Slide 1: FY24 Q3 Earnings
FY24 Q3 Earnings February 1, 2024 Copyright © 2024 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 © 2024 Gen Digital Inc. All rights reserved. 3
Slide 4: Q3 Non-GAAP Business Highlights
Q3 Non-GAAP Business Highlights • 18th consecutive quarter of growth: Cyber Safety (1) Bookings up 4% and Cyber Safety Revenue up 3% • Sequential direct customer count growth of 330,000 with continued acceleration in mobile and international markets • Double digit EPS growth, supported by operating
Slide 5: Business & Portfolio Highlights
Business & Portfolio Highlights Copyright © 2024 Gen Digital Inc. All rights reserved. 5
Slide 6: Avast Q3 Threat Report
Avast Q3 Threat Report: Stunning 50% Surge in Blocked Attacks, Resulting in 1 Billion Monthly Blocks in Q3 and a record-breaking 10 Billion in 2023 The adoption of AI by threat actors, particularly in deepfake financial scams is accelerating. The nefarious use of deepfakes targeting TikTok users, of
Slide 7: Total Radius: All-in-one, Executive Protection
Total Radius: All-in-one, Executive Protection 360-degree AI-powered protection against reputation, privacy, and physical safety risks Reputation Privacy Threat Intelligence AI-powered monitoring sifts Personal information removal Real-time monitoring across the through the noise, providing an makes
Slide 8: Paving the way for Next Gen Cybersecurity
Paving the way for Next Gen Cybersecurity https://Genie.AI Norton + AI: • Scam Detection at your fingertips • Simply take a screenshot of your text or email and share it with Genie • Proprietary AI that delivers results in seconds • More you use it, smarter it gets • So easy to use, it's like magic
Slide 9: A Recognized Leader
A Recognized Leader Copyright © 2024 Gen Digital Inc. All rights reserved. 9
Slide 10: Q3 FY24 Financial Results
Q3 FY24 Financial Results Copyright © 2024 Gen Digital Inc. All rights reserved. 10
Slide 11: Consistent Execution
Consistent Execution Non-GAAP P&L Q3 Q2 Q3 Y/Y % FY23 FY24 FY24 (USD) • Driving Sustainable Growth: Q3 Revenue of $951M ($mil), except per share amounts Revenue $936 $948 $951 2% • Cyber Safety revenue up 3% in constant currency Y/Y % (CC) 38% 28% 2% -- • Broad-based growth across channels and produ
Slide 12: Gen Performance Metrics
Gen Performance Metrics REVENUE CYBER SAFETY METRICS Q3 Q2 Q3 Y/Y % Y/Y % Q3 Q2 Q3 Y/Y FY23 FY24 FY24 USD CC FY23 FY24 FY24 Direct Customers 38.4M 38.5M 38.9M 0.5M Direct (1) $818 $837 $837 2% 3% (219K) (Q/Q change) +380K +330K + Partners $95 $95 $99 4% 4% Direct Monthly ARPU (3) $7.09 $7.28 $7.21 $
Slide 13: Operating Margin Expansion to 59%
Operating Margin Expansion to 59% ● Integration Update: % of Q3 Q2 Q3 Revenue FY23 FY24 FY24 ● Nearly $290M annual run-rate synergies achieved to date ● Remaining portfolio integration: timeline on track, COGS 13% 13% 13% expected to consolidate platforms by end of CY24 S&M 19% 18% 18% ● Unlocks add
Slide 14: Balance Sheet & Cash Flow
Balance Sheet & Cash Flow Key Balance Sheet, Q3 Q2 Q3 Cash Flow, & Other Metrics FY23 FY24 FY24 ($mil) Balance Sheet • Liquidity of $2B (~$500M cash + $1.5B revolver undrawn) Cash, Cash Equivalents and STI $812 $629 $490 • Does not include $900M domestic tax refund (1) received at Contract Liabiliti
Slide 15: Q4 FY24 and FY24 Non-GAAP Guidance
Q4 FY24 and FY24 Non-GAAP Guidance Q4 FY24 FY24 Key Assumptions • Revenue low single digit growth • Stable SOFR rates and currency REVENUE REVENUE • Free cash flow generated in Q4 to be deployed for $960M - $970M $3.805B - $3.815B debt paydown and share buyback • Exiting fiscal year with: EPS EPS •
Slide 16: Supplemental Information
Supplemental Information Copyright © 2024 Gen Digital Inc. All rights reserved. 16
