MCFE - Earnings call transcript Q1 2021

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Operator

Good day, thank you for standing by, and welcome to the McAfee First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Eduardo Fleites, Vice President of Investor Relations. ahead. go Please

Eduardo Fleites

call Vice Good today Bhamidipati, operator. for thank financial for on of and a President and you Chief period and President Thank discuss afternoon press McAfee McAfee's results. issued Corporate Development. release and Ashish Executive us today's Participating Financial Senior XXXX. its Agarwal, to March results Peter CEO; first joining President Leav, Venkat ended you, afternoon, announcing XX, Vice and are Strategy quarter the Officer; Earlier earnings this

fiscal While documents, on this file to our quarter plan we March which XXXX, within we the call will Report week reflect Exchange XXXX, you XX-K Form items this ended financial December for discussed on those year quarterly ended read XX, encourage the and Annual XX, to the fiscal our Commission. for Securities about complete XXXX with and report for Form our information performance, XX-Q

beliefs on that I begin, we performance, and we this Before are to business our current outlook, assumptions. statements based financial discussed occur. want no call, may the operating this date to goals which These remind you and developments as reflect result forward-looking of opinions and our revise of a information include of forward-looking management's may related as on matters today's obligation new to call undertake statements that

cause our today. to subject various described other results to that risks, actual are statements could materially and Forward-looking expected from uncertainties differ and those factors

quarterly of week will Commission, Securities Form to could you risk Exchange see For and report review the Form our that on a please where a most XX-Q factors, A our this will call, you performance. like the annual our non-GAAP this on website discuss actual I and with of cause discussion measures results more filed in description call recent from factors during relations available XX-K be the of detailed be McAfee's the our we talking investor that differ also to replay conference remind under will on about those statements. section. to materially company's would report some

of find in You reconciliation our the a nearest can GAAP measures these earnings measures comparable release. to

pass liabilities as operations I related remind our call together the business of continuing I discontinued of classified results our to condensed the that sale announced are XXXX, with to would everyone on assets, financial due and enterprise March were like assets, presented. periods certain statements and business all operations the certain the over in financial excluded Peter, Before consolidated liabilities thus of to enterprise X, from for

such, will and Consumer the will operations focus continuing call turn CEO. and I our to on As president we Leav, on business future Peter this over McAfee's now on calls.

Peter Leav

afternoon. was cash profitability increased you, consolidated We robust a free Thank year-over-year. top-line revenue we and operations, Eduardo delivered QX good and quarter very with discontinued as both revenue, significantly total million, XX% McAfee growing which results, of $XXX include for and operations strong company flow. continuing

for million, year adjusted to both We had also growth year-over-year strong EBITDA and total quarter a with versus revenue growth EBITDA. a both with of last $XXX XX% Clearly, segments. company start of improved profitability adjusted and XX% double-digit for the solid year. margin We a

included an net or revenue, our year-over-year. net executed Consumer with our increase continuing revenue expectations. cash well XX% our delivered flow operations business, of Adjusted We of Moving to and team QX beating the up profitability million, free $XXX year, costs at same margins $XXX the quarter adjusted EBITDA of period $XX stranded the with million, for XX% versus period in the XX% million. dis-synergy and quarter. The EBITDA closed of EBITDA last

XXth core XX.X terrific the and strong million of subscriber adds. the quarter industry-leading we marks to quarter or subscribers omnichannel go-to-market direct-to-consumer period revenue of core platform, start XX.X profitability marking net the our direct-to-consumer improved subscribers and strategy. XXXX, In double-digit DTC versus continue added quarter growth, another drive in another to this cumulative year. core through same We to growth last XXX,XXX closing differentiated million QX, with new at along consecutive fiscal a our A sequential DTC year-over-year

QX the In best-in-class the addition Lumen, to security service agreement expansion following: the Computing these provider. Dixons Fujitsu extension consumer and Client and with to retailer, division a a of solutions extended U.S.-based strong renewal electrical users; agreement operating multiyear to highlights agreement results, included Fujitsu deliver an Carphone; a consumer device with with U.K.

