Core Insights - Gen Digital Inc. (GEN) reported strong first-quarter fiscal 2026 results, with both revenues and earnings exceeding the Zacks Consensus Estimate [1][9] - Non-GAAP earnings were 64 cents per share, surpassing the estimate by 6.7% and showing a year-over-year increase of 20.8% [1][9] - Non-GAAP revenues rose 30.3% year over year, driven by heightened demand for AI-driven cyber safety solutions [2][9] Financial Performance - Gen Digital's Cyber Safety revenues reached $869 million, up 11.4% year over year, while Trust-Based Solutions segment revenues surged 109.7% to $388 million [5] - Direct Customer revenues increased 25.4% to $1.07 billion, and Partner revenues improved 67.3% to $189 million [5] - Quarterly bookings advanced 31.7% year over year to $1.202 billion, with an average direct customer count rising to 40.6 million [6] Operating Metrics - Non-GAAP gross profit grew 26.9% year over year to $1.06 billion, although gross margin contracted by 220 basis points to 84.1% [7] - Non-GAAP operating income totaled $650 million, reflecting a 15% year-over-year increase, with an operating margin of 52% [8] Cash Flow and Balance Sheet - The company ended the quarter with cash and cash equivalents of $828 million, down from $1.006 billion in the previous quarter [10] - Long-term debt increased to $8.963 billion from $8.335 billion year over year [10] - Operating and free cash flows generated in the quarter were $409 million and $405 million, respectively [10] Guidance and Outlook - For Q2 fiscal 2026, Gen Digital anticipates revenues between $1.18 billion and $1.21 billion, with non-GAAP earnings projected between 60 cents and 62 cents [12] - For the full fiscal 2026, the revenue outlook has been raised to a range of $4.8 billion to $4.9 billion, with EPS guidance adjusted to between $2.49 and $2.56 [13]

Core Insights - Gen Digital Inc. (GEN) is set to report its first-quarter fiscal 2026 results on August 7, with expected non-GAAP revenues between $1.18 billion and $1.21 billion, reflecting a year-over-year growth of 22.4% [1][8] - The company anticipates non-GAAP earnings per share in the range of 59-61 cents, with a consensus estimate of 60 cents, indicating a year-over-year increase of 13.2% [2][8] - Factors contributing to GEN's performance include increased demand for cybersecurity products, particularly due to a rise in global hacking incidents, and the successful launch of new features like Genie Scam Protection [3][4] Revenue and Segment Performance - The Consumer Security segment is projected to generate revenues of approximately $730.9 million, representing a 20.4% year-over-year increase, while the Identity and Information Protection division is expected to see revenues of $440.8 million, indicating a growth of 28.1% [4] - The increase in client bookings, strong retention rates, and international expansion are expected to positively impact top-line growth [5] Market Challenges - Despite positive indicators, GEN's performance may be affected by a decline in IT spending due to high interest rates and inflation, leading enterprises to defer significant IT investments [6][8] - The broader economic environment, including macroeconomic and geopolitical challenges, is also anticipated to weigh on enterprise demand [6] Earnings Expectations - The company's earnings model suggests a strong likelihood of an earnings beat, supported by a positive Earnings ESP of 1.67% and a Zacks Rank of 3 [7]

Financial Data and Key Metrics Changes - Fiscal year 2025 total bookings reached a record $4 billion, up 4% year over year, with revenue exceeding the high end of annual guidance [8][25] - Non-GAAP operating margin was a record 58.4%, reflecting strong cost controls and operational efficiencies [9][26] - Non-GAAP EPS was $2.22, marking a 15% increase year over year and at the high end of annual guidance [9][26] - Unlevered free cash flow was nearly $2 billion, with net leverage reduced to 3.2 times EBITDA [9][34] Business Line Data and Key Metrics Changes - Direct revenue in Q4 was $877 million, up 4% in constant currency, with a total Q4 revenue exceeding $1 billion for the first time at $1.01 billion, also up 5% [27][26] - Partner revenue in Q4 was $121 million, up 15% year over year, driven by strong growth in the employee benefits channel [31][32] - The identity theft protection segment saw double-digit growth internationally, with increased demand for LifeLock following major data breaches [12][14] Market Data and Key Metrics Changes - The direct customer count increased by 1.3 million to over 40.4 million direct paid customers, with a total of over 65 million direct and indirect paid customers [15][28] - Approximately 45% of direct customers now have comprehensive cyber safety memberships, reflecting the increasing value of the product portfolio [15][30] - The company expanded its privacy and identity products into 15 new markets, achieving encouraging early results [14] Company Strategy and Development Direction - The company is committed to increasing innovation pace and expanding geographic reach to deliver cyber safety solutions [10][22] - The acquisition of MoneyLion is expected to enhance financial wellness offerings and expand the total addressable market [16][37] - The business will operate under two segments: Cyber Safety Platform and Trust Based Solutions, focusing on customer needs and operational efficiency [18][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business despite macroeconomic uncertainties, citing a strong subscription model and high customer retention [68][70] - For fiscal year 2026, the company expects revenue between $4.7 billion and $4.8 billion, representing 6% to 8% pro forma growth [22][39] - Non-GAAP EPS for fiscal year 2026 is projected to be between $2.46 and $2.54, indicating double-digit growth [39] Other Important Information - The company plans to continue a balanced capital allocation strategy, focusing on share repurchases and debt paydown [48][36] - Q4 operating income was $590 million, translating to an operating margin of 58.4% [33] - The company has a robust cash flow generation capacity, with a Q4 ending cash balance of over $1 billion [34] Q&A Session Summary Question: Guidance for fiscal year 2026 and MoneyLion growth visibility - Management confirmed that guidance assumes MoneyLion growth can remain in the 29% to 30% range, with a focus on cross-selling and transforming the business model [44][45] Question: Capital allocation strategy regarding share repurchases - Management indicated a balanced approach to capital allocation, looking forward to resuming share repurchases while managing debt [48][49] Question: Impact of MoneyLion's customer network on potential subscribers - Management highlighted the opportunity to cross-sell to MoneyLion's customer base and enhance offerings through their technology [54][58] Question: Signs of demand resilience amid macro uncertainty - Management noted strong subscription levels and a resilient business model, with confidence in continued demand for cyber safety products [68][70] Question: Indirect revenue growth outlook and new partnerships - Management expects sustainable, profitable growth in the indirect channel, particularly from employee benefits and telco partnerships [82][86]

