Q4 2024 Gen Digital Inc Earnings Call

Yeah.

Operator: Good afternoon, everyone. Thank you for standing by.

Good afternoon, everyone. Thank you for standing by my name is Joe and I will be your conference operator today I would like to welcome everyone to <unk> fourth quarter and fiscal year 2024 earnings call.

Joel: My name is Joel, and I will be your conference operator today. I'd like to welcome everyone to GEN's fourth quarter and fiscal year 2024 earnings call. Today's call is being recorded, and 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 this time, for opening remarks, I would like to pass the call over to Jason Starr, head of investor relations. You may proceed.

Joel: Today's call is being recorded and all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. At this time for opening remarks, I would like to pass the call over to Jason Starr head of Investor Relations you May proceed.

Jason Starr: Thank you, Joel, and good afternoon, everyone. Welcome to GEN's fourth quarter and fiscal year 2024 earnings call. Joining me today are Vincent Pilette, CEO, and Natalie Derse, CFO. As a reminder, there will be a replay of this call posted on the Investor Relations website along with our slides and press release. I'd like to remind everyone that during this call, all references to financial metrics are non-GAAP, and all growth rates are year over year unless otherwise stated.

Jason Starr: Thank you Joel and good afternoon, everyone welcome to <unk> fourth quarter and fiscal year 2024 earnings call. Joining me today are Vincent <unk>, CEO, and Natalie Jersey CFO.

Jason Starr: As a reminder, there'll be a replay of this call posted on the Investor Relations website, along with our slides and press release.

Jason Starr: I'd like to remind everyone that during this call all references to financial metrics are non-GAAP and all growth rates are year over year, unless otherwise stated a reconciliation of non-GAAP to GAAP measures is included in our press release and earnings presentation, both of which are available on our IR website at Investor Doc Gen Digital Dot com.

Jason Starr: We encourage investors to monitor this website as we routinely post investor oriented information such as news and events in financial filings.

Jason Starr: A reconciliation of non-GAAP-to-GAAP measures is included in our press release and earnings presentation, both of which are available on our website at investor.gendigital.com. We encourage investors to monitor this website as we routinely post investor-oriented information such as news and events, and financial filings. Today's call contains statements regarding our business, financial performance, and operations, including the impact of our business and industry, that may be considered forward-looking statements. And such statements involve risks and uncertainties that may cause actual results to differ materially from our current expectations.

Jason Starr: Today's call contains statements regarding our business financial performance and operations.

Jason Starr: Including the impact of our business and industry and may be considered forward looking statements and such statements involve risks and uncertainties that may cause actual results to differ materially from our current expectations.

Jason Starr: Those statements are based on current beliefs, assumptions, and expectations as of today's date, May 9th, 2024. We undertake no obligation to update these statements as a result of new information or future events. For more information, please refer to the cautionary statement in our press release and the risk factors in our filings with the SEC, and in particular, our most recent reports on Form 10-K and Form 10-Q.

Jason Starr: Those statements are based on current beliefs assumptions and expectations as of today's date May nine 2024.

Jason Starr: We undertake no obligation to update these statements as a result of new information or future events.

Jason Starr: For more information please refer to the cautionary statement in our press release and the risk factors in our filings with the SEC and in particular, our most recent reports on Form 10-K and Form 10-Q.

Jason Starr: And now, I'll turn the call over to Vincent. Thanks, Jason. Good afternoon.

Jason Starr: And now I'll turn the call over to Vincent.

Vincent Pilette: Good afternoon, and thank you all for joining our Q4 and Fiscal Year 24 earnings call. Fiscal 24 was our first full year as GEN, and what a transformational year it was. We finished the year with strong operating results across the board and delivered our fifth year of organic growth with record revenue, profitability, and cash flow.

Speaker Change: Thanks, Jason Good afternoon, and thank you all for joining our Q4 and fiscal year 'twenty four earnings call fiscal 'twenty four was our first full year as Jen and what a transformational jewelry to US. We finished the year with strong operating results across the board and delivered our fifth year of organic growth with revenue with record revenue.

Vincent Pilette: Profitability and cash flow.

Vincent Pilette: Our Q4 and full-year results reinforce our confidence in the tremendous opportunity in consumer cyber safety and put us right on track to meet our long-term aspirations. Natalie will take you through the details of our quarterly and annual financial performance, but I would like to take a moment to talk more about the opportunity in consumer cyber safety and why we are so well positioned to win. You have heard me say it many times; digital life is now just life, but the risks it creates are different, are bigger, and more pervasive, and are getting more and more sophisticated.

Vincent Pilette: Q4, and full year results reinforce our confidence in the tremendous opportunity in consumer cyber safety and put US right on track to meet our long term aspirations.

Vincent Pilette: Natalie will take you through the details of our quarterly and annual financial performance, but that would like to take a moment to talk more about the opportunity in consumer cyber safety and why we are so well positioned to win.

Vincent Pilette: You have heard me say many times digital lives is now just lives, but the risks it creates are different they are bigger.

Vincent Pilette: More pervasive and are getting more and more sophisticated.

Vincent Pilette: As quickly as our lives move online, cyber risks dynamically follow. Everywhere you look nowadays, you hear about data being stolen from telecom providers, healthcare companies, banks, leading apparel makers, and even government organizations. And those are just from the first few months of 2024.

Vincent Pilette: As quickly as our lives move online the cyber risk dynamically follow everywhere you look nowadays you hear about data being stolen from telecom providers health care companies banks, leading apparel makers and even government organizations.

Vincent Pilette: Those are just from these first few months of 2024.

Vincent Pilette: Cyber risks are here to stay, but we know that Gen can bring comprehensive cyber safety protection to everyone in a way no one else can. In an always-on world, bad actors have countless ways to threaten your privacy, identity, and financial assets. We have seen a significant increase in scams delivered through mal-advertising and malicious browser push notifications, the majority of which were social engineering attacks, with a massive growth in dating scams of tenfold year-over-year.

Vincent Pilette: Cyber risks are here to stay but we know that gen can bring comprehensive cyber safety protection to everyone in the.

Vincent Pilette: No one else can.

Vincent Pilette: In an always on world bad actors have countless ways to threaten your privacy identity and financial assets. We have seen a significant increase in scans delivered through multiple <unk> and malicious browser browser push notifications the majority of which were socially engineered attacks.

Vincent Pilette: With massive growth in leading scans.

Vincent Pilette: Full year over year.

Vincent Pilette: The increasing sophistication and intensity of phishing campaigns, up 40% year over year, targeted spear phishing attacks, leaked PII on the dark web, and the emerging use of generative AI technologies by threat actors are all accelerating the shifting focus from device to user-centric security. And as the threat landscape continues to rapidly evolve, so do the cyber safety needs of consumers, providing a compelling and dynamic market opportunity. Many others will try to convince consumers that their safety is important to them, but most have other substantial interests in delivering their core services or even monetizing your data.

Vincent Pilette: The increasing sophistication and intensity of phishing campaigns up 40% year over your targeted spear phishing attacks leaked VII on the dark web and the emerging use of generative AI technologies by threat actors are all accelerating the shifting focus from device to user centric security.

Vincent Pilette: Yeah.

Vincent Pilette: And as the threat landscape continues to rapidly evolve so do the cyber safety needs of consumers, providing a compelling and dynamic market opportunity.

Vincent Pilette: Many others will try to convince consumers that their safety is important to them, but most have other substantial interest in delivering the core services.

Vincent Pilette: Even monetizing new data.

Vincent Pilette: At Gen, cyber safety is not something on the side that can be at odds with another business model. It is our mission and the most important thing we do. Unlike many other players, we have teams dedicated to uncovering, researching, and stopping new threats in their tracks. In Fiscal Year 24, we blocked over 12 billion attacks using threat telemetry data from those tube data models 500 times a day and trained them on datasets that are 6 petabytes large.

Vincent Pilette: Jen cyber safety is not something on the side that can be at odds with another business model. It is our mission and the most important thing we do.

Vincent Pilette: Unlike many other players we have teams dedicated to uncovering researching and stopping new threats in their trucks in fiscal year 'twenty four we blocked over 12 billion attacks, yielding threat telemetry data from dose to update our models 500 times, a day and trained them on datasets that are six petabytes large.

Vincent Pilette: In our labs, our researchers and AI scientists are catching up with anomalies and patterns to deliver insights to consumers and our product teams so we can keep up with the dynamic threat. The combination of those people, plus our technology, results in us having developed and deployed on all major platforms and devices an engine and technology stack that is second to none. And when you add in our AI capabilities in consumer cyber safety, alongside with our market-leading visibility across the entire ecosystem, we expect to continue to lead the way with the strongest, most relevant protection that delivers value and peace of mind for millions of loyal customers.

Vincent Pilette: In our labs are researchers and AI scientists are catching.

Vincent Pilette: Emily and patterns to deliver insights to consumers and our product teams. So we can keep up with dynamic threats.