go-to-market Our attracting perspective, was the journey. Advanced competition, McAfee's from subscribers product unique ranking by digital lab and Plus on Protection of at three the their Austrian-based emanation a April McAfee XX, AV-Comparatives. awarded anti-malware the strategy possible outpace omnichannel Furthermore, Total stars throughout test highest to the allows point again

Our plan in the deliver balance need is capture to results of opportunity while and investing to market us. the simultaneously to execute front tremendous

increased in growth rate. product to a security. driven motions forces by tied this invest adoption portfolio, personal go-to-market of acquisition transformation, professional proliferation devices, digital long-term and the the double-digit awareness use of revenue the our of sustainability the public confident the remain trajectory and We of We subscriber importance continue in to to maintain and educational market positive engine and privacy retention and

urgency. in compound cohort in in is the base flywheel in out subscribers from the play acceleration we sweeping has transformation more to X.X our a been from served world. trailing has to will taken digital security McAfee's associated the bringing million the the solutions consumers benefit of we role renewal never with continue larger look XX-month we place wave million The understand the securing timely. X.X expertise confident net year rest that As increasing that effect has of over new over We QX. to are XXXX, past differentiated digitization business DTC to mission-critical that that the only

once every is Thank provide learn, must-haves. peace to permanently you gone conveniences expect have to experiences to digitally they interaction and of daily on execute team McAfee results. for exercise, our bank, secure. turn nice-to-haves to shop, consumers' our our allowed lives focus will mind. New as deliver hard discuss the further to McAfee in strategy and financial results call woven members work, and work, QX success, your has dedication which enabled Venkat and partner I have again stream on that very detail. now in the of from realm These strong us to be to telemedicine become into over there customer

Venkat Bhamidipati

Thanks, Peter everyone. afternoon, and good

continuing be find financials the I'll discussion, you'll non-GAAP of specifically today's on within of unless supplemental the operations stated our Also, IR For focusing historical continuing operations on a our view section otherwise. website.

strong demand personal for expectations revenue, double-digit continued security We in our and in growth profitability Overall, driven flow cash execution offerings. strong increased holistic by our with year-over-year. QX, and results momentum exceeded

of $XXX first up $XXX of year. of $X.XX. for year. a $X.XX. year-over-year, Adjusted XX% margin million, growth of $XXX EBITDA and over representing EPS a million, of growth the Revenue margin EPS representing XX% last year-over-year, total for revenue a For was quarter, last EBITDA adjusted up XX% company operations million, was over XX% Adjusted was of $XXX XX% was million, continuing a XX% adjusted and

Excluding EBITDA $XX adjusted million representing XX% of million, stranded would a $XXX costs, margin. be

expenses. to Moving

gross line with sales cost margin XX%. at with in were of revenue, Our

while operating by continuing approximately the revenue, of quarter expenses even basis the in year-over-year, quarter. in points XX percentage investments customer decreased acquisition to a invest in As

across gains and a strong services. holistic demand business geos growth We continues to portfolio Our for invest solid saw we demand to pure-play of subscriber and all address show increasing security consumer channels. as the

digital in continues basis, industry-leading most team we and transformation ongoing execute toward recent customer the including of online trailing to an subscribers online on added shift Our well, QX, conversion across retention. million net XXX,XXX ended acquisition, which XX-month new focusing In consumers This reinforces with for the their the a protection. need activities, quarter. reflects X.X on permanent

business. mix revenue Across initially $X.XX, renewal or see and down which all subscribers, per dollar customer new versus indirect strong there geographies, retention a and our mix from of stronger perspective, XXX%. reflected channel of which continue at are remained the was also retention $X.XX Average was our a in for We to ARPC. new From rate growth revenue. QX, mobile dilutive demand QX DRR to

on DRR value execution our experience, continues user deliberate upselling to packages team's offerings, improvement. value-added of ease through Our higher to contribute renewal of our excellent focus and a

million paid in an operations. and increased from per company cash the Class dividend discontinued improvement that and From first $XXX balance year, declared million total cash we our cash include operations total is to in capital. of share $XXX flows, turning the in and working flow quarter perspective, March in to $X.XXX second a Now million A We with cash prior equivalents. early XX%. generated results and to attributable in compared profitability well-managed amount flow sheet The which cash of and ended We the dividend increase continuing from April. company common in post-IPO $XXX

