Slide 1: FY24 Q1 Earnings
FY24 Q1 Earnings August 3, 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: Business & Portfolio Highlights
Business & Portfolio Highlights Copyright © 2023 Gen Digital Inc. All rights reserved. 4
Slide 5: Growth & Business Expansion
Growth & Business Expansion Avast Integration Essentially Complete What we said Where we are On-going Sep 2022 (Merger Close) June 2023 Today & Moving Ahead Accelerates our transformation Differentiated technologies and AI-powered Strengthening our suite and expanding into of consumer Cyber Safety s
Slide 6: Norton Secure Browser: Online Safety Right From Your Browser
Norton Secure Browser: Online Safety Right From Your Browser Safer and private Browse with browsing — for free greater privacy Browse, message, and shop Search and shop more safely in peace while we help block — block cybercriminals and online threats and phishing easily control ads, trackers, attem
Slide 7: Introducing Genie
Introducing Genie AI-powered, real-time scam detection tool at your fingertips Genie early access is available in the U.S. on Norton.com and the Apple App Store Genie is a brand-new innovation from Norton still in an early access phase and learning. Powered by AI, Norton Genie is designed to be as s
Slide 8: 2023 Social Impact Highlights
2023 Social Impact Highlights Copyright © 2023 Gen Digital Inc. All rights reserved. 8
Slide 9: Q1 FY24 Financial Results
Q1 FY24 Financial Results Copyright © 2023 Gen Digital Inc. All rights reserved. 9
Slide 10: Q1 Non-GAAP Business Highlights
Q1 Non-GAAP Business Highlights • 16th consecutive quarter of growth: Cyber Safety Bookings and Revenue up 2% (CC) when including Avast historical results • Operating margin reached 58%, up 50 bps Q/Q and up 6 pts since merger; Avast integration largely completed • Expanded earnings power bolstered
Slide 11: Consistent Execution
Consistent Execution Q1 Q4 Q1 Y/Y % • Broad-based growth: Q1 Revenue of $946M Non-GAAP P&L FY23 FY23 FY24 USD ($mil), except per share amounts As Reported • Cyber Safety up low-single digits in constant currency when Revenue $708 $948 $946 34% including Avast historical results Y/Y % (CC) 6% 35% 35%
Slide 12: Gen Performance Metrics
Gen Performance Metrics REVENUE CYBER SAFETY METRICS Y/Y % Y/Y % Q2 Q3 Q4 Q1 Pro- Q2 Q3 Q4 Q1 USD FY23 FY23 FY23 FY24 As Reported Forma FY23 FY23 FY23 FY24 Incl. Avast historical Direct Customers 38.6M 38.4M 38.2M 38.2M Direct (1) $660 $818 $831 $832 33% 2% (252K) (219K) (Q/Q change) (183K) (29K) Di
Slide 13: Post-Covid Effects on Customer Count
Post-Covid Effects on Customer Count 1• Covid-fueled demand drove a step GROSS ADDS UNIT CHURN change increase in customer acquisition through FY21-22, followed by post-Covid 1 temporarily depressed demand 2• With stable retention, higher base 2 resulted in higher unit churn in years 3 following Cov
Slide 14: Cost Synergies Almost Completed
Cost Synergies Almost Completed Annual Gross Cost Synergies (run-rate) Q2 (1) Q3 Q4 Q1 Future (2) FY23 $300M+ ~80% % of Before FY23 FY23 FY24 with 100% Commitment Achieved Revenue Synergies Reported Reported Reported Synergies COGS 13% 13% 14% 13% 10 - 12% Expected One-Off Costs to Achieve Synergies
Slide 15: Balance Sheet & Cash Flow
Balance Sheet & Cash Flow Key Balance Sheet, Since Avast Merger Q1 Q4 Q1 Cash Flow, & Other Metrics FY23 FY23 FY24 $1B Dollars in millions Balance Sheet $850M (1) Free Cash Flow Cash, Cash Equivalents and STI $1,291 $750 $623 Capital Returned Contract Liabilities $1,220 $1,788 $1,709 $1.3B+ uFCF to
Slide 16: Non-GAAP Guidance
Non-GAAP Guidance Q2 FY24 FY24 LONG-TERM REVENUE REVENUE $940M to $950M $3.8B to $3.85B ANNUALIZED EPS EPS EPS $3 Exiting FY25 $0.46 to $0.48 $1.95 to $2.02 Key Assumptions: Key Assumptions: Key Assumptions: • Cyber Safety low-single digit growth • Cyber Safety low-to-mid single digit growth • Cyber
