Q4 2023 Gen Digital Inc Earnings Call

Speaker 1: Thank you.

Speaker 2: Thank you for your patience. Jan's fourth quarter and fourth year 2023 Erning Call will begin in approximately two minutes.

Speaker 1: The for.

Speaker 1: The I.

Speaker 2: have been placed on mute to prevent any background noise.

Speaker 2: After the speaker's remarks there will be a question and answer session. That's this time for opening remarks. I would like to pass the call over to Ms Mary Lye, Head of Investor Relations. Miss you may begin.

Speaker 3: Thank you, Lauren, and good afternoon, everyone. Welcome to Gen's fourth quarter fiscal 2023 earnings call. Joining me today to review our Q4 and full year results are Vincent Pillette, CEO , and Natalie Dursey, CFO . As a reminder, there will be a replay of this call posted on the IR website, along with our slides and press release.

Speaker 3: I'd like to remind everyone that during this call, all references to the financial metrics are non-GAAP in all growth rates year over year, unless otherwise stated.

Speaker 3: A recon of non-GAAP to GAAP measures is included in our press release, which is available on the IRE website.

Speaker 3: Today's call contains statements regarding our business, financial performance, and operations, including the impact of our business industry that may be considered for looking statements, and such statements involve risk and certainties that may cause actual results to differ materially from our current expectations.

Speaker 3: Those statements are based on current beliefs, assumptions, and expectations, and speak only as of the current date.

Speaker 3: For more information, please refer to the cautionary statement in our press release and the risk factors in our filings in the SEC and in particular our most recent reports of Form 10-K and 10-Q. And now I will turn the call over to our CEO , Vincent. Thank you, Mary. Good afternoon, everyone, and welcome to our earnings call.

Speaker 4: As I reflect on the year, I'm proud of all that we have accomplished, and I'm excited about the tremendous long-term opportunity in front of us. Three years ago, we strategically set out and really focused on and redefined cyber safety for the billions of individuals connected to the digital world.

Speaker 4: We believe then, as we do now, that the complexity of our digital lives call out for someone to help protect people from the merits of threats with innovative and easy to use technology.

Speaker 4: that could seamlessly stick together solutions across security, identity and privacy.

Speaker 4: and then reach into adjacent trust-based solutions.

Speaker 4: Well, that's someone is us, Jen. We are confident that our reach, innovation capability and discipline execution can deliver on that strategy and will sustainably deliver long-term profitable growth and increasing the shareholder value.

Speaker 4: Let me quickly recap our year. For fiscal year 23, we delivered another year of organic growth, our fourth consecutive year of growth in consumer cyber safety.

Speaker 4: With delivered mid-single digit growth in cybersecurity bookings and revenue, an exited delier on a 3.7 billion revenue run rate up from 2.4 billion three years ago.

Speaker 4: During that period, we considerably expanded our scope across our cyber safety pillars, security identity and privacy.

Speaker 4: and became truly global with 60% of our customers now from outside the US. We also expanded our reach with our vast capabilities in freemium and free user base in the hundreds of millions. Gen, with its trusted brands, omnichannel expertise, and rigorous execution, is well positioned to expand the adoption of cyber safety across the globe.

Speaker 4: We have over 38 million direct paid customers as we exit fiscal year 23, up from 20 million three years ago.

Speaker 4: Despite the pressure on our direct customer count in a post-COVID environment, which saw a sequential decline of 180,000 in Q4,

Speaker 4: Our direct business actually grew single digit in fiscal year 23. Our direct customer retention rate ended the year at 76% and our annual ARPU was nearly $87 as we exited fiscal year 23. In two quarters, our direct customer retention rate ended the year at 76% and our annual ARPU was nearly $87 as we exited fiscal year 23.

Speaker 4: Since the close of the Avath acquisition, we have increased our overall annual R2 by $3.

Speaker 4: and our overall retention rate by one point, a testament of the increased value we are providing our customers.