approximately flow XX% cash million This which free onetime million $XX year-over-year. unlevered costs. in inclusive Finally, is total company the period, $XXX of in grew was

guidance we and revenue $XXX in respectively. be for EBITDA million, consumer EBITDA the guidance, revenue range adjusted XX, are to second quarter to quarter we and Turning pure-play $XXX In providing adjusted and for $XXX business. million, June ranges ending million operations, our the XXXX, continuing annual expect current of million and and and $XXX

shares. million. range second-quarter $XX million to to count Our to million, assume approximately be second for you expense of costs anticipate XXX of cash in fully share should estimated in $XX Furthermore, million the the stranded million interest the $XX of net $XX range includes and guidance quarter a diluted we

year and $X.XX $X.XX the XXXX, and full respectively. adjusted the December to billion EBITDA and of ending XX, $XXX and $XXX billion, million, For in revenue expect we range be million

$XXX be million. of range stranded the million to For fiscal interest annualized in cash and of 'XX, we $XXX net costs expense million estimate and $XXX

should For share million XXX you shares. approximately fully assume diluted count,

the is second be expected normalized operations For 'XX, FY to continuing rate quarter tax XX%. non-GAAP for and

platform we in company, long-term market. industry-leading advantages. double-digit McAfee's consumer growing As competitive a high growth constitute pure-play a business highly with loyal scale, sophisticated and and profitability consumer-focused a product sustainable attractive personal relationships have subscription security

you profitability. success are McAfee customers for our our growth positioning and to and of time. We We to continued the committed forward look progress to reporting over long-term

scheduled state business of turn plan With Q&A. to that, close FY to sell begin closing, I'll I'd on 'XX. like the Before that the call end the operator remains to back the track enterprise to to as before

Operator

Stanley. from Fodderwala from [Operator instructions] Our line first question of will come the Morgan Hamza

may begin. You

Hamza Fodderwala

with question. announced this give how been taking it that Can touch How QX, recent in partnerships thank in the on to been grew partnership that quite for has Lumen of us things. that quarter. these I of you see some given did I sustain business side you particularly any a of and forming? doing? wanted Hey, Obviously, you've XXXX. ISP you fast sort on my update sort of mobile that

Peter Leav

new some And the we've for we've performer Lumen partners I formerly strong question. Hamza, CenturyLink. And really a we've be also mobile overall, appreciate added that us to It's Peter. with continues partners. the Hey. as business expanded is as known had.

for CenturyLink, of is very So Lumen It's number expansion number had if years. the about a the we've a you particularly, that's what relationship a does U.S. or bulk of think been which successful. market in a ways. that's seeing of market, And

the is year, One of the And in in related of will expectation behavior. neighborhood to home this is the devices increase that those the of U.S. consumer connected XX%. number

for market So home things many like multiyear. and this think router And -- how of talked have it into how is, extension very and its story but folks we has, turns like all devices not really long about when us, term. we was Lumen very, subscribers in an like now about, that home and many broadband entity an security how only deals at positive the expansive was this a

a relationship, continuation. very good continues happy and that have and be, to a we're for very it it's signed So multiyear been to

Hamza Fodderwala

on maybe just one follow-up And it. perhaps OEM the side. Got PC

pent-up year, some see given through there? be XXXX. a issues? of like deal of seems of supply coming how considering the channel rest into demand still within channel there's the the wondering specifically chain that the So demand you Any it impact that good should OEM on we I'm trending especially

Peter Leav

PC -- XXXX. demand or all statement shipments. too for PC an Well, tied continue this that are we IDC the But PC to are other be strong expectation expected shipments you PC to to wel, is is in know and not exclusively

we PC now, and continuing like seeing, usage the change, it's what I XXXX Again, as it's traditional gaming, mobile. new think are. the that certainly obviously, about expands see we're clip. that very that case, down are shipments the in But we're seeing PC to of when just very, for more did shipments our than seeing applications. business. kind just it's solid So right We a with be not that's And utilization to a direct strong. of we're into we're at projections areas And you grow correlation asked whether that PC also are broadening

seemingly continuing and it's been strong yes, to be. So it's

Hamza Fodderwala

you. Thank

Peter Leav

Thank you.

