Q3 2020 Earnings Call
Welcome to Norton Lifelocks fiscal third quarter 2020 earnings call.
All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session at that time, if you'd like to ask a question debate do so by pressing star one entered the Q if you'd like to withdraw your question first the boundary.
Q I would now like to turn the call over to the head of Investor Relations to one Kim Thank you.
Maybe again.
Thank you I'm pleased to walk me through our call to discuss our third quarter fiscal year 2020 earnings results.
Posted hearings material in slide for Investor Relations events Web page speakers on today's call our Vincent a lot Norton Lifelock CEO some of your Korea, President and Matt Brown interim CFO.
Call will be available for replay via webcast my website.
As a reminder, in connection with the sale of certain assets of our enterprise security business to Broadcom on November four 2019, we choose our corporate name just simply from Symantec's Norton lifestyle.
The results of our enterprise security business were classified as discontinued operations in our concerns.
These statements of operations and does exclude it from continuing operations and segment results for all periods presented.
Starting in the second quarter fiscal 2020 operate in one reporting.
Revenues and associated cost of our Ideate analytic solutions, which were formally including the enterprise curious segment are now in.
Moving over many reportable segment.
On January 31st 2020, we completed the sale guar I'd analytic solutions.
To remind everyone that all references to financial metrics, our non-GAAP unless otherwise stated please refer to the supplemental materials posted on the Investor Relations website further that punished definitions of our non-GAAP metrics.
Please note Nongaap financial measures reference during this call are reconciled the comparable GAAP financial measures in the press release and supplemental materials personnel website.
We believe our presentation of non-GAAP financial measures when taken together with a corresponding GAAP financial measures provide meaningful supplemental information regarding our operating for reasons discussed.
Hello.
Our management team uses these non-GAAP financial measures in assessing our operating results as relevant planning and forecasting future periods.
We believe our non-GAAP financial measures also facilitate comparisons of our performance to prior period isn't that investors benefit from understanding our non-GAAP financial measures.
Non-GAAP financial measures a supplemental.
It should not be considered as a substitute gosh, which mission presented in accordance with job.
Today's call contains forward looking statements based on conditions, we currently see.
It was statements are based on current beliefs assumptions and expectations speak only as of the current state as such involve risks and uncertainties that may cause actual results to differ mature.
Really from our current expectations.
Particular, our statements regarding our sale our enterprise curiosity to Broadcom.
He has dissipated benefits from such sales and cost reductions associated with this transaction are subject to a variety of risks.
Please refer to the cautionary statement in our press release for more information you'll also find a detailed.
Discussion about our risk factors in our filings with the FCC and in particular, our annual report on form 10-K for fiscal year ended March 29, 2019 recently filed quarterly reports on form 10-Q, Let me now I'll turn the call over to Vincent [laughter]. Thank you see one and good afternoon, everyone. I'm very pleased to report that we delivered better than expected to be.
Dogs in Q3, the first quarter off northern Lifelock as a Standalone company.
We delivered revenue above the high end of the range supported by bookings growth of 4%.
S was 25 cents up nine cents from a year ago and winnable about guidance.
Even by strong execution and lowest.
Splendid cost.
We have actually the weighted our transition to become the pure play leader in consumer cyber safety and we are driving to what's on your target of $1.50 cents EPS.
We have delivered on our commitment of returning more than 100% of the net proceeds from the sales <unk> enterprise business.
Who broadcom by being a $12 per share special dividend on January 31st and starting at 1.6 billion dollar share repurchase program in December.
Before I go into more detail I would like to thank all of our employee.
Achieving these results in a quarter in which we completed the sales of our enterprise.
Business.
He is another testament to the operational discipline and the dedication of our team.
These encouraging results speak for themselves, but let me give you a few more details.
Since the close of the sales of Entre probably the business on November 4th we have been removing stranded costs at the next at a weighted basis.
Previously estimated community just trying to cost both gross way at $1.2 billion, we skosh cost of 900 million to remove these trended activities.
We have exit or we do that transition to be done in Q2 fees could you at 21 three month ahead of plan.
