Gen Digital (GEN) - 2025 Q3 - Quarterly Report

Financial Performance - Net revenues for the three months ended December 27, 2024, increased by $38 million to$986 million, primarily driven by higher sales in consumer security and identity protection products [152][166]. - Operating income for the same period rose by $42 million to$374 million, attributed to increased net revenues and lower amortization of intangible assets [152][153]. - Net income increased by $17 million to$159 million, with diluted net income per share rising by $0.04 to$0.26, mainly due to higher operating income and decreased interest expenses [152][153]. - For the nine months ended December 27, 2024, net revenues increased by $89 million to$2,925 million, with significant contributions from identity protection and consumer security products [152][167]. - Operating income for the nine-month period surged by $480 million to$1,193 million, benefiting from increased revenues and reduced legal costs [152][153]. Customer Metrics - Direct customer count at the end of the quarter was 40.1 million, up from 38.9 million in the previous year, indicating growth in the customer base [168][169]. - Average revenue per user (ARPU) for the three months ended December 27, 2024, was $7.27, compared to$7.18 in the prior year [168][170]. - The retention rate improved to 78% from 77% year-over-year, reflecting effective subscription renewal strategies [168][171]. Cash Flow and Capital Management - Cash and cash equivalents increased by $37 million to$883 million, primarily due to cash generated from operating activities [152][153]. - Cash provided by operating activities increased by $82 million to$748 million for the nine months ended December 27, 2024, driven by higher profit before taxes and improved cash collection [194]. - The company executed stock repurchases of 11 million shares for $272 million during the nine months ended December 27, 2024, compared to 7 million shares for$141 million in the same period last year [200]. - The company announced a cash dividend of $0.125 per share to be paid in March 2025, subject to Board approval [204]. - The remaining balance of the stock repurchase authorization as of December 27, 2024, was$2.728 billion, with no fixed expiration date [205]. Debt and Financing - As of December 27, 2024, total outstanding debt amounted to $8.569 billion, including$5.963 billion in term loans and $2.6 billion in senior notes [203]. - The company has$2,600 million in aggregate principal amount of fixed-rate Senior Notes outstanding, with a fair value of $2,626 million as of December 27, 2024 [211]. - The company has$5,963 million in outstanding debt with variable interest rates, where a hypothetical 100 basis point change in SOFR would result in a $60 million increase in annual interest expense [212]. - The company entered into interest rate swap agreements in March 2023, converting$1 billion of variable rate borrowings to fixed rates, with $500 million at 3.762$500 million at 3.55% [213]. - The company has a $1,495 million revolving credit facility that bears interest at a variable rate based on SOFR [214]. Strategic Initiatives - The company announced a definitive agreement to acquire MoneyLion Inc. on December 10, 2024, indicating a strategic move for market expansion [154]. - The company expects to incur total costs up to$150 million related to the September 2022 restructuring plan following the acquisition of Avast, with $21 million in cash payments made during the nine months ended December 27, 2024 [206]. - As of December 27, 2024, the company has incurred costs of$128 million related to the September 2022 restructuring plan [206]. Operational Efficiency - Total operating expenses decreased by 3% to $419 million for the three months ended December 27, 2024, with significant reductions in general and administrative expenses by$335 million (60%) compared to the previous year [177][180]. - Cost of revenues increased by $11 million (6$193 million for the three months ended December 27, 2024, primarily due to a $12 million increase in revenue share costs [174][175]. Risk Management - The company is exposed to foreign currency exchange rate risks due to operations in multiple currencies, which may impact revenue expressed in USD [215]. - The company manages foreign currency exposure by executing monthly foreign exchange forward contracts [217]. - As of December 27, 2024, the company has excluded$1,384 million in long-term income taxes payable from its quarterly review of contractual obligations due to uncertainty in cash flow timing [208]. - There were no material changes to the company's contractual obligations reported in the Annual Report [209].