Gen Digital (GEN) 9 May 192019 Q4 Earnings call transcript

Good day, ladies and gentlemen. My name is Ian, and I will be your conference operator today. At this time, I would like to welcome everyone to Symantec's Fourth Quarter and Full Year Fiscal Year '19 Earnings Conference Call. [Operator Instructions] Thank you. I'd now like to turn the call over to the Vice President of Investor Relations, Ms. Hiponia. Cynthia begin. may you Ma'am

our you, posted materials GAAP materials Ian, meaningful Vice available references I'm everyone is Hiponia, financial reasons metrics We website. to corresponding website afternoon. unless to fiscal full XXXX earnings and of Investor good results. discuss Executive call Symantec's and CEO President be and regarding our in release to our on below. and our the replay metrics you IR reconciled stated. the This financial We our together posted for press quarter to comparable further operating Speakers non-GAAP, definitions Relations supplemental performance call supplemental our and measures President webpage. welcome for and year information today's discussed this call This earnings Noviello, metrics. webcast during Interim website. of provide Cynthia are to financial financial on financial measures our posted non-GAAP that their taken to measures on GAAP Please believe Vice Thank fourth the note, IR of events at are President the Please pleased CFO. Symantec, Rick all remind with on Hill, like I'd via when our are otherwise Nick supplemental will presentation call non-GAAP our referenced the refer non-GAAP for materials and to to

in periods. comparisons the supplemental performance be our benefit measures Safety. beliefs, accordance our financial on to them. investors with measures. please statements should on management we prior our Today's forecasting speak Also, as presented call for based in have of expectations, planning based currently Consumer and operating contains Consumer believe assessing uses results, name Cyber from considered conditions not current our non-GAAP cautionary as that assumptions and financial financial note, risks the future financial financial well actual date, non-GAAP changed non-GAAP information facilitate are substitute for when and GAAP. periods information. understanding to of of Non-GAAP as are measures also our the Our segments see materially statements results as Please and measures our team those only we to forward-looking statements Those current as as uncertainties such, release from in and current to refer more press and and expectations. differ involve We

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Nick? to Now, year-end to time results. Nick and it is over quarter it turn for report results fourth

fiscal XXXX, XXXX. measures, ASC Symantec to revenue financial currency prior the year first any Investor we XXX fiscal recast in fiscal results to which have to references new are the year I company method, did will non-GAAP discuss otherwise materials method. note, metrics, recognition to Please website. adopted posted QX financial Great. Thank our tables reconciliations our the GAAP on and over my you, be Relations adoption impacts our modified this financial quarter everyone. Rick retrospective today, other Rick accounting All unless as of to as information XXXX historical guidance. call to to our not metrics and to financial turn afternoon, Starting to for stated. financial comments of the standard, limiting in good information results and year non-GAAP, Due transition well I'll we supplemental after under

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for For divestitures. as growth organic and which comparative rates, adjusted purposes, we growth acquisitions define we report

revenue due Total margin guidance was was GAAP guidance our contract while revenue Total million was the range. by impacted guidance just GAAP interest negatively within Now results. $X.XXX of ASC the X% loss lower at and X% $X.XX. of of EPS one down income below below to revenue our to end the came GAAP our range. true-ups. a company and QX was the XXX. $XXX inside contract tax guidance our consumer than XX% an was equity and margin and were Enterprise $X.XX EPS of fourth of quarter quarter basis Operating point billion. in end At billion from revenue revenue slightly was Enterprise was margin liabilities our low flat the operating currency quarter, range, liabilities revenue for expected $X.XXX in to range, Security with quarter the non-GAAP due end the impact fourth constant guidance balance year-over-year. XX%, ending operating approximately high the year-over-year in $X.XXX billion our for was revenues on This our due company GAAP of segment. for our guidance was below of organic

diluted range in period million. and was from shares to CapEx activities up tax fully diluted as operating We QX million our $XXX $XX rate for average $XXX QX flow our guidance million, XX.X%. from share the XX.X% was on within $XXX effective for quarter. earnings the was ago QX million based and $X.XX, Fully Our weighted in compared per cash of guidance of generated year

performance. segment operating QX our discuss let's Now,

Security. Enterprise First,

constant Security was year-over-year $XXX currency. in revenue Enterprise Our flat million,