Cumulative stranded.
Both gross and I'm talking to less than 1 billion dollar in total of which 750 million are in cash.
We are making good strides towards exiting or rightsizing, the cosby's to achieve target operating margin of 50% for the total company by the end of the transition period.
In addition, we made significant progress towards our goal to monetize and dispose off underutilized assets to more than offset this trying to cash cost.
We recently closed the sales I thought I'd analytics business for $375 million in cash.
In addition, we received the first round up bids for the sales so far.
Soon to be vacated properties, including I'm going to view campus.
We now project the cash proceeds from the underutilized assets to be approximately $1.5 billion significantly higher than the 1.1 billion. We previously estimated on our last earnings call.
When you combine that 10.7 billion.
Sales of the enterprise business with the 1.5 billion in monetization if I said.
Lets the 750 million is trying to cost.
We project a generated roughly $11.5 billion in gross proceeds directly or indirectly related to the sales of our enterprise asset Wow I know Rick.
Would be very proud.
Even after taxes, which I know lower than initially expected and the return of a substantial amount of cash to our shareholders in the form of dividends and stock buybacks, we're left with meaningful capacity to invest and sustainably grow I can seem a bit.
Well nice.
Odyssey, you I talked about some key priorities for us in the short term.
First established credibility by consistently delivering on what we say.
Secondly, accelerate the transition to quickly get too long term business model was 50 per cent profitability for the company.
And lastly, and more importantly, free up investment capacity to return the company to sustainable growth delivering on the full potential of a standalone consumer business.
Also said that it would take time to reach our full potential.
I think it goes without saying that we have delivered on that commitments in terms of executing on the sales of the enterprise business accelerating the elimination of stranded cost and maximizing the value of our under utilized assets.
As for the ongoing consumer cyber safety business this quarter with delivered bookings growth of 4% you over your and increase net subscribers by 66000 sequentially, while maintaining operating margin over 50% when you exclude the impact of stranded cost.
It is the first positive quarter of net customer at in a long time, but to be fair one quarter does not make a trend.
While customer count is stabilizing are focused execution and reprioritizing investments have us on the right path to deliver long turn sustainable growth our strategy is working out.
I will pass now the cold over to my business partner Semira for more details on our product can initiate it and selling motion.
Thank you Vincent.
Momentum in launching Norton 360, memberships worldwide continues and the third quarter, we expanded our membership offerings Mia Asia Pacific and Latin America, including Ireland, South Africa, Australia, and Mexico, We remain focused on our strategy to deliver increasing value to Norton lifelock members by offering abroad set up.
Cyber safety solutions.
In a third quarter average revenue per user or our pool increased to $8.99 per month up 1.2% sequentially and up 2.7% year over year.
More importantly, we saw continued stabilization of our direct customer account.
Grew customer accounts sequentially this quarter for the first time in more than two years, we add a new customers at the top of the final while maintaining our high retention rates are sarvis safety messages resonating with customers. We believe the growth in customers directly results from our strategy to invest and drive consumer awareness of the value.
So far offering.
In addition to our direct customers. We also protect millions of customers through indirect relationships, we've established through partnerships around the world, including telcos employee benefits retailers and Etailers.
One example is a recent partnership agreement, we signed with a large telecom service provider will be bundling, our new membership product powered by Lifelock.
It will be the first time will be launching the full version of Lifelock, which includes identity restoration outside the United States, we're starting to see more and more of these organizations understand how much value cyber safety can bring both their businesses and their customers.
These relationships contribute to our foundation for growth in the future.
We are continuing to invest in our product capabilities to address cyberthreats, they're evolving at a fast pace. Let me highlight two examples of identity offerings that we launched in the quarter.
In December we launched home title alert. This additional features available to our U.S. members, who subscribe to the highest level of identity protection.
For many Americans their home is there most valuable asset and we're helping protected from fraud. We're now monitoring for changes to their home title and tax records at the County Recorders office.
With this service members are loaded when potential scammers use victims identities to take out fraudulent loans or place liens on a victim's home for financial benefit.