Vincent Pilette: The combination of doors people plus our technology results in us having developed and deployed on all major platforms and devices and engine and technology stack that is second to none.

Vincent Pilette: And when you add in our AI capabilities in consumer cyber safety alongside with our market leading visibility across the entire ecosystem. We expect to continue to lead the way with the strongest and most relevant protection that delivers value and peace of mind for our millions of loyal customers.

Vincent Pilette: Yeah.

Vincent Pilette: Our people and technology are the foundation of the most complete and comprehensive product portfolio in the industry. We have our customers covered on all fronts, whether they are facing a threat to their online security, privacy, identity, or reputation. And just as important as all those features that we deliver, we also demand that our engineers, product managers, designers, and other specialists find ways to make our offering fit the real world needs of consumers.

Vincent Pilette: Our people and technology are the foundation of the most complete and comprehensive product portfolio in the industry.

Vincent Pilette: We have our customers covered on all fronts, whether they are facing a threat to the online security privacy identity our reputation.

Vincent Pilette: And just as important as all those features that we deliver we also demand that our engineers product managers designers and other specialists find ways to make our offering fit the real world needs of consumers.

Vincent Pilette: We were the first to come up with the all-in-one cybersafety membership because we believed it was what consumers wanted and needed, and we were right. So, over 40% of our customers have adopted a cybersafety membership, and we continue to see that grow as we expand the membership's value by offering identity and privacy features internationally and into the Avast offering, along with the launch of Avast Identity and the release of new Avast One membership tiers, enabling customers to tailor their security, privacy, or performance coverage based on their own needs, preferences, or risk profile.

Vincent Pilette: We were the first to come up with the all in one cyber safety membership because we believed it was what consumers wanted and needed and we were right. So the over 40% of our customers have adopted the cyber safety membership.

Vincent Pilette: And we continue to see that grow as we expanded the membership value through offering identity and privacy features internationally and into the avast offering.

Vincent Pilette: Along with the launch of Avast identity, and the release of New Avast, one membership tiers, enabling customers to tailor the security privacy of performance coverage based on their own needs preferences, our risk profile.

Vincent Pilette: Okay.

Vincent Pilette: While we strongly believe in the need for and the value delivered by our membership tiers, we also know that not everyone lives their digital life in the same way, or that each person understands all the cyber threats at the same level. Still today, many customers are only looking for specific solutions, and we are hard at work on delivering innovation in our point products to meet the needs of those consumers. In January, we launched our first AI-driven anti-scam app called Norton Genie. With this free anti-scam assistant in your pocket, customers can determine if a text or social media post is a scam, featuring conversational UI for additional insight.

Vincent Pilette: While we strongly believe in the need for and the value delivered with a membership tiers. We also know that not everyone leaves the digitalized in the same way that each person understand all the cyber threat at the same level.

Vincent Pilette: Still today, many customers are only looking for specific solution and we are hard at work on delivering innovation in our products to meet the needs of those consumers.

Vincent Pilette: At the end of April, we crossed 1 million downloads in just 100 days, and customer satisfaction was high, with Norton Genie rated 4.7 stars. It's a good start, if you ask me. And the great thing is that the more it is used, the better it gets. Another innovation that we are proud of is Total Radius, which we fully launched in January 2024. Total Radius is a 360-degree reputation defender tool that fully and automatically analyzes your online information to help you quickly take action on content to protect your digital reputation.

Vincent Pilette: In January we launched our first AI, driven anti scam app cannot and jeanie.

Vincent Pilette: This free anti scam assistant in your pocket customer can determine if a text or social media post is a scam featuring conversational UI for additional insights.

Vincent Pilette: At the end of April we crossed 1 million downloads in just 100 days and customer satisfaction is high with northern generated four seven stars.

Vincent Pilette: So good start if you ask me and the Great thing is that the more of these use the better it gets.

Vincent Pilette: Another innovation that we are proud of his total radius, which we fully launched in January 2024, total radius is 360 degree reputation defended tool that fully and automatically analyzes your online information to help you quickly take actions on content to protect your digital reputation.

Vincent Pilette: Our consumer-centric approach combines key consumer trends with deep insights about the threat landscape and emerging technologies. We want to simplify your digital life, protect your ever-growing number of online transactions, bring you visibility into the privacy risks, and do it seamlessly and in real time through the deployment of generative AI consumer use cases. No one can bring these things together like Gen. And now, with our new Gen Stack, which I will talk more about later, we will be able to adapt to and more quickly meet the needs of our customers.

Vincent Pilette: Our consumer centric approach combines key consumer trends with deep insights about the threat landscape and emerging technologies.

Vincent Pilette: We want to simplify your digital life protect your ever growing number of online transactions, bringing visibility to the privacy risks and do it seamlessly and in real time to deployment generative AI consumer use cases.

Vincent Pilette: No one can bring these things together like Gen and now with our new Gen stack, which I will talk more about later, we will be able to adapt to and more quickly meet the needs of our customers.

Vincent Pilette: It truly has been a transformational year for Gen, and I can't tell you how proud I am of what this team has accomplished. Some things were out of our control that definitely changed the world and our business, conflicts in multiple regions, volatile microeconomic conditions with spiking interest rates, and dramatic currency fluctuations.

Vincent Pilette: Truly has been a transformational year for Jen and I can't tell you how proud I am of what this team has accomplished.

Vincent Pilette: Some things were out of our control that definitely change the world and our business.

Vincent Pilette: Conflicts in multiple regions volatile microeconomic conditions with spiking interest rates and dramatic currency fluctuations. Despite those very real challenges this team delivered.

Vincent Pilette: Despite those very real challenges, this team delivered. For the full fiscal year, and for the last three consecutive quarters, we returned to our customer count to grow. We now have in total over 65 million paid customers, 39 million of which are direct, and hundreds of millions of users. More importantly, our customers are showing greater engagement and satisfaction across all of our brands. With respect to the commitments we made when we acquired Avast, we delivered on those as well, despite a very mature change to the cost of our debt. In terms of cost synergies, we beat and raced on that front, and we did it faster than expected.

Vincent Pilette: For the full fiscal year and for the last three consecutive quarters, we've returned to our customer count to grow.

Vincent Pilette: We now have in total over 65 million paid customers $39 million of which are direct and hundreds of millions of users.

Vincent Pilette: More importantly, our customers are showing greater engagement and satisfaction across all of our brands.

Vincent Pilette: With respect to the commitments, we made when we acquired the Vas with delivered on those as well despite the very material change to the cost of our debt.

Vincent Pilette: In terms of cost synergies, we beat and raised on that front and we did it faster than expected.

Vincent Pilette: On top of that, we didn't just reduce costs; we worked together to combine the best assets of Northern LifeLock and Avast. We laid the foundation to tackle cyber safety by tightly integrating the fabric of two industry leaders to create things like our integrated technology stack, which delivers the full suite of our capabilities to our customers in a more modern and accessible way. We call it the GenStack.

Vincent Pilette: On top of that we didn't just reduce cost we work together the best assets of Norton Lifelock and avast.

Vincent Pilette: We laid the foundation to tackle cyber safety by tightly integrating the fabric of two industry leaders to create things like our integrated technology stack, which delivers the full suite of our capabilities to our customers in a more modern and accessible way we call. It the gen stack and over the last 18 months our engine.

Vincent Pilette: And over the last 18 months, our engineers, designers, and product managers have worked tirelessly to consolidate our tech portfolio into a single, scalable, and modular platform. This quarter, we released Norton 360 for Windows and Mac on the new stack in selected countries, with the majority of our customers to experience our new platform in a phased approach as we move through this new fiscal year. With our new Gen Stack, we are marching towards a vision of increased personalization and empowerment through natural, tailored, contextual communication that is unobtrusive.

Vincent Pilette: Here's designers and product managers.

Vincent Pilette: Tirelessly to consolidate our tech portfolio into a single scalable and modular platform. This quarter, we released Norton 360 for Windows and Mac on the new stack in selected countries with the majority of our customers to experience our new platform in a phased approach as we move through this new fiscal year.

Vincent Pilette: Okay.

Vincent Pilette: With our new Gen stack, we are marching towards our vision of increased personalization and empowerment through natural tailored contextual communication that is unobtrusive.

Vincent Pilette: AI enhancements and innovation will lead to a better customer experience, and we believe it will improve loyalty and value-add cross-sells and upsells. AI has been, and will only become, more pivotal for us. We will continue to enhance our portfolio to address new threats. We will also keep investing in AI to expand the types of new solutions and the way we bring them to our customers. We know that as we keep addressing this growing set of needs, our growth will accelerate over time.

Vincent Pilette: AI enhancements and innovation will lead to a better customer experience and we believe improved loyalty and value add cross sell and upsell.

Vincent Pilette: AI has been and will only become more pivotal for US we will continue to enhance our portfolio to address new threats. We will also keep investing in AI to expand the types of new solutions and the way, we bring them to our customers.

