Q3 2025 Gen Digital Inc Earnings Call
Good afternoon, everyone and thank you for standing by my name is Jay Leno would be a conference operator today today's call is being recorded in all lines have been placed on mute to prevent any background noise.
Speaker Change: 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.
Jason Starr: Thank you Taylor and good afternoon, everyone welcome to <unk> third quarter fiscal year 2025 earnings call. Joining me today are Vincent <unk>, CEO, and Natalie Jersey CFO 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.
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 IR website at Investor <unk> 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: Today's call contain 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. Those statements are based on current beliefs assumptions and expectations as of today's date January.
Jason Starr: <unk> 2025, we undertake no obligations to update these statements as a result of new information or future events.
Jason Starr: 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, and now I will tell you we turn the call over to Vincent Thanks, Jason and welcome everyone to our earnings call Q3 was another quarter of solid execution.
Innovation innovating on the most comprehensive cyber safety portfolio for consumers, while delivering profitable growth.
Jason Starr: We grew cyber safety bookings and revenue mid single digits and delivered our fifth consecutive quarter of double digit growth for EPS up 15%.
Jason Starr: Our direct customer base is that a record $40 million up nearly 400000 sequentially and up over $1 million compared to last year.
Jason Starr: <unk> studied results are a testament to the consistent and disciplined execution by our team to serve the needs for comprehensive cyber safety.
Jason Starr: You've heard me tell you every quarter now about the dynamic nature of the threat landscape and that continues to be the case in calendar year 2024 alone we blocked nearly 15 billion attacks globally now.
Jason Starr: Not only are people all over the world being exposed to agreed a number of threats scams and other risk to their digital lives. These threats are getting harder to detect as bad actors deployed increasingly sophisticated techniques and more believable nurse to compromise and exploit their victims.
Jason Starr: Our researchers estimate that 90% of all cyber threats.
Jason Starr: <unk> was a scam up from just 30% in 2020.
Jason Starr: As technology rapidly evolves and consumers' digital footprint expands the proliferation of breach.
Jason Starr: Just keeps adding fuel to the fire. In addition to the large scale breaches like the national public data breach last quarter recent ones are putting not only individuals at risk, but entire families. As we saw with the power school breach.
Jason Starr: This means that threat actors have no shortage of information available to us to convince you to help them attack a new asset.
Jason Starr: We have seen this trend accelerate this quarter with the dramatic rise in scam yourself attacks, which manipulate people into compromising their own devices to deceptive in routine based means.
Jason Starr: We saw this coming and we launched Norton Genie just over a year ago to give consumers an easy to use tool to help detect camps coming to you via email text video files our website, our proprietary AI engine continuously trains on the extensive datasets and realized scams submitted by <unk>.
Jason Starr: Users catching the newest threats with almost 100% efficacy.
Jason Starr: With 2 million downloads of the product genius AI engine can not only understand the meaning and intense of fixed but also scans a wide range of additional attachment files urls images, and even audio and video files and we aren't stopping there will soon be extending the power of genie into our Nolan.
Jason Starr: 360 product family.
Jason Starr: This enhanced version of Genie will be available in all memberships seamlessly, providing proactive and comprehensive scan protection and acting as your AI powered scam assistant.
The Pro version provides advanced features including call blocking <unk> filtering and scan reimbursement and will be included in the higher membership tiers that customers can upgrade to or available as an add on for the remaining customer base.
Jason Starr: Beyond our own AI investments to address this growing threat. We recently teamed up with Qualcomm at CES to showcase an early preview of how AI powered scam detection can be integrated into neural processing units and to use embedded into smartphones.
Jason Starr: By leveraging the NPA speed and efficiency, we are able to detect deep fakes and other sophisticated threats on the device in the device in mere seconds, while keeping user data private a lot of exciting developments with more to come.
Jason Starr: In this dynamic digital world, we continue to invest in and innovate around how we keep customers devices personal information reputations and financial assets safe.
Jason Starr: Our security Foundation stays at the forefront with advanced protection recently, earning top accolades from EV test EV comparative and <unk> labs.
Jason Starr: And our products provide solutions for evolving consumer needs not only securing customer against cyber threats, but also protecting their identity and finances empowering them to manage and grow their finances and safeguarding their personal data.
Jason Starr: Earlier this month, we brought to the protection of our security identity to 15, new countries, which helps consumers keep their identity safe from escalating scam and identity theft risks.
Jason Starr: Our secure identity continuously scours across private firms in the dark web identifying and notifying you if we detect your personal information.
