Gen Digital Inc. · NASDAQ:GEN
Gen Digital — NortonLifeLock — Q1 FY2022 Earnings Presentation
33 slides from Gen Digital's earnings presentation, Jul 27, 2021
Slide 1: Fiscal 2022 Q1 Earnings
JULY 27, 2021 FISCAL 2022 Q1 EARNINGS Copyright © 2021 NortonLifeLock Inc. All rights reserved.
Slide 2: Forward-Looking Statements
Forward-Looking Statements This supplemental information 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 s
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 Fiscal 2022 Q1 Total Users Direct Customers ~80M 23M+ Copyright © 2021 NortonLifeLock Inc. All rights reserved. 3
Slide 4: Q1 Non-GAAP Business Highlights
Q1 Non-GAAP Business Highlights • Solid start to fiscal year 2022, with double digit Y/Y growth in Revenue +13% and Bookings +12% • Strong profitability and continued EPS expansion, up 35% Y/Y • 7th consecutive quarter of growing direct customer count: +150K Q/Q, +2.6M Y/Y Bookings Revenue Op. Margi
Slide 5: What's New
What’s New Copyright © 2021 NortonLifeLock Inc. All rights reserved.
Slide 6: New Optimizer for Gamers
New Optimizer for Gamers Unveiled Game Optimizer New feature on Norton 360 for Gamers • Maximizes gaming performance while strengthening security • Freeing PCs from power-hungry programs running into the background that tie up system resources For more product information and other terms and conditi
Slide 7: Norton Crypto Launch
Norton Crypto Launch New Feature Enables a Safe and Easy Way to Mine Cryptocurrency Norton Crypto delivers a secure, reliable way for consumers to mine for Ethereum, without having to make trade-offs that could compromise their cyber security. Once cryptocurrency has been earned, customers can track
Slide 8: Norton Secure VPN Adds New Features
Norton Secure VPN Adds New Features Industry-leading Norton Secure VPN adds new features to help keep sensitive information private and help consumers take control of their personal information more effectively • Safe Connections / Compromised Network Detection • Kill Switch • Split Tunneling For mo
Slide 9: Norton Labs Released Consumer Cyber Safety Pulse Report
Norton Labs Released Consumer Cyber Safety Pulse Report Trends This Year First quarterly report tapping into NortonLifeLock’s breadth of threat telemetry to reveal top cybersecurity trends Ransomware, Stalkerware, Illicit Coinmining, Gaming Threats and Phishing Scams on the Rise Copyright © 2021 Nor
Slide 10: NortonLifeLock Named to 100 Best Corporate Citizens of 2021
NortonLifeLock Named to 100 Best Corporate Citizens of 2021 NortonLifeLock named to the 100 Best Corporate Citizens ranking, recognized for its outstanding environmental, social and governance (ESG) transparency and performance among the 1,000 largest U.S. public companies. NortonLifeLock recognized
Slide 11: Financial Results
Financial Results Copyright © 2021 NortonLifeLock Inc. All rights reserved.
Slide 12: Q1 Results Reflect Continued Growth Momentum
Q1 Results Reflect Continued Growth Momentum $691M As Non-GAAP P&L Q1 Q4 Q1 Reported REVENUE Dollars in millions, except per share amounts FY21 FY21 FY22 Y/Y Up 13% Y/Y in USD, 11% Y/Y in CC Revenue $614 $677 $691 13% Broad based strength across Gross Profit 535 589 599 12% products and regions. Str
Slide 13: 7th Consecutive Quarter of Net Customer Adds
7 th Consecutive Quarter of Net Customer Adds Consumer Metrics Dollars in millions, except ARPU in dollars Q1 Q4 Q1 Growth Growth Direct Customer Count Q/Q +150K (Non-GAAP) FY21 FY21 FY22 Y/Y Q/Q Ending customer count, millions Revenue $614 $677 $691 13% 2% Y/Y +2.6M Direct Customer Revenue $552 $60
Slide 14: Drove business above 50% margin
Drove business above 50% margin Trended Operating Margin Non-GAAP 51.2% Operating Margin Up 410 bps Y/Y Q1 FY22 Continued efficiency in G&A 51.0% 51.2% 50% re-deployed to fund growth. 50.2% 50.5% 47.1% % of revenue: 87% Gross Margin 22% Sales & Marketing 9% Research & Development <5% G&A Q1 FY21 Q2
Slide 15: Healthy Balance Sheet With Strong Cash Flow
Healthy Balance Sheet $1.2B+ Cash on hand With Strong Cash Flow Strong total liquidity position Includes retirement of $250M in 2.50% convertible notes for $362M in cash, net of cash dividends and interest expense (closed in May 2021) Key Balance Sheet, Q1 Q4 Q1 Does not include cash proceeds from s
Slide 16: Q2 Fiscal 2022 Non-GAAP Guidance
Q2 Fiscal 2022 Non-GAAP Guidance REVENUE EPS $690M - $700M $0.41 - $0.43 10-12% growth Y/Y Assumes stable currency rates Q/Q Note: We are not providing GAAP EPS guidance because most non-GAAP adjustments pertain to events that have not yet occurred and would be unreasonably burdensome to forecast. C
Slide 17: Reaffirm Full Year Fiscal 2022 Non-GAAP Guidance
Reaffirm Full Year Fiscal 2022 Non-GAAP Guidance (First shared in May 2021) REVENUE GROWTH EPS 8% - 10%+ $1.65 - $1.75 Note: We are not providing GAAP EPS guidance because most non-GAAP adjustments pertain to events that have not yet occurred and would be unreasonably burdensome to forecast. Copyrig
Slide 18: Appendix
Appendix Copyright © 2021 NortonLifeLock Inc. All rights reserved.