This is one of many examples of our continued focused on innovation to deliver additional protection to our members across security privacy identity and home.
We also expanded our identity theft offering outside the U.S. with the launch up our dark web monitoring service powered by Lifelock in Japan.
Dark web isn't an index part of the Internet and it is a hotbed of criminal activity, where criminals can buy and sell stolen information.
When we detect our members information in the dark web we alert our members so they can take action.
Product has seen good adoption in that market and we are working hard to deliver it to consumers around the globe.
Those are just two examples of leading innovation, but we have a robust r. and d. pipeline of products that we believe will help keep our customers cyber safe.
Let me turn the call over to map to discuss Q3 actual results in more detail.
Thanks Amir.
Let me review, our Q3 result in a bit more detail focusing on non gap results.
Q3 revenue was 618 million of 1% year every year and constant currency and above our guidance range of 602 to 612 million.
Analytics revenue was included in both actually and our guidance and landed at 15 million for the core.
Diluted D.P.S. was 25 cents exceeding our guidance range, driven primarily by better than expected stranded costs in our piano.
Operating margin was 36.2% compared to 28.6% in Q3 19.
We drove strong margin performance by reducing stranded costs.
Ingest one quarter, we reduced our head count by 52% and significantly reduced our real estate footprint, making substantial progress on right sizing our company for the go forward business.
Well progress was made Q3 continuing operations included stranded operating expenses of approximately 85 million.
As we stated on our prior quarter earnings call. During this transition period are reporting cost structure will be complex and burdened with stranded costs. The timing of the transition the net costs associated with our transition service agreements asset right off and the location of these costs.
And the piano will impact operating margin and or E.P.S. for the next three quarters.
For example, depending on the underlying nature of these costs. They may be recorded and operating expenses of continuing operations or transition services expenses, which are included below the line in other income and expense or discontinued operations or restructuring, which are excluded from our non gap.
Results altogether.
Because of this complexity, we're providing detail on the approximate amounts and location of stranded costs incurred in the quarter in our earnings deck posted on our Investor Relations website, which I invite everyone to review.
In Q3, our cash flow from operations was 399 million with free cash flow of 389 million.
These amounts include cash flow from continuing and discontinued operations, which also includes stranded costs and benefited from collections of enterprise related receivables in the quarter.
By the way the estimated tax liability on the enterprise sale is now estimated at 2.2 billion versus the 2.5 billion estimated at the time of the deal.
The majority of this tax liability is left to be paid <unk>, and therefore will be reflected in that quarters cash flow from operations.
We ended the third quarter with cash and short term investments of 12.8 billion.
Our total debt level was unchanged at 4.5 billion.
Our strong cash flow has enabled us to return a significant amount of cash to our shareholders in.
In Q3 under or 1.6 billion share buyback plan, we repurchased 14.1 million shares for 364 million in cash.
In addition in Q3, we paid our recently increased regular quarterly dividend of 12, and a half cents per share and lastly, we recently completed the previously announced special dividend of $12 per share.
We will continue to return cash to our shareholders, while maintaining our ability to invest in growth opportunities.
We now expect are estimated cash balance at the end of the transition to be over two and a half billion as a result of lower expected cash transition costs.
Lower expected cash taxes on the enterprise sale lower cash paid on the special dividend due to timing of our share buyback and higher expected cash receipts from the sale of under utilized assets.
All told this is significantly increased our cash expectations and allows greater flexibility to create more value to invest in sustainably grow the business as well as gives us the option to deploy additional capital as we Opportunistically managed deletion.
Let me now turn the call back to Vincent to provide our queue for outlook. Thanks to my very clear.
Provide I.Q. for outlook and also discussed a longtime growth strategy for note in life luck.
The fourth quarter, we expect running the range of 595 million to $605 million, excluding idea and then it takes which close in January.
Well, we'll need to drive the business for growth, which is expected to commute to yield no single digit bookings growth in q. for ultimately delivering revenue growth in later quarters.
We expect queue for non gap E.P.S., two being the Rancho 15 tends to 20 cents per share.