quarters, quarter. license liabilities XX% have Enterprise This billings, billion, reported X% liabilities ending impacted due XX% Consistent XX% third revenue impacted point quarter; our million ratable our the of $XXX revenue as our was XXX. as balance $XXX which including to second posted Enterprise approximately segment our sales. negatively compared lower of X% website and supplemental ASC business, were upfront referred we the billings, quarter, ratable quarter levels the down XX% ratable Relations was contract upfront down were than for In XX% and was were and details. Security XXXX. upfront by implied fourth Investor XXX, as Security in of ASC year-over-year. expectations. up and please under to impact lower-than-expected to Enterprise Enterprise contract Security the prior liabilities to and first implied and with contract the to was the hardware materials fiscal prior year calculated in million, the was our year-over-year XX% see in and Our quarter and Security by to - XX% are same XX% upfront this XX% in billings compared QX ratable of up $X.XXX XX

at basis will lower are ratable that stated year The the Security ago in approximately our XXXX, in for period margin the XXXX. year this XXX. we decline in in and metric fiscal not XXX through QX under This an Enterprise due we in duration approximately be XX% for in to was quarterly operating XX.X disclosing our revenue reported and year-over-year months year As report. Enterprise months. XXX after under year compares ASC spending. ASC of the operating earnings contract higher the as margin XX.X QX was ASC duration X% XX on business to Company Security Please was ago a to this beginning compared period. is fiscal Contract note, ratable reporting business months

our segment down month, safety Cyber was year-over-year up turning average ARPU million, Safety our currency. million Direct from from $X.XX Cyber QX. quarter, Safety $XXX count XX.X In quarterly flat fourth Consumer revenue Consumer the in QX. of direct-to-customer slightly constant to cyber Now and slightly was was metrics. per

of expect any We time. to these our approximately point direct-to-customer at statistics XX% represent in revenue

margin Cyber year prior in was XX%, compared to Safety XX% the - Finally, Consumer operating period. Consumer Safety

QX. Our operating saw in with what margin is we consistent

year-over-year. $X.XX. We operating fiscal to for $X.XXX while below was was inside turning the range, EPS for guidance a fiscal revenue was X% cash total segment revenue Enterprise exceeded and flow company and GAAP revenue income currency fiscal loss year spending results. XX% our lower and XXXX fiscal achieved to revenue total margin This Now was primarily margin XXXX year billion. and revenue for Safety margin XXXX This X% $X.XX and segment. from true-ups. GAAP Organic company revenue, activities. and year XXXX growth adjusted flat operating of XX% decline fiscal constant to GAAP growth X% interest our XXXX and our GAAP Operating segment guidance margin acquisitions in operating guidance due EPS Total as guidance Cyber our divestitures, in by was company revenue Consumer our and versus year Enterprise included our non-GAAP operating higher EPS was driven year-over-year. year was tax for was reported XXXX. from Security year compared equity fiscal year-over-year Security in

of Our effective our to as for was X% guidance compared year-over-year. the tax year $X.XX, XX.X% was share diluted earnings per down Fully XX.X%. rate

fully in million billings shares flow was the were $XXX from year and year XXX $XXX than fiscal as our XXXX from due costs, tax to $X.XX benefits. We CapEx of the Cash year investments, We $XXX items flow total half working QX debt cash our in range, benefits U.S. with cash approximately was flow the taxes. and of fourth of and and executed quarter the benefited fiscal transition due fiscal billion. XXXX, quarter, high billion, in year as end outstanding convertible during higher Cash in our on of XXXX well million fiscal from our year approximately capital balance $X.X bringing of cash And in lower to lower end XX primarily average year as billion XXXX. balance generated allocation, of collections capital with of activities XXXX operations timing-related guidance the from fiscal year period from operations $X.X versus Our up ago operating million million. XX% million. weighted diluted cash in repurchase of debt billion the with down held of approximately We plan in of term year-end $X.X the M&A. approximately XXXX $XXX loan was related in in billion XXbX-X with short-term $XXX to fiscal ended repurchases down, million have prepaid repurchase $X We one-time finally, billion share August pay notes. our billion million shares and remaining the comprised the under share for year $X the authorization $X.X the fourth

Finally, during million Rick discuss tuck-in and on we XXXX. turn Thank now $XXX over spent call several me acquisitions let Company fiscal you, to year the to guidance.

