Gen Digital (GEN) 14 May 202020 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to NortonLifeLock's Fourth Quarter Fiscal Year 2020 Earnings Call. [Operator Instructions] Please be advised that today’s conference in being recorded. [Operator Instructions]

I would now like to hand the conference over to the Soohwan Kim, Head of Investor Relations. Please go ahead.

you. Thank welcome XXXX call earnings to fourth discuss to fiscal quarter results. you pleased to our our I'm We posted the Investor Relations earnings materials and web slides page. events to our

President; Pilette, Speakers will call for on CEO; are today's webcast available Brown, Vincent via website. on Samir CFO. call be Kapuria, our and replay This Matt Interim NortonLifeLock's

from results The As a Enterprise the we business Broadcom to with our Security Security consolidated discontinued of segment from Enterprise periods of X, changed in operations operations certain operations XXXX, all continuing excluded as NortonLifeLock. of our presented. reminder, sale in classified Symantec were corporate name on business thus, connection our assets our to and statements November condensed for of both results and

quarter reportable XX, On fiscal in now segment, of of our of operate included formally ID which cost associated Security our second segment. segment. completed and ID in remaining we one solutions. January Analytics our solutions, are XXXX, Analytics sale in included we were XXXX, in the Starting Enterprise Revenues the the reportable

with reasons when together our operating performance posted to our believe their taken comparable meaningful discussed financial I'd GAAP to corresponding our that our during Investor supplemental note, financial financial supplemental financial below. press website measures release posted the remind are non-GAAP Please website. call provide We on everyone measures, regarding of to measures supplemental this materials all reconciled measures materials on references otherwise GAAP in non-GAAP the definitions are for further metrics. and information the presentation like of for Relations refer unless Please to referenced financial non-GAAP stated. non-GAAP metrics the

information as facilitate these planning presented our understanding a operating of team well prior should also our in and forecasting our to measures periods. non-GAAP non-GAAP Non-GAAP assessing financial financial future GAAP. considered comparisons substitute not measures as be periods with in financial measures benefit uses that measures. non-GAAP believe investors We as are for and performance management financial our from and financial Our supplemental results accordance

business on Those such, currently as to that and see. Today's contains current risks current are actual particular, cost as expectations. may and anticipated the and to subject expectations, our sale of forward-looking the on risks. statements based a cause our beliefs, our call the statements assets regarding uncertainties differ materially or with based Security COVID-XX and with sale conditions such our assumptions our date speak on involve reductions ongoing variety are from transaction pandemic Enterprise industry only of current we the Broadcom impact and to statements this In associated of from results and benefits

the cautionary press release to refer Please in more information. our for statement

detailed about annual particular, and You the on XX-K our our will for Form the and filed also Form discussion find in in risk quarterly recently with March in SEC reports filings year fiscal XX-Q. ended our a XXXX, factors on report XX,

Let turn me the call to Vincent. over now

of want adjusting driving from persevered you call each Good afternoon you this and start all our many as I by supporting while to home you customers and our new and joining employees, thanking you, are to I as Soohwan. today. us Thank working reality. mission this our in know for thank listening, of

online want the you activities, never of all to placed employees, for to customers trust thank relevant on today. is mission and than us. products also behalf more And people's in Our have our protect which our has our in been I

ourselves Managing the caused Our occasion, challenges NortonLifeLock crisis that by part part built as of our of team in restoration company DNA and be I hackers. of potential to There resources. navigate is is and world is facing. no damages around is and customers and help our processes prevention, entire to would the business as the and by currently adapting time handling rather communities well is other need as donating detection then we rising

to was currency of up by results standalone ago, $X.XX year-over-year and from the expected driven a pleased elimination X%. X% in better NortonLifeLock revenue We growth are supported in a stranded report than We bookings up year by strong QX, second constant Consumer of generated the EPS company. $X.XX quarter costs. as execution of

digits, our margin per the to impact growth XX% year-over-year addition customer of users. when over average retention, We you revenue costs. We bookings count maintaining by net delivered In mid-single grew operating of profit we sequentially. XX,XXX industry-leading exclude stranded increased while

the growth, in This last was adding six customer our net of XXX,XXX over sequential months. customers second quarter

