares in millions Basic Share Count Weighted Average 580 582 582 582 581 578 590 647 639 614 Dilutive Potentially Issuable Shares: • From Employee Equity Awards 4 2 3 4 3 4 3 4 5 4 • Fr
Slide 26: Trended EBITDA (Non-GAAP)
Trended EBITDA (Non-GAAP) Reported EBITDA (Non-GAAP) (1) ($M) Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 FY22 Q1 FY23 Q2 FY23 Q3 FY23 QQ4 FY23 FY23 Net income $181 $333 $202 $120 $836 $200 $69 $165 $915 $1,349 Adjustments: • Net interest expense 32 31 32 31 126 29 45 149 163 386 • Income tax expense (benefit)
Slide 27: 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,
Slide 28: 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
Slide 29: Thank you
Thank you Web: Investor.GenDigital.com Email: IR@GenDigital.com Copyright © 2023 Gen Digital Inc. All rights reserved. 29