also Thank guidance perspective details and based you, XXXX And just reflects now current we turn view today fiscal guidance. to the XXXX Nick. with our the on Nick FX four quarter as to like year-end where rates. of ending our the and our reported I'd with QX of our are products, results, of And the business

and impact revenue on income on significant rates operating our forecasting a not year. for exchange are We the

of occurs week, the represents extra Additionally, first quarter. revenue $XX million approximately of fiscal one year million XXXX includes and week which additional $XX expenses. in This

there that as to as results cumbersome, but clear curveball possible. always make communicating as some So little attempt a is make our it my bit I'll usual, makes

revenue $XXX year million $XXX billion revenue comprised range billion, $XXX a a to week. The are in and to a Enterprise of $XXX to Security basis. on total million in implies We company. X.X% and for X.X% constant forecasting currency guidance the million QX in includes in Consumer XXXX Enterprise the X.X% of fiscal growth At the $X.XXX Cyber midpoint, million growth $X.XXX growth incremental Safety. Consumer our

We investments 'XX. in below operating to in costs need XX% to additional down decline range XX% in sequentially includes invest are forecasting the to we QX direct with support conjunction people, to In the margins of which Security cloud done we of the sequential is also in business. fiscal increased as is to to productivity. of margin primarily which Enterprise of Increased in operating the individual business. Enterprise, hiring our spend the the in XX%, be infrastructure due The QX goal sales revenue, sales being growth increasing is protect grow of our in

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cash from be drop The flow multiple Finally, operations billion. to expected attributable billion year $X.X the $X.X is cash is to flow for to in items.

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our I repurchase We cash to billion billion flow have left billion $X.X in just $X our $X.X billion here $X.X cash - about authorization. I got that. apologize flow, corrected

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Kalia [Operator from from first line Barclays. is question Instructions] Our of Saket

Greg's the and start and departure. in elephant just you, room the with start we'll introduce of Maybe with sort Rick

is, you talk so question abruptness And can the I the about announcement. of the guess

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ability the next phase to where continue Okay. has and ill is the and we've want this Greg focus shareholders the simultaneously. both quite strategy implemented of combination he and And beyond on the issues to that be laser as for with with given line where growth where also today, as I in strategy being are, operational executing well today. deliver the is how extend pressure Board strategy requires And his Company had the well the that to think father financial a results to strong the decided able it clear top we we high is

And and the so Greg time. Board was agreed mutually, the right now that both

why So, the announcement. this is question was as the all the timing. Well, earnings close very coming to down, was it

there to And effective so do with timing earnings. effect simultaneously that it that to the seemed way of it announce the no more was And most than it. of the was it

early, something announce finalized would until why a you circumstances, before announcement it really normal earnings two under up a than but and in days right two wasn't week less the You're row. announcements have

I can in most you think the and So give best I the answer that's truthful.

you just deeper a business. just the we for increase on touched Can Enterprise the area kind the your it stronger license I into from you, in about those think Maybe can in maybe of different quarter? follow-up something quarter, we at billings and talk how rates a Security? sales dig the as versus expectations close a on I you sort Nick, sequential a pipeline for typically hardware little of guess, would you Enterprise looking well, seasonally lens, expect compared wrapped up versus as but and lighter maybe in

we back make But we end pipeline, about guidance the how those Saket, at our felt some for pipeline we about cetera et with we fact I'll cetera. there that how obviously you ask or So around felt activity. felt had, grounded call had, and QX that in up the And we of the that second in and and XX may comments I'll et was maybe the question QX, capacity this a conference the Rick to capacity, leading pieces. ago, in asked days a reference QX then about to

revenue call comments license we're sales. but you there. if as quarter license as outsized that to the as of business I revenue terms results And know So, by think of you results fourth lower well business impact in than in-period quarter talked in go hardware people don't from impact know well have I and let well. has you any me let Rick, the of in on know an the Enterprise, other the disappointed expected and the of hardware the obviously down here. We and level about in implied the the billings as lower

key I at think funnel fourth some out a for that area groups April. that global involves improvement. when at both already cross-functional were while And sales of organization. of we processes new the routine I the communication. our think But process more we product the beginning and words, management think of need understand look is quarter, the rolled implemented we've In the week-to-week I during we some interaction the sales that in a have more quarter other people numbers, who the the kick-off

we we So, are. exactly know where

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think change I other to questions? going Any think I are do ready this our and products trajectory. we're