since quarter month the strong the of quarters For two XXXX, time the had consecutive we steady saw performance a finish in March. Through we've first a of net-adds. with

we numerous consistent, phase, right the in and focused The home, products and need of in telemedicine, online and virtual from business gaming, that online stabilization risk from current environment. looking moving advantage still is criminals, for us in growth working time. at will deliver by sustainable However, is take direction especially streaming, driven to this that accelerated The trend. believe ever, our are execution we interactions, than meetings, present other all put cyber this over the transactions more our e-Shopping,

protecting will Samir but it static us a not in our portfolio people world. a does from all online As a moment, is job remind tremendous threat,

of success. measure when is delivering with a number and focused are deliver on features evolve succeeding, these each why is that and products And digital is consistently that behaviors we customer’s mission. our know count our will growth, the customer element that of we our we protects life one As are added our threats portfolio technology, that it

Let these me now. few highlights mention of a

the We reach platform launch crisis. we’ve to expanded awards and protection free AV-TEST COVID-XX capabilities Canada. offering. received with three numerous from expanded solutions during April, LifeLock we with Institute we for our of family other device Norton In our in usage and improvements international We and made products. the offered quarter XXX This our

long-term be and and at that success. will know we innovation We here our have NortonLifeLock a innovation long history of cornerstone of product a

high-value only direct-to-consumers on reliance but strong our of team physical the model. performance opportunity partners, of execution delivering at of fourth from these demonstrate each requests XX% a recurring. challenging minimal points. not investors, business various expand our low of times reflects ARPU, Our these Considering resiliency let with is the on plus our also and We and our business me over the quarter relatively sell

each recurring revenue our vast revenue is where paid Starting XX% working bookings with quarter. are our revenue, nice, of of direct-to-consumers. are subscriptions, upfront majority which annual is ratably The

base. total about recurring; to products like Our XX% indirect they as of employee us month customer carriers revenue, our every and also partners is pay telecom benefit provide providers half our their

quarter, have our over on our of as XX% we visibility sheet is I and total On over revenue off XX% our coming recurring. the the of first day revenue balance of mentioned,

physical indirect business. OEM partners. these represent we might retail impacted conservative part generated on about Secondly, our our we crisis is have be channels be The included with X% of of a our in minimal revenue forecasting. by will the or bookings These and the and total reliance by bookings health X% prolonged

not impact we capabilities However, believe or restrictions chain travel much do supply disruption distribution on overall. our have

monthly value Lastly providing a and ARPU relevant tremendous $X. and importantly, are most of we for

about has restoration of increased is team we're We've of providing environment, members. heard keeping our related theft when criminal at we Norton that started with our subsidy COVID-XX payments. helping instances substantially in are The more activity. cases for their all first opportunity of protection and around the Norton safe. time customers online know confidence, them knowing already handling is identity clock all almost spending the online, this manage increasing April, During online our home consumers that for cybercrime activities the XXX In XXX

back these resilient bookings. have to during rates is everyone's business To products the our mission our half seen times. protect relevant ever, customer as any digital the QX In financial new is life month reflected April of model in confidence of and and this more than uncertain and in and solid renewal our as in we

Now our sheet cash balance position are equally strong. and

the of $X.X back, buy dividend quarter billion. and At cash the was end after balance our payments

maturities in XXXX. all of the we end result have taken of a refinancing As QX, year addressed actions fiscal debt until

and we that liquidity to invest with our are shareholders. financial plenty of well-capitalized to payments Our strong our to cash tests in various interest continue and stress strategically make business, show flexibility return

acquisitions, structure his section. us both. balance about will further with Our provide and trends more give you accretive sheet capital in or Matt details return buybacks optionality liquidity through tuck-in make to the the capital and financial

to So is the it pure-play and might pace. if stranded Well, a what because I finish about We've made to run transition in the be now, you a line transition at cross I cost decisive ask? a rapid with company only to decisions consumer it all about the almost done, August. consider talk

been X,XXX. have have transitions on closed. I elimination around today XX, and stand notifications front job you headcount and all As today All is May in been serviced our operational stranded of essentially made

reflect scheduled we'll will and QX million The last and restructuring QX the a in of total have spent the from $XXX cumulative total asset underutilized are Analytics beginning costs. the write-offs cash activities. stranded ID stranded proceeds of have cash August, half DigiCert of By fully it sales from of around realized the the already assets billion and projected to still of be $X.X costs. and we sales funding other