Slide 19: Trended Non-GAAP Quarterly Results
Trended Non-GAAP Quarterly Results Non-GAAP P&L Q1 Q2 Q3 Q4 Q1 (Continuing Operations) FY21 FY21 FY21 FY21 FY21 FY22 Dollars in millions, except per share amounts Total Revenue $614 $626 $639 $677 $2, 556 $691 Gross Profit 535 544 558 589 2,226 599 Gross Margin 87.1% 86.9% 87.3% 87.0% 87.1% 86.7% Sa
Slide 20: Reconciliation of GAAP to Non-GAAP Gross Profit
Reconciliation of GAAP to Non-GAAP Gross Profit GAAP to Non-GAAP Gross Profit Q1 Q2 Q3 Q4 Q1 FY21 Dollars in millions FY21 FY21 FY21 FY21 FY22 GAAP Results of Operation Net revenues $614 $626 $639 $672 $2,551 $686 Cost of revenues 86 90 87 99 $362 102 Gross profit (GAAP) 528 536 552 573 2, 189 584 N
Slide 21: Reconciliation of GAAP to Non-GAAP Operating Income
Reconciliation of GAAP to Non-GAAP Operating Income GAAP to Non-GAAP Operating Income Q1 Q2 Q3 Q4 Q1 FY21 Dollars in millions FY21 FY21 FY21 FY21 FY22 GA AP Results of Operation Gross profit $528 $536 $552 $573 $2,189 $584 Sales and marketing 145 143 140 148 576 156 Research and development 65 63 71
Slide 22: Reconciliation of GAAP to Non-GAAP Net Income
Reconciliation of GAAP to Non-GAAP Net Income GAAP to Non-GAAP Net Income Q1 Q2 Q3 Q4 Q1 FY21 Dollars in millions FY21 FY21 FY21 FY21 FY22 GA AP Results o f Operation Operating income $120 $230 $280 $266 $896 $287 Interest expense (40) (37) (32) (35) (144) (32) Other income (expense), net 19 38 5 58
Slide 23: Q1 GAAP to Non-GAAP Reconciliation
Q1 GAAP to Non-GAAP Reconciliation Bridge from GAAP to Non-GAAP EPS Q1 FY22 and Net Income from Cont. Ops Dollars in millions, except per share amounts EPS Net Income GAAP EPS / Net Income $0.31 $181 GAAP EPS / Net Income from Disc. Ops - - GAAP EPS / Net Income from Cont. Ops $0.31 $181 Current lia
Slide 24: Trended Contract Liabilities, Bookings, and Reported Billings
Trended Contract Liabilities, Bookings, and Reported Billings Contract Liabilities, Q1 Q2 Q3 Q4 Q1 Bookings, and Reported Billings FY21 FY21 FY21 FY21 FY21 FY22 Dollars in millions Contract Liabilities $1, 058 $1, 074 $1, 135 $1, 265 $1, 265 $1, 231 Y/Y Growth 5% 6% 8% 18% 18% 16% Bookings $588 $636
Slide 25: Trended Share Count
Trended Share Count Diluted Share Count Q1 Q2 Q3 Q4 Q1 FY21 Shares in millions FY21 FY21 FY21 FY21 FY22 Bas ic Share Count Weighted Average 590 592 593 582 589 580 D ilutive Potentially Issuable Shares: From Employee Equity Awards 4 3 1 2 3 4 From Convertible Debt 20 5 3 4 8 7 D iluted Share Count 6
Slide 26: Trended Stock Based Compensation
Trended Stock Based Compensation Stock-Based Compensation Q1 Q2 Q3 Q4 Q1 FY21 Dollars in millions FY21 FY21 FY21 FY21 FY22 Cost of revenues $- $1 $- $- $1 $- Sales and marketing 4 5 5 4 18 5 Research and development 6 7 8 5 26 6 General and administrative 8 6 7 5 26 9 Restructuring and other costs 7
Slide 27: Trended EBITDA (Non-GAAP)
Trended EBITDA (Non-GAAP) Reported EBITDA (Non-GAAP) (1) Q1 Q2 Q3 Q4 Q1 FY21 Dollars in millions FY21 FY21 FY21 FY21 FY22 Net income $118 $64 $178 $194 $ 554 $181 Adjustments: (Income) loss from discontinued operations 31 102 (5) 14 142 - Net interest expense 38 36 32 34 140 32 Income tax expense (b
Slide 28: 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 N et income $ 617 Adjustments: (Income) loss from discontinued operations 111 Net interest expense 134 Income tax expense (benefit) 297 Depreciati
Slide 29: Use of GAAP and Non-GAAP Financial Information
Use of GAAP and Non-GAAP Financial Information To assist our readers understand our past financial performance and our projected future results, we supplement the financial results that we provide in accordance with generally accepted accounting principles, or GAAP, with non-GAAP financial measures.
Slide 30: 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 ope rational metric of bookings because it reflects customers' demand for our products and services and to assist reade
Slide 31: UK Takeover Code: Profit Forecast disclosures
UK Takeover Code: Profit Forecast disclosures U K Takeover Code On July 14, 2021, NortonLifeLock announced that it is in advanced discussions with the board of Avast plc (“Avast”) regarding a possible combination of NortonLifeLock and Avast (the “Possible Com bination”). The Possible Combination wou
Slide 32: 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 changes in legislation or regulatory requirements impacting on NortonLifeLock’s operations or its a ccounting policies. • There will be
Slide 33: NortonLifeLock
‘) NortonLifeLock”