Slide 1: Q2 FY25 Earnings
Q2 FY25 Earnings October 30, 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: Business & Portfolio Highlights
Business & Portfolio Highlights Copyright © 2024 Gen Digital Inc. All rights reserved. 4
Slide 5: Q2 Threat Landscape
Q2 Threat Landscape 1B+ Blocked attacks monthly 46% Increase in blocked attacks YoY 90% Scammers' Playbook: New and Revamped Tactics Accessibility and rise of AI allows cybercriminals to lure more victims of all threats are scams & malvertising (social engineering) Digital Identity Theft: The New Go
Slide 6: Shaping the NextGen product portfolio based on consumer needs
Shaping the NextGen product portfolio based on consumer needs Protect my digital Verify the people Keep my finances Give me control of 1 life from any security threats 2 safe online 3 my personal data 4 and information I interact with online Scam, fraud, Financial and Personalized risk Identity malw
Slide 7: Anti-Scam Leadership
Anti-Scam Leadership Download today: 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 • Powered by Norton - Advice you can trust 1.6M+ App Downloads to date 4.8
Slide 8: LifeLock Control Room
LifeLock Control Room Driving awareness of LifeLock Data Exposure Scan through integrated marketing • In-person experience at the Grove in LA captured people's reactions after realizing how 'Out of Control' their data is • Influencers amplified the experience and expanded awareness of the Data Expos
Slide 9: Expanding financial wellness services in LifeLock
Expanding financial wellness services in LifeLock Introducing Credit Score Financial Monitoring Credit Services Insights, providing LifeLock customers with insights into their financial information. • Complementing existing financial monitoring features • Building, leveraging, protecting, and extend
Slide 10: FY25 Q2 Results
FY25 Q2 Results Copyright © 2024 Gen Digital Inc. All rights reserved. 10
Slide 11: Q2 Non-GAAP Business Highlights
Q2 Non-GAAP Business Highlights • Bookings up 5% in constant currency, 21st consecutive quarter of growth • Operating margin expansion to 58.2%, up 40 bps Y/Y • Double-digit EPS growth driven by focused execution and balanced capital allocation Bookings Revenue (1) Operating Income (1) EPS (1) +5% Y
Slide 12: Solid Start to FY25
Solid Start to FY25 Non-GAAP P&L Q2 Q1 Q2 Y/Y % ($mil), except per share amounts FY24 (1) FY25 FY25 USD • Q2 Revenue of $974M, up 3% in USD and CC Revenue $945 $965 $974 3% • Stronger growth in US market and Identity offerings, supported by increased awareness from recent mega Y/Y % (CC) 28% (2) 3%
Slide 13: Gen Performance Metrics
Gen Performance Metrics REVENUE CYBER SAFETY METRICS Q2 Q1 Q2 Y/Y % Y/Y % Q2 Q1 Q2 FY24 FY25 FY25 USD CC Y/Y FY24 FY25 FY25 Direct (1) (2) $834 $850 $860 3% 3% Direct Customers 38.5M 39.3M 39.7M 1.1M+ (Q/Q change) +380K +192K +389K + Partners $95 $101 $102 7% 8% Direct Monthly ARPU (4) $7.25 $7.23 $
Slide 14: Balance Sheet & Cash Flow
Balance Sheet & Cash Flow Key Balance Sheet, Q2 Q1 Q2 Cash Flow, & Other Metrics FY24 FY25 FY25 ($mil) ● Liquidity of $2.2B+ Balance Sheet ● $737M cash + $1.5B revolver undrawn Cash and Cash Equivalents $629 $644 $737 Contract Liabilities (1) $1,744 $1,819 $1,827 Debt (Principal) $9,633 $8,628 $8,62
Slide 15: Q3 FY25 and FY25 Non-GAAP Guidance
Q3 FY25 and FY25 Non-GAAP Guidance FY25 Key Assumptions (Growth in Constant Currency) Q3 FY25 • Cyber Safety Bookings growth: 4-5% REVENUE $980M - $990M FY25 • Cyber Safety Revenue growth: 3-4% EPS $0.54 - $0.56 REVENUE • EPS growth: 12-15% $3.905B - $3.930B Note: All numbers presented are non-GAAP
Slide 16: Supplemental Information
Supplemental Information Copyright © 2024 Gen Digital Inc. All rights reserved. 16
Slide 17: Capital Structure
Capital Structure Facility Revolver (RCF): undrawn Principal ($ mil) $1,500 Maturity 2027 Coupon If drawn: SOFR+CSA+1.5% Debt Maturities in $mil (Initial Principal Amounts) As of September 27, 2024 Term Loan A (TLA) $3,617 2027 SOFR+CSA+1.5% Term Loan B (TLB) $2,405 2029 SOFR+1.75% 2025 Sr. Unsecure