is own. put we outbreak, for made each multiple up half sale. the had building up Prior various properties we that we of COVID-XX to The of the other offers for

bargaining the the which our ability We nine planned. faster enhanced is than position of months, near transition down, confident by position. assets strong contract sheet be completed, done been months our in have some our initially these officially While balance slowed negotiations and summer we three end that the are in By monetize is cash should future. in our believe to

out. run In and and in out right-sized is about for billion fiscal all fiscal functions our leaner nimbler productivity year our cost In annual of increasingly product our products Enterprise year to $XX might sold the now billion infrastructure motions rate $X.X the innovation great of various levels consumers selling taking it XXXX, we platform approach for an and membership and XXXX, Business be business. upselling receptive products, our in taking marketing developing to energy We can services. and focus environment all of through consumer optimizing a our be where and our on attention

We mission online people's about our protect activities. are to passionate

product We our that now hear will progress our team future. selling XXXX. pass a fiscal details the need and are I and consumer the for building fulfilling over dedicated is year will to my leadership to initiative, position going more in Samir, about motions call on partner more that into business our you

Thank you, Vincent.

despite history I would living is to the through moment generational a A are that together, have physically We bringing apart. world event. in we closer the fact say stay

focusing have a health evolved safety and We our focus families, common our communities. our and quickly friends on of to for

on and online as a focused the fraud commerce attackers malware, the taking of and wave COVID-XX home in them tailored seeing rise tidal people's We've As is seen to of emotions, more. new forefront scams of this panic, attacks mode advantage get impulsively cyber Hackers means to a various at at safety leveraging phishing clearly we're of enable change, stay on messages, theft identity on click malicious to links. fear, preying through are life.

coming fake malware away Instead reportedly We Organization World vaccines. for, Hackers We're offers looking are Disease from devices. and end from also for on Centers governments personal many help emails of organizations world. the seeing for their checks information Control. like up seeing downloading stimulus are the targeting of or phishing getting identifiable masks giving they're and various consumers recipients around Health

keep safety become customers more is to mission ever. important as cyber than has Our aware

family community to protecting why and platforms. of online, offering Family brings the now for even or we’ve a across the every Norton more simple the multiple-devices a strengthened of family and in As whether products way need. security our of hours spend That's households school, all and is here. member protection in home more the work

to reach parents manage akin the request the top for of have of we are time. extended children With duration on time to On allowance the their Android enables of day time the that, to management allowance. time additional easily simply and capability When kids an our ability many their spending technology, online include internet, their on kids they limits, management capability to iOS recently devices. Windows more

parents an finish time can balance. activity to online example, their to learning For add and more

going of how commitment be beyond their is conversation continued deeper to part safety our go with understanding also parents online. leads safe on extension the provide tools, a and of which which Time supervision blocking to to children, help to keep online

a platform, to parental and our safety global execution thank its our In security, XXX we home bringing our this XXX being had as all for Norton capabilities membership. cyber-safety end-to-end time. included transformative XX coverage is members. major like our with also QX. available Norton product, privacy, families goal available is to been adaptation XXX This Norton completed undertaking precision and stand-alone in in control full rollout Norton provide family countries accomplishing would team of and a the to to now during indent, as best together I

on We our in and can XXX our has delighting reach the of cyber of new to three value now other scale update No adding memberships ways. as do. areas to and pillars; safety and the as help our other focus out on quick many company a consumers privacy, Norton with Rounding security of new safety here's portfolio each we identity, customers these.

even stealing or the inscription personal encouraging healthcare included members Network tears offering to are become through prevent VPN enable information more food, Private to on help or XXX accounting membership exchanging via current information most of internet activity. information Norton crucial. A information uses our VPN has hackers or help the over were privacy frequently digital become people in and environment block more in hackers Our use their shopping even a internet. more to from as personal has more VPN eavesdropping to personal from even relevant is financial it our for Virtual for telehealth channels sensitive

We're our competitive marketing privacy UK into extend is India. the SurfEasy the in premium unlimited with to brand reach segment the and market. capabilities brand SurfEasy blocking for VPN very U.S., bandwidth and devices, of technology positioning, a started also SurfEasy called tracker flagship marketing end-to-end ad Norton protection While value provides five and for price. we currently our another