Jason Starr: It also gives consumers additional features like restoration support stoller unwanted assistance and in selected markets identity theft insurance.
Jason Starr: We've also embedded financial monitoring features to allow consumers to suspicious bank account transactions that may indicate fraud.
Jason Starr: Although we only launched a few weeks ago, we've already seen strong interest and engagement from our vast customer base affirming our belief in the need for these types of solutions and the growth opportunity ahead with identity and financial wellness across our entire family of trusted brands.
Jason Starr: In Japan, one of our largest international market. We also rolled out a pilot digital volt with I'd advisor plus with IV volt, we automatically detects and sensitive identity information on users phone and move it to a secure cloud volt for added protection and we don't stop there with IV.
Jason Starr: Advisor plus we also include access to scan verification specialist and a privacy adviser to on demand services that are available to consumers in their time of need.
Jason Starr: As we drive engagement and early feedback to this offering we plan to expand our digital vault technology across our portfolio in the coming quarters to give our customers more control over when and where to share their data.
Jason Starr: I'm also proud to share that all of these new launches has been built on the new Gen stack, which our team has been hard at work on since the reverse acquisition closed we set on this foundational technical initiative.
Jason Starr: Build a new best in class cyber safety infrastructure.
Jason Starr: With the brightest minds from both teams who've create our next Gen Tech stack that enable us to provide strong protection a more modern user interface and a more personalized experience for our customers.
Jason Starr: Gen stack enable us to deliver a unified dataset that makes our AI enhanced solution more relevant for our customers given our extensive threat telemetry and behavioral data.
Jason Starr: With the scale of our cyber safety networks, which protect hundreds of millions of users we have exceptional visibility into the threat landscape.
Jason Starr: The massive amount of data that comes from all of this enabled us to further train our machine learning models and harness the power of AI driving additional improvement in the efficacy rates of our award winning rates a threat protection, making current and future customers inherently safer with Jen.
Jason Starr: The technical benefits are unquestionable, but he does something equally if not more important for our customers. The next gen stack allows us to begin delivering on our re imagined user centric experience is a more intuitive simpler and fully integrated experience our customer can use more of the tools we have available.
Jason Starr: To protect their digital lives.
Jason Starr: It also allows us to more smartly advice and offer products and services that match their actual needs to enhance and uninsured is in product contextual messaging.
Jason Starr: Our extensive machine learning models helps us bring the right cross sell and upsell campaigns to the right people at the right time, which helps us better protect them and as a result improve customer loyalty.
Jason Starr: We have already started extending this technology into our customer success function with advanced machine learning models and data driven communications to personalize our engagement with customers.
Jason Starr: All of these new products and capabilities are enabling us to deliver on our plan to expand our cyber safety platform, which already protect hundreds of millions of users and over 65 million paid customers.
Jason Starr: These customers all benefit from the most comprehensive features and best technology in the market backing by one of the world's largest consumer cyber safety networks protecting people around the globe against advanced online threat.
Jason Starr: Further building on our foundation in cyber safety in December we announced the acquisition of multi line in order to strengthen and accelerate our financial wellness offerings.
Jason Starr: This transaction enables us to offer a complete set of personal financial management tools enhances our AI and personalization capabilities.
Jason Starr: Diversify our customer base with consumer in earlier stage of their financial lives more than double our addressable market to over $50 billion and finally reinforces our long term financial model.
Jason Starr: We've started to address our customers' demand for more credit and financial insight.
Jason Starr: With this acquisition, we'll open up and accelerate new opportunities for <unk> and our customer base.
Jason Starr: While we cant provide additional commentary about this transaction until it closes in the first half of fiscal year 'twenty six we will continue our effort to build out our financial wellness offering through organic and inorganic investments that can enhance the capabilities Janet moneyline have today.
Jason Starr: In summary, we see a long runway of opportunities fueled by the very real and expanding consumer needs to protect their data and assets. We have the best Cyber safety Foundation in place that empires inspires customer trust confidence and loyalty. Our Q3 results demonstrate that we are executing to our plan to.
Jason Starr: Accelerate revenue and drive double digit EPS growth.
Jason Starr: With our pending acquisition of multi line. We're excited for the next phase of our strategy to deliver and empower our customers with digital Trust services, such as financial wellness to further accelerate our growth while operating with the same consistent and disciplined execution you've come to expect from our team.
Jason Starr: And I think we're just getting started so with that let me pass it to Natalie to review our Q3 performance in detail.