Vincent Pilette: We know that as we keep addressing these growing set of needs our growth will accelerate over time.

Vincent Pilette: Our AI-infused roadmap, which addresses security, financial safety, personal data control, and verification, combined with our insight into the threat landscape and AI technology, enables us to deliver on a mission of protecting and empowering people's digital lives. And we're just getting started.

Vincent Pilette: Our AI infused roadmap, which addresses security financial safety personal data control and verification combined with our insight into the threat landscape NII technology enables us to deliver on our mission of protecting and empowering people digital lives and we're just getting started.

Vincent Pilette: Before I pass it to Natalie, I do want to thank the team and our loyal customers for another strong year. We delivered a fifth year of organic growth, had strong adoption of our offering, with almost 1 million net direct customer ads, and established the identity and mission-driven culture of Gen in our first full year together. We are confident that our reach, customer centricity, innovation, and, of course, disciplined execution will enable us to deliver on our strategy to accelerate long-term and profitable revenue growth and increase shareholder value.

Speaker Change: Before I pass it to Natalie I do want to thank the team and our loyal customers for another strong year with delivered a fifth year of organic growth and strong adoption of our offering with almost $1 million net direct customer adds.

Vincent Pilette: And establish the identity and mission driven culture of Gen. In our first full year together.

Vincent Pilette: We are confident that our reach customer centricity innovation and of course disciplined execution will enable us to deliver on our strategy to accelerate long term and profitable revenue growth and increase shareholder value.

Vincent Pilette: I could not be prouder of what we have accomplished together and more excited about our prospects. Finally, I would be remiss if I didn't thank Andrei Volchek for his contributions in putting Gen on this trajectory. Three years ago, Andrei and I dreamt about bringing two industry leaders together to transform consumer cyber safety. Three years have now passed, along with a successful integration, and Andrei has decided to step down as president. Andre will still be a big part of Gen's future, as I know he will remain a trusted sounding board and supporter of our leadership team, and, of course, he will continue to help shape the strategy from his seat on our Board of Directors. And with that, I will pass it to Natalie to review our performance in greater detail and our guidance for the next fiscal year and quarter.

Natalie: I could not be prouder of what we have accomplished together and more excited about our prospects.

Vincent Pilette: Finally, I would be remiss, if I didn't think Andre walczak for his contributions in putting Jen on this trajectory three years ago, Andre and I dreamt about bringing two industry leaders together to transform consumer cyber safety.

Natalie: Three years have now passed along with the successful integration and Andre has decided to step down as president and.

Vincent Pilette: We will still be a big part of <unk> future as I know it will remain a trusted sounding board and supporter of our leadership team and of course, it will continue to help shape. The strategy from his seat on our board of directors.

Vincent Pilette: And with that let me pass it to Natalie to review our performance in greater in greater detail and our guidance for the next fiscal year and quarter.

Natalie Marie Derse: Thank you, Vincent, and hello, everyone. On today's call, I will walk through our full year fiscal 2024 results, followed by our Q4 results, and wrap up with our outlook for Q1 and full year fiscal 2025. I will focus on non-GAAP financials and year-over-year growth rates, unless otherwise stated. Please recall that our acquisition of VIVAST closed in September fiscal 2023 near the end of our second quarter, and therefore, I will break out select financial metrics for relevant annual comparisons throughout today's call.

Natalie: Thank you Vince and Hello, everyone for today's call I will walk through our full year fiscal 2024 results followed by our Q4 results and wrap up with our outlook for Q1 and full year fiscal 2025.

Natalie Marie Derse: I will focus on non-GAAP financials and year over year growth rates unless otherwise stated.

Natalie Marie Derse: Please recall that our acquisition of the vast closed in September of fiscal 2023 near the end of our second quarter, and therefore, I will breakout select financial metrics for relevant annual comparisons.

Natalie Marie Derse: Throughout today's call.

Natalie Marie Derse: Fiscal year 2024 was a pivotal year for Gen as we integrated Avast, returned our direct customer base to growth, and delivered our fifth straight year of organic growth. We finished the year with over $3.8 billion in total revenue, growing 14% in USD and 15% in constant currency. When including a vast historical result, cyber safety revenue and bookings increased 3% year-over-year in constant currency with broad-based growth across our brands and across geographic regions.

Natalie Marie Derse: Fiscal year 2024 was a pivotal year for <unk> as we integrated the vast returned our direct customer base to growth and delivered our fifth straight year of organic growth.

Natalie Marie Derse: We finished the year with over $3 $8 billion in total revenue.

Natalie Marie Derse: 14% in USD and 15% in constant currency.

Natalie Marie Derse: When including a vast historical results cyber safety revenue and bookings increased 3% year over year in constant currency with broad based growth across our brands and across geographic regions.

Natalie Marie Derse: We delivered nearly $300 million of annual cost synergies within 18 months of the Avast acquisition, $20 million more than our original plan, and we used less cash than previously planned to achieve this. As a result, fiscal 2024 operating income was over $2.2 billion, with full-year operating margin of 58% and exiting the year at 59%.

Natalie Marie Derse: We delivered nearly $300 million of annual cost synergies within 18 months of the avast acquisition $20 million more than our original plan and we used less cash than previously planned to achieve this.

Natalie Marie Derse: As a result fiscal 2024 operating income was over $2 2 billion.

Natalie Marie Derse: With full year operating margin of 58% and exiting the year at 59%.

Natalie Marie Derse: This represents seven full points of margin expansion since the close of the transaction net of partial reinvestment. Driving continued top-line growth, our operating discipline, and our strong capital allocation strategy enabled us to deliver $1.96 in full-year EPS in line with our guidance and up 8% from the prior year and up 11% in constant currency. We've also made significant progress reducing our net leverage to 3.4 times, down from 3.9 times at the time of the merger.

Natalie Marie Derse: This represents seven four points of margin expansion since the close of the transaction net of partial reinvestment.

Natalie Marie Derse: Driving continued topline growth, our operating discipline and our strong capital allocation strategy enable us to deliver a $1 96 and full year EPS in line with our guidance and up 8% from the prior year and up 11% in constant currency.

Natalie Marie Derse: We've also made significant progress reducing our net leverage to three four times down from three nine times at the time of the merger.

Natalie Marie Derse: Now, with the integration largely behind us, we look forward to the next chapter, driving our strategic priorities into fiscal 2025. Turning to Q4 performance, Q4 reflects our 19th consecutive quarter of growth with financial results in line with our guidance. Q4 bookings were a record $1.044 billion, exceeding $1 billion for the second consecutive quarter, growing 2% in USD and 3% in constant currency.

Natalie Marie Derse: Now with the integration largely behind US we look forward to the next chapter driving our strategic priorities into fiscal 2025.

Natalie Marie Derse: Cyber safety bookings also grew 3% year over year in constant currency. Total Q4 revenue was $967 million, up 2% in USD and up 3% in constant currency. Cyber safety revenue also increased 3% year over year in constant currency.

Natalie Marie Derse: Turning to Q4 performance Q4 reflects our 19th consecutive quarter of growth with financial results in line with our guidance.

Natalie Marie Derse: Q4 bookings were a record $1 $44 billion.

Natalie Marie Derse: Exceeding $1 billion for the second consecutive quarter growing 2% in USD and 3% in constant currency.

Natalie Marie Derse: Cyber safety bookings also grew 3% year over year in constant currency.

Natalie Marie Derse: Total Q4 revenue was $967 million up 2% in USD and up 3% in constant currency.

Natalie Marie Derse: Cyber safety revenue was also increased 3% year over year in constant currency.

Natalie Marie Derse: Our revenue growth was driven primarily by the U.S. market, up 3% as we scaled the adoption of our privacy and performance offerings through cross-sells and increased our membership revenue, particularly for our higher-tier Norton 360 with LifeLock membership. In our more developed international markets, growth was mid to high single digits in constant currency as we expanded our identity partnerships. And we continue to drive double-digit growth in our emerging markets as we capitalize on the growing cyber safety awareness among a mobile-first population.

Natalie Marie Derse: Our revenue growth was driven primarily by the U S market up 3% as we scaled the adoption of our privacy and performance offerings are through cross sells and increased our membership revenue.

Natalie Marie Derse: Particularly in our higher tier Norton 360, with Lifelock memberships.

Natalie Marie Derse: In our more developed international markets growth was mid to high single digits in constant currency as we expanded our identity partnerships.

Natalie Marie Derse: And we continue to drive double digit growth in our emerging markets as we capitalize on the growing cyber safety awareness for a mobile first population.

Natalie Marie Derse: With varying degrees of market maturity, the growth levers will be different, and we will continue to execute on all levers at our disposal to drive broad-based growth in a profitable manner. Direct revenue was $847 million, up 3% in constant currency.

Natalie Marie Derse: With varying degrees of market maturity the growth levers will be different and we will continue to execute on.

Natalie Marie Derse: On all levers at our disposal to drive broad based growth in a profitable manner.

Natalie Marie Derse: Direct revenue was $847 million up 3% in constant currency.