Speaker 4: Our partner revenue delivered its third consecutive year of double-digit growth for fiscal year 23, and we continue to see tremendous opportunities to reach more consumers via diversified channels in our partner business. Our employee benefits channel again grew double digits, accelerating in growth as employers recognized the growing demand from the employees. Financial protection is becoming a staple offering in benefits packages, just like healthcare and life insurance. We also continue to scale our telco relationships in key international markets.

Speaker 4: working closely with our partners to expand their offerings and provide comprehensive cyber safety protection to millions of customers.

Speaker 4: Our strategy to diversify the distribution channels and grow the value of the offering with these partners is actually working. On the innovation front, we maintain a strong pace throughout fiscal year 23. We committed to realizing the goals of all existing innovation front bring us in.

Speaker 4: We introduce more than 10 new products and features, including international privacy monitoring assistance, not an anti-track, not an identity advisor, a vast email guidance, a vast identity solution with a vast secure identity and a vast one platinum.

Speaker 4: Northern Executive Benefit Program for the T Suite with Reputation Management features. Utility Accounts are for U.S. LiveLock and Northern 360 Members.

Speaker 4: Each of these is a step forward in our strategic efforts to rapidly expand capabilities, protection, and geographic reach in privacy and identity. We have accomplished a lot in the business this year.

Speaker 4: But I would be remiss to not mention the tremendous job the team has done in bringing together a vast and northern life log

Speaker 4: Within six months of growth, our sales, G&A, and overall infrastructure processes

Speaker 4: We have already realized two-thirds of the cost changes as we exited fiscal year 23. This was no small feat given the size, scale and complexity of the two businesses. Overall, we have accelerated the integration process and we are on track to achieve the 300 million plus annual cost savings exiting fiscal year 24. Our integration efforts helped us deliver another point of sequential operating margin improvement in Q4 reaching 57%.

Speaker 4: In fiscal year 23, we scaled operating profit to $1.8 billion, up 24% the other year, and more than doubled compared to three years ago. This profit margin and the resulting unleveraged free cash flow gives us great confidence that we can navigate to the short-term volatility and uncertainties of the global economy.

Speaker 4: Product integration, broadly defined, is what remains in front of us and is well underway. We see it as an opportunity to accelerate our march towards our vision of cyber safety that is digitalized, centered, tailored to you needs and easy to use.

Speaker 4: This requires a unified and simplified product architecture. Progress on this front will allow us to extend our reach to more people giving them exactly what they need while better enabling us to educate them on additional protection and value that we can offer.

Speaker 4: This is a key enabler of our revenue synergies in fiscal year 24 and 25.

Speaker 4: We still have work to do here, but with our comprehensive set of products, we believe these changes unlock not only those midterm opportunities, but also position us perfectly for the long term in cyber safety and in trust-based adjacencies.

Speaker 4: You've heard me talk time and time again about all of our opportunities, but let me sum it up briefly.

Speaker 4: First, in a complete study, we've received much more successful, engaging, and easy to use for everyone.

Speaker 4: That will undoubtedly continue to grow our customer feel and loyalty. To start, and in particular within the Avaaz business, we can improve the customer experience and fully integrate our customer journey. Avaaz retention improved two points in the last six months, and we believe the potential is at least 10 points improvement as we incorporate user-focused changes. Secondly, customers always focus consistently due to their 2020 e- Allan global numbness across Stefan.

Speaker 4: on value and we have a tremendous opportunity to show them the value of our cyber safety offering and to continually add to it as the needs evolve and the threats increase. The move towards protection of identity, privacy, and the protection of your full digital footprint will continue. We have increased monthly RPU 26 cents or 4% in the last six months and our long-term objective is to move above $8 where we were with not a knife lock adjusted for a new geographical mix.

Speaker 5: Fiscal year 2023 was another year of progress towards achieving our long-term $3 EPS target and was our fourth straight year of organic growth as a pure play consumer cyber safety company. As we successfully closed our merger with Avast and integrated as one Gen company, we finished fiscal year 2023 with over $3.3 billion in total revenue, growth of 19% in USD and 23% growth in constant currency.

Speaker 5: When including vast historical financials, cyber safety revenue grew 4% year-over-year in constant currency amidst a dynamic macro environment.