Slide 17: Go Forward Capital Structure
Go Forward Capital Structure Facility Principal ($ mil) Maturity Coupon Debt Maturities in $mil (Initial Principal Amounts) Revolver (RCF) – undrawn at Q3 qtr-end $1,500 2027 If drawn: SOFR+CSA+1.5% As of December 29, 2023 Term Loan A (TLA) $3,715 2027 SOFR+CSA+1.5% Term Loan B (TLB) $3,053 2029 SOF
Slide 18: Trended Non-GAAP Quarterly Results
Trended Non-GAAP Quarterly Results Non-GAAP P&L Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 FY23 Q1 FY24 Q2 FY24 Q3 FY24 ($M), except per share amounts Direct Customer Revenues 624 660 818 831 2,933 832 837 837 Partner Revenues 72 74 95 100 341 97 95 99 TOTAL CYBER SAFETY REVENUE $696 $734 $913 $931 $3,274 $929
Slide 19: Reconciliation to Non-GAAP Gross Profit
Reconciliation to Non-GAAP Gross Profit GAAP to Non-GAAP Gross Profit Q1 FY23 Q2 FY23 Q3 FY23 QQ4 FY23 FY23 Q1 FY24 Q2 FY24 Q3 FY24 ($M) GAAP Results of Operation Gross profit (GAAP) $605 $629 $758 $757 $2,749 $767 $768 $769 Non-GAAP Gross Profit Adjustments Net revenues • Contract liabilities fair
Slide 20: Reconciliation to Non-GAAP Operating Income
Reconciliation to Non-GAAP Operating Income GAAP to Non-GAAP Operating Income Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 FY23 Q1 FY24 Q2 FY24 Q3 FY24 ($M) GAAP Results of Operation Operating income (GAAP) $261 $241 $368 $357 $1,227 $362 $25 $335 Total Non-GAAP gross profit 7 17 58 59 141 58 59 58 adjustment No
Slide 21: Reconciliation to Non-GAAP Net Income
Reconciliation to Non-GAAP Net Income GAAP to Non-GAAP Net Income ($M) Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 FY23 Q1 FY24 Q2 FY24 Q3 FY24 GAAP Results of Operation Net income (GAAP) $200 $69 $165 $915 $1,349 $189 $149 $144 Total Non-GAAP gross profit adjustment 7 17 58 59 141 58 59 58 Total Non-GAAP opera
Slide 22: Reconciliation to Non-GAAP EPS and Net Income
Reconciliation to Non-GAAP EPS and Net Income Q3 FY24 GAAP to Non-GAAP EPS and Net Income (1) ($M), except per share amounts EPS Net Income GAAP EPS / Net Income $0.22 $144 • Stock based compensation 0.05 35 • Amortization of intangible assets 0.18 118 • Restructuring and other costs 0.00 2 • Acquis
Slide 23: Reconciliation to Non-GAAP (Unlevered) Free Cash Flow
Reconciliation to Non-GAAP (Unlevered) Free Cash Flow Unlevered Free Cash Flow Reconciliation ($M) Q3 FY24 Net Cash Flow from Operating Activities $315 Adjustments: • Capital Expenditures (8) Free Cash Flow $307 Adjustments: • Cash paid for interest expense, net of interest rate hedges $201 Unlevere
Slide 24: Trended Share Count and Stock-Based Compensation
Trended Share Count Diluted Share Count Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Shares in millions Basic Share Count Weighted 578 590 647 639 614 640 640 639 Average Dilutive Potentially Issuable Shares: From Employee Equity 4 3 4 5 4 3 4 6 Awards From Convertible Debt 22 2 - -
Slide 25: Trended EBITDA (Non-GAAP)
Trended EBITDA (Non-GAAP) Reported EBITDA (Non-GAAP) (1) ($M) Q1 FY23 Q2 FY23 Q3 FY23 QQ4 FY23 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Net income $200 $69 $165 $915 $1,349 $189 $149 $144 Adjustments: • Net interest expense 29 45 149 163 386 164 167 160 • Income tax expense (benefit) 29 126 51 (751) (545) 15 (2
Slide 26: Debt Covenant EBITDA (Non-GAAP)
Debt Covenant EBITDA (Non-GAAP) Debt Covenant EBITDA (Non-GAAP) (1) ($M) LTM (3) Net income $1,397 Adjustments: • Net interest expense 654 • Income tax expense (benefit) (989) • Depreciation and amortization 499 EBITDA (Non-GAAP) 1,561 Adjustments to EBITDA: • Contract liabilities fair value adjustm
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 © 2024 Gen Digital Inc. All rights reserved. 29