Natalie Marie Derse: We are making progress across our key performance metrics. Our installed base is healthier compared to the prior year, growing in both scale and in value as we execute all components of our growth strategy. Let me share some specifics.

Natalie Marie Derse: We're making progress across our key performance metrics, our installed base is healthier compared to prior year growing in both scale and in value as we execute all components of our growth strategy let.

Natalie Marie Derse: A key ingredient in our growth strategy is driving new customer acquisition, and in Q4, we expanded our customer base for the third consecutive quarter, increasing to 39.1 million, up over 230,000 customers sequentially and over 900,000 year-over-year. To help drive this growth, we continue to invest in a diverse mix of marketing spend to reach new audiences, generate more traffic to our sites, while dynamically optimizing channel performance. We are acquiring positive new ads at healthy ROIs across all brands, fueling our renewable base.

Natalie Marie Derse: Let me share some specifics a key ingredient to our growth strategy is driving new customer acquisition and in Q4, we have expanded our customer base for the third consecutive quarter, increasing to $39 1 million up over 230000 customers sequentially and over 900000 year over year.

Natalie Marie Derse: To help drive this growth we continue to invest in a diverse mix of marketing spend to reach new audiences Jenny.

Natalie Marie Derse: <unk> generated more traffic to our sites, while dynamically optimizing the channel performance.

Natalie Marie Derse: We are acquiring positive new adds at healthy rois across all brands fueling our renewable base.

Natalie Marie Derse: And our growth is coming through our diverse set of acquisition channels, particularly international growth markets and mobile devices. On monetization, our monthly direct ARPU was $7.24 in USD, up three pennies versus last quarter and in line with last year's result. But note, as reported, this result absorbed six pennies of negative FX headwinds given the dollar's rise over the year, particularly against the Japanese yen, and we expect these headwinds to continue impacting reported ARPU comparisons through the next fiscal year.

Natalie Marie Derse: And our growth is coming through our diverse set of acquisition channels, particularly international growth markets and mobile devices.

Natalie Marie Derse: On monetization.

Natalie Marie Derse: Our monthly direct <unk> was $7.24 in USD up three pennies versus last quarter and in line with last year's result, but note as reported this result absorbed six pennies of negative FX headwind given the dollar's rise over the year, particularly against the Japanese yen.

Natalie Marie Derse: And we expect these headwinds to continue impacting reported <unk> comparisons through the next fiscal year.

Natalie Marie Derse: With that said, let me provide additional commentary on the operational drivers of our expanding ARPU. In Q4, the ARPU of our online customers, which is the vast majority of our customer base, was up on a year-over-year and a quarter-over-quarter basis across Norton, LifeLock, and Avast brands. This growth reflects the synergistic efforts and learnings from the Avast cross-sell model brought into the Norton and LifeLock go-to-market efforts, with cross-cell penetration nearing 20%, up approximately 5 points over the past two quarters.

Natalie Marie Derse: With that said, let me provide additional commentary on the operational drivers of our expanding <unk>.

Natalie Marie Derse: In Q4, the <unk> of our online customers, which is the vast majority of our customer base is up on a year over year and quarter over quarter basis across Norton Lifelock and avast brands.

Natalie Marie Derse: This growth reflects the synergistic efforts and learnings from the Avast Cross sell model brought into the Norton and Lifelock go to market efforts with cross sell penetration nearing 20% up approximately five points over the past two quarters.

Natalie Marie Derse: In addition, the ARPU of our mobile customers was stable on both a year-over-year and a quarter-over-quarter basis with measured, healthy ROI, another proof point of our ability to balance customer acquisition costs, ARPU, and retention rates across the channels. Demand for our increased cyber protection is growing as threats evolve, and we are well positioned with a broad portfolio of cross-sell products. Across our customer cohorts, we will continue to drive expansion through their journey, increasing value through additional product offerings suited to their cyber safety needs or upselling to a higher tier membership, offering more comprehensive protection for their growing digital footprint. This increase in engagement drives retention.

Natalie Marie Derse: In addition, the <unk> of our mobile customers was stable on both a year over year and a quarter over quarter basis with measured healthy ROI. Another proof point of our ability to balance customer acquisition costs <unk>, a retention rate across the channels.

Natalie Marie Derse: Demand for our increased cyber protection is growing as threats evolve and we are well positioned with a broad portfolio of cross sell products.

Natalie Marie Derse: Across our customer cohorts, we will continue to drive expansion through their journey, increasing value through additional product offerings suited for their cyber safety needs.

Natalie Marie Derse: Or upselling to our higher tier membership.

Natalie Marie Derse: Offering more comprehensive protection for their growing digital footprint.

Natalie Marie Derse: This increase in engagement drives retention.

Natalie Marie Derse: In Q4, our overall customer retention rate increased to over 77%, improving by over one point year-over-year and by two and a half points since the merger. A key component of our 5 for 5 growth strategy is driving retention rates to 80% over the next few years, and we have made progress towards that target in our first year operating as Gen, with every brand in our portfolio increasing retention rates year over year and quarter over quarter.

Natalie Marie Derse: In Q4, our overall customer retention rate increased to over 77% improving by over one point year over year and improving by two five points since the merger.

Natalie Marie Derse: A key component to our five for five growth strategy is driving retention rates to 80% over the next few years and we have made progress towards that target in our first year operating as Jen with every brand in our portfolio, increasing retention rates year over year and quarter over quarter.

Natalie Marie Derse: As we look forward, we expect to drive additional uplift, leveraging our strong, trusted brands while creating more personalized customer experiences throughout their journey. And although we already have industry-leading retention rates today, we have many opportunities to drive higher customer loyalty and increase lifetime value through simplification, optimization, and personalization. And we have the expertise across our team and the technology to ensure we are providing the experience our customers want. Turning to our partner business, partner revenue was $105 million in Q4, up 5% year-over-year. We have a record pipeline for employee benefits. We continue to build strategic partnerships with financial services and insurance providers. And we have seen strong traction already for our newly launched Norton private browser.

Natalie Marie Derse: As we look forward, we expect to drive additional uplift leveraging our strong trusted brands, while creating more personalized customer experiences through their journey.

Natalie Marie Derse: And although we already have industry, leading retention rates today, we have many opportunities to drive higher customer loyalty and increase lifetime value through simplification optimization and personalization.

Natalie Marie Derse: And we have the expertise across our team and the technology to ensure we are providing the experience our customers want.

Natalie Marie Derse: Turning to our partner business partner revenue was $105 million in Q4 up 5% year over year.

Natalie Marie Derse: We have a record pipeline in employee benefits, we continue to build strategic partnerships with financial services and insurance providers.

Natalie Marie Derse: And we have seen strong traction already in our newly launched Norton private browser.

Natalie Marie Derse: Scaling our partner business to half a billion in annual revenue is a key component to achieving our overall growth plan. We are proud of the traction we're making across multiple partner channels, and we look forward to sharing more progress in the coming quarters. Rounding out our revenue, our legacy business lines contributed $15 million this quarter, down from $17 million in the prior year. As a reminder, we expect our legacy revenue to continue to decline double digits year over year and represent less than 2% of our total revenue.

Natalie Marie Derse: Scaling our partner business to half a billion in annual revenue is a key component to achieving our overall growth plan.

Natalie Marie Derse: We are proud of the traction, we're making across multiple partner channels and we look forward to sharing more progress in the coming quarters.

Natalie Marie Derse: Rounding out our revenue our legacy business lines contributed $15 million this quarter down from $17 million in prior year. As a reminder, we expect our legacy revenue to continue to decline double digits year over year and represent less than 2% of our total revenue.

Natalie Marie Derse: Turning to profitability, Q4 operating income was $569 million, up 5% year-over-year, translating to an operating margin of 59%. Since the close of the merger, we have reduced our overall operating expense profile from 35% to 27.5% of revenue while maintaining gross margins above 86%. We've right-sized our organization to under 3,400 full-time employees, down from approximately 4,500 at the time of the merger, representing productivity of over $1 million of revenue per employee. You will see us continue to invest in marketing as well as product and technology to reach new and existing customers, to bolster our product portfolio with differentiated solutions, to amplify our international presence, especially in identity and privacy, and expand into trust-based adjacencies that will touch more parts of the consumer's digital life.

Natalie Marie Derse: Turning to profitability Q4, operating income was $569 million up 5% year over year translating to an operating margin of 59%.

Natalie Marie Derse: Since the close of the merger we have reduced our overall operating expense profile from 35% to 27, 5% of revenue, while maintaining gross margins above 86%.

Natalie Marie Derse: We've right sized our organization to under 3400 full time employees down from approximately 4500 at the time of the merger representing productivity of over $1 million of revenue per employee.

Natalie Marie Derse: You will see us continue to invest in marketing as well as product and technology to reach new and existing customers to bolster our product portfolio with differentiated solutions.