Speaker 5: We challenged ourselves to accelerate the execution of our committed cost energies and remain disciplined in our investments, which enabled us to expand full-year operating margin to 55 percent up 220 basis points year-over-year.

Speaker 5: This growth and discipline led us to deliver a $1.1 in EPS of 4% from the prior year and up 10% in constant currency after incurring a significantly higher amount of debt cost than anticipated at the time of the deal announcement.

Speaker 5: Our customer base is resilient with over 38 million direct cyber safety customers.

Speaker 5: Across our Gen business, we have a strong and increasing customer retention rate of 76%, and a growing direct monthly average revenue per user, or ARPU, of $7.24, as we scale our cross-selling and up-selling efforts, providing increased value to our direct customer base with new security, identity, and privacy offerings.

Speaker 5: expanded together to a total paid customer base of approximately 65 million.

Speaker 5: We are enabling growth with the continued evolution of our product portfolio and introduced over 10 new products and features this year to provide best-in-class protection and unlock new capabilities for our customers.

Speaker 5: Turning to Q4 performance, Q4 was our 15th consecutive quarter of growth, and our results reflect another quarter of consistent execution. We exceeded our revenue guidance and came in at the high end of our EPS guide.

Speaker 5: We also crossed $1 billion in bookings for the first time, with Q4 bookings up 29% in USD and up 32% in constant currency.

Speaker 5: When including a vast historical financials, cyber safety booking is screwed 2% year-over-year in constant currency.

Speaker 5: Q4 non-GAAP revenue was $948 million, up 32% in USD and up 35% in constant currency.

Speaker 5: This also includes an unfavorable FX headwind of $21 million year over year, or three points to growth.

Speaker 5: When including a vast historical results, Cyber Safety Revenue grew 3% year-over-year in constant currency.

Speaker 5: Direct revenue was $831 million up 32% in USD and up 3% when including a vast historicals.

Speaker 5: We continue to drive higher value and loyalty with our existing customers as both RPU and retention improve.

Speaker 5: As I referenced above, monthly direct ARPU is $7.24 in USD, an expansion of 15 cents quarter over quarter driven by our cross-sell and up-sell efforts and as our identity and privacy offerings grew double digits in the quarter.

Speaker 5: Ending direct customer count was 38.2 million, a decline of 183,000 customers quarter over quarter, a trend we are working hard to reverse.

Speaker 5: Lower web traffic demand continues to impact the customer acquisition funnel despite improvements in conversion. We continue to invest in a diverse mix of marketing spend to reach new audiences, drive more traffic to our sites, while dynamically optimizing the channel and geographic mix to drive the highest returns. It is imperative that we continue to focus on improving retention in our existing...

Speaker 5: over the coming quarters to support our bookings and top-line growth expectations.

Speaker 5: Two quarters later we have expanded monthly ARPU by over 25 cents, translating to $3 of increased annual ARPU.

Speaker 5: We have improved a vast retention making progress to narrow the prior 20 point retention differential between N-lock and a vast observed at the time of close.

Speaker 5: You will continue to see us expand our Arcoon Retenture Rate of the Common Portors.

Speaker 5: Moving on to partners, partner revenue was $100 million in Q4, delivering 35% growth year over year as reported in USD, and 9% growth when including Avast historical results. This was our third consecutive year of double-digit revenue growth in our partner business as we continue to scale our identity offerings through key channels like employee benefits,

Speaker 5: telcos, and breach protection.

Speaker 5: With our broad reach and omni-channel strategy, we will continue growing our pipeline, scale and nurture existing partnerships, and build further growth momentum.

Speaker 5: Rounding out our revenue, our legacy business lines contributed $17 million this quarter and now make up less than 2% of our revenue.

Speaker 5: We expect legacy to continue its decline at a similar pace as Q4.

Speaker 5: Turning to profitability, Q4 operating income was $541 million, up 3080% year-over-year.

Speaker 5: We expanded operating margin to 57% as we continue to make strong inroads to the 60-plus margin framework we've outlined in our long-term model. In Q4, we reduced our overall operating expense profile from 31% to 29% of revenues sequentially.