Financial Data and Key Metrics Changes - Fiscal year 2025 total bookings reached a record $4 billion, up 4% year over year, with revenue exceeding the high end of annual guidance [8][25] - Non-GAAP operating margin was a record 58.4%, reflecting strong cost controls and operational efficiencies [9][26] - Non-GAAP EPS for the year was $2.22, up 15% year over year, and at the high end of annual guidance [9][26] - Q4 revenue exceeded $1 billion for the first time, reaching $1.01 billion, up 5% year over year [27][26] - Q4 operating income was $590 million, translating to an operating margin of 58.4% [33] Business Line Data and Key Metrics Changes - Direct revenue in Q4 was $877 million, up 4% in constant currency, with a customer base increase to 40.4 million, up 1.3 million year over year [27][28] - Partner revenue in Q4 was $121 million, up 15% year over year, driven by growth in the employee benefits channel [31][32] - The identity theft protection segment saw double-digit growth internationally, with increased demand for LifeLock [12][14] Market Data and Key Metrics Changes - The identity category grew double digits internationally, with privacy and identity products introduced in 15 new markets [14] - The overall customer base grew to over 65 million direct and indirect paid customers, with nearly 45% having comprehensive cyber safety memberships [15] Company Strategy and Development Direction - The company is focused on increasing innovation pace and expanding geographic reach to enhance its cyber safety platform [10][12] - The acquisition of MoneyLion aims to expand into financial wellness, enhancing the company's total addressable market [16][17] - The business will operate under two segments: Cyber Safety Platform and Trust Based Solutions, with a focus on driving profitable growth [18][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business despite macroeconomic uncertainties, citing a strong subscription model [68][69] - For fiscal year 2026, the company expects revenue between $4.7 billion and $4.8 billion, representing 6% to 8% pro forma growth [22][39] - Non-GAAP EPS for fiscal year 2026 is projected to be between $2.46 and $2.54, indicating double-digit growth [39] Other Important Information - The company plans to continue a balanced capital allocation strategy, focusing on share repurchases and debt pay down [48][36] - The Q4 ending cash balance was over $1 billion, with liquidity exceeding $2.5 billion [34][35] Q&A Session Summary Question: Guidance for fiscal year 2026 and MoneyLion growth visibility - Management confirmed that guidance is based on maintaining current momentum in both the Cyber Safety Platform and MoneyLion, with expected growth rates of mid-single digits for Cyber Safety and around 24-25% for MoneyLion [44][45] Question: Capital allocation strategy regarding share repurchases - Management indicated a balanced approach to capital allocation, focusing on both share repurchases and debt pay down, with plans to resume share buybacks post-acquisition [48][49] Question: Impact of MoneyLion's customer network on potential subscribers - Management highlighted the opportunity to cross-sell to MoneyLion's customer base and enhance offerings through the integration of financial wellness features [55][58] Question: Resilience of the business amid macroeconomic uncertainty - Management reassured that the business model is resilient, with a strong subscription base and continued demand for cyber safety products [68][69] Question: Indirect revenue growth outlook - Management expects sustainable, profitable high single-digit growth in the indirect channel, particularly from employee benefits and telco partnerships [87][88]

Q4 FY25 Earnings May 6, 2025 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 expressions, and variations or negatives of these words, but the absence of these words does not mean that a statement is not forward-looking. All statements other than statements of histo ...