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Fatima the Boolani question UBS. Our from next of is from line

on business question the question the one one had on Enterprise and business. I Consumer

that a of start But So and transition maybe into talk the some Enterprise within organization. I'll the changes Rick, just of leadership soft out, there. side with did been degree Art in the just about performance the has brought zooming to the there's to drill significant Enterprise you organization.

understand And on you us gating to sort renewal through Consumer And wanted against dynamics, that of competitive of sort tell then question. your follow competition large very are the to a I'll with pipeline self-inflicted for better if rates of can execute the you I what factors sort my win are us large to and factors against if step for up against portfolio. can So you what a is base? you very customer

this for that answers. him over question question - Sounds rapid-fire because am in here answer to is well-armed going it. who turn on I sitting and good. And right I'm Art, my to let battle I'm to

and business five about in XXXX industry security the the here level also XX ago, portfolio My to name experience XXXX. senior seven I've Symantec but you look And joined Symantec. the obviously, for months run got years in of at mean, I've as was I for is I from deep a Gilliland to been the meet level, years. nice it's I for I think you. change, at So, I the enterprise if Art

terms of that business when here teams. the think lot I was brings so some of still a an product group understanding with the in stability before Company, back the of And work and in that the understanding here the to of are I portfolio, product the and candidly I and folks

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the our think new lie I where in challenges end forecasting. is front business the of

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I decline think there. revenue business, the there I sequential bit And about stable, quarters essentially last little for eight direct a has the as fairly maybe We've six been trajectory Rick, back count count. on direct that to seen but to consumer and that unpack is customer a at wanted in shifting to you, your the look customer

jump you time, - to erode, same wanted actually you've at what's I able drive able understand been ARPU customer base that happening to So to increases. the have there but are

I prevailing So count get chunk And to move helping wanted - customer as up it me. a down? that's sense factor in ARPU to coming that's better of you. that contrast Thank for

once time, heads this my in. me, of other and again Samir, piece business. bring Let who I Consumer the deflect armor have

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as to meet well. you Nice

we as increase. program, at look annually. the we safety metric had That XX% proposition to as for is ARPU have XX%. it what's with grown you a tailwind we relates So from has driving the us introduced that shared to cyber a Consumer, value the for That

price is increase program from been into and value that combines from translated in Safety one the that's increasing been driving security, that's the ARPU. and in Cyber of privacy, our value force So identity restoration

next our Keith And line is Morgan question of Stanley. from Weiss from the

pretty they're equation of a billings, In side down turning 'XX. to big the down further was drop. of actually it's the lot bit that business I a was around. FY the Enterprise felt part had it Security going to risk into of terms because that's And Greg beating a XX% a accelerate into a of in want kind confidence horse, of the of dead I little drill

question the of recurring of get Coat can last degree size to just of of how hardware and year issue kind give the much the versus well door? basically base the can the and side new renewal a that you terms Blue relatedly, what us getting an in number sustained? nonrecurring we revenues, customers So the of one to the the in terms are recurring? side And was of of able guys from is you sustaining equation of sense this being versus of more comes well How recurring business, how new have a in rates sense the business be

my I three weeks. that since Well, give best had about working I've been I've on data analysis this for

moves, which is I had to what I And not where in strengthened the as our is the in we, fact single more spoke that fact, OK? customer weakness this are offering, largest cloud have want. try we to text, quickly, moving solution. think we And our they the we cloud cloud my have that to customer our Coat we think don't in a core Blue is the force systems, the about in that But initial piece I about factor to downward so that business, affecting trend it want which spoke customers fixed. remarks, my go the fact the

product. a better this what our declining is the we more the led downward position. fact we're in hardware our much now But key that business So rapidly that's than we've into the to to anticipated, improved that customers retain position cloud

for still and believe having planning we of it not said quarters. we're did planning the last the rate we're that, somewhat, but it's decline in decline at Now that couple

business. analysis we that's that the have now, of So right

a away what's the you improved spent the product to the in dramatically work down again, fall really we to thing But I've win feel go you I saddle, we you you and over that those of vitality you. And checking has really, six how vitality. and fair realize, when been telling and to product that's time I have and foremost, people product start from I'm months. with to customer causing first the got a the got versus We the the of back. last think given long move a as first don't competitor amount that

through We cross-section we these had got also though wider really to get business of a opportunities. quickly products how expand

I think that's extremely important.