Natalie Jersey: Thank you Vince and Hello, everyone for today's call I will walk through our fiscal Q3 2025 results followed by our outlook for Q4 and full fiscal year 2025.
Natalie Jersey: I will focus on non-GAAP financials in year over year growth rates unless otherwise stated.
Q3 was another quarter of solid execution with revenue above the midpoint of our guidance and EPS at the high end and reflects our 22nd.
Natalie Jersey: Consecutive quarter of growth.
Natalie Jersey: Cyber safety bookings, which exclude our legacy business lines were up 4% in constant currency.
Natalie Jersey: Reported bookings exceeded $1 billion and increased 3% in USD and constant currency.
Natalie Jersey: Q3 revenue was $986 million up 4% in USD and constant currency.
Natalie Jersey: We drove broad based growth across our product portfolio Ngos further bolstered with 5% growth in the United States.
Natalie Jersey: In security, our Norton Cross sell program continues to gain momentum, reflecting our strong incremental monetization after initial purchase.
Natalie Jersey: With identity adoption of our Norton 360, with Lifelock membership is increasing as consumer awareness grows alongside breaches and productivity and consumers recognize the need for comprehensive cyber safety protection.
Natalie Jersey: Our privacy offerings, namely anti track and privacy monitoring assistant are bolstered by broader market shifts towards greater privacy needs.
Natalie Jersey: Any traction across both the security and identity customer base.
Natalie Jersey: Direct revenue was $869 million up 4% supported by improvements across our key performance metrics at the cohort level.
Natalie Jersey: Let me share some specifics.
Natalie Jersey: A key ingredient to our growth strategy is driving net new customers and in Q3, we expanded our direct customer base for the sixth quarter consecutive quarter, increasing to $40 1 million up 371000 sequentially and up $1 $2 million year over year.
Natalie Jersey: Our customer base is more diverse as we continue to expand our penetration and broad based geos and we prioritize our marketing allocations to where we see the highest demand in ROI.
Natalie Jersey: This quarter customer growth in international markets and in mobile remains strong.
Natalie Jersey: While the unit economics are different in international markets. Our strategy is to reach these customers early in their cyber safety journey.
Natalie Jersey: And leverage our brands our comprehensive product set.
Natalie Jersey: And customer service to drive long term loyalty.
Natalie Jersey: With mobile we remain top of mind during a potential customers purchasing decision and we've intentionally shifted more marketing dollars to reach these customers in the app stores at lower customer acquisition costs and increased opportunities for cross sell and upsell.
Natalie Jersey: We are encouraged by the early indicators as an increased percentage of our new Norton mobile customers are purchasing our Norton 360, membership, which has a higher <unk> than the Standalone mobile security product.
Natalie Jersey: We are confident that as we extend our improved in product messaging and lifecycle marketing playbook towards this growing base, we will increase customer lifetime value.
Natalie Jersey: Tribune towards our mid single digit growth target.
Natalie Jersey: And as we shared in our Investor Day, we continue to fund customer acquisition across regions products and customer value segments as we expand.
Natalie Jersey: On monetization on.
Natalie Jersey: Our monthly direct <unk> was $7 27 in USD up a penny from the prior quarter and up nine cents compared to last year's result.
Natalie Jersey: Note that this metric was negatively impacted by about a penny a quarter over quarter and year over year due to FX headwinds.
Natalie Jersey: Keep in mind. This is a blended number across geos channels products and customer tenure.
Natalie Jersey: When we review at the cohort level the story is even stronger.
Natalie Jersey: Across our online and mobile cohorts ARPA was up mid single digits year over year, as our cross sell and up sell activity scale with new products introduced into the base.
Natalie Jersey: We will continue to feed this flywheel as we execute our product roadmap and add new features into our membership such as scan protection powered by Genie.
Natalie Jersey: The expanded value and services provided to our customers are also reflected in our strong retention rates and.
Natalie Jersey: In Q3, our direct retention rate was approximately 77, 5% similar.
Natalie Jersey: Similar to <unk>, we continue to see gains at the cohort level for mobile customers to our highest retaining lifelock base.
Natalie Jersey: The first year and tenured customers.
Natalie Jersey: Driving long lasting customer relationships with a strong engagement focus on each stage of their customer journey remains a key tenant of our growth framework.
Natalie Jersey: Turning to our partner business partner revenue was $105 million in Q3 up 6% in USD and constant currency as we execute on the strategy shared a year ago.
Natalie Jersey: Mobilizing to where the customers are and expanding through our identity and privacy offerings.