Natalie Marie Derse: To amplify our international presence, especially in identity and privacy and expand into trust based Adjacencies that will touch more parts of the consumers' digital life.

Natalie Marie Derse: These investments fuel progress in each of our growth levers and strengthen our position to accelerate revenue growth to mid-single digits over the next three years. We will continue to operate our GNA functions at approximately 3 percent of revenue, reinvesting any further productivity into levers for growth. Q4 net income was $336 million, up 14% year over year. Diluted EPS was $0.53 for the quarter, up 15% year-over-year, and up 16% in constant currency. Interest expense related to our debt was approximately $154 million in Q4.

Natalie Marie Derse: These investments feel progress in each of our growth levers and strengthen our position to accelerate revenue growth to mid single digits over the next three years.

Natalie Marie Derse: We will continue to operate our G&A functions at approximately 3% of revenue reinvesting any further productivity and de levers for growth.

Natalie Marie Derse: Q4, net income was $336 million up 14% year over year.

Natalie Marie Derse: Diluted EPS was <unk> 53 for the quarter up 15% year over year and up 16% in constant currency.

Natalie Marie Derse: Interest expense related to our debt was approximately $154 million in Q4, our non-GAAP tax rate remained steady at 22% and our ending share count was $637 million down $7 million year over year, reflecting the impact of share repurchases.

Natalie Marie Derse: Our non-GAAP tax rate remained steady at 22%, and our ending share count was $637 million, down $7 million year-over-year, reflecting the impact of share repurchases. Turning to our balance sheet and cash flow, our Q4 ending cash balance was $846 million. We are supported by over $2.3 billion of total liquidity, consisting of our ending Q4 cash balance and a billion and a half revolver. Q4 operating cash flow was $1.398 billion, and free cash flow was $1.395 billion, which included the $900 million tax refund received in January and approximately $114 million of cash interest payments this quarter.

Natalie Marie Derse: Turning to our balance sheet and cash flow Q4, ending cash balance was $846 million.

Natalie Marie Derse: We are supported by over $2 3 billion of total liquidity, consisting of our ending Q4 cash balance and $1 billion of half revolver.

Natalie Marie Derse: Q4, operating cash flow was one 398 billion and free cash flow was $1 $3 95 billion.

Natalie Marie Derse: Which included the $900 million tax.

Natalie Marie Derse: Tax refund received in January and approximately $114 million of cash interest payments this quarter.

Natalie Marie Derse: Turning to capital allocation, we remain intentional and balanced with our capital deployment and are committed to returning 100% of excess free cash flow to shareholders. We voluntarily paid down $600 million of our TLB during the fourth quarter, with an additional $58 million repaid per our maturity schedule.

Natalie Marie Derse: Turning to capital allocation, we remain intentional and balances our capital deployment and are committed to returning 100% of excess free cash flow to shareholders.

Natalie Marie Derse: We voluntarily paid down $600 million of our <unk> during the fourth quarter with an additional $58 million repaid per our maturity schedule.

Natalie Marie Derse: We are now at 3.4 times net levered, down from 3.9 times at the time of merger, with $1.2 billion in repayments in fiscal year 24. We also deployed $300 million for share repurchases this quarter, the equivalent of 14 million shares. Since the start of fiscal year 23, we have deployed a total of $1.3 billion of share repurchases, and we're pleased to announce the board has recently expanded our current buyback program to $3 billion with no expiration date to support our future capital allocation strategy.

Natalie Marie Derse: We are now at three four times net levered down from three nine times at the time of merger with $1 $2 billion in repayments in fiscal year 'twenty four.

Natalie Marie Derse: We also deployed $300 million for share repurchases this quarter, the equivalent to 14 million shares.

Natalie Marie Derse: Since the start of fiscal year 'twenty three we have deployed a total of $1 3 billion of share repurchases and we're pleased to announce the board has recently expanded our current buyback program to $3 billion with no expiration date to support our future future capital allocation strategy.

Natalie Marie Derse: We paid $78 million to shareholders in the form of a regular quarterly dividend of 12.5 cents per common share. For Q1 Fiscal 2025, the Board of Directors approved a regular quarterly cash dividend of $0.125 per common share to be paid on June 12, 2024 for all shareholders of record as of the close of business on May 20, 2024.

Natalie Marie Derse: We paid $78 million to shareholders in the form of a regular quarterly dividend of $12.05 per common share for.

Natalie Marie Derse: For Q1 fiscal 2025, the board of directors approved a regular quarterly cash dividend of $12.05 per common share to be paid on June 12, 2024 for all shareholders of record as of the close of business on May 22024.

Natalie Marie Derse: With our strong cash flow generation now nearing $2 billion unlevered, excluding one-time items, and our disciplined capital deployment, we will continue to pay down debt and deploy opportunistic share buybacks to help achieve our goals of delivering EPS growth of 12 to 15 percent and driving net leverage below three times EBITDA by fiscal year 2025. In summary, fiscal year 2024 was about bringing two large companies together as one operating business. Starting to scale our revenue synergies by returning our customer base to growth and increasing our retention rate while driving improvements in our cost structure and executing our integration commitments. We have accomplished a lot since the merger.

Natalie Marie Derse: With our strong cash flow generation now nearing $2 billion unlevered, excluding onetime items and our disciplined capital deployment, we will continue to pay down debt and deploy opportunistic share buybacks to help achieve our goals of delivering EPS growth of 12% to 15% and driving net leverage.

Natalie Marie Derse: Below three times EBITDA by fiscal year 2025.

Natalie Marie Derse: In summary fiscal year 2024 was about bringing two large companies together as one operating business starting to scale, our revenue synergies by returning our customer base to growth and increasing our retention rate, while driving improvements in our cost structure and executing our integration commitments.

Natalie Marie Derse: We have accomplished a lot since the merger.

Natalie Marie Derse: Now, looking forward, our margins are world-class, with room to make disciplined investments in our organic growth initiatives outlined in the 5 for 5 structure we shared at our Analyst Day in order to accelerate growth to mid-single digits. Turning to our Q1 and fiscal year 2025 outlook, for fiscal year 2025, we expect full-year revenue in the range of $3.89 billion to $3.93 billion. This translates to three to four percent growth in cyber safety expressed in constant currency and supported by expected cyber safety bookings growth of 3 to 5%.

Natalie Marie Derse: Now looking forward our margins are world class with room to make disciplined investments into our organic growth initiatives outlined in the five for five structured we shared at our analyst day in order to accelerate growth to mid single digits.

Natalie Marie Derse: Turning to our Q1 and fiscal year 'twenty five outlook for fiscal year 2025, we expect full year revenue in the range of $3 89 billion to $3 $93 billion.

Natalie Marie Derse: Translating to 3% to 4% growth in cyber safety expressed in constant currency.

Natalie Marie Derse: And supported by expected cyber safety bookings growth of 3% to 5%.

Natalie Marie Derse: We expect non-GAAP EPS to be in the range of $2 17.

Natalie Marie Derse: The $2 23 per share representing an annual increase of 12% to 15% in constant currency.

Natalie Marie Derse: We expect non-GAAP EPS to be in the range of $2.17 to $2.23 per share, representing an annual increase of 12% to 15% in constant currency. Please note that we expect continued FX headwinds impacting our reported revenue primarily from the Japanese Yen, which has depreciated over the past year and is now at multi-decade lows. For Q1, we expect non-GAAP revenue in the range of $960 to $970 million, translating to approximately 3% growth in cyber safety, and Q1 non-GAAP EPS to be in the range of $0.52 to $0.54, up 12% to 16% in constant currency.

Natalie Marie Derse: Please note that we expect continued FX headwinds impacting our reported revenue primarily from the Japanese yen, which is depreciated over the past year and is now at multi decade decade lows.

Natalie Marie Derse: For Q1, we expect non-GAAP revenue in the range of $960 million to $970 million translating to approximately 3% growth in cyber safety and.

Natalie Marie Derse: Q1, non-GAAP EPS to be in the range of 52 to 54.

Natalie Marie Derse: Up 12% to 16% in constant currency.

Natalie Marie Derse: As we kick off our new fiscal year, we are in line with the expectations we set out at Analyst Day back in November 2023. We remain steadfast in driving our long-term growth plan. We are focused on delivering our commitments, always in a disciplined and balanced manner. Our key performance indicators are trending in the right direction. Our strategy is working, and our financial model is resilient. We're committed to investing in our business to drive sustainable and profitable mid-single-digit growth and create shareholder value over the long term. We look forward to reporting on our progress in the quarters ahead. As always, thank you for your time today, and I will now turn the call back to the operator to take your questions.

Natalie Marie Derse: As we kick off our new fiscal year, we are in line with the expectations. We set out at analyst day back in November 2023.

Natalie Marie Derse: We remain steadfast in driving our long term growth plan.

Natalie Marie Derse: We are focused on delivering our commitments always in a disciplined and balanced manner.

Natalie Marie Derse: Our key performance indicators are trending in the right direction or.

Natalie Marie Derse: Our strategy is working.