Slide 17: Supplemental Information
Supplemental Information Copyright © 2023 Gen Digital Inc. All rights reserved. 17
Slide 18: Go Forward Capital Structure
As of June 30, 2023 Facility Principal ($ mil) Maturity Coupon Go Forward Capital Structure Revolver (RCF) – undrawn at Q1 qtr-end $1,500 2027 If drawn: SOFR+CSA+1.75% Debt Maturities in $mil (Initial Principal Amounts) Term Loan A (TLA) $3,812 2027 SOFR+CSA+1.75% As of June 30, 2023 Term Loan B (TL
Slide 19: Trended Non-GAAP Quarterly Results
Trended Non-GAAP Quarterly Results Non-GAAP P&L Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 FY23 Q1 FY24 ($M), except per share amounts Direct Customer Revenues 624 660 818 831 2,933 832 Partner Revenues 72 74 95 100 341 97 TOTAL CYBER SAFETY REVENUE $696 $734 $913 $931 $3,274 $929 Legacy Revenues 12 14 23 17 6
Slide 20: Reconciliation to Non-GAAP Gross Profit
Reconciliation to Non-GAAP Gross Profit GAAP to Non-GAAP Gross Profit ($M) Q1 FY23 Q2 FY23 Q3 FY23 QQ4 FY23 FY23 Q1 FY24 GAAP Results of Operation Gross profit (GAAP) $605 $629 $758 $757 $2,749 $767 Non-GAAP Gross Profit Adjustments Net revenues • Contract liabilities fair value 1 - - 1 2 - adjustme
Slide 21: Reconciliation to Non-GAAP Operating Income
Reconciliation to Non-GAAP Operating Income GAAP to Non-GAAP Operating Income ($M) Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 FY23 Q1 FY24 GAAP Results of Operation Operating income (GAAP) $261 $241 $368 $357 $1,227 $362 Total Non-GAAP gross profit adjustment 7 17 58 59 141 58 Non-GAAP Operating Expense Adjust
Slide 22: Reconciliation to Non-GAAP Net Income
Reconciliation to Non-GAAP Net Income GAAP to Non-GAAP Net Income ($M) Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 FY23 Q1 FY24 GAAP Results of Operation Net income (GAAP) $200 $69 $165 $915 $1,349 $189 Total Non-GAAP gross profit adjustment 7 17 58 59 141 58 Total Non-GAAP operating expense adjustment 112 130
Slide 23: Reconciliation to Non-GAAP EPS and Net Income
Reconciliation to Non-GAAP EPS and Net Income Q1 FY24 GAAP to Non-GAAP EPS and Net Income (1) ($M), except per share amounts EPS Net Income GAAP EPS / Net Income $0.29 $189 • Stock based compensation 0.06 37 • Amortization of intangible assets 0.18 118 • Restructuring and other costs 0.03 17 • Acqui
Slide 24: Reconciliation to Non-GAAP Unlevered Free Cash Flow
Reconciliation to Non-GAAP Unlevered Free Cash Flow Unlevered Free Cash Flow Reconciliation ($M) Q1 FY24 Net Cash Flow from Operating Activities $226 Adjustments: • Capital Expenditures (4) Free Cash Flow $222 Adjustments: • Cash paid for interest expense, net of interest rate hedges 152 Unlevered F
Slide 25: Trended Share Count; Trended Stock-Based Compensation
Trended Share Count Diluted Share Count Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 FY23 Q1 FY24 Shares in millions Basic Share Count Weighted 578 590 647 639 614 640 Average Dilutive Potentially Issuable Shares: From Employee Equity Awards 4 3 4 5 4 3 From Convertible Debt 22 2 - - 6 - Diluted Share Count (GAA
Slide 26: Trended EBITDA (Non-GAAP)
Trended EBITDA (Non-GAAP) Reported EBITDA (Non-GAAP) (1) ($M) Q1 FY23 Q2 FY23 Q3 FY23 QQ4 FY23 FY23 Q1 FY24 Net income $200 $69 $165 $915 $1,349 $189 Adjustments: • Net interest expense 29 45 149 163 386 164 • Income tax expense (benefit) 29 126 51 (751) (545) 15 • Depreciation and amortization 29 4
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, operating income, net income, results of operations, 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
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