Natalie Jersey: Employee benefits continues to grow double digits as more companies recognize the importance of cyber safety as a necessity for their employees.
Natalie Jersey: Our pipeline and pipeline conversion are strong and we have added new reputation and privacy services to the channel to scale further.
Natalie Jersey: Internationally, we are leveraging key strategic partnerships to scale identity by adding more features such as stolen funds insurance.
Natalie Jersey: Our mobile attach products have become even more compelling with the digital board offering that Vincent shared driving double digit bookings growth in Japan.
Natalie Jersey: We continue to strengthen our value proposition to existing and potential partners progressing towards our goal of generating half a billion dollars in.
Natalie Jersey: An annual partner revenue over the next few years.
Natalie Jersey: Rounding out our revenue our legacy business lines contributed $12 million this quarter down from $15 million the prior quarter.
But as a reminder, we expect our legacy revenue to continue declining double digits year over year and represent only approximately 1% of our total revenue.
Natalie Jersey: Turning to profitability Q3, operating income was $577 million up 4% year over year in line with revenue growth and translating to an operating margin of 58, 5%.
Natalie Jersey: Our efficient business model creates the capacity to make investments in our portfolio and sales expansion efforts, coupled with our operational discipline.
Natalie Jersey: Consistent with our plan, we are investing in our R&D and technology capabilities to drive continuous innovation in our portfolio, which is crucial to our growth strategy.
Natalie Jersey: We are also investing in marketing as we launched new products and reach new audiences with our existing portfolio with incremental spend always evaluated within a disciplined ROI decision framework.
Natalie Jersey: We will continue to invest in our business with the same disciplined approach as we focus on driving sustainable mid single digit growth in our core cyber safety business.
Natalie Jersey: Q3, net income was $350 million up 11%.
Natalie Jersey: Diluted EPS was <unk> 56 at the high end of our guidance and up 15% year over year, representing our fifth consecutive quarter of double digit EPS growth.
Natalie Jersey: Interest expense related to our debt was $134 million, our non-GAAP tax rate remained steady at 22%.
Natalie Jersey: And our ending share count was $623 million down $22 million year over year, reflecting the impact of share repurchases.
Turning to our balance sheet and cash flow Q3, ending cash balance was $883 million were supported by $2 4 billion of total liquidity consisting of our ending Q3 cash balance and $1 billion of half revolver.
Natalie Jersey: Q3, operating cash flow was $326 million and free cash flow was $318 million, which included approximately $180 million of cash interest payments this quarter.
Natalie Jersey: Our debt to EBITDA net leverage was three three times.
Natalie Jersey: As we look at near term maturities, we plan to refinance our 2025 senior unsecured note of $1 1 billion in Q4 fiscal year 2025.
Natalie Jersey: Moving to capital allocation in.
Natalie Jersey: In the quarter, we paid $59 million of mandatory debt payment across our term loan a interim loan b.
In December we announced the acquisition of money line for approximately $1 billion in cash plus an additional $23 per share in gen stock.
Natalie Jersey: Assuming certain trading conditions are met.
Natalie Jersey: We're excited about what this combination enables for our customers and also our financial model, which we will share more details about after closing.
Natalie Jersey: As a result of the pending transaction there was no additional debt pay down or stock repurchases in Q3.
Natalie Jersey: In the quarter, we paid $77 million to shareholders in the form of a regular quarterly dividend of $12.05 per common share.
Natalie Jersey: For Q4 fiscal 2025, the board of directors approved a.
Natalie Jersey: Regular quarterly cash dividend of $12.05 per common share to be paid on March 12, 2025 for all shareholders of record as of the close of business on February 17th 2025.
Natalie Jersey: Since the start of fiscal year 2023, we have paid down over $2 billion worth of debt and have deployed a total of $1 6 billion of share repurchases over that time period.
Natalie Jersey: Following the closure of the deal we will execute on our long term capital allocation strategy, returning 100% of excess free cash flow to shareholders, maintaining our dividend and balancing our capital allocation between debt paydown and share buyback, while remaining opportunistic and disciplined with M&A opportunities to further access.
Natalie Jersey: The rate growth and expand our portfolio.
Natalie Jersey: With our strong cash flow generation, we will continue to deploy capital to achieve the long term objectives laid out in our analyst day.
Natalie Jersey: Now turning to our Q4 and fiscal 'twenty five outlook.
Natalie Jersey: Given our strong operating results year to date, we are again strengthening our prior guidance and expect full year revenue in the range of $3 91, 5 billion to $3 $93 billion.