Natalie Marie Derse: In our financial model is resilient.

Natalie Marie Derse: We're committed to investing in our business to drive sustainable and profitable mid single digit growth and create shareholder value over the long term.

Natalie Marie Derse: We look forward to reporting on our progress in the quarters ahead.

Natalie Marie Derse: As always thank you for your time today and I will now turn the call back to the operator to take your questions.

Natalie Marie Derse: Operator.

Operator: Thank you. We will now open the line for the Q&A session. If you'd like to queue for a question at this time, please dial star 1 on your telephone keypad. If, for any reason, you'd like to remove that question, you can dial star 2. Again, it is Star 1 if you'd like to ask a question. The first question is from the line of Peter Levine with Evercore ISI. Your line is now open.

Speaker Change: Thank you we will now open the line for the Q&A session, if you'd like to queue for question. At this time. Please dial star one on your telephone keypad defer any reason you'd like to remove that question you can dial star two.

Peter Marc Levine: And it is star one if you'd like to ask a question.

Operator: The first question is from the line of Peter Levine with Evercore ISI. Your line is now open.

Peter Marc Levine: Hi Peter. Great. Thank you for taking my question. You know, Natalie, I think one comment that actually stuck out to me that you said was kind of moving into kind of new trust-based adjacencies. Can you maybe just provide a little color there outside of what you already provide?

Peter Marc Levine: Hi, Peter Great for Us.

Speaker Change: Thank you for taking my question.

Peter Marc Levine: Natalie I think one topic that stuck out to what you said was kind of moving in Canada.

Peter Marc Levine: New truck base.

Peter Marc Levine: Could you maybe provide a little color there outside of what you already.

Peter Marc Levine: Right.

Vincent Pilette: Hey, Peter, I'll take that one. So I would refer to the AI-infused roadmap that we shared at AID, right? We've started with, we have a very strong membership structure, which we upgraded on the Avast side, and we are now deploying GNOME 360 on the new Gen stack. And so we're rolling that out. That enables very strong modularity, scalability, and a much more flexible usage from a customer perspective, to which we'll be able to add a lot of different value.

Natalie: Hey, Peter I'll take that one so I would referred to the AI infused roadmap that we share that at AIB right. We've started with we have a very strong membership structure, which we upgrade on the advanced side and now deploying Norton 360 on the new Gen.

Vincent Pilette: Skagen, so we're worrying that out that enable a very strong modularity scalability and a much more flexible usage from a customer perspective, too which will be able to add a lot of different value. We're already over the last two years have added like reputation management and other services.

Vincent Pilette: We've already, over the last two years, added features like reputation management and other services. We'll move GNOME and GENIE and TASCAM into the membership, and again, we are going to grow into a discovery of deepfake, protecting your financial transactions and calling you to progress. So over the next few years, you'll see us launch more features into these.

Vincent Pilette: We will move.

Vincent Pilette: Northern Virginia anti scam into the membership and again going to grow into.

Vincent Pilette: Discovery of deep faith, protecting your financial transactions and continue to progress. So over the next few years, you'll see us to launch more features into these areas.

Vincent Pilette: So if I think about Norton Genie, you know, a million downloads to date, you know, what's the monetization, you know, what's the trajectory in terms of monetization for that product? What do you think customers are going to pay? And how do you think that kind of bakes into your model longer term?

Vincent Pilette: Think about Norton Jeanie.

Vincent Pilette: Most of the day.

Vincent Pilette: What's the monetization.

Vincent Pilette: What's the trajectory in terms of the monetization for that product. What do you think customers are willing to pay and how do you think that kind of thing.

Vincent Pilette: And to your model longer term.

Vincent Pilette: Yeah, and today we don't have anything in our model. That's not how we see it.

Vincent Pilette: And today, we don't have anything in our model that's not how we see it.

Vincent Pilette: We first wanted to develop our AI models using the vast data that we have, building this new generative AI interface for people to interact with their security officer in their pocket if they want. And we continue to develop the model. The goal was to really grow adoption first and foremost, and that's our strategy. The second aspect is to add new features. So moving from text, email, and scans to voice and others and progressing towards the value add.

Vincent Pilette: First wanted to develop AI models using vast data that we have building this new <unk>.

Vincent Pilette: Generally if AI interface for people to interact with their security officer in their pocket if you want.

Vincent Pilette: And we continue to develop the model. The goal was to really grow the adoption first and foremost and Thats. Our strategy. The second aspect is to add new features so moving from text E mail scams to voice and others and progressing towards the value add.

Vincent Pilette: The third item is to move that feature as part of the membership. Remember the 505 from Natalie is, of course, to acquire new customers, retain them with great features, cross-sell where you can, but mainly to move up into the membership, full protection. So at some level of our membership levels, we'll be integrating into the price. And as you know, we price for value. And then only then will we come up with the Genie Pro, which is our project name, which would be a monetized version, but it's down the line and not in our model today.

Vincent Pilette: The third item is to move that feature as part of the membership remember the $5 five from Natalie is of course to acquire new customers retain them with great features cross sell where you can but mainly moving up into the membership full protection. So at some level of a membership level, you'll be integrating to the price.

Vincent Pilette: And as you know we price for value.

Vincent Pilette: And then and then only and only then will then come up with the Gd.

Vincent Pilette: <unk>, which is a project name, which would be a monetized version, but it's down the line and not in our model to them.

Natalie Marie Derse: And the last one real quick, Natalie, for you, obviously, the rate environment, I don't think anyone can predict at this point, but given what we've seen on the macro from these past two, three weeks, does that change your appetite in terms of capital deployment? debt repayment, focus more on debt repayment versus buybacks. I'm curious to know the environment today and then where rate cuts potentially go over the next, call it 12 to 24 months. Does that change your appetite here in the near term?

Speaker Change: Last one real quick for you.

Natalie Marie Derse: Obviously the rate environment I don't think anyone can predict at this point, but given what we've seen.

Natalie Marie Derse: On the macro for the past two to three week does that change your appetite in terms of capital deployment.

Natalie Marie Derse: Repayments.

Natalie Marie Derse: Focus more on debt repayment versus buybacks I'm curious to know if the.

Natalie Marie Derse: The environment today.

Natalie Marie Derse: Where rate cut potentially go over the next call. It 12 to 24 months does that change your appetite here in the near term.

Natalie Marie Derse: I don't think we've seen too much of a change in terms of what people, what the external community is expecting for the rates. I mean, we've talked about the number of cuts, etc. Of course, you know, I don't know what's going to happen, but we're tracking right along with the latest and greatest in the news. And from our business model and the way we choose to allocate our capital, the beauty of it is we've got a lot of cash flow generation, which frees up a lot of deployment opportunities.

Natalie: I don't think we've seen too much change in terms of what people what the external community is expecting for the rates I mean, we've talked about number of cuts et cetera of course, I don't know whats going to happen, but we're tracking right along with the latest and greatest in the news and from our from our business model and the way we choose to allocate our capital.

Natalie Marie Derse: <unk> the beauty of it is we've got a lot of cash flow generation, which frees up a lot of deployment opportunity and every time, we deploy our capital we're looking at the most competitive option. The most the most profitable thing that creates the most shareholder value and so youre going to see us continue to strike there.

Natalie Marie Derse: And every time we deploy our capital, we're looking at the most competitive option, the most profitable thing that creates the most shareholder value. And so you're going to see us continue to strike the right balance across share buybacks, share repurchases, and accelerated debt paydown. But we've made notable progress in fiscal year 24 on both fronts, and I would encourage you to expect the same disciplined approach with that cash flow generation and turning that into the most advantageous capital deployment for our business.

Natalie Marie Derse: <unk> balanced across share buyback our.

Natalie Marie Derse: Share repurchases and accelerated debt pay down, but we've made notable progress in fiscal year 'twenty four on both fronts and I would I would I would encourage you to to expect the same disciplined approach with that cash flow generation and turning that into the most advantageous capital deployment for our business.

Peter Marc Levine: Thank you for taking my questions.

Speaker Change: Thank you for taking my questions.

Peter Marc Levine: Sure.

Operator: Thank you, Peter. The next question is from the line of Dan Bergstrom with RBC. Your line is now open.

Peter Marc Levine: Thank you Peter the next question is from the line of Dan Bergstrom with RBC. Your line is now open.

Daniel Robert Bergstrom: Hey, it's Dan Bergstrom on behalf of Matt Hedberg. Thanks for taking our question. The launch of Gen Stack is obviously exciting. Congratulations on that. Vincent, you talked about a phased approach there. Maybe more thoughts around what that could mean or how you plan to go about the rollout?

Operator: Hi, It's Dan Bergstrom for Matt Hedberg, Thanks for taking our questions.

Daniel Robert Bergstrom: So the launch of Gen stack, obviously exciting congratulations on that.

Daniel Robert Bergstrom: Can you talk to a phased approach there maybe more thoughts around what that could mean or how do you plan to go about the rollout.