Operator

from comes line And Fatima of the from our next Boolani question UBS.

You may begin.

Fatima Boolani

you start for Thank afternoon. taking you. questions. I'll Peter, Good with my

model your as positive change Venkat, and it change with as assumptions? that please. force to renewal As I So decay I implied a decay guide. Is understand the then sequential in quarter? the that better a revenue quarter Is more. expectations revenue it, love little the the in cadence? direct-to-consumer flywheel in disparity the the a expectation that bit for follow-up there would in to profile have on in I'd play think about you want in model, characterized drill on some of renewal why And

Peter Leav

have may opinions this You one on And bet. as well. Venkat

thanks for question, Fatima. So the

growing to expansive. a The continue help element think see. to in market early no. we inform only So We a healthy innings we really first absolutely also that continue we key to clip and is to it's is foremost, on front. Consumer see at us, we're and and that the continues that, think answer be behavior very

as XXX,XXX this as We XXX,XXX added QX, it you in quarter. far itself, bit XXX,XXX new flywheel QX dilutive. As past DTC in can a be and subscribers the know,

long-term marketing record-breaking in, with we number, very, the the and etc. economics retention we year dollar-based that But nicely experience for at consumer year initially. as solid. that at a of the and it frankly, will So number, tracking that's holding and expected, we that's But very key moving XXX% for renewal. come be base like, that betterment in to great, more that's coming look those channel, the focus toward it's that is economics of the as something very noninclusive discussed. making related frankly, cohort And us and dilutive we're that as DRR And like we've more us, X, course, mobile that, And X, and performance of projection. of now

about XX% we As year as is We far Venkat you it. of good very which talk renewal do guide, to a described the But the bit. very And that about as market, that. really this before. guided a for hadn't the remember, about business. feel good certainly opted we the flywheel, can business

leave So color on as solid question, Venkat in feel have it's very answer about and the other very, But that to he good we and sense, one very well. upcoming. may some that I'll that

Venkat Bhamidipati

Peter. Yes, Hey, Fatima. thanks,

of we're Just with growing a pleased QX. both pleased QX very It's very Obviously, And couple additional incredible in certainly, growth the of of QX. with and in the an results comments. year, the been subscribers. in the start fiscal we're number XX%,

we overall, momentum. the like So

itself. it's Now, sort things did of guidance just terms a a One, you provide as overall. remind of growth, of midpoint, guidance we at mentioned, in to XX% couple full-year Peter

is to be we seasonally just the our So second very One feel for weakest. and grower QX, tends QX things full-year from consider. the last of positive it's potential. you Specific about growth is a tough to couple year; a to

QX, QX. tend our guide to the sequentially So QX being in for strongest. we thoughtful are QX and QX And weakest how be and traditionally we're

think very And XX% feel we pragmatic at respect full being about So growth. we're good to the year QX. with I

Fatima Boolani

point quarter? you me. But cash cash well for the And of I any appreciate Consumer generation And in cash that related performance Understood. it consumers can for that's for any heard sense basis, the could flow, was cost specific as understood in consolidated to the free operations and the and of as cash a if then Thank you flow give the And point clarification, segment Consumer you. i.e., a just business stranded quarter, us tied you. on us directionally that. correctly. in I The impact that Venkat flow? you terms flow continuing

Venkat Bhamidipati

sure. Yes,

down. had of So QX a million solid margins the of XX% projecting, operations, operations almost quarter. full in Clearly, we $XX the a from identified stranded are $XXX a brings projecting we -- couple year. continuing was EBITDA we margin, of from continuing achieved post-stranded perspective, perspective, pre-stranded business. full-year a things it our margins. stranded for XX% overall consumer we with which we're our quarter the costs But about the and the very to consider million guidance Include for the worth for from or costs, And of year, if -- full

Peter Leav

Fatima, more thing. just one

it hit Venkat beautifully. think I

and other The but very through piece, again, we're all working components, strong the business it a cash business. very, conversion is to Consumer related

cash a front it's conversion strong related can upcoming we in further go EBITDA that business to very but on conversion. So quarters,

Okay, thanks. we'll next. Operator, I think the take

Fatima Boolani

Understood. you. Thank

Peter Leav

Thanks, Fatima.

