Gen Digital Inc. · NASDAQ:GEN
Gen Digital — NortonLifeLock — Q1 FY2021 Earnings Presentation
25 slides from Gen Digital's earnings presentation, Aug 6, 2020
Slide 1: Q1 Fiscal Year 2021 Earnings Investor Presentation
AUGUST 6, 2020 Q1 FISCAL YEAR 2021 EARNINGS INVESTOR PRESENTATION Copyright © 2020 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: Business Highlights
Business Highlights • Current environment continues to accelerate the digitalization of consumers’ lives and their need for comprehensive personal cyber safety • Better than expected Q1 results begin the fiscal year with strong momentum • Revenue of $614M, up 4% PF Y/Y CC, with reported billings up
Slide 4: What's New
What’s New
Slide 5: Our Consumer-Focused Leadership Team
Our Consumer-Focused Leadership Team Vincent Pilette Samir Kapuria Natalie Derse CHIEF EXECUTIVE OFFICER PRESIDENT CHIEF FINANCIAL OFFICER Kara Jordan Bryan Ko Gagan Singh CHIEF PEOPLE & CULTURE CHIEF LEGAL OFFICER & CHIEF PRODUCT OFFICER OFFICER CORPORATE SECRETARY Robert Clarkson Darren Shou Krist
Slide 6: Fighting Disinformation on Social Media
Fighting Disinformation on Social Media Released as a free tool by our research organization, Botsight uses machine Likely a learning to identify humans versus bots real- Human time in Twitter feeds. You will see us extend this technology to other social media platforms In this time of increased dis
Slide 7: Keeping Personally Identifiable Information Private
Keeping Personally Identifiable Information Private Privacy Monitor scans for and guides members on how to opt out of their personally identifiable information (PII) on 'people search' websites, third-party sites that gather and buy data on consumers Part of Cyber Safety is giving consumers control
Slide 8: Partnering with AARP to Bring Cyber Safety to their Members
Partnering with AARP to Bring Cyber Safety to their Members AARP members now have access to discounted Cyber Safety subscriptions with multiple layers of protection By making these NortonLifeLock products available, we hope to build on AARP’s education efforts to protect and help its members fight f
Slide 9: Financial Results
Financial Results
Slide 10: Q1 Results Start the Year with Strong Momentum
Q1 Results Start the Year with Strong Momentum Non-GAAP P&L (Continuing Operations) (Dollars in millions, except per share amounts) As Reported Pro Forma • Revenue of $614M, above guidance and up 4% PF Y/Y Non-GAAP Q1 FY21 Q1 FY20 Y/Y Y/Y CC (1) CC. Reported Billings of $596M, up 9%, with 2 ppts Con
Slide 11: Shifted from Declining to Growing Customer Count
Shifted from Declining to Growing Customer Count Average • Q1 Ending Customer Count: 20.6M Direct Indirect • Q1 Average Customer Count: 20.4M; used for Revenue = Direct Cust x + ARPU(1) Revenue Count ARPU calculation • Added ~400K customers Q/Q and Y/Y – first Y/Y Q1FY21 $614M (2)(3) 20.4M $9.03/mo
Slide 12: Reported Billings Support Mid-Single Digit Growth Targets
Reported Billings Support Mid-Single Digit Growth Targets Trended Consumer Reported Billings Growth • Q1 FY21 Reported Billings Growth +9%, with 2 ppts from FX revaluation of contract liabilities; puts business on the 9% Range to Support path to long-term target of mid single digit revenue Mid Singl
Slide 13: Running at Target Operating Margins
Running at Target Operating Margins Trended Operating Margin (As Reported; Impact of Stranded Directional) • Near-and-long term operating margin target As Reported 60% Impact of Stranded Costs remains at 50%+ • On an as-reported basis, we are approaching Target Operating Margin our target level as t
Slide 14: Final Stretch of Stranded Cost Elimination
