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Gen Digital (GEN) - 2025 Q1 - Quarterly Report
GENGen Digital (GEN)2024-08-07 01:55
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Financial Performance - Net revenues for the three months ended June 28, 2024, increased by 22millionto22 million to 965 million, compared to 943millionforthesameperiodin2023,representinga2943 million for the same period in 2023, representing a 2% growth[88][94] - Operating income rose by 58 million to 417million,primarilydrivenbyincreasednetrevenuesandreducedrestructuringcostsrelatedtotheacquisitionofAvast[89]−Netincomedecreasedby417 million, primarily driven by increased net revenues and reduced restructuring costs related to the acquisition of Avast[89] - Net income decreased by 6 million to 181million,attributedtohigherincometaxexpenses,despiteincreasedoperatingincomeandlowerinterestexpenses[89]−RevenueforthethreemonthsendedJune28,2024,was181 million, attributed to higher income tax expenses, despite increased operating income and lower interest expenses[89] - Revenue for the three months ended June 28, 2024, was 190 million, an increase of 6% compared to 179millionforthesameperiodin2023[99]−Incomebeforeincometaxesincreasedto179 million for the same period in 2023[99] - Income before income taxes increased to 276 million from 201million,withaneffectivetaxrateof34201 million, with an effective tax rate of 34% compared to 7% in the prior year[103] Customer Metrics - Direct customer revenues increased to 850 million, up from 829million,whilepartnerrevenuesroseto829 million, while partner revenues rose to 101 million from 97million[95]−Thedirectcustomercountattheendofthequarterwas39.3million,anincreasefrom38.2millioninthepreviousyear[95]−Theretentionrateimprovedto7897 million[95] - The direct customer count at the end of the quarter was 39.3 million, an increase from 38.2 million in the previous year[95] - The retention rate improved to 78%, up from 76% in the prior year, indicating better customer loyalty[95] Expenses and Cost Management - Total operating expenses as a percentage of net revenues decreased to 37% from 43%, reflecting improved cost management[93] - Cost of revenues increased by 11 million, primarily due to a 9millionincreaseinrevenuesharecosts[100]−Totaloperatingexpensesdecreasedby129 million increase in revenue share costs[100] - Total operating expenses decreased by 12% to 358 million from 405millionintheprioryear,withsignificantreductionsinamortizationofintangibleassetsandrestructuringcosts[100][101]CashFlowandCapitalManagement−Cashprovidedbyoperatingactivitiesincreasedby405 million in the prior year, with significant reductions in amortization of intangible assets and restructuring costs[100][101] Cash Flow and Capital Management - Cash provided by operating activities increased by 38 million to 264million,drivenbyhighercashcollectionsfromcybersafetybillings[107]−Cashandcashequivalentsdecreasedby264 million, driven by higher cash collections from cyber safety billings[107] - Cash and cash equivalents decreased by 202 million to 644millioncomparedtoMarch29,2024,mainlyduetostockrepurchasesandcashinterestpayments[89]−Thecompanyexecutedstockrepurchasesof11millionsharesfor644 million compared to March 29, 2024, mainly due to stock repurchases and cash interest payments[89] - The company executed stock repurchases of 11 million shares for 272 million during the three months ended June 28, 2024, compared to 3 million shares for 41millioninthesameperiodlastyear[111]DebtandRestructuring−Thecompanyhasatotaloutstandingdebtof41 million in the same period last year[111] Debt and Restructuring - The company has a total outstanding debt of 8,628 million, with 6,022millionintermloansand6,022 million in term loans and 2,600 million in senior notes[114] - A restructuring plan related to the acquisition of Avast is expected to incur total costs of up to 150million,with150 million, with 124 million already incurred as of June 28, 2024[117] Foreign Currency Exposure - The company operates in multiple currencies, including Euro, Japanese Yen, British Pound, Australian Dollar, Czech Koruna, and Canadian Dollar, which exposes it to foreign currency exchange rate risks[122] - Growth in international operations will increase exposure to foreign currency fluctuations and volatile market conditions, potentially negatively affecting revenue expressed in USD[122] - The company executes monthly foreign exchange forward contracts to hedge foreign currency balance sheet exposures, with gains and losses recorded in Other income (expense), net[122] - The company does not use derivative financial instruments for speculative trading purposes and does not fully offset the effects of foreign exchange rate changes[122] - As international operations grow, the company will continue to reassess its approach to managing risks related to foreign currency fluctuations[122]