Slide 18: Trended Non-GAAP Quarterly Results
Trended Non-GAAP Quarterly Results Non-GAAP P&L Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 FY24 Q1 FY25 Q2 FY25 ($M), except per share amounts Direct Customer Revenues 829 834 834 844 3,341 850 860 Partner Revenues 97 95 99 105 396 101 102 TOTAL CYBER SAFETY REVENUE $926 $929 $933 $949 $3,737 $951 $962 Legacy
Slide 19: Reconciliation to Non-GAAP Gross Profit
Reconciliation to Non-GAAP Gross Profit GAAP to Non-GAAP Gross Profit Q1 FY24 Q2 FY24 Q3 FY24 QQ4 FY24 FY24 Q1 FY25 Q2 FY25 ($M) GAAP Results of Operation Gross profit (GAAP) $764 $765 $766 $774 $3,069 $775 $780 Non-GAAP Gross Profit Adjustments Cost of revenues • Stock-based 1 1 1 1 4 1 1 compensat
Slide 20: Reconciliation to Non-GAAP Operating Income
Reconciliation to Non-GAAP Operating Income GAAP to Non-GAAP Operating Income Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 FY24 Q1 FY25 Q2 FY25 ($M) GAAP Results of Operation Operating income (GAAP) $359 $22 $332 $397 $1,110 $417 $402 Total Non-GAAP gross profit 58 59 58 58 233 58 59 adjustment Non-GAAP Operatin
Slide 21: Reconciliation to Non-GAAP Net Income
Reconciliation to Non-GAAP Net Income GAAP to Non-GAAP Net Income ($M) Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 FY24 Q1 FY25 Q2 FY25 GAAP Results of Operation Net income (GAAP) $187 $147 $142 $131 $607 $181 $161 Total Non-GAAP gross profit adjustment 58 59 58 58 233 58 59 Total Non-GAAP operating expense 125
Slide 22: Reconciliation to Non-GAAP EPS and Net Income
Reconciliation to Non-GAAP EPS and Net Income Q2 FY25 GAAP to Non-GAAP EPS and Net Income (1) ($M), except per share amounts EPS Net Income GAAP EPS / Net Income $0.26 $161 • Stock based compensation 0.05 33 • Amortization of intangible assets 0.16 102 • Restructuring and other costs 0.00 3 • Acquis
Slide 23: Reconciliation to Non-GAAP (Unlevered) Free Cash Flow
Reconciliation to Non-GAAP (Unlevered) Free Cash Flow Unlevered Free Cash Flow Reconciliation ($M) Q2 FY25 Net Cash Flow from Operating Activities $158 Adjustments: • Capital Expenditures (2) Free Cash Flow $156 Adjustments: • Cash paid for interest expense, net of interest rate hedges $70 Unlevered
Slide 24: Trended GAAP Revenue by Geo
Trended GAAP Revenue by Geo Revenue by Geo ($M) Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 FY24 Q1 FY25 Q2 FY25 US 558 563 563 578 2,262 579 584 Rest of Americas 56 55 56 56 223 57 57 Americas 614 618 619 633 2,484 636 641 EMEA 226 227 230 233 916 233 233 APJ 103 100 99 98 400 96 100 Total Revenue $943 $945 $9
Slide 25: Trended EBITDA (Non-GAAP)
Trended EBITDA (Non-GAAP) Reported EBITDA (Non-GAAP) (1) ($M) Q1 FY24 Q2 FY24 Q3 FY24 QQ4 FY24 FY24 Q1 FY25 Q2 FY25 Net income $187 $147 $142 $131 $607 $181 $161 Adjustments: • Net interest expense 164 167 160 153 644 145 143 • Income tax expense (benefit) 14 (291) 36 81 (160) 95 97 • Depreciation a
Slide 26: Trended Share Count and Stock-Based Compensation
Trended Share Count Diluted Share Count Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 FY24 Q1 FY25 Q2 FY25 Shares in millions Basic Share Count Weighted 640 640 639 630 637 621 616 Average Dilutive Potentially Issuable Shares: From Employee Equity 3 4 6 7 5 6 6 Awards Diluted Share Count (GAAP) 643 644 645 637 64
Slide 27: Debt Covenant EBITDA (Non-GAAP)
Debt Covenant EBITDA (Non-GAAP) Debt Covenant EBITDA (Non-GAAP) (1) ($M) LTM (3) Net income $615 Adjustments: • Net interest expense 601 • Income tax expense (benefit) 309 • Depreciation and amortization 446 EBITDA (Non-GAAP) $1,971 Adjustments to EBITDA: • Stock-based compensation 130 • Restructuri
Slide 28: 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 29: 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 30: Thank you
Thank you Web: Investor.GenDigital.com Email: IR@GenDigital.com Copyright © 2024 Gen Digital Inc. All rights reserved. 30