Gen Digital Inc. · NASDAQ:GEN
Gen Digital — NortonLifeLock — Q2 FY2021 Earnings Presentation
25 slides from Gen Digital's earnings presentation, Nov 5, 2020
Slide 1: Fiscal 2021 Q2 Earnings
NOVEMBER 5, 2020 FISCAL 2021 Q2 EARNINGS 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: Our Vision
Our Vision To be the trusted brand in Cyber Safety by protecting consumers and giving them control of their digital lives. Total Customers Direct Customers ~50M 20.7M Copyright © 2020 NortonLifeLock Inc. All rights reserved. 3
Slide 4: Business Highlights
Business Highlights • Delivered sustainable top-line growth in the mid-single digits • Another quarter of growing customer count, +117K customers Q/Q, +608K customers Y/Y • Achieved 50%+ operating margin and completed our transition to a consumer company Reported Billings Revenue Op. Margin EPS +7%
Slide 5: What's New
What’s New
Slide 6: Norton for Gamers
Norton 360 for Gamers Protection designed for PC gamers Reimagined PC gaming security solution includes the industry-first Dark Web Monitoring Powered by LifeLock for gamer tags to give gamers the device, online privacy and identity protection they need. Designed with a Gamers-First Mindset Key feat
Slide 7: Norton with LifeLock for Family
Norton 360 with LifeLock for Family All-in-one family plans to help safeguard devices, online privacy and identity through one subscription Flexible Subscription Options Previously, Norton 360 plans were available for individuals to purchase, and identity theft protection plans for family members co
Slide 8: Privacy Monitor Assistant
Privacy Monitor Assistant Helping consumers reclaim control of their personal information with expanded privacy offerings Expanded Online Privacy Lineup Privacy Monitor Assistant is the latest addition to NortonLifeLock’s online privacy lineup, which includes Norton Secure VPN, PC SafeCam and Privac
Slide 9: Financial Results
Financial Results
Slide 10: Q2 Results Delivered Sustainable Growth
Q2 Results Delivered Sustainable Growth Non-GAAP P&L (Continuing Operations) Revenue $626M (Dollars in millions, except per share amounts) • Up 5% Y/Y in USD, 4% Y/Y in CC As Reported • Driven by broad-based strength across Non-GAAP Q2 FY21 Q2 FY20 Y/Y products and geographies Consumer Revenue 626 5
Slide 11: Another Quarter of Growing Customer Count
Another Quarter of Growing Customer Count Avg. Direct Indirect Direct Direct Customer Count Q2 Revenue = Customer x + (Partner) ARPU(1) (Ending customer count) Count Revenue Q/Q +117K $626M = 20.6M x $9.10/mo. + $63M Y/Y +608K Consumer Metrics (Dollars in millions, except ARPU in dollars) 20.6 20.7
Slide 12: Reported Billings Up Mid-Single Digits
Reported Billings Up Mid-Single Digits Trended Consumer Reported Billings Growth Reported Billings Growth +7% (Excluding Q/Q FX impact to ending contract liabilities) • With 2 ppts from FX revaluation of 9% contract liabilities 7% Direct Business 6% 5% 5% 5% Mid-Single-Digits • Driven by broad-based
Slide 13: Achieved Long-Term Target Operating Margin
Achieved Long-Term Target Operating Margin Trended Operating Margin Operating Margin 50.2% (As reported, Non-GAAP) • Up 20.1 pts Y/Y • Includes ~$10M of stranded 60% costs in continuing operations Long-Term 50% Op. Margin Total company operating margin will Target be clean of stranded costs starting
Slide 14: Healthy Balance Sheet Supported by Financial Flexibility
Healthy Balance Sheet Supported by Financial Flexibility Key Balance Sheet, Cash Flow & Other Metrics Strong total liquidity position (Dollars in millions) • Over $1B+ cash on hand Current leverage levels Q2FY21 Q1FY21 Q4FY20 • Gross debt leverage 2.8x Balance Sheet • Net debt leverage 2.0x Cash, Ca
Slide 15: Successful Transition to a Pure-Play Consumer Company
Successful Transition to a Pure-Play Consumer Company • Eliminated $1 billion of costs since sale of Enterprise business in Nov. 2019 All Stranded Costs Eliminated • Completed cost takeout in August 2020, 4 months ahead of plan $1 billion of costs taken out • Realized $875 million of cash proceeds f
Slide 16: 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% ……………….…… ✓ Achieved • Free Cash Flow (Annualized) of >$900M .… ✓ Tracking - by Q3 Already Achieved excl Stranded ✓ Tracking - by Grow fas
Slide 17: Q3 FY21 Guidance
Q3 FY21 Guidance (Dollars in millions, except per share amounts) Non-GAAP Q3 Guidance Revenue $625 - $635 Y/Y Change (Adj for IDA) Approx. +4% to +5% EPS $0.36 - $0.38 • Growth rate excludes IDA ($15M in Q3 FY20) • Assumes business at ~50% operating margin • Assumes stable share count and currency r
Slide 18: Appendix
Appendix
Slide 19: 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 Q2 FY21 Revenue 636 595 603 610 2,444 614 626 ID Analytics 14 13 15 4 46 - - Total Revenue $650 $608 $618 $614 $2,490 $614 $626 Gross P
Slide 20: Trended Contract Liabilities and Reported Billings
Trended Contract Liabilities and Reported Billings Contract Liabilities and Reported Billings We isolated FX impact on (Dollars in millions) reported billings by revaluing contract liabilities Non-GAAP Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 FY20 Q1 FY21 Q2 FY21 in USD at the end of each Contract Liabilitie
Slide 21: Trended Share Count
Trended Share Count Diluted Share Count (Shares in millions) Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 FY20 Q1 FY21 Q2 FY21 Basic Share Count Weighted Average 619 620 621 599 615 590 592 Dilutive Potentially Issuable Shares: From Employee Equity Awards 13 8 6 6 8 4 3 From Convertible Debt 10 16 20 34 20 20 5
Slide 22: Q2 Stranded Costs Detail
Q2 Stranded Costs Detail Stranded Cost Breakdown Q2 total stranded costs of ~$50M: (Dollars in millions) Informational • ~$10M operating expenses (continuing operations) Non-GAAP Q2 FY21 Stranded • ~$25M restructuring costs including severance for Revenue $626 Enterprise sale TSAs (discontinued oper
Slide 23: Q2 GAAP to Non-GAAP Reconciliation
Q2 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 Q2 FY21 Q2 FY21 GAAP EPS / Net Income $0.11 $64 GAAP EPS / Net Income from DiscOps 0.17 102 GAAP EPS / Net Income from ContOps $0.28 $166 Sto
Slide 24: 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 25: NortonLifeLock
‘) NortonLifeLock”