Based on assumptions have locked share pound with the business up waiting at approximately salary, 50% profit margin when excluding the stranded costs.
As we exit out transition period upon examination of the stranded cost and there was a full benefit from share buybacks. We expect the operating margin to reach 50% annualized eat yes to come to approximately $1.50.
Fiscal year 2020, so as we turn to previous marketing investment levels, primarily targeting a direct acquisition programs in the U.S. and worldwide. We'll we'll continue to invest in our distribution and product <unk>.
While these initiatives take time to generate revenue Wang courage to see two consecutive quarters, how full pretend building schools you over Europe.
We believe <unk> well positioned to continue our market leadership by offering a simple reliable path to cyber safety.
<unk> to protect our customers digital and connect it lies is reflected in our commitment to make the world safer.
I'd transformation is well underway.
We've become much more nimble and customer focused on talked to achieve a new tomb goals to removes trying it cost and neither foundation for growth.
For me too long term goals were excited by the opportunity to deliver innovative solutions to protect consumers and produce sustained revenue and earnings growth, we strong cashflow generation for shareholders.
As I told all all of our employees it will not be a linear path. They would it be changes along the way, but <unk> tremendous and our focus is on protecting and the lighting consumers was innovative solutions.
And we've that Matt <unk> happy to take you question.
Ladies and gentlemen at this time, if you like to ask a question you may do so by pressing star follow the number one on your telephone keypad, if you'd like to withdraw your question <unk>. Please ensure that you pick up your hands when asking a question for the best audio quality and the interest of time, please limit yourself to asking one main question.
One follow up question. So we we could make sure we get to everyone.
The first question is one of the team up Boolani from yes <unk>.
<unk>. Thank you for taking a question.
And maybe I'll start with you I just you get a progress update on then membership sandals 10 version installed base.
How the body you're at data points here as you move the base cheated the membership model. So it was wondering if you could sort of update us as to how you're tracking along that path and maybe if you can give us a little bit more color S.Q.. How the 10 versions are landing whether it here in in sort of the the low back it or the very convenient bucket that would be really helpful.
Then I have a follow up now.
Thanks for theme.
Yeah as as we as we rolled out last April our cyber safety.
Programs, which includes security identity privacy in home and family we've been moving.
Both our existing customer base into that bucket as well as acquiring new customers into that combines solution both of which have progressed well I think we share the data on that progression on an annual basis and we are very happy with the results. We've we've had over this year. So next quarter will be sharing the the <unk>.
<unk>.
Existing customers moved into that program, but in addition to that as I mentioned my opening remarks, we have also rolls out new identity to protection capabilities in international markets like the dark where monitoring in Japan, and and soon to be released identity threat restoration service in another country. So.
What we're seeing is the combination of capabilities in value, we're providing a resonating with our customers and that's resulting in both the the are who as well as retention you've seen in our reporting today.
Thank you and not for you very helpful color around that go forward or normalized capital structure, if you well, but I'm wondering just kind of given the mechanics around a convertible notes on the balance sheet with respect to that dilution. That's come on line as a result of those notes and.
Back that you have in place I'm wondering if you can kind of step us through how we should be thinking about share account and share account dilution mechanics going forward. Thank you.
Sure.
Yeah, So as Vincent mentioned in his outlook remarks, we're modeling flat share account a quarter over quarter.
So our queue for guidance incorporates are expected dilution.
Also with the offset of our share buyback program and as we move forward as that as the dilution from our converts.
Continues we have the ability to opportunistically managed that through additional share buybacks.
And so that is built into our model.
And our next question <unk> Kaleo from Barclays. Okay.
Hey, guys. Thanks for taking my questions here.
<unk> and so maybe maybe we just start with you you know you talked about some of the some of the incremental investments that that the team is putting into you know additional marketing programs to help drive somebody improvements that we're seeing it bookings from the top line.
I guess my question is are those investments you know the type that you think we can leverage or do you think that we need to increase them potentially to sort of sustained disapproved growth.
Yeah. So as we mentioned in private quarters to write that we've increase our marketing investment to go back to prior levels, They're really true. He said actions we've done with those investment. The first one was we need to move from long form.
