Gen Digital Inc. · NASDAQ:GEN
Gen Digital — NortonLifeLock — Q3 FY2020 Earnings Presentation
16 slides from Gen Digital's earnings presentation, Feb 6, 2020
Slide 1: Q3 Fiscal 2020 Earnings Investor Presentation
FEBRUARY 6, 2020 Q3 FISCAL 2020 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: Q3 Results Better than Expected
Q3 Results Better than Expected • Revenue of $618M, above guidance and up 1% Y/Y in constant currency • Continued increase in marketing investments showing early signs of success with sequential customer growth and reported billings growth 4% Y/Y • Non-GAAP EPS of $0.25, above guidance and up 56% Y/
Slide 4: Billings, Revenue and EPS Growth
Billings, Revenue and EPS Growth Q3 Non-GAAP P&L (Continuing Operations) (Dollars in millions, except per share amounts) • Revenue of $618M, up 1% Y/Y in constant currency, Non-GAAP Q3 FY20 Q3 FY19 Y/Y Change and above guidance range of $602M to $612M • IDA contributed $15M in revenue (1) (1) Revenu
Slide 5: Removing Stranded Costs at an Accelerated Pace
Removing Stranded Costs at an Accelerated Pace Cumulative (Nov ‘19 – Sept ‘20) Over Time (Nov ‘19 – Sept ‘20) Includes $1.20 Stranded Opex & Restructuring Includes Stranded Opex & Restructuring • Cumulative stranded costs lowered (Dollars in billions) (Directional) to under $1.0B, of which ~$0.75B i
Slide 6: Stabilizing Customer Count and Strong ARPU
Stabilizing Customer Count and Strong ARPU Average Direct Partner Revenue = Direct Customer x + ARPU(1) Revenue Count • Stabilizing customer count, net adds up 66K Q/Q Q3FY20 $603M 20.1M $8.99/mo $61M QoQ 1% = QoQ 0% x QoQ +1% + QoQ +3% (2) YoY 0% YoY (2%) YoY +3% YoY (2%) • ARPU remains strong, as
Slide 7: New Identity Offerings Launched in Q3
New Identity Offerings Launched in Q3 Home Title Monitoring Dark Web Monitoring in Japan Part of Norton360 with LifeLock Ultimate Plus (U.S. only) Launched as a standalone product in Japan (previously only NortonLifeLock monitors and notifies users if we detect available in the U.S. as part of
Slide 8: Strong Balance Sheet and Cash Flow
Strong Balance Sheet and Cash Flow Key Balance Sheet, Cash Flow & Other Metrics (Dollars in millions) • Q3 Ending Cash balance was $12.8B, post transition expected to be $2.6B+ (see next page for adjustments Q3FY20 Q2FY20 to post-transition cash) Balance Sheet Cash, Cash Equivalents and STI $12,768
Slide 9: Improved Outlook on Post-Transition Ending Cash
Improved Outlook on Post-Transition Ending Cash Post-Transition Ending Cash(1) (Dollars in billions) • Better than expected post-transition cash balance Directional expected to be ~$2.6B+ Q3 Ending Cash $12.8 • Improved outlook driven primarily by Special Dividend Payout (7.8) • Lower cash paid on t
Slide 10: Q4FY20 Guidance
Q4FY20 Guidance Non-GAAP Q4 Guidance Revenue $595 - $605 (1) Y/Y Change (2%) - 0% Non-GAAP EPS $0.15 - $0.20 • Expecting low single-digit bookings growth supported by continued marketing investment • Revenue guidance excludes IDA and is impacted by Q4 FY19 customer count decline • Assumes business a
Slide 11: Marching towards the Long Term Model
Marching towards the Long Term Model Growth Drivers… Post-Transition Long Term Model Model • Drive adoption of membership offering Low Single Mid Single Revenue Digit Growth Digit Growth • Increase investment in customer acquisition Operating ~50% Margin >50% Margin Income • Convert partner subscrib
Slide 12: Appendix
Appendix Copyright © 2020 NortonLifeLock. All rights reserved. 12
Slide 13: Trended Quarterly Results
Trended Quarterly Results Non-GAAP P&L (Continuing Operations)(1) (Dollars in millions, except per share amounts) Non-GAAP Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Revenue 600 601 602 605 2,408 636 595 603 ID Analytics 12 11 13 12 48 14 13 15 Total Revenue $612 $612 $615 $617 $2,
Slide 14: Trended Contract Liabilities and Reported Billings
Trended Contract Liabilities and Reported Billings Contract Liabilities and Reported Billings (Dollars in millions) Non-GAAP Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Contract Liabilities $1,070 $1,040 $1,046 $1,059 $1,011 $1,016 $1,047 Y/Y Growth (6%) (2%) 0% Revenues 612 612 615 617
Slide 15: Q3 Stranded Costs
Q3 Stranded Costs Q3 Stranded Cost Breakdown (Dollars in millions) Informational: Stranded in ContOps Non-GAAP Q3 FY20 Pre-Close Post-Close Q3 • Total Stranded Costs in Q3 of ~$550M consists of the following: Revenue $618 Cost of Revenue 95 • ~$85M in operating expenses of continuing Sales & Marketi
Slide 16: 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.