Operator

Rob will of And come line the Sandler. question your from next Piper Owens from

line is Rob, open. your may begin. You

Rob Owens

afternoon. the hoping there. unpack guess button a little dollar retention about net I that. components Sorry Good the could mute bit I'm you and the on. is Thanks. rate

is of churn in where with throughout and guess, environment Just increased pandemic it? awareness you've the upsell around and seen, I what security this versus importance the

Peter Leav

You in bet. mode. been all have Hey, Rob and button the we mute

been So through times that us. one of every through we've all COVID, multiple

So the... related to

Rob Owens

less question the My articulate more first time. was

the it first time, So better if a question so sorry. was

you read sorry, So got to through.

Peter Leav

too. around great two did You

that NPS do, We scores easier. whether making an as that LiveSafe broader example. we with So sat related to We've digital subscriber We've in continued retention we've in also, in to the recent more marketing. so invested processing realization invest. and go continue frankly, conversion, we've DRR to and this We've and of McAfee seen payment getting or customer broader addition to that's we've and invested we've what of improve. in have retention invested you're do it and the continued We're marketing. larger aspects improving to up. seen some We've to performance still is base generally, larger grow, work benefit and

been helped the to go XXX% we've So of past, about today, that's FY those really from 'XX important. of XX% in DRR. all And as really, us, talked things have

just this the subs with this amount me, We're what we with users we for devices. in more the people do continue higher number cohort, been with it's line track And family. to triple-digit opposed of up. retention to more had is is adding, think we Importantly we're portfolio, volume. not as that seeing part of about has more part become massive see that as where of I about well, and more go with what more we're when we've to it's users that see seeing protection typically that retention new anticipated now a my with on And

about that's of what positive, story and PC It's to broader seeing. that leads we're portfolio. home exclusivity proliferation As in we're but devices, devices, not often all we seeing home than past earlier, is broader are buying a talked years etc. were they a more folks an And connected very And the mobile it's in VPN, short, where stickiness.

that helps. hopefully, So

Rob Owens

better does guess conversion PC historically or big And same? Mac front we the roughly on seeing. given front, holding or than been spike I on ratios customers of net new we've are versus the the That just you help. shipments more the seeing Mac Are Mac that the have in

Peter Leav

a because it's globally. again, line now perspective, continue as and we largely the of on to anticipate. to from we important And that in you would see applications transitions volume-wise, are It's that fronts, increasing continue ratio of and that because all but see consumer behavior those digitized,

Rob Owens

Thank you.

Peter Leav

bet. You Rob. Thanks

Operator

from of Brian next Our comes line Goldman Essex from Sachs. the question

You may begin.

Brian Essex

net have of it Just put platform, afternoon from a outside direct-to-consumer question we context. well the PC? and for question. Good mobile, look of kind channels Maybe and thank investors channel-led taking I that new PC business percentage some there. is both alternative as a kind gauge what you Peter, versus just get sensitivity into Hi. as to you, focused on of have at for the If

Peter Leav

much look changed it Well, And back is than the McAfee. that's thing today. we is it a percentage for was historically, higher when

we talk And One Direct. about we've us. of a very invested more, that's and maybe for the been significantly that very, growth areas, should channel in it McAfee is strong

know, at clip the to to continues addition So and very, that retail direct McAfee.com. in perform strong you in very healthy a well. a business we the is we e-tail really much are mobile that, growing business, business the and business And as have fact very

much out again, we've mobile with expanded we've become the and and in it's well. it in channels like delineated also that a we balanced has So haven't sense. others, fashion, but business the And performing a broken as expanded been direct more Lumen opportunities in really piece grown and

Brian Essex

I'm consumer the we Got dark or on just the going helpful. shot information. take and might between any total in chance billings percentage it. wild search? channel, That's DTC, the And a that and maybe the mobile to you'd chance follow-up, off here breakout But get a the disclose

Peter Leav

we're We We're we all this component out to that those each be a of I which of line them. projected, that we would we've in everything all think continue sure we're making to have in certainly, assess. broken going with still in hitting But at and we've of far cases, the point. exactly job mode haven't good many and done sure beating numbers broadcasting thus outlining making what

Brian Essex

Okay, the Peter. shot. it was worth Thanks,

Peter Leav

bet. You

Operator

will the of next question line come from Gregg from Our Moskowitz Mizuho.