Final Stretch of Stranded Cost Elimination Cumulative Stranded Costs (Directional) • Further lowering cumulative stranded cost estimates Includes Stranded Opex in ContOps, DiscOps & Restructuring to ~$950M total / ~$650M cash % Complete • Q1 total stranded costs were ~$210M, of which ~40% ~70% ~95%
Slide 15: We Have Over Delivered on Our Commitments
We Have Over Delivered on Our Commitments % Cash / Total Stranded Costs Realized / Expected Sale of % Completed (Deal Close Nov 4) Through Transition Period (1) Underutilized Assets Realized (Deal Close Nov 4) $1B / $1.4B $-- / $800M August 2019 August 2019 0% $900M / $1.2B $0.4B / $1.1B ~25% Novemb
Slide 16: Well-Capitalized to Support Growth
Well-Capitalized to Support Growth Key Balance Sheet, Cash Flow & Other Metrics (Dollars in millions) • Q1 Ending Cash balance is $1.1B, with most material transition-related cash transactions completed to date Q1FY21 Q4FY20 Balance Sheet • Debt decreased to $3.625B with the retirement of $625M in 2
Slide 17: Our Long-Term Commitment
Our Long-Term Commitment What we said… …and where we stand Sustain or ➢ Revenue Growth of Mid-Single Digits ……… ✓ Achieved accelerate ➢ Operating Margin of >50% …………………… ✓ Tracking - by Q3 Already Achieved excl Stranded ✓ ➢ Free Cash Flow (Annualized) of >$900M ..… Tracking - by Q3 Already Achieved
Slide 18: Q2 FY21 Guidance
Q2 FY21 Guidance (Dollars in millions, except per share amounts) Non-GAAP Q2 Guidance Revenue $615 - $625 Y/Y Change (Adj for IDA) 3% - 5% Non-GAAP EPS $0.31 - $0.35 • Growth rate excludes IDA ($13M in Q2 FY20) • Assumes business at ~50% operating margin excluding stranded costs • Non-GAAP EPS guida
Slide 19: Appendix
Appendix
Slide 20: Trended Quarterly Results
Trended Quarterly Results Non-GAAP P&L (Continuing Operations) (Dollars in millions, except per share amounts) Non-GAAP Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 FY20 Q1 FY21 Revenue 636 595 603 610 2,444 614 ID Analytics 14 13 15 4 46 - Total Revenue $650 $608 $618 $614 $2,490 $614 Gross Profit 562 519 523 5
Slide 21: Trended Contract Liabilities and Reported Billings
Trended Contract Liabilities and Reported Billings Contract Liabilities and Reported Billings (Dollars in millions) We isolated FX impact on Non-GAAP Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 FY20 Q1 FY21 reported billings by revaluing Contract Liabilities (1) $1,011 $1,016 $1,047 $1,076 $1,076 $1,058 contrac
Slide 22: Trended Share Count
Trended Share Count Diluted Share Count (Shares in millions) Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 FY20 Q1 FY21 Basic Share Count Weighted Average 619 620 621 599 615 590 Dilutive Potentially Issuable Shares: From Employee Equity Awards 13 8 6 6 8 4 From Convertible Debt 10 16 20 34 20 20 Diluted Share Co
Slide 23: Trended Headcount
Trended Headcount 11,410 10,400 4,873 3,539 2,467 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Note: Based on full-time equivalent. Excludes interns and non-working headcount covered under statutory labor laws (notified but not yet off books).. Copyright © 2020 NortonLifeLock Inc. All rights reserved. 23
Slide 24: Q1 Stranded Costs Detail
Q1 Stranded Costs Detail Stranded Cost Breakdown (Dollars in millions) Informational Non-GAAP Q1 FY21 Stranded • Total Stranded Costs in Q1 of ~$210M consists of the following: Revenue $614 • ~$30M in operating expenses of continuing operations Cost of Revenue 79 Sales & Marketing 142 • ~$20M in TSA
Slide 25: Q1 GAAP to Non-GAAP Reconciliation
Q1 GAAP to Non-GAAP Reconciliation Bridge from GAAP to Non-GAAP EPS and Net Income from ContOps (Dollars in millions, except per share amounts) EPS Net Income Q1 FY21 Q1 FY21 GAAP EPS / Net Income $0.19 $118 GAAP EPS / Net Income from DiscOps 0.05 31 GAAP EPS / Net Income from ContOps $0.24 $149 Sto