Speaker 5: 700 from approximately 4,500.

Speaker 5: Our hybrid workforce strategy has also enabled us to further rationalize our real estate and data center footprint, driving structural reductions in our operating model. Exiting Q4, we achieved approximately two-thirds of the annual cost energy target from a run rate perspective.

Speaker 5: with the remaining integration efforts focused on product and engineering. We remain well on track to achieve cost energies of over $300 million as we exit fiscal year 2024.

Speaker 5: year 24 and beyond. Q4 net income was $296 million dollars up 9% year over year.

Speaker 5: diluted EPS was 46 cents for the quarter stable year-over-year and up 4% in constant currency including two cents of currency headwind.

Speaker 5: Interest expense related to our debt was approximately $160 million dollars in Q4, an EPS impact of 19 cents, and a 16 cent headwind compared to last year.

Speaker 5: Our non-GAAP tax rate remains at 23% and our ending share count was 644 million, down 7 million quarter over quarter, reflecting the weighted impact of last quarter's share repurchases. Thanks for listening to our cash flow imbalance sheet.

Speaker 5: Tier 4 operating cash flow was $324 million and free cash flow was $323 million, which includes approximately $177 million of cash interest payments this quarter.

Speaker 5: This brings our total fiscal year 2023 free cash flow to over $750 million, which includes $381 million of interest expense paid, approximately $120 million of costs related to the Avast merger and $43 million of cash restructuring expenses.

Speaker 5: Our ending cash balance is $750 million.

Speaker 5: Turning to capital allocation, we remain intentional and balanced with our capital deployment. In fiscal year 2023, we returned over $1.2 billion of capital to shareholders, with approximately $900 million share buybacks and the rest in the form of our regular quarterly dividends.

Speaker 5: In Q4, we paid $80 million to shareholders in the form of our regular quarterly dividend of $0.12.50 per common share.

Speaker 5: For the next quarter Q1 fiscal 24, the Board of Directors approved a regular quarterly cash dividend of 12.5 cents per common share to be paid on June 14, 2023 for all shareholders of record as of the close of business on May 22, 2023.

Speaker 5: In addition, since we closed the Avast merger, we have deployed approximately $460 million towards debt pay down when you include the April voluntary payment.

Speaker 5: We continue to be supported by strong total liquidity of over $2.2 billion, and we have no near-term maturities due in the next two years.

Speaker 5: With our strong cash flow generation and disciplined capital deployment, we will continue to utilize our capital to deliver EPS expansion, with expected net leverage of approximately 3.9 times within 12 months post the vast deal close.

Speaker 5: and remain committed to the target of approximately three times over the long term.

Speaker 5: We will maintain a balanced approach, commit toward regular dividends, pay down debt, and deploy opportunistic share buyback.

Speaker 5: Now turning to our fiscal Q1-24 outlook. For Q1 we expect non-GAAP revenue in the range of $940 to $950 million, translating to low single digit growth in cyber safety expressed in constant currency.

Speaker 5: We expect Q1 non-gap EPS to be in the range of 45 to 47 cents per share as cost energies are partially offset by near-term increased interest expense based on current SOFR forward curves.

Speaker 5: For the full fiscal year 2024, we expect bookings growth in low to mid single digits.

Speaker 5: scaling through the year as we make progress on our key metrics. We were made focused on driving our long-term objectives and are still targeting to exit fiscal year 25 on a $3 annualized EPS with the following underlying key assumptions.

Speaker 5: Cyber safety business to grow mid single digits. Energy structure of 60 plus percent operating margin.

Speaker 5: Free cash flow deployed towards debt pay down and share buyback. So for curve trends indicate rates below 3% exiting fiscal year 2025.

Speaker 5: The looted share count expected to be around pre-evast merger levels.

Speaker 5: In summary, we are closing out this fiscal year with a strong sense of accomplishment. We have successfully introduced Gen to the world and are excited to scale as the leader in global cyber safety protection. Our financial model remains resilient, powered by our best-in-class products and technologies and a loyal customer base. As we look forward to fiscal year 2024, we will continue to work to ensure that our financial

Speaker 5: in an evolving macroeconomic environment. We will remain very disciplined in how we operate, focusing on executing our plan.

