Gen Digital, Inc. Q4 FY2024 earnings call

• Fiscal 2024 was a transformational year with strong operating results, record revenue, profitability, and cash flow. The cyber threat landscape is evolving with more sophisticated attacks, shifting focus to user-centric security.
• Product innovations include Norton Genie, a first AI-driven anti-scam app with 1 million downloads in 100 days; Total Radius, a 360-degree reputation defender tool; and the Gen Stack, which enables personalization and innovation through AI enhancements.
• Integrated Avast, achieving cost synergies faster than expected, reducing net leverage to 3.4 times, and growing direct customer base to 39.1 million with over 230,000 sequential new customers in Q4.
• Customer retention rate increased to over 77% in Q4, with progress across key performance metrics like ARPU and installed base health.

Fiscal year 2024 was a pivotal year for Gen Digital with total revenue exceeding $3.8 billion, growing 14% in USD and 15% in constant currency. Q4 revenue was $967 million, up 2% in USD and 3% in constant currency. Cybersafety revenue grew 3% year-over-year in constant currency. Direct revenue was $847 million, up 3% in constant currency. Partner revenue in Q4 was $105 million, up 5% year-over-year. Legacy business lines contributed $15 million in Q4, down from $17 million in the prior year and representing less than 2% of total revenue.

• For fiscal year 2025, expected full year revenue is in the range of $3.89 billion to $3.93 billion, translating to 3% to 4% growth in cybersafety in constant currency and supported by 3% to 5% cyber safety bookings growth.
• Non-GAAP EPS is expected to be in the range of $2.17 to $2.23 per share, representing an annual increase of 12% to 15% in constant currency.
• Q1 fiscal 2025 revenue is expected to be in the range of $960 million to $970 million, with non-GAAP EPS in the range of $0.52 to $0.54.

• Macro-economic conditions such as volatile interest rates and dramatic currency fluctuations.
• Competitive landscape where other players may have conflicting interests with consumer cybersafety.
• Continued impact of foreign exchange headwinds on reported ARPU comparisons.

Q: Peter Levine asked about new truck-based adjacencies and monetization of Norton Genie.

A: Vincent Pilette responded that the AI-infused roadmap allows for modularity and scalability, with Norton Genie focused on growing adoption first, then adding features and integrating into memberships.

Q: Dan Bergstrom inquired about the rollout of Gen Stack and reception of modular approach.

A: Vincent Pilette said Gen Stack rollout is phased, with testing in countries and progress to move into more global markets, and the modular approach is well-received as it allows users to tailor coverage.

Q: Saket Kalia asked about bookings growth drivers and retention rate for Avast.

A: Natalie Derse explained bookings growth is driven by a mix of customer acquisition, cross-sell, upsell, and partner business. Vincent Pilette discussed retention rate improvements, noting Avast's retention rate improved to over 70% with plans to continue enhancing through customer journey definition and Gen Stack-enabled personalized communications.