Targeting to social media and other new area in which we had not been marketing in the past. So that's one one shift the second one wants to really move from mainly being <unk> to be more into national we've been going and you'll have we been growing nudity Pacific and that of course, he's too she bought a new product product launch.
So those are important factor and then we've.
Align our marketing investment to the board on off more than 360 membership structure.
Making our customer aware of the incremental value we provide them through the the membership.
When you raise the the the noise level, if you wanting to market the awareness level in the market you have a long way to go in term of improving productivity of those marketing investments. So I do believe that while we've wasted here in the fiscal year 20, we have <unk> to gain productivity from those investment going into fiscal year 21.
Got it got a map maybe from my follow up for you.
Can't just talk a little bit about the mechanics of the transition services agreements or T. essays, how much you know when when did those start sort of start to kick and you mentioned that those go below the line one of those start to kick in what sort of magnitude and and for how long broad brush as if you can.
Sure.
So our transition services agreement began right. After the closes the transaction on November 4th and those continue for about six months. So expect goes to continue until about may 4th.
The cost of those transition services agreements are included down in other income an expense, but so are the the offsetting.
Reimbursements from broad com, which which offset the expenses that are down in in other income expense. So those will continue.
All the way through May 4th at which point, we will exit.
And those amounts will then come out of other income and expense going forward and second just so so weekly we have multiple T.C. agreements depending on the function on their way out of the countries.
So they have different timeline time off of stopping once the services over than eat it of course I immediately shut down all come back into the normal up until we shut them down. So this idea dynamic P.N.L. and we focusing mainly on the getting towards the end of the transition pure admission showed that 100% of those trying these costs are being illuminated yeah.
U.S. a specific question around amount.
It was as we've indicated in the in the Investor Relations deck at 65 million is included down and other income an expense and that is offset by the income that we're getting.
Very helpful. Thanks, guys.
And our next question this blind of bread Celnik from credit Suisse Brad.
Thanks, So much hi, Vincent how are you.
Very good.
Very nice quarter. Congratulations my my first question for you.
To drill down into the marketing investments a bit.
<unk>, if you can help us better understand which channels, you're seeing the best conversion from and and perhaps the demographics of the incremental customers that you're adding.
Yeah. So we have our traditional long form investment T.V. radio et cetera doors have been very efficient Luke and strong would go and continues to be that way.
We now have redirected some of the market investment into social media and other new avenues.
And we see early success and sign off of newness. If you one going into those channels. So we can you to invest money to that and optimize our customer acquisition cost as we as we learn a mother's channel when two I didn't think so let me on that yeah. It just telling you that we're focused on moment of truth marketing to grow.
Kostroma Grace first and foremost and although TV and radio are important parts of our final we've added the investment into new digital media. So I just mentioned shared social but also search engine optimization and mobile and all our focus investing in those channels. It's also investing in international performance marketing include.
Routing Europe and in Asia and.
And as you know with a Norton Lifelock and our check Mark we have a very powerful brand. So most of our marketing investments is to take that trust brand and channel. It is so that people are more aware around or cyber safety solutions and drive customer growth from that.
Thank you so much smeared, it's actually very helpful and if I could just follow up for format I suppose it's it's good to see how well I had a plan you all are on eliminating stranded costs now less than a billion dollars versus the original estimate of one and a half billion can you just maybe help us understand what's changed and is there even a chance.
That that number might come down further from here.
So I don't want to commit to to getting faster than than what we've already done, but I'm happy that we were able to accelerate the elimination of those stranded costs and and so what we've seen as we've pulled forward some of those actions earlier than had been expected.
And as a result, now we've been able to to lower the amount the cumulative amounts post transition to just under a billion.
I think that's where we'll leave it for now.
Okay excellent. Thanks, so much for taking my questions nice job.
Thank you.
And our next question as one of Walter <unk> from city alter.
And one of them.
Hey, Hey.
<unk> or.
<unk>.
So any changes and then I'm curious how you're thinking about the the only channel the P.C.L.U.M. channel going forward.