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those and As you get we to by when but can for will tell wanted our drive we for projection go out there. to we we where be, year-end QX, that's results,

you, can Keith. best give I that's answer So the

And is question our line from Wells from Fargo. next Phil Winslow the of

Keith's made highlighted to changes reacceleration to needle that on technically positioning But kind for that the you don't to about of just thinking Why you the looking are what products of about that the obviously, idea drive us guidance from higher? you've drive the earlier, have that and cloud product Just some you on service. when you that better these? here you're question from build think you've been given, walk how through

to will drive accelerating. everybody really, And I see to corporations offering. that can damage DLP of think one look it And at us to happen. course, that to you Well, fastest, get does needs only intense our is at the people's the focus that the, the is - criminals quickest, only in data to the the product who the allow thing is on trying going

selling that's think to a Our substantive. growth is And to right? spoke really the we've problem I at we point get over and X all as about at rate. product growing we're When small it the at point, that's phishing, Enterprise the when comes should accelerated quarters. very, else And a of is email the everything of it's we And have in strategy make risk, in of their that that that over and that stopping long of so the opportunity. DLP of Number that a The I importance undermarketed solutions have product think our offering them Xx their selling will with phishing, spear and take email. that email are back be our partnering that the handsomely effectiveness it through, the doesn't to has people has to very from Enterprise. is we market customers go through supplier sure think are And something platform coming where they're you see next not rates and But that whatever, those huge type inflection to dramatically it's customers, XX%, to an few malware grow Then I amount to. puts email, those XX% we're continue going Number a they forward. the major - base. it, X

next is our from of line Credit And question Zelnick Suisse. the Brad from

you role. Excellent. questions. new in Rick, your my Thank And so welcome taking for much

Thank you.

Board related to still related several Company? the way litigation in investigation transparency, ask, disagreement mentioned Greg's think times, against But of him, news the I want or I comes in is Company question very quite a he in were at investors the I of I on to lot on many unresolved spirit SEC a or either in first you any and fond speak any need of think of of I Saket's and follow changes the as the Greg's to the abruptly departure behalf saying Symantec. which with up positive the we to made pending departure way or

Greg's Symantec today. has can were I there's disagreement He about no remarks of say Well, the position contribution to strategic heartfelt great me. a mind. My with significant

been out I to we can out business like of the for certainly, he quarter, for huge I felt of and business happened the the like - while. industry, in myself, a getting of where swings, Greg, the is think That we know a down, are were with and the times, had semiconductor I I coming today results anyone, when hard reality slug. doesn't And capital the you, equipment of that okay. someone see tell fourth cycle that it's pride at the

I for So can't answer Greg.

didn't it my other You of at the certainly top an time - And things comes to you pyramid. CEOs, didn't effect the in pyramid, when can than From aren't companies, you're as there perspective, a talk when the him much have or do happen you're the on it CEOs happen. things at sometimes want. top as of

don't do that to answer. So can to least ever an that's one's that I with I know no said have definitive. Because that there's the I say no me. factually. of. the best can And absolutely question At investigation I

that rates on we business? about embedded within was difficulty in of given terms the business board years, And forecasting your assume with in past incoming upfront what's revenue embedded guidance how over the CFO given we Enterprise the conversion the Should you've also the should think the And us? pipeline of in contribution outlook? couple

room. since in he's the himself speak Well, than for going rather speak, me let I'm him to

This how participated with for of review up observed Hi. the an Vincent. I the XX came is the and I the the put together last they guidance. observer. of as they management team plan days how

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team work forward look at and I guidance. to the So join those hard delivering

that does extremely answer That he All going he's on. and I right, what's speed am knows your question? to transparent, up Brad.

me knows that. it. Everybody know that knows all You

Excellent.

for out presenters thank our I And we remarks. gentlemen, like would to turn unfortunately, you, any ladies time. of greatly, We and back closing it are and to

forward updating here Thank and Great. joining to everyone our for next on you today us look we earnings call.

conference. thank today's you, gentlemen, again, we does your conclude for Ladies participation. this and Once greatly

disconnect. now may You