Vincent Pilette: Yeah, we won't share the full roadmap, obviously, but we're super excited, right? Part of the opportunity in this merger was to be able to write a client and a full stack that can use AI for more personalization and that can have a better user experience. As you know, the product and security were built a couple of decades ago with the idea that it would run in the back end, and then, over the years, it evolved to become much more of a partner in your security and became front end.

Vincent Pilette: Yeah, we won't share the full roadmap, obviously, but we're super excited what part of the opportunity in this merger was to be able to write.

Vincent Pilette: Client and a full stack that can use AI for more personalization that can have.

Vincent Pilette: A better user experience as you know.

Vincent Pilette: Product and security were built.

Vincent Pilette: A couple of decades ago was the idea that it would run in the backend and then over the years it evolve to become much more of a partnering new security and becoming front end. So the user experience also has tremendously improved the way we communicate in that which is concert contextual and personalized is all opportunities and then it's pretty scalable.

Vincent Pilette: So the user experience is also tremendously improved. The way we communicate with that, which is contextual and personalized, it's all opportunities, and then it's fully scalable. So we don't have to launch a new app or something else; we can roll out new features. And based on your membership or price level you sign up for, you will have or can activate different features.

Vincent Pilette: We then have to launch a new app or something else you can vote up new features and based on your membership price level.

Vincent Pilette: You sign up for you will have or can activate different future features we will take full fiscal year 'twenty five to deploy it obviously, we want to be very cautious if it goes smoothly, we may accelerate that but so far we have three countries with testing it in and early we have April under our belt and very positive.

Vincent Pilette: We will take the full fiscal year 2025 to deploy it. Obviously, we want to be very cautious. If it goes smoothly, we may accelerate that. But so far, we have three countries we're testing it in, and early April under our belts with very positive signs. So we'll progress that, we'll move into a little bit more global countries, so more countries will open here at the end of the quarter, and then we'll move as fast as we can, depending on what we see.

Vincent Pilette: So we'll progress that will move into a little bit more global countries or more countries open here at the end of the quarter and then and then it will move as fast as we can depending on.

Vincent Pilette: On what we see.

Vincent Pilette: Thanks. And then you mentioned consumers kind of choosing their own features. You also had some comments and prepared remarks around making offerings fit real world needs of consumers. You know, I noticed a slide of a vast one on the deck, realizing it's still kind of early there. But you know, what's been the reception around that modular approach and letting users really kind of tailor their coverage to their needs and upgrade what they want, you know, where they want? Yeah, absolutely. And it's part of the new stack structure in deployment.

Vincent Pilette: Thanks, and then you mentioned <unk>.

Vincent Pilette: <unk> kind of choosing their own features you also had some comments in the prepared remarks around making offerings fit real world needs of consumers.

Vincent Pilette: I noticed the slide with vast one in the deck, realizing it's still kind of early there, but what's been the reception around that modular approach letting users really kind of tailor their coverage to their needs and upgrade what they want where they want it.

Vincent Pilette: Yeah, absolutely, and it's part of the new stack structure and deployment coming with the Avast 1.3 concept and deployment. It's part of it. So for the Avast install base, the vast majority is still an on-point product, and as we migrate to the new stack, we'll offer the opportunity to upgrade. So we have in the same way that two-and-a-half, three years ago, we moved north by 360 and reached 60% in the northern installed base.

Vincent Pilette: Yeah, absolutely and as part of the the new stock structure in deployment coming with the Avast, one free concept and deploying its part of it so for for the vast installed base. It's still the vast majority is on point product.

Vincent Pilette: And as we migrate to the new stock, we will offer the opportunity to.

Vincent Pilette: Upgrade so we have the same way that 253 years ago, We moved Norton 360, and reached 60% in the Norton installed base with progress to make on that on that side, but we have no doubt that that suites coming or going especially with.

Vincent Pilette: We have progress to make on that side, but we have no doubt that that's where it's coming or going, especially with an agile stack that can really mimic a single product if you pay only for the single feature or benefit from the value of the full stack. It's that flexibility of scalability, if you want, that we're super excited about.

Vincent Pilette: Giles stock that can really mimic a single product if you pay only for the single feature or benefit from the value of the full stack is that flexibility scalability <unk> Super excited about.

Speaker Change: Thank you.

Speaker Change: Thank you Andrew.

Vincent Pilette: Yeah.

Operator: Our final question comes from Saket Kalia with Barclays. Your line is now open.

Vincent Pilette: Our final question comes from Socket Korea with Barclays. Your line is now open.

Saket Kalia: Okay great.

Saket Kalia: Hey Natalie, thanks for taking my questions here and a nice end of the year. Yes, thanks again. Natalie, maybe, yeah, absolutely. Natalie, maybe just to start with you, I think the guide for fiscal 25 said three to five percent bookings growth. Great to see.

Saket Kalia: Hey, Natalie Thanks for taking my questions here nicely every year.

Saket Kalia: Yes. Thanks.

Saket Kalia: Okay, Natalie maybe yeah, absolutely not only maybe just to start with you.

Saket Kalia: I think I think the guide for fiscal 'twenty, five we said 3% to 5%.

Saket Kalia: Bookings growth great to see.

Natalie Marie Derse: I think that implies a little bit of a pickup in bookings growth compared to fiscal 24. So, do you just maybe have a general rule of thumb on how much of that can be driven by subscribers or ARPUs? Is it a mix of growth? How do you sort of think about that growth formula for next year?

Saket Kalia: I think that implies a little bit of a pickup in bookings growth compared to the fiscal 'twenty. Four. So can you just maybe you have a general rule of thumb on on how much of that can be driven by subscribers or our <unk>.

Natalie Marie Derse: The mix of growth how do you sort of think about that that growth formula for next year.

Natalie Marie Derse: Hi Saket. Good to hear from you. Yes, the bookings are 3% to 5% as we look into 2025. We're super excited about it. But, you know, nothing's really changed from what we talked to you guys about back in November at AID. It's going to be a mix of our 5 for 5 growth strategy, and those levers are going to be all equally important, but scalating at different paces and different magnitudes as we kick off 2025 and continue down that three-year journey. I'll just give you a bit of color.

Speaker Change: Hi, socket good to hear from you, yes, the bookings of 3% to 5%.

Natalie Marie Derse: As we look into 2025, we're super excited about but.

Natalie Marie Derse: Nothing has really changed from what we talked to you guys about back in November at AIG, it's going to be a mix of our five for five growth strategy.

Natalie Marie Derse: We and those levers are going to be are all equally important but scaling at different pace and different magnitude as we as we kick off 25 and continue down that three year journey I'll, just give you a bit of <unk>.

Natalie Marie Derse: So we're committed to driving the acquisition of new customers in a healthy ROI way. And we'll continue to stay committed to that. Of course, our aspiration is to drive new customer acquisition growth, quarter in, quarter out. The absolute number of new customers will vary, but we definitely stay steadfast and committed to investing our marketing dollars, doing that in a healthy way, and doing that very, very differently geographically and across brands. And then the other levers that are going to drive the installed base, both in scale and quantity, as well as in scale and value, are cross-cell and up-cell.

Natalie Marie Derse: Color. So we're committed to driving the acquisition of new customers and a healthy ROI way, we'll continue to stay committed to that of course, our aspiration is to drive.

Natalie Marie Derse: New customer acquisition growth quarter in quarter out the absolute number of customer acquisition will vary, but we definitely stay steadfast and committed to investing our marketing dollars doing that in a healthy way and doing that very very diverse.

Natalie Marie Derse: Geographically and across brands.

Natalie Marie Derse: And then the other levers that are going to drive.

Natalie Marie Derse: The installed base and both in scale and quantity as well as scale and value is cross sell and upsell cross sell I mean being able to close the year in 2000 for fiscal year 'twenty four.

Natalie Marie Derse: Cross-cell, I mean, being able to, you know, close the year for fiscal year 24 at, you know, an approaching 20 percent penetration of cross-cell is something that we're very, very proud of and is significant progress, even over the last two quarters. So, you guys should look at those as real, real proof points, measured proof points that we will continue to successfully drive cross-cell and, therefore, increase the engagement with our existing customers. Now, Pepper In is our prioritized growth lever in up-cell.

Natalie Marie Derse: And approaching 20% penetration of cross sell is something that we're very very proud of and is significant progress even over the last two quarters. So you guys should look at those as real real proof points measured proof points that we will continue to successfully drive cross sell and therefore increase the engagement with our <unk>.

Natalie Marie Derse: <unk> customers now pepper in are our prioritized growth lever in up sell and what we mean by that is getting more and more of our customers, both new and existing and higher tiered higher valued Norton 360 membership offerings and so the mix of those two of course is going to do.

Natalie Marie Derse: And what we mean by that is getting more and more of our customers, both new and existing, into higher-tiered, higher-valued Norton 360 membership offerings. And so, the mix of those two, of course, is going to drive our bookings. It's going to, therefore, drive our revenue growth in a scalable manner, and then we'll, in turn, drive higher rates of retention across the brands. With higher-engaged customers, we see significantly higher retention rates. And so, at the end of the day, I would say the combination of all those things is what we call the flywheel.