Natalie Jersey: Translating to 4% cyber safety growth at the midpoint supported.
Natalie Jersey: Supported by expected cyber safety bookings growth of approximately 4% both expressed in constant currency.
Natalie Jersey: We have also raised the lower end of our EPS guidance and now expect non-GAAP EPS to be in the range of $2 20 to.
Natalie Jersey: $2 22 per share representing 14% to 15% growth in constant currency and in line with the EPS growth objectives, we shared at our Investor day.
Natalie Jersey: This translates to Q4 non-GAAP revenue in the range of 990 to $1 5 million in Q4, non-GAAP EPS in the range of 57 to 59.
In summary, we are pleased with the execution and financial results.
Natalie Jersey: We're on target for our 2025 plan and we remain well positioned to achieve our long term goals with our key performance indicators trending in the right direction.
Natalie Jersey: We look forward to closing out the fiscal year strong.
Natalie Jersey: As always thank you for your time today and I will now turn the call back to the operator to take your questions operator.
Natalie Jersey: Yeah.
Speaker Change: At this time, if you'd like to ask a question. It is star followed by one on your telephone keypad. If for any reason you would like to remove that question. It is star followed by two again to ask a question. It is star one.
My Minder, if youre using a speakerphone please pick up your handset before asking a question.
Speaker Change: Briefly he asked questions registered.
Speaker Change: Our first question comes from Roger Boyd with accompany UBS. Roger Your line is now open.
Roger Boyd: Great. Thank you for taking the question I wanted to touch on retention rates. The directional trend you saw there I know you mentioned on the cohort level all retention rates came up but were impacted by the higher mix of mobile year one customers.
Roger Boyd: How do we reconcile that with the still improve still improving heartburn numbers and then given the continued strength of the mobile and international channels. What are you expecting to see.
Roger Boyd: Erode over our retention as we move forward from here. Thanks.
Yeah. Thanks for the question so retention rate is definitely one of our top kpis.
Roger Boyd: And the Q3 results that we saw were relatively in line with Q2, albeit there is some rounding in there.
I would call out is the strength of the retention rate being industry, leading in total and then yes as you as as we said all the cohorts, whether youre talking about by brand by.
Roger Boyd: By device and the tenures are all stable to up which is which is the strength that we that we point to and what leads us to the confidence in our revenue guide.
Roger Boyd: To call out.
Roger Boyd: These are output metrics that performance metrics that we really look at as the ingredients for our growth and it's about the mix of these kpis coming together.
Roger Boyd: All to drive top line and revenue acceleration and Thats exactly what we saw across all of the Kpis when they all come together, our revenue growth this quarter being 4% last quarter being 3% and so all with the positive net positive customer count quarter over quarter, the strength of the retention rate and the.
Roger Boyd: Expanding <unk>.
Roger Boyd: Feel confident in that revenue acceleration and then as it pertains to the mix of those metrics, whether its retention rate customer count <unk> et cetera.
Roger Boyd: We're down the lanes of what we laid out for analyst day, we're going after.
Roger Boyd: All of the demand globally across geos across products across experiences whether its desktop or mobile.
Roger Boyd: We want to be where the customers are we want to capture as much demand as we possibly can in an ROI positive fashion and thats exactly what I see.
Roger Boyd: As I evaluate the ingredients of our revenue performance that is what I see and so how those mix on a go forward basis and how they come together in the metrics.
Roger Boyd: We obviously have our eyes on it and we operate in a disciplined fashion. So far the kpis are performing to our expectation and we are and we're delivering on that revenue acceleration from 3% to 4% quarter over quarter.
Roger Boyd: Got it thanks Bentley.
Roger Boyd: Thank you.
Speaker Change: Our next question comes from Andrew Nowinski with the company Wells Fargo. Andrew Your line is now open.
Roger Boyd: Yeah.
Roger Boyd: Great. Thank you all and thank you for taking the question maybe just a.
Roger Boyd: Quick clarification, so the cyber safety bookings growth certainly is still strong.
Roger Boyd: At 4% this quarter I think that maybe it was down from last quarter at five 5%.
Roger Boyd: What you just said about <unk>.
Roger Boyd: Retention up new customer adds up.
Roger Boyd: I guess was that deceleration just entirely due to that one time bump from the national public data breach you saw last quarter.
Roger Boyd: Yes, if you if you recall in our conversations and now on the call last quarter. We did say there is no specific pinpoint exactly how much came from the breach but that increased awareness that came when NPD hit the news.