Speaker 5: and will be strategic and intentional in where we invest to maximize long-term shareholder value.

Speaker 5: As always, thank you for your time today and I will now turn the call back to the operator to take your questions. Operator?

If you would like to ask a question then please press star followed by one on your telephone keypad now. If you change your mind please press star followed by two. When preparing to ask your question please ensure that your phone is on mute as it is not. Have a reminder that your staff may at once ask a question.

Our first question comes from Sacket Kalya from Barclays. Sacket, please go ahead. Okay, great. Hey, good afternoon, guys, and thanks for taking my questions here. Hey, second. Hey, Vincent. Vincent, maybe first for you. Great to see the improvement in retention. I think you said it was one point for the company overall quarter-over-quarter. Great to see that.

be a vast base from a retention perspective.

Absolutely, and as you know, we don't like to share our operational know-how with everyone in the world and like to nurture that as our own process IP if you want, but let me give everyone here a few examples of what we've been doing. So as you mentioned, overall company retention improvement 76% plus one point is driven by two things. Women's

continued stable retention in Northern and LifeLock brands, and then an improvement of two points of the Avast retention. I do mention the stabilization of our retention in the brands of Northern and LifeLock, which as you know are industry leading retention rates, because it's no small feat. The decision does not happen by itself. We're really working and developing.

for Northern LifeLock and we had already acquired before the acquisition of Avas experience in retention with premium business models such as Avira which was also driven slightly above 80%. And so we had a plan to identify the operational opportunities. We identified about half the

bucket of 10 points. We made a bunch of operational changes. I'll give you a few. We combined our renewal team for all of the brands as one team. We separated the renewal activities with the customer journey activities, with customer journey focused on education and understanding the

e-commerce experience. As you know, Audra and Laffloch has an in-house engine. Avast was outsourced and so starting to share best practices and making sure we can apply the quick wins we had identified. Those are the operation work if you want in progress. It will take a few courses we can evolve overall.

once the operational buckets, if you want, has been tackled and fully digested, consciously increasing the value to the customer, moving them to high value, full portfolio of cyber safety, moving them to the platform view, using the customer journey team to drive the usage and engagement of the functionalities, making sure they understand.

all up for you. I thought it was great to see the de-levering in the quarter. I think it was about $300 million. You correct me there from wrong. But can you just maybe talk through how you are thinking about that pay down this year and maybe related to that how you are thinking about interest expense, even just broad brush?

Yeah, sure. Hi, Sockett. Just for a reminder for everybody else on the phone, so we did, you know, since the funding of the deal, we did $460 million of debt repayment. 400 of that, including the April voluntary payment, $400 million was voluntary.

Yes, with $7 billion of debt at an increasing and volatile SOFR, with Q4 SOFR up to 5%, it's a meaningful challenge for us to overcome. If you just extrapolate the Q4 interest expense, that's $600 to $700 million on an annualized basis of interest expense.

That's 75 to 80 pennies of EPS. So yes, it's a huge headwind slash challenge to overcome. And if you looked at that in isolation, combine that with our stated targets on leverage over the long term, the cost, the expense, you know, that and the level of debt that we've got, that would point you to deploy as much capital as you possibly could to get that paid down.

But we know we have multiple levers in our business. We know that we have expressed a balanced capital allocation. And if you look at the $17 stock price that we've got and you look at our

strategy and vision on where we're going over the long term, I personally believe that we're massively undervalued. And so that makes the share buyback capital deployment very, very important. And so when we talk to you guys about a balanced approach on our capital allocation, it's exactly that. Both of them are challengers of each other.

but both of them are incredibly viable and critical to drive our business and to achieve our long-term objectives. So what you'll see us do on a go-forward basis, whether you specifically call it Q1 2024 or over the long term, is strike that right balance looking at all of the dynamics that we've got in our business.

Got it. Super helpful. I'll get back in queue. That was very helpful. Thanks, guys.

