Release Date: January 30, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gen Digital Inc (GEN, Financial) reported its fifth consecutive quarter of double-digit EPS growth, with EPS up 15% year-over-year.
- The company achieved a record direct customer base of 40 million, increasing by 1.2 million year-over-year.
- Gen Digital Inc (GEN) successfully launched new products like Norton Genie, which has been downloaded 2 million times, enhancing scam detection capabilities.
- The company announced the acquisition of MoneyLion, which is expected to strengthen and accelerate its financial wellness offerings.
- Gen Digital Inc (GEN) reported strong retention rates, with a direct retention rate of approximately 77.5%, indicating customer loyalty and satisfaction.
Negative Points
- Cyber Safety bookings growth decelerated to 4% from 5% in the previous quarter, partly due to the one-time impact of the National Public Data breach.
- The company's legacy business lines continue to decline, contributing only $12 million in revenue this quarter.
- Gen Digital Inc (GEN) faces challenges from increasingly sophisticated cyber threats, with 90% of threats now beginning with scams.
- The company is experiencing FX headwinds, which negatively impacted ARPU by approximately $0.01 quarter-over-quarter and year-over-year.
- There is uncertainty surrounding the integration and synergies of the MoneyLion acquisition, as it targets a different customer demographic compared to Gen Digital Inc (GEN)'s existing customer base.
Q & A Highlights
Q: Can you discuss the trends in retention rates and how they relate to ARPU, especially with the increasing mix of mobile customers?
A: Natalie Derse, CFO: Retention rates are stable and industry-leading, with all cohorts showing stability or improvement. The mix of KPIs, including retention and ARPU, is driving revenue acceleration. We are capturing demand globally across different channels and products, which supports our revenue growth from 3% to 4% quarter-over-quarter.
Q: What caused the slight deceleration in Cyber Safety Bookings growth from last quarter?
A: Natalie Derse, CFO: The deceleration is partly due to the one-time impact of the National Public Data breach last quarter, which increased awareness and demand for Cyber Safety. We estimated a 1-point impact on Q2 bookings from this breach. While the immediate impact has lessened, the heightened awareness continues to benefit us.
Q: Can you explain the synergies you expect from the MoneyLion acquisition, given the different customer demographics?
A: Vincent Pilette, CEO: MoneyLion will enhance our Personal Financial Management features, allowing us to offer comprehensive financial insights and management tools to our customers. This will enable cross-selling opportunities and enrich our AI and personalization capabilities, ultimately expanding our Cyber Safety platform.
Q: How is the full-year revenue guidance affected by FX movements?
A: Natalie Derse, CFO: The impact of FX on our full-year revenue guidance is relatively immaterial.
Q: What percentage of your customer base is using Norton 360, and how do you see this evolving?
A: Vincent Pilette, CEO: Currently, about 50% of our desktop customers use Norton 360, with mobile adoption slightly lower. We aim to increase this as we continue to innovate and integrate new features like Genie into our membership structure, enhancing overall Cyber Safety.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