Roger Boyd: Absolutely you can see that on any chart of demand and traffic you can see that you can see that in our sales you can see that in our conversion we put approximately a point of impact. Our Q2 bookings result last quarter. We turned about one point of that acceleration on that NPD breach and now it is not yet the breaching it.
Roger Boyd: Itself is onetime in nature.
Roger Boyd: But we expect tailwind benefits from that in terms of.
Roger Boyd: We obviously evaluate how long that lift it has has sustained it has come down from the peak, but of course any awareness any education any thing that we can do to expand the awareness and therefore, the demand for cyber safety protection with potential customers.
Roger Boyd: See that in our business and keep in mind, we're talking about the bookings growth rate that will continue to fuel our revenue throughout as we amortize that bookings growth.
Roger Boyd: We service those contracts and then we continue to foster this strengthened the retention rate to keep those customers in our cohorts in into in our in our properties.
Speaker Change: That'll be that makes sense and if I could just sneak a follow up on the Moneyline acquisition I know, it's not closed yet and there's not much color you can provide but on the financial side, but I'm just wondering at a high level. It seems like maybe their customer base is a very different demographic relative.
Speaker Change: Give to the customers that are buying the Norton.
Speaker Change: The Norton membership so I'm just wondering if you could just help us understand.
Speaker Change: Where do you see the synergies between the two businesses. Thank you.
Speaker Change: Hey, Andrew This is Vincent I'll say I'll take that one as you know we've moved from a core addressing a core security needs with our customers to addressing what we call total cyber safety, which was moving towards identity protection was in identity with the trucking the entire web around your personal data many of them being financial data and the consumer needs that.
Speaker Change: We address and number one is protect me against my financial.
Speaker Change: Potential lasso protect my financial assets from what's out there and so as we migrate our customers along their cyber safety journey, those who are the most advanced kept asking about more insight into their financial lives. If you won a financial wellness how do you give some.
Credits in size, how do you build your credit how do you leverage your credit and some of those aspects. So we started to feed that organically.
Speaker Change: And building kind of a product a layer of features inside our own cyber safety for that what moneyline will do as a first level of revenue synergies is provide the backend architecture around all of our complete PFM feature of personal financial management set of features that we can then offer to our customers to better manage.
The inside that we protect them for and then the second one is the embedded marketplace, where they can also make best choices to make best financial decisions. So cross selling into our installed base with the UI that is in all Brian was its lifelock or northern or advanced with a back end architecture off multiline is kind of the <unk>.
Speaker Change: First step vision than if you push a little bit out there.
Speaker Change: Tier financial or credit journey, if you want we have a layer of it which is protection and moving up that layer around building. It and then leveraging it is super important later on we'll be able to offer to the monoline customers the entire set including the protection of some.
The assets that they want to manage and grow. So those are the kind of a two views. Obviously it has other benefits it will give us a much more robust set of data, which will enrich our AI and personal personalization capabilities and then youll see us continue to expand both globally and through features making the.
Speaker Change: The cyber safety platform, including financial wellness richer for our customer base.
Speaker Change: Thank you that was very helpful. I appreciate it.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Our next question comes from <unk> Kalia with the company Barclays. Your line is now open.
Speaker Change: Okay.
Speaker Change: Okay, Great Hey, guys. Thanks for taking my questions here.
Speaker Change: Natalie maybe maybe for you just a little bit of a housekeeping question great to see the full year revenue guide go up a little bit can you just talk about any incremental FX movement, and how thats impacting the full year guide if at all I know that it was a little impactful to <unk> in the quarter can you just level set kind of any impact of the full year revenue guide if at all.
Speaker Change: That is relatively immaterial.
Speaker Change: Okay.
Speaker Change: Got it got it that's helpful. Vincent if I could maybe squeeze in.
Paul: Paul maybe.
Paul: There was so much innovation that you talked about in your in your prepared remarks, just around whether it's G&A or other things in terms of funding scams.
Paul: And it really adds to some of those higher end.
Speaker Change: Kind of bundles like Norton 360 can you just sort of give us a state of the state in terms of what percentage of the basis kind of using Norton 360, now and how you think that can trend going forward.
Yeah, absolutely and if I can use your question second you also elevated a bit the discussions I've had a few questions from investors, saying, Okay. I understand you have your anti virus business, that's growing low single digit youre diversifying with money line. We actually believe there is a lot of opportunities within cyber safety I mentioned, it's a dynamic.