Got it. Super helpful. I'll get back in queue. That was very helpful. Thanks, guys. Thank you.

Thank you. As a reminder to ask any further questions please press star followed by one on your telephone keypad.

Our next question comes from Angie Song from Morgan Stanley . Angie please go ahead.

Hi, thank you guys so much for taking my question today. I'm speaking on behalf of Amzoo Fadarwala from Morgan Stanley . So just a quick question on net ads. The last quarter you mentioned net ads for Norton and LifeLock lines a little bit more under pressure compared to Avast net ads. So could you just talk a little bit more about the dynamic of net ads for Norton LifeLock versus Avast for this quarter?

And how should we think about this dynamic as we model out fiscal year 24? Thank you. Yeah, hey, Angie. Thanks for your question. So as you mentioned, Q4 sequential decline in the direct customers is about 180,000. The lowest of the year, so we see the trend stabilizing and.

We're working very actively. Our plan to, as we said, for stabilizing and then returning customer accounts, direct customer accounts to grow. So we continue to grow, or we grew, continue to grow our indirect customer accounts. So in the direct piece, last quarter it was a little more pressure on the Northern LifeLock site on a ratio basis. It was 2.1, then Avast, and I think it was two-thirds, one-third of the decline.

The quarter before it was the reverse, so we also said quarter in quarter out, just be careful not to drive trends within the brands. We see the overall tensions to be about the same across the globe, but being more focused on the security side versus the identity side, so slightly more focused on security.

And then I would say Avast, because we improved retention two points, of course continue to reduce the gap if you want and we're very confident that we'll return them to gross once we fully bridge the 10-point retention of Avast versus Norton. So that should give you some color of the dynamic.

Great, thank you. And just one more, if I may.

So on long-term targets, I know that Avast acquisition definitely brought some complexity into the equation and given the recent macro backdrop that caused even more uncertainty. Could you just remind us what your confidence level is now as we have a little bit more visibility into fiscal year 24?

in achieving your $3 EPS target exiting fiscal year 25. Thank you so much. I'll pass it to Nathalie on the confidence with us. So you'll hear directly from the CFO . But what I can tell you is that when you talk about advanced bringing complexity, in one sense is right. It's merging multi-billion dollar companies together.

But it's a similar business model with very complementary strengths, so we very focused every day on the opportunities that Avast is bringing. And we talked about the complementary of the product portfolio. They bring more strengths on the privacy side. Combined with identity, that now allow us to offer across six months.

being more global. Cyber safety has no borders, as you know, and threats are across the globe, and people are moving virtually in the world. Being truly global is a real asset for us. We also said that we have some revenue synergies, and the advanced retention rates is the beginning of that. You'll see more of that in 24 and 25 as we...

We turned two growth using those revenue synergies. And then the cost synergies where we delivered or we too short of the 300 million plus promises. Now where is the complexity coming from that you may have mentioned? Yes, we did not anticipate the cost of the debt. Frankly, when the time we signed the deal, it was a software being a zero and today is a 5% and that he mentioned that. But we will deliver it quickly with our cash flow and

If I follow you guys, investors community predicting so far at 3% by exiting fiscal year 25, by then you will see the full realization of those synergies. So our focus is really on the opportunities that this acquisition is bringing to us. And I'll pass it to Natalie for the confidence in the bridge in the different levels.

Yeah, I think you heard about the majority. I would just summarize it into from a growth perspective, we really look at it from a value, reach, and loyalty perspective. Value is where the innovation is coming from or coming into play where we will constantly innovate, bring great products and services to market.

in a very competitive way. Reach is our intent and our priority to expand our reach globally, really focusing on international and bringing different products and services, different vectors to new global markets. And then loyalty is about looking at how we can best service our customers, focus on MPS, but also increase the...

a strong feeder into the $3 EPS. We also said, don't forget, back when we came out with our analyst day, we said M&A could be also considered as an accelerator as we continue to generate very, very strong cash flow.

And as we look at other products and services, as cyber safety protection continues to expand and evolve. And so all of that in, really, what you have to believe, we just laid out some of the assumptions that we've got with the $3 EPS. When you ladder all that up.

from a whiteboard perspective or just the back of the envelope, it's not hard to see how you get to the $3 EPS target over the timeframe we've provided.