For acquiring customers.
Yeah. So two things on renewal, we share every quarter, but we shed that I think one or two quarters, who go that were around a slight the on the 85% the renewal ways have been extremely peebles overall renewal buckets as as continue to have contributed to the group with overall so so good stabilization.
The the second come into round, let's call. It Avenue, a distribution of of the grooves and going into ever we way to reach customers. We mainly obviously a direct to test them acquisition and distribution company, but we look at all aspect on the Oh yeah.
M. side, we have we'll have one or two as you know when we look all wayside all the options, making sure that we we do not overlook anything we have no specific blend to show today.
But we'll we'll continue to too broadly at all ways to reach out continues.
Okay. Thank you.
And our next question just one of Greg Moscowitz from Mizuho Securities Reg.
Hey, Greg Hey, Thank you very much hi, guys. So a bit of a follow up to to Brad question as you alluded to in your prepared remarks. This is the first time in a while in which the the number of subscribers increase financially by my count at least 10 quarters and and you know Vincent it sounds like the fire wire from the increase marketing focus will probably be seen more in fiscal 21.
But I'm just wondering what you would say is the primary driver or the improvement in subs at this stage.
Yeah. So so a couple of come under the first one of these you're right. The first ones. These Q2 thousand 18, when there was a breach we think we fucked if you'll remember so would scenes defoe's coin a very very long time that we are growing sequentially structurally without a specific even being driven into markets, which I think is very very.
Encouraging note still <unk> sequentially I would feel according to that kind of Stabilisation mode.
And the only sign of success has been mainly of raising the marketing investment to you then review, where we are marketing, our our products and making consumers aware of of the need and and the product so moving into new China and said we discussed in moving internationally and then after world because we are a product company of useless.
<unk> launching new products and said, we had talked about the new functionalities <unk>, we 60, a new concept for membership fee you can access to all over the functionality. So my portfolio in that good reading Goodwin <unk>.
Okay Fantastic that's really helpful. And then just as a follow up or do you showing any progress on upselling at the point of renewal or do you see a realistic opportunity to take that higher going forward.
So the first objective for us outside of growing consumers, he's really to move and and and increase the adoption <unk> 360 membership structure, we <unk> Fatima mentioned earlier, we're going to hit the the one you're renewal event.
And a different point of the life cycles, we have the ability to continue to demonstrate high value and up so.
Great. Thank you.
Once again, ladies and gentlemen that star one on your telephone keypad. If you liked asking audio question.
Our next questions wine of Keith Weiss for Morgan Stanley Keith.
You guys for chicken.
How's it going guys.
Thanks for taking the questioning and and and very nice corridor.
One question I kind of digging in a again and kinda the bread like vein, but on the other side of the equation in terms of your ability to monetize somebody's stranded assets and and that number going up is that the result of kind of what you've been able to realize or already or you kind of revising your estimates on.
Some of the remaining asked us on a going forward basis.
Yeah. So the question.
So we sold a few assets that a partial ownership in indeed, you sort of business the idea and that it takes and then we revising based on the price that which we sold those assets plus the first set of offers that we got for most of our facilities that way put four sales.
Got it so.
And then on the on the core business on the [noise] are presided equation any improvements that you're seeing there to help us on pack a little bit of kind of where those are coming from what sort of.
How much of that comes from sort of mixed shift toward some of the higher price solutions how much. It any is coming from just absolute price increases you're putting it against the product or less promotions against the product to get a better understanding of the durability those are pro increases.
I had some air so as as we discuss a little earlier cyber safety and the roll out of the the combined membership offering has been our focus and and with that security privacy identity in home capabilities. They do have a higher our poo and as we add those capabilities, we're seeing more and more.
Our customers adopt that that solutions that and that is reflected in the r., who increase as well as the the retention comments that that means in shared earlier.
And above and beyond that you know user growth is our priority and multiple geographic in multiple geography is so those are both high R.P. geography, but as we focus on on user Grove, we might also be looking at lower our who cohorts specifically to adopt a higher volume of users.
Got it.
Yeah.