As earlier, and within customers be is in way number company, growing for count customer product said security. one we our bring family another believe the SurfEasy Vincent our will goal to new our

value integral our part leadership the deliver members is we in we for consistent Security security. an device have and of maintained

AV-TEST the protection award home awards Institute protection quarter windows for the These our included best best user protection. android as win as device solutions. During best represents we best Norton performance awards for the and from NortonLifeLock’s consecutive fifth received three This the for well protection Security.

helps devices technology that We’re from innovative building threat. protect committed cyber evolving to consumer’s ever

As people and in for the securing is more spend play and this than we be online time to foundation believe will devices more security environment, important work ever.

Last we major milestone agreement identity quarter we agreement country a a provider, telecom a aligning together safer, United mentioned last the with partnership service LifeLock cause first largest Identity this creating company very outside a suite online closely. telecom our that restoration world to full-fledged in of signed the that international Telus, with large one Canada a partner Telus’s is friendlier is second States. of companies pillars, our two

residents. insurance personal and and It all the targeted other and things. and Cana most piece Similar to is proof by health Cana of any therefore types a hackers. unique insurance the of Canada the for which number, Canadian the States, social education the social security important government's identity has number United It credit, as information of is in highly identifier is for used amongst of considered identifiable

to be overall forward and ago. a for decade. that our an been enjoyed and to identity scores bringing about level are with grow April of believe of customers to have Canadians just educate American that market the to important not before. some LifeLock small nascent It to identity restoration same U.S. is akin alerts, will features products an capabilities XXX Canada will the time, credit We theft us plan. looking the benefits the Telus Canada take of protection years existed protection. and protection time have in over limited we're which market has protection Currently to market market over the for launched a Norton where our

the capabilities Working to are important work continue and e-tailers strategy, we partners helps telcos, an consumers need area where all safety. go-to-market to bring like us broaden out and retailers of this our our and with near our employee from for in part Look to cyber more our future. combine Partners customers. audience, closer products their in to reach they more our more and benefits, and partners

X% In up per revenue and month, user to year-over-year. up X% ARPU the increased per sequentially fourth average or quarter, $X.XX

quarter XX,XXX the increase customer another had also We quarter. adding of in

For providing. year at rate These the demonstrate value retention the customers metrics that whole was are stable XX%. appreciate our we

membership more to you in coming for updating enhancements products. programs looked future of our about our and forward have with the pipeline We robust we quarters R&D

turn call now me QX detail. to over the Let to discuss Matt the in more actual results

Thanks, Samir.

balance which me up currency. $XXX on million year-over-year despite reduced supported which our customers sold liabilities Diluted ads, a QX million, Let quarter up excluding up better retention at a revenue QX was year. was X% our driven ending growth review in than Analytics, XX% expected customer headwinds, FX sheet. customer expected XX% contract range by exceeded better excluding along second steady in The the was the consent, reported and ID strong and was constant XX,XXX our January our net ID EPS in by results billings was X% QX P&L in adding costs guidance Analytics year-over-year detail. XX, of at bit with more on than reported QX, revenue stranded execution $X.XX, was negative rate billings and our year-over-year $XXX for

during our transition burdened stranded in will quarter stated with cost our and this be we complex costs. earnings reported structure period As calls, prior

less becoming progress is through our transition. so this However, we as accelerated

approximately increase the the and operating be In financials. to than We quarter related $XX reached the was QX, XX.X% points, XX in compared million XX.X% costs, expect with operations QX last period, from and an continuing moving by in more transition company year prior ago total of pieces to stranded margin significant our in quarter. burdened XX.X% in

growth margin for way the operating on steady XX% and post-transition the company. by evidenced is costs total achieving the stranded we're margin to eliminating on our operating execution well Our

TSAs activities. remaining headcount stranded and end to approximately positions reduce we Vincent that QX, finished employees the we linked X,XXX continue were addition, In to as our of to all April. eliminate mentioned, at was down the In service notifications and substantially ending and