Speaker Change: A threat landscape from the old virus or anti virus, which is absolutely still necessary to protect to devise the needs have moved towards a real anti scam set of tools and that is a very different threat landscape and so with that the evolution of our portfolio. If you followed that that threat evolution, you see a lot of <unk>.
Speaker Change: Our new features is about making sure you're done gets Ken was age protecting you EMEA was protecting again, even a scam yourself anti virus or making sure that your data is not out there in the dark web and then can be patchy centuri full you into doing something you don't want to do so.
Speaker Change: So the introduction of that gene into a platform used to view more and more of our customers have been adopting that membership structure for a full review of the portfolio on desktop we are at around 50% now cross I don't know if you remember, but before we acquire avast, we reach all the way to think two showed 65% on <unk>.
Speaker Change: Remember the exact percentage in the membership advanced didn't have yet that membership structure that head of US one of the single digit percent adoption and now our entire population has about 50%. When you include mobile which is still a little bit point product, we dropped a little bit more we had $45, 46%, but I think we continue to make.
Good progress towards that that view that.
Speaker Change: In the future we will have the majority of our customers all on a membership structure.
Vincent: Super helpful. Thanks Vincent.
Speaker Change: Yes.
Our next question comes from Dan Bergstrom with a company RBC Dan Your line is now open.
Speaker Change: Hey, it's Dan Bergstrom, Matt Hedberg, Thanks for taking our questions.
Speaker Change: Like you're having good success with the mobile customers purchasing Norton 360, you called that out in the muscles.
Speaker Change: Prepared remarks.
Speaker Change: Maybe a little bit more on what youre doing there some of the areas that you could lead into to help drive that mobile adoption of 360.
Speaker Change: Yes, I can take that so differently I think it's worth about two years ago that we launched loan 360 on mobile and then a year. After the majority of sales on mobile away on that platform.
Speaker Change: With our vast we had back to a few single product, but then now we launch more of a new product into the new Gen architecture, We launched our ultra VPN product a few months ago and that is essentially a membership structure that enables you to move to different tier as you enable new features to be <unk>.
Speaker Change: <unk> cyber safe and protected with that launch in that new Gen. Stack. We also launched the IPM product message tool. If you want that enable us also to give real time feedback on the consumer behavior and needs as they used their product on mobile that engagement. If you want on mobile as enabled us to improve.
Speaker Change: All of our ratios and I thought he was mentioning whether it's our <unk> retention was of course, its customer count, but on mobile all of our metrics are trending in the right direction, what that is because of moving more to the membership and having that full engaged tech platform.
Speaker Change: That's great and then Vince could you talk a little bit about the customization and personalization of offerings I know that's something that remains underway, maybe what are some of the personalization efforts that have been most impactful to you and then maybe where are we in that journey.
Vince: Yeah definitely so so the first step here is to deploy everybody on the new Gen stock in.
Vince: Our very disciplined and cautious as we deploy it as you know we want to make sure that it's a very smooth for the customers, we well on the way we'll finish through the year that that migration that will enable us to use that AI enable.
Vince: PM platform message in product messaging.
Vince: Now have a team working on developing the various models and looking at all of the data set to now to further refine and cut the different cohorts in smaller size based on behaviors and then be able to have the product. If you one react based on dose.
Vince: <unk> tailored to specific activities.
Vince: And I think the whole team is super mobilized around enabling that.
Vince: Hyper personalization, if you want once we own the full on our common stock then everybody has a unified set of data and all of our models can be deployed across either brands or product sets.
Vince: That's exciting.
Vince: Yes.
Vince: Okay.
Vince: I think the question comes from.
Vince: The on photo Waller with the company Morgan Stanley.
Vince: That is now open.
Speaker Change: Alright. Thank you for taking my question Nathalie just a quick one for you I was wondering if you could.
Vince: Give us a sense of how youre thinking about.
Speaker Change: Oh occasion.
Speaker Change: <unk>.
Speaker Change: Debt Paydown buyback.
Speaker Change: The pending acquisition of money line I know there was a bit of a pause there right now, but once you do start to digest.
Speaker Change: How should we think about modeling that on a longer term basis. Thank you.
Speaker Change: Yes, Hi, Anja.
Speaker Change: We will get back to you as soon as we can.
Speaker Change: We're locked out just because of where we're at on the deal once we.
Speaker Change: Once we move past that.
Speaker Change: Youll see us get right back into the market on both I would just point you to.
Speaker Change: <unk> I think we balance we do strike the right balance, especially if you zoom out and you look at the annual numbers we provided.