As a final reminder, to ask any further questions, please press star, police by one on your telephone keypad.

Our final question is a follow up question from Saket Kalia from Barclays. Saket please go ahead.

Okay, great. Hey guys, me again. Sorry, just had a couple more follow-ups.

Natalie, maybe for you. Although it's great to see the RPU expansion, quarter of a quarter. Maybe a question for you. Where do you think that can go over time? And sort of how do you think about that?

Yeah, I think we're just getting started, honestly. I think with the expanded portfolio that we now have as Gen and with the express desire and strategy and commitment to invest in more and more innovation, I'm confident that we're going to continue to bring great products and services to market that, honestly, I think will be easy sell to our customer base.

And so where specifically our approval will go, I'm not sure. It's going to be a balanced or a dynamic approach, depending on markets, customer cohorts, the source of those customers, et cetera. But if you even look at the progress we've made already…

with the equivalent of a $3 ARPU expansion, just start applying that to more and more and more of our customer base. In my opinion, we're just getting started. We have a ton of space to increase our ARPU as we expand and really bring to market.

that innovation, but then also expand our reach across our existing 38 million. And as we bring in new customers as well, just be able to expand there as well.

Got it, got it. Maybe for my follow-up for you, Vincent. Listen, I mean, we're clearly trying to control what we can with margins and operational improvements in retention. Of course, the other part of the net ad equation is new customer acquisition.

And so maybe the question is, for you Vincent, what can you do on the new customer side to sort of continue the stabilization in that as we've seen, but then maybe turn that corner and reverse the trend.

Yeah, and if you allow me to think slightly differently, while you compare margin and what we control versus customer acquisition, I would say you can take a stable stake that the operational commitment of running lean

and really redirecting every dollar to either innovation or sales is what we do, is what is in our DNA and in our culture, and we'll continue to do that very, very well. The value we drive and the price we're able to charge representing that value

A couple of operations in the SIPLIN is what drives the margin. As you know, it's a very high margin business. When it comes to the growth and how we grow our business, we really have the three buckets. Not that you mentioned the R2 and supported with innovation. How much more do we add to the value of the portfolio?

And Natalie is right that in some way it's not like a daily focus. I told you the first proof point we can go to is where we were with Northern LifeLock. Above $8 adjusted for the mix between the geographies and the portfolio. And over the next eight quarters to this timeframe we gave you, we believe we'll...

come from added value, new adjacent services, the ability for you to manage your digital reputations that are services above and beyond what your core cyber safety membership brings. The second one of course is the retention. As the second bucket for the growth, the more we retain, the more we satisfy you as a customer.

The more value would be able to drive for the business. And there you've seen some of the progress. I talked about the operational view. A whole focus here is around the customer journey, giving them peace of mind in this hacking world that's going to evolve and is actually pretty scary. And then the third one is about bringing new people to Cyber Safety.

On the net ad, the first one is you retain more and then you try to acquire new customers. We now have a full set of capabilities from premium to product sales to membership sales through all the countries we can go after. But we know that we're not perfect in every one of them and we still have more opportunities.

that we're driving. With Avast, a strong footprint in emerging markets and now bringing a full cyber safety to emerging markets would be another one where we can add new customers. And back to my comment, we'd have a little bit more pressure on our pool because the price per month in emerging market is lower than in the Western world.

in full swing. I'd rather not give you a precise score of customer count. We're confident we'll return that metric to growth. We're working with, you've seen a reduction of the gap. I would say in Q1 you plan with similar trends that you've seen in the last two quarters, but we continue to improve. And by the end of fiscal year 25, when we give you that model, we're assuming that we will...

Our entire team is driven to protect and advocate for our customers, and we do not take for granted the millions of people around the world who trust us to help them safely navigate the complex digital world.

execute to drive profitable growth and create long-term value for all our stakeholders. So thank you for joining our call today and I look forward to talking to you soon. This concludes the conference call. Thank you.

Thank you.

We will continue soon.