And our next question is one of Karl Cure said from Deutsche Bank Girl.
Oh, I think so I've got yeah, Hi, I've got a revenue growth and a cash flow question. All all I suppose at once so you you highlighted you just put up your second consecutive quarter of a 4% billings gross in the core business and I guess my questionnaires, whether your confidence level that that can be a catalyst for you to achieve.
Revenue growth in the consumer segment of mid single digits. Some time in fiscal 21 is now grader and then I'll on the cash flow side, you you outline the stranded cost impact on <unk> and other income a combined at 150 mill.
But what was the impact on free cash flow that you reported a 389 million. So that we can get some sense of how the core businesses tracking towards your goal of 900 million and a run right. Thank you.
Yeah. Thanks, Thanks for the two questions had started with with the growth you know booking gross 4% for now two quarters in a row custom of count growth are two very good leading indicators of the future state of the business and what it will mean for the revenue.
Line, which is more of an accounting line. If you go back to the end of fiscal year.
19, we had revenue decline with has different bands decline and we had custom of come decline in the what you see today in the on the revenue line is the impact of those Mitch week 12 months ago.
So obviously as as I mentioned looking rules and <unk> was to approve image weeks that we are really driving for and achieving these results I would say off early sign of success that will not called them yet sustainable growth <unk> sign that we on the right path.
To deliver on our strategy.
Some of the cash flow you you mentioned the the the cost on the continue the operations. P.N. Then you also have a discount you the permissions and restructuring all of which impact cash flow and this quarter. In Q3. We also had the collection of the accounts receivable from the enterprise segment the.
Deal from both come did not dig the E.R.
The way it precludes so it was really a a higher quoted you do that when we feel down our cashflow stayed when the new what's linked to our consume a business. We went on taught to deliver on 900 million free cash flow I knew last for the 40, if you want or by the end of the transition period.
Got it okay very helpful. Thank you. Thank you.
And our next question is line of <unk> from Oppenheimer and company <unk>.
Action. Thank you.
Good afternoon, Congrats on this folded results.
Vincent one one of the views supporting this steady growth of some of the next generation and points 80 providers is that they are displaced and some of the legacy providers semantic included within that list.
Should we expect you to starts in in change going forward.
Skiing this levels for for your view.
I'm not exactly sure what you were for you, but I really want to detach <unk> and phone security provider and much more back to the membership Northern 360 of course not for security is a basic view for you and pointing device is also offer privacy to a V.P.N.
<unk> offers identity protection now moving to nationally Doc web monitoring and who are much more company offering a cyber safety.
<unk>, if you one creating and helping to design that got the only as a new category for a full consumers.
Fair enough understood and my follow up I'm interested actually in your <unk> product created question that dark web but that throughout client are these sensors that that you're sitting in the dark web is it more analytic strip and what's what's the exact product.
<unk> is is at home grown and well what's the go to market strategy associated with this product. Thank you.
That's a great question as you know identity protection is growing need for consumers around the world and one of the key platform stolen information exchanges on the dark web, but our secret sauce is the question, you're asking and and the answer is yes, we have all different ways in which we are monitoring the dark at the end of.
The day being able to bring a dark web capability to our customers around the globe requires us to have a robust way in which we monitor for P.I. potentially being stolen and sold in in the dark web and what our focus is on how we get that information real time to our consumers so they're alerted and.
Well to take action on it.
Thank you.
And ladies and gentlemen at this time, we have no further questions I'd like to turn it back over to visit pull it for closing remarks.
Thank you thanks for joining us today, well there was allowed to feel good about our transformation will not be linear we still have ways to go to deliver sustainable growth and delight our customers, we need to keep delivering innovative solutions to me the world Cyber save I am confident that this team can build on early.
Signs of success. These first quarter inspires us to reach our full potential has the puberty leader in consumer cyber safety.
It is an exciting start far journey has known in Lifelock.
<unk>.
Ladies and gentlemen, this does come through today's conference call. We think you j. leave for joining us for Norton Lifelocks. The school third quarter 2020 earnings call me down disconnect.