Natalie Marie Derse: Drive our bookings, it's going to therefore and drive our revenue growth in our scaling manner and then we will in turn.

Natalie Marie Derse: Drive higher rates of retention across the brands higher engage customers, we see notable higher retention rates and so at the end of the day I would say the combination of all those things are what we call the flywheel and let's not forget the partner business the partner business drives broader awareness, it's our competitive differentiator.

Natalie Marie Derse: And let's not forget the partner business, which drives broader awareness. It's our competitive differentiator, and it's a diversification of our acquisition in a scalable revenue contributor way. And so we will continue to invest behind the diversification of our partner channels, with our world-class sales teams, and really have all five of those levers come together. You're going to start to see those all come through in fiscal year 25. Yes, at varying pace and magnitude throughout the year, and we will build throughout the year. As you can assume, when we talk about retention rates, it's the annual retention rate of the customers.

Natalie Marie Derse: <unk>.

Natalie Marie Derse: And it's the diversification of our acquisition and are scaling revenue contributor way and so we will continue to invest.

Natalie Marie Derse: Behind the diversification of our partner channels.

Natalie Marie Derse: With our World class sales teams and really have all five of those levers come together, you're going to start to see those all come through in fiscal year 'twenty five yes at varying pace and magnitude throughout the year and we will build throughout the year as you can assume when we talk about retention rates, it's the annual retention rate of the.

Natalie Marie Derse: So as we bring in more and more cross-sells, and when we increase our coverage of our membership tier offerings, those are all going to scale throughout the year, which is why you should expect bookings to scale throughout the year as well.

Natalie Marie Derse: So as we bring in more and more cross sells.

Natalie Marie Derse: <unk> increased our coverage of all of our membership tier offerings. Those are all going to scale throughout the year, which is why you should expect the bookings to scale throughout the year as well.

Saket Kalia: Got it. Got it. That's super helpful. And maybe that's a good segue into the follow-up for you, Vincent.

Speaker Change: Got it got it that's super helpful and maybe that's a good segue into the follow up for you Vincent.

Vincent Pilette: I think you said we expanded retention rates on the Avast customer base by more than two points since the deal, which has been great to see. How are we maybe thinking about that retention rate for next year? And maybe relatedly, is it the same blocking and tackling that's going to just continue to lift that retention rate higher as the years go on? Or are there other parts of the playbook around improving that retention rate for Avast?

Vincent Pilette: I think you said, we expanded retention rates on the a vast customer base.

Vincent Pilette: By more than two points since since the deal which has been great to see how can we be thinking about that retention rate for next year.

Vincent Pilette: And maybe Relatedly is it is it the same blocking and tackling that's going to just continue to.

Vincent Pilette: Lift that retention rate higher as the years go on or are there other sort of parts of the playbook around improving that retention rate for best.

Speaker Change: Yes, let me take that one on so just to rattle a few numbers to put everybody on the same page when we closed the merger 18 months ago, our aggregate retention rates for the full portfolio was around 75.

Vincent Pilette: When we closed the merger 18 months ago, our aggregated retention rate for the full portfolio was around 75%, as we mentioned. You remember, the Northern Lifelock combined business was around 84%, and Avast was around 65-66%. First, as we discussed, we centralized our operations around a center of expertise for process management, the same techniques, the same set of operations as we drive these retention activities that really start on day one when the customer is on board for the first time all the way to day 365 when they renew. We closed Q4 here after 18 months on an aggregated basis at 77.5% retention, a 2.5 points improvement in the merger, but Avast itself closed at a record retention rate of over 70%.

Vincent Pilette: Percent retention.

Vincent Pilette: As we mentioned you remember at the northern lateral combined business around 84% and and advanced was around 65, 66%.

Vincent Pilette: We first as we discussed centralize our operations around a center of expertise expertise for process management same techniques in thin.

Vincent Pilette: Set of operations as we drive these retention activities that really start on day, one when the customer onboard for the first time, all the way to the D 365, when we.

Vincent Pilette: When they renew.

Vincent Pilette: And we closed Q4 here after <unk>.

Vincent Pilette: 18 months on an aggregated basis at 77, 5% retention two five point improvement in the merger, but advanced itself closed at a record retention rates of over 70% with close to five point improvement in 18 months, while Norton and Lifelock combined states.

Vincent Pilette: We closed to five points of improvement in 18 months while Northern and Lifelock combined stayed somewhat flat, all of the brands slightly trending up on customer satisfaction and improving on retention, even though Northern and Lifelock combined, it was immaturely perceptible, so I call it flat. We still have a good, in my opinion, as you remember, we had today maybe Avast of the 20-point delta. We can improve half of it operationally, so we've done half in 18 months. We'll now, over the next 18 months, drive the other half, at least that's how we linearly are projecting it, and no, the approach is now different.

Vincent Pilette: Flat all of the brands slightly trending up on customer satisfaction and improving on retention, even though automotive and aflac combining to us.

Vincent Pilette: In materially perceptible according to flat.

Vincent Pilette: We still have a good in my opinion as you remember we had said hey, maybe <unk> of the 20 points Delta can improve half of it operationally. So we've done half in 18 months.

Vincent Pilette: We'll now over the next 18 months driving the other half at least Thats, how we linearly projecting it and know the the approach is no different we are shifting from having centralized the operations standardized the operations to working on three areas. The first one is defining the customer journeys within the customer lifecycle lifecycle as you on.

Vincent Pilette: We're shifting from having centralized the operations and standardized the operations to working on three areas. The first one is defining the customer journeys within the customer lifecycle. Lifecycle is you on board for the first time all the way to when you decide to leave, it could be a multi-year view, and then you have many different steps in your cyber safety journey, and you have different journeys. We've done a lot of work and beefed up our team and our framework to drive a very integrated part of the journey into our product.

Vincent Pilette: For the first time, all the way to when you decide to leave it could be multi year view and then you have many different steps new cyber safety journey and you have different journeys, we've done a lot of work and beefed up our team and our framework to drive a very.

Vincent Pilette: Integrated part of the journey into our product. The second one is really what the new Gen stack will enable on one side you will enable us to use a vast amount of data and use our data scientist and AI modeling to improve these what I call contextual communications personalized communications and the second one.

Vincent Pilette: The second one is really what the new GenStack will enable. On the one hand, it will enable us to use a vast amount of data and use our data scientists and AI modeling to improve this, what I call contextual communications, personalized communications. And the second one is really being able to offer a better path between the cross-sell, up-sell, and the membership side, all of which leads to better retention. We'll work on those three axes. The whole company that touches the customer journey is mobilized behind that, and we know it's a very, very important aspect of our plan moving forward.

Vincent Pilette: <unk> is really being able to two.

Vincent Pilette: To offer a better path between the cross sell upsell and the membership side, so all of which leads to better retention. When we work on those three axes. The whole company that touches the customer journey is won't be mobilized behind that and we know it's a very very important aspect of our plan moving forward.

Vincent Pilette: Yes.

Saket Kalia: Got it. Thanks, guys. Appreciate the time.

Speaker Change: Alright, Thanks, guys I appreciate the time.

Saket Kalia: Absolutely.

Vincent Pilette: Thank you, Saket. That concludes our Q&A session. I'd like to turn the call back over to Vincent Pilette, CEO of Gen. Thanks.

Saket Kalia: Thank you <unk> that concludes our Q&A session I'd like to turn the call back over to Vincent <unk> CEO of <unk>.

Vincent Pilette: Thank you, operator, and of course, thank you all for joining our call. I started this call by saying that Fiscal Year 24 was a transformational and pivotal year for Gen. In Fiscal Year 25, we're putting the company in a position to reap the benefits of the hard work we put in. As the leader in consumer cyber safety markets, we are well positioned to succeed in transforming the industry. We have a strategy to accelerate growth, and while it is not always a smooth journey, it is working. We have a long and proven track record of investing in technology and innovation to best serve our customers, and we will continue to do so. Thank you.

Vincent Pilette: Thank you operator and of course, thank you all for joining our call are starting this call by saying that fiscal year 'twenty four was a transformational and pivotal year for Gen in fiscal year 'twenty five we are putting the company in a position to reap the benefits of the hard work, we put in as the leader in consumer cyber safety market, we are well positioned to <unk>.

Operator: That concludes today's conference call. Thank you for your participation. You may now disconnect your lines.

Operator: <unk> transforming the industry, we have a strategy to accelerate growth and while it is not always a smooth journey. It is working we have a long and proven track record of investing in technology and innovation to best serve our customers and it will continue to do so thank you.

Vincent Pilette: and you will continue to do so. Thank you.

Vincent Pilette: That concludes today's conference call. Thank you for your participation you may now disconnect your lines customers and it will continue to do so thank you.

Vincent Pilette: Yes.