United States securities and exchange commission logo
January 4, 2024
Natalie Derse
Chief Financial Officer
Gen Digital Inc.
60 E. Rio Salado Parkway, Suite 1000
Tempe, AZ 85281
Re: Gen Digital Inc.
Form 10-K for the
Fiscal Year Ended March 31, 2023
Form 10-Q for the
Quarterly Period Ended September 29, 2023
Form 8-K furnished
November 7, 2023
File No. 000-17781
Dear Natalie Derse:
We have limited our review of your filings to the financial
statements and related
disclosures and have the following comments.
Please respond to this letter within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe a
comment applies to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to this letter, we may have additional comments.
Form 10-K for the Fiscal Year Ended March 31, 2023
Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations, page 30
1. You attribute the
increase in revenue to a $406 million increase in sales of your consumer
security products and a
$117 million increase in sales of your identity and protection
products, which was
offset by $113 million of foreign exchange headwinds. Please revise
here to provide a
quantified discussion of the impact of the Avast acquisition on your net
revenues. In this
regard, avoid using vague terms such as "primarily," as you have done on
page 28, in favor
specific quantification to more clearly describe the organic versus
inorganic revenue
growth. Similarly, revise to include a discussion of Avast's impact on
your performance
metrics such as direct customer count, ARPU and annual retention rate.
For example, the
decrease in your annual retention rate from 84% in fiscal 2022 to 76% in
fiscal 2023 appears to
be impacted by the Avast acquisition. Refer to Item 303(b) of
Regulation S-K.
Natalie Derse
Gen Digital Inc.
January 4, 2024
Page 2
Performance Metrics, page 30
2. We note that annual retention rate is defined as the number of direct
customers who have
more than one-year tenure as of the end of the most recently completed
fiscal period
divided by the total number of direct customers as of the end of the
period one year ago.
Please revise to clarify whether you compare the customer base as of a
year ago to the
same customers in the current period. If not, explain further how this
measure represents
retention of existing customers.
Consolidated Financial Statements
Note 1. Description of Business and Significant Accounting Policies
Revenue recognition, page 47
3. We note your disclosure that revenue from e-commerce partners is
recognized on a gross
basis before the deduction of partner incentive and fees. Please
revise to disclose the
nature of these arrangements, clarify whether you have direct billing
arrangements with
the end consumer, and describe the basis for your accounting treatment
conclusion, if
material. In your response, tell us the amount of e-commerce revenue
for
each period presented, including subsequent interim periods, and
clarify whether e-
commerce revenue is included in direct or partner revenue as disclosed
in MD&A. Refer
to ASC 606-10-50-12.
Form 10-Q for the Quarterly Period Ended September 29, 2023
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Performance Metrics, page 30
4. Please provide us with your customer retention rates for each quarter
of the last two fiscal
years and the current interim periods. Also, tell us your
consideration to include this
information in your Form 10-Q filings. In this regard, we note you
present quarterly
retention information in your investor presentations along with a
discussion of changes in
such metric since the Avast acquisition.
Form 8-K furnished November 7, 2023
Exibit 99.01 Press Release, page 1
5. We note that you highlight the non-GAAP year-over-year information in a
different style
(i.e. bullet points) than you do the GAAP information, which appears to
place undue
prominence on your non-GAAP measures. In addition, you discuss non-GAAP
operating
FirstName LastNameNatalie Derse
income in your highlights without discussing GAAP operating income with
equal or
Comapany NameGen
greater Digital
prominence. Inc. revise. Refer to Question 102.10(a) of the
Non-GAAP
Please
JanuaryCompliance
4, 2024 Page and
2 Disclosure Interpretations.
FirstName LastName
Natalie Derse
FirstName
Gen DigitalLastNameNatalie Derse
Inc.
Comapany
January NameGen Digital Inc.
4, 2024
January
Page 3 4, 2024 Page 3
FirstName LastName
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
Please contact Joyce Sweeney at 202-551-3449 or Kathleen Collins at
202-551-3499 with
any questions.
Sincerely,
Division of
Corporation Finance
Office of Technology