Notified running accordance as the the enterprise we of schedule. business will QX with in but employees books now remain when long-term with through are operationally well periods U.S. employees, targeted sold the in business on such Warren approximately the model country we specific our notice X,XXX achieving we ahead

divestiture And you payments well On cash call from topic negative cash as QX in mentioned operating cost, activities materially from planned. outflows of large cash these tax last as related and amounts. as cash net the QX, earnings payments includes for to quarter's result we flow from operating stranded of activities in as flow QX was a one-time as our

absent of However, fourth model $X.X and operating business flexibility, the on the an free with and cash one-time short-term line costs, plenty quarter our payments approximately our in of investments us growth. giving billion in basis. stranded is $XXX We million with long-term our ended business for driving cash-flow annual of

to significant repurchased buyback capital of billion continue and We for This of we've share utilized authorization. amounts thus a in shareholders $X.X return of XX the million $X past total through million, $XXX we quarter repurchases far billion dividends. shares and quarter to the

the of this addition, share principle and conversion settled diluted dividend debt reduced committed convertible per paid dividend level remain In and $X.XXX overall lowered per we our cash and regular annual share $XXX to note, count. we rights paying share. $X.XX our We our which quarter of of a million our

business we after-tax return $XX the from the not XXX% commitment special per January. the of good to at on via certainly of least, sale of our proceeds end the enterprise share And dividend but last made the

was by paused of now recent to uncertainty opportunities the COVID-XX a the left with early share amid discussing and This flexibility. the In like may on prudent days with couple cash we the how buyback flexible positioned our economic to be million greater our the crisis. economic crisis, we're COVID-XX arise us caused the that any in new I'd challenges excess $XXX affords authorization as minutes a of approximately spend approach environment. capacity

to of to a resume options number our buyback However, plan we and open program remain opportunistically.

approach. in impact take potential the assets, the estate a COVID-XX slower real sales our Another the as delay of is of buyers underutilized crisis some

it we temporary is However, and a remain delay believe confident.

move timeframe. reasonable to forward the with will We be sales in able a

slowdown operating the the to ability And on not more run that business. relying not this does outlook. Importantly, achieve to impact we cash our post-transition margin importantly, are

headwinds. mentioned As our is Vincent recurring short-term ratable base. The disruption of subscriber business our diverse our direct helps in financials to nature highly minimize from economic

spending. a and sheet cash with our expense and CapEx low spending access to in addition, In reflected in undrawn depreciation million We be $X approximately forward. model term QX, billion as $XX annual well be investments CapEx is range as QX strong just to in with in as of should $X the have efficient And capital revolver. our billion expect CapEx spent $X.X our million of our balance our short we going

maturities into debt future. the the of addition, well In our outstanding extend

Our September maturity senior the that's structured occur don't debt that pushes by until XXXX. and Draw out Delayed million year back almost that being $XXX note now. The $XXX we in next term-loan million replaced is maturities two in due years from November to fiscal

We ran sufficient minimum well severe business test we the addition, In we stress financial cash operate sensitivity covenant under our and well flow as have dividends. the our limits. series as covenant, regular Even within business. our to of protect scenarios, scenarios needed downturn room cash to a in downturn are

drop trailing at current have with issues to levels. our XX the almost would example, months any EBITDA adjusted before by debt our For triggering covenants XX%

So feel liquidity about very we good structure. and capital our

revenue very strong growth, EPS financial with heading into COVID-XX delivering executed. To and We lowering liquidity this debt, we a and recap, performance economic our environment. pleased transition accelerating share, strong quarter, our maintaining how I'm reducing count, the in turned

call the provide Vincent back turn outlook. a now QX to me Let

Thanks, Matt.

retail digits trends March sales, overall. net April, me customer we was to high-single partner our Let home. to into growth This indirect continue booking in our also as working mid-single-digit life our consumers from positive provide QX overall generated to in strategy impacting sales. adapt people long-term and Direct partially decline for offset slightly grew growth adds by and not growth our Quarter-to-date, almost continued April. a discuss NortonLifeLock? outlook booking

million expect extra revenue zero revenue in supported positive and of in to week range single or the This IDA XXXX. growth is when net normalizing this $XXX the million the year in X% digit fiscal trend, outlook by $XXX growth for to bookings range. we Maintaining low-to-mid QX

be XX% when EPS non-GAAP QX approximately the to operating expect cost. margin, at the $X.XX business profit range We in to excluding with per $X.XX stranded share of a