Speaker Change: Earlier today in the script.
Speaker Change: Or in the prepared remarks.
Speaker Change: <unk>.
Speaker Change: We'll continue to do that I think there is value in both we have demonstrated.
Speaker Change: Rated our value proposition in terms of really understanding at the right time, when we go for accelerated debt Paydown and.
Speaker Change: Opportunistic share buyback.
Speaker Change: And keep in mind too.
Speaker Change: We will be we will be in the refi market.
Speaker Change: Re financing that unsecured note pretty soon as we expressed will be in that market in Q4.
Speaker Change: So youll start seeing some more activity from us as soon as we've got we're past the close of the deal and.
Speaker Change: And we'll be focused on really delivering additional value through that balanced approach.
Speaker Change: I'll, just say really nothing has changed in our in our capital allocation tenants, we've been relatively consistent.
Speaker Change: Actually since I got here, but definitely in line with our AIG.
Speaker Change: Yeah.
Speaker Change: Final question comes from it.
Thomas Zimbelman: Absolutely. Our final question comes from Thomas Zimbelman with the company Bank of America Tomer. Your line is now open.
Speaker Change: Hey, guys I actually wanted to go back and touch on <unk>. So you talked about a one sequential improvement.
Speaker Change: Currency had a one time negative impact so call. It maybe two stents normalized sequential improvement are.
Speaker Change: Are you seeing that kind of more broad based across your cross sell and upsell momentum or is there anything specific that you can call out that happened this quarter that helped.
Speaker Change: The numbers I know you talked about an increasing number of mobile customers adopting Norton 360, but anything additional you have would be helpful. Thank you.
Speaker Change: Yes. Thank you for the question so of course I'm, keeping my eye on the quarterly metrics because like we've indicated they are they are key performance indicators for the health and the.
Speaker Change: The growth ingredients of our business, but.
Speaker Change: But when you when you really evaluate I would I would encourage us to kind of zoom out and look at the year over year, that's when you're really going to see the full suite. The full set of cohort of customers really perform and so when you look at that were up a point of retention rate in the overall cyber safety retention rate and we're up nine pennies in <unk>.
Speaker Change: So what are you looking at it from an annualized perspective or specifically in Q3 against last quarter.
Speaker Change: The economics in the <unk> components.
Speaker Change: Components of growth I would say are very consistent so.
Speaker Change: Cross sell and upsell is working in the Norton base across all the regions and is really driving success in terms of not only driving <unk>, but we have studied and shown impacts to increase retention and so we continue to diversify that through new products being introduced.
Vincent has talked a couple of times in terms of what we're doing to optimize the membership offerings. So that drives the upsell lever and we see that coming.
Speaker Change: Customer acquisition as our offerings become even more and more relevant and in demand. It comes through <unk> as we see the <unk> continuously expand as we sell.
Speaker Change: More and more of the additional service and we see the retention rate gains from those two levers because retention rate is just frankly higher.
Speaker Change: And then as it pertains to.
Speaker Change: Our mobile acquisition.
Speaker Change: Different theyre, just different starting points, but the behaviors are very consistent and that's why we point to just such incredible opportunity. We have very healthy ROI customer acquisition internationally in mobile and then it just allows us cohorts of customers to go after and really as Theyre getting more familiar.
Speaker Change: We have the opportunity to further educate the needs and then therefore the services that we can provide to these customers. So it's really really a flywheel effect as to where the customers were diversely diversifying at the very top of the funnel to campus customer acquisition, and we're sending them with a unique experience a very focused.
Speaker Change: Variance in terms of leveraging cross sell upsell and all of our CSM retention efforts and in my opinion, when I look at the customer performance indicators and unpack them at the cohort level, they're trending in the right direction.
Speaker Change: That helps.
Speaker Change: Yes, that's great color. Thank you very much.
Speaker Change: Thank you.
Vincent: At this time I would like to pass the conference back over to Vincent <unk> CEO for closing remarks, Vincent you May proceed.
Vincent: Thank you and thank you everyone for joining our call today as the leader in consumer Cyber safety, we have a bold vision to provide digital freedom for everyone. Our many investments in new products and technology are paying off as we shared today with the progress, we're making with <unk> the new Gen stock and AI technologies.
Vincent: Pending moneyline acquisition will accelerate the next phase of our strategy to empower our customers financial wellness. Thanks for joining our call today and I look forward to speaking with you in the coming days and weeks.
Vincent: That will conclude today's conference call. Thank you for your participation and enjoy the rest of your day.