Our stranded activities, return previous the we impact. be eliminated fiscal XXXX, direct assets expect by we be I acquisition June. in XX% distribution end it to although marketing In additional QX write-off in the and to fully year we of to will by over with long-term investment goal our levels, done primary programs, product to targeted for continue and invest roadmap that will August,

to to initiatives means. encouraged these cyber growth While see year-over-year. to quarter we any linear consecutive time a very have we fantastic that safety, path of a said simple by be define opportunity reliable won't and low-to-mid digit while revenue, bookings it generate road a also three single I take are to

month business; we to could no to to be and work anticipated and gave have we in cautious guidance. after only enable the our will a digital protect managing is lives more relevant. one a safely our Certainly, mission customer last going lockdown full agile Well,

now that and with question. I take happy Samir to any Matt, Operator? are And

[Operator is with your line of Keith, is Keith Morgan Instructions] open. Our the first line question Stanley. Weiss

Hi, Keith.

bit the go sounds of into was and work more that because from but same retail for very you tailwinds of hoping offset the that time. could home Thank the could heightened people kind environment Can what going? understand and kind it a in is How puts the overall from durable the have little working tailwind impacts stores just there's It us just drill obviously, way. it the guys. persist whether the nice on were of you consumer can't equation; Vincent, place you been a the environment, people kind takes for question given threat quarter. and help home think shelter that for down you, more side by business? and you some for slightly taking of and of may us Thank that think in you from kind like COVID-XX to of direct your

Yes.

we have they safety online driving So the in that the we and underlying let growth a want the at which safe back environment. me live go developed drivers, and Norton are more core, cyber they first is more XXX, operations, that as to consumers do membership,

pushed products became marketing We at this NortonLifeLock reinvested fiscal out you launched there November, the in Norton make known, we year, have since XXX beginning a rollout path a more turning and We into you bringing through. customer that want, and we the it was steady customers; if on our had where in new declining path-through-the-quarter. were had we to of know, we more situation count a as

from month go saw the a increased malls only things that you shopping protection We not need all the the April or that better slow and the working into those of wanting saw demand of month the to of We conversion home, March, and and that activities through increased more in from realization of demand. online. obviously can have for understand all of

couldn't the a that mile go that partially fact at token As we buy offset of products, was a or one that you by was mentioned, physical but stores, offset. our and

We their will people will we work trends, that a home, and will the from is more believe trends. life our be by which it we'll products. encouraged long-term need So online will continue live and,

just just I'm sure follow-up estate. clear on the to And it. Got real make one

because that estate the like XX% a transactions levels assumptions our fact of operating part and feel don't on closed were the that you getting there's that relatively like them is the a a expecting real basis, they expectation little estate? origin margin they OpEx you close. minor operating real still you slowed get or still go-forward The still bit, it impact get was of on good it’s it pretty – that but just down So guys sounds had without to selling

off multiple to our sale business the then to consumer [indiscernible] off put drop, teed X,XXX. sale P&L, back our for them you imagine we about and that of outbreak, headcount them have accelerated them vacated do put those slow model with each them those them try we've with sales. had on our And an we want. up our long-term what some buildings needed for the one We’ve that, anymore. for as is put down coming and some offers and sheet, you reduced buildings if the around, So through our balance for not offers structure discussions, hold We the into are

our expectation And it it time. – will that will a bit take is more

revised came in as not have they short-term press down. with including we figuring our a were lease cash back the for and not know, need. have options, We they value out short-term, the multiple buyer of We you while one

So don't impact our from of it's to this perspective, see and any about that underutilized realizing term assets. in business, time in cash operational I

Saket line is next question our Barclays of Kalia Saket, Capital. open. And is line from your

Okay. questions Great. for my here. guys Thanks taking

Sure.

First, as about to maybe do as here top I you grows improve kind on couple first to you've of hey the in positive year? importance lot and more And XXXX, anything of in top that yet. sort quarters of you guess of rate renewal subscriber of the I you Vincent, fiscal additions. And nice for – sort sort could funnel. versus to thinking there that how are base retention XXXX, forward of fiscal obviously not funnel? a rate guiding know as well that you invested look we're retention marketing Is of

absolutely. No,

customers. level, one areas that very So, one more growth, at drive three the take is high number a if you

level want Norton our great XX% The XXX, of we've of second and retention. membership, Norton engagement. have to about the a a that all is And we not install XXX higher you product third offering into one at at they increased and that base increase know, one is

those growers. great have driving driving one of areas operational and teams for We each three

with and team the one three ago the but net between it's all the quarter customer behind the number metric the marketing that. is driving and a a count, the drivers, balance we shared share I the all scores time, those that and As investment, increasing were is promoter satisfaction it’s customer

the tenure. of they our our that the lower to by as increases, year you retention, improved and If seem that in retention it each you portfolio. one is But see a cohort of has first tenure know

offset because we’re slightly and though the customer engage than returning value they And increase business. growth, is for to so more overall as the always retention all more XXX

Got makes sense. it. That

Matt, little my are QX the perhaps cost For stranded the TSA guide that up; Vincent's lot of down to sort just EPS we're can pace of on. talk you of and of removal? a here sounds maybe headcount point sort to planning were you, wrapping the a It about for we bit follow-up, expenses the like in

about you how QX? So sequential in downtick that in think do EPS

types of So, close, areas and stranded a they will in a come costs to but end. how they depending are P&L they on impact our the activities to of quarters, different as the close coming different

different message the you of activities. so, in last sort depending complex. consistent types over the up our of we've stranded costs structure as The quarters, of been this areas the is And show of know, on in couple reporting P&L

we've that we discuss. come operating XX% though, reason, they said that operate activities P&L. our to to margin expect expect a for core Having so And to impacting of that at the and these may that be business, different discussed a to close, area continue we

that course And so you make when reason $X.XX. clear, stranded But where the guide to quarter for will next costs report is it we showed the up. those of we $X.XX know, of

open. question next line your is Fatima, of our UBS. with Fatima Boolani And is from one

for you Good Matt afternoon. question for retention. Maybe the a Vincent on Thank you, taking or questions.

I backdrop consumer us, weakening little spending think broader sense and for to a spending the of of weakening a all unemployment confidence in sort harder of bit and in signals. it's overlook

churn give dynamics follow-up trends is guys have then today So the I'm into level-of renewal sustainable, you a seating you’re wondering as that that I can in and retention if the that we take those as well. you to consideration up-sell talk confidence

Yes, absolutely.

COVID-XX you imagine days a back the to went of lot as outbreak, scenarios. of the at So beginning

during went in back XXXX, to also retention look the rate at time. happened what pretty actually there that resilient then. and sustainable even We And was

interact? is The we Now changes one changes crisis way every very every the It we and different. our we or changed something is shop? work? the the that way brings operate we It It way lives. environment this unique way

there a of lives with see few video Logitech for privacy, why And And selling I security the companies think trend. I more products. more you moving having security of the acceleration systems trends online more that's is selling a conferencing online and more of more that awareness think underlying is structural like need us

short-term economic well acceleration very have And Norton in the we're here I different think by impacting positioned the the We the an may through the last pleased launching perfect that. XXX that. and from of saw we it by rate quarters, Now be we're there headwind. last solution But year, and membership. adoption two

helpful. your That’s Samir, rollout maybe And super international appreciate continue you, here. to for

higher-end still a of aren't perhaps some available ARPU functionality, feature maybe that your more the in so the of as domestic include comprehensive as LifeLock and is offerings offerings the quarter. product comparatively LifeLock level the And internationally the your of in lot up with

improve, the comparative thank that's So some as can that ex-U.S. here are understand product? on go and geographies within it ARPU And you typically the have of to feature for the takes even lower into us you what continuing me, puts a you. base help

Yes. Fatima. Thanks,

markets entering so we international look have us to the ARPU. for expansion, solutions where cohorts hit and offering, the international at premium that's us even security, with identity increased to and As dramatically most privacy the we those that certain maintain allow markets for our we're our and have a and our designed the markets part allowed needs

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line is question RBC from next Markets. the our Matt? with of Capital Matt And Hedberg

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ladies like for it CEO And I would final now gentlemen, summary. turn to the and to back

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Ladies for and call. participation. conclude your thank gentlemen, you greatly We today's this does conference

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