You begin. may

Gregg Moskowitz

Okay, for taking you question. thank the

wanted to sequential for about question appreciate that, guidance uncommon. And ratable quite the revenue on Fatima's about revenue I I just said a for completely is point my the the basis, Having question, forecasted model decline comp. year-over-year obviously tough a first follow for up a QX. So on

clear that any weeks in be increase churn or to seeing wanted just I so. few you been haven't the so And past over

Peter Leav

and on Hey, have Gregg. I'll may first, it some. touch Venkat

We are in an not seeing churn. No. increase

Gregg Moskowitz

divestiture, for you are in Okay, enterprise And just how clear. of M&A? about Peter. so going that very Is light then strategy of that just the the forward? follow-up, Thanks thinking part as a

Peter Leav

sense. we're going the to We've the that done at in will, thus frothy, look continue we're to a but bit when be effective of use very time, I are at capital, that responsible. things opportunities. absolutely, to arguably continue And at over we look done far. think we've make job look The a to markets think past. But going you very I Well, those

potentially continue things bring was create opportunity us that an that served to and to more for an really well. look acquisition the market. we about to differentiation broaden And talked earlier we'll VPN, that also As at us

the off So not we'll but it's continue be to definitely very table, responsible.

Gregg Moskowitz

great. that's Peter. right, All Thanks,

Operator

line will from Hedberg come next the of Markets. Our Matt question from RBC Capital

You may begin.

Matt Hedberg

guide, my question. I definitive your apologize. guess more you you answer, though, any in not when full-year Hey, go the of as last increase think in at about we guys. I I Peter, school, go one Thanks people as in work churn for stay now churn is longer-term to question. It to sounds back were seeing factored students to you're sort Venkat, or want this any churn. really sort you year? great have of it expect deterioration to and ask like in back this level taking through

Venkat Bhamidipati

Matt. you thank Hey,

about. of exponentially, healthcare So with and think shifts need of there a there. a and as have couple increased things banking, about has increasing One, some the it brought talked shopping to for usage devices Peter of the permanent schooling, TAMs unpack that actually I accelerating. been earlier, been Starting for

So retaining thus far, we well. have been

our very expectations. with in fact, is line churn our much In

Matt Hedberg

if we know Venkat. I don't Matt. lost is This

Peter Leav

phone is sure not can your sure I'm you want okay. and make out. hear if just in we to Venkat, I

Venkat Bhamidipati

Can you hear me okay, Matt?

Peter Leav

better. think I that's

Matt Hedberg

Yes, better. much

Venkat Bhamidipati

Yes okay, a see things. structurally banking, had schooling, all we increased all devices. device we across mean -- shopping, couple healthcare. usage One, of so I for fronts,

of see as tailwinds a long-term that. do we result So

consumer security. growing So underlying in see for an and and therefore, nicely TAMs TAM sort consumers do been of the we incremental increase TAMs,

for refresh The second continue. on increasing, security software -- has the shipments especially is I the touched Peter aspect, demand cycles as as consumer it, the obviously, which been increase and think market, for

phones IoT in across is all device the mobile and growth angle types. third The

And So actually we do and results, expectations internal pretty better. see and own churn slightly see that in TAM. with subscriber an in expanding our our is and voluminous our tracking much churn subscription we line

expanding results, to well. of emanation QX you the point TAM, in obviously because we XX% with see these happen So that And and net of over at for year, execute channels. saw XXX,XXX we And to subscribers all the sort that, ability growth new added. the an of bodes rest especially our do be across different the

and have as evolves continue market momentum We with we very So continue. the QX we execute. and we're momentum the see pleased that to in

Matt Hedberg

of do obviously, strong helpful. for seem to Is at obviously you well, toward sales balance R&D? firing When marketing Got the how it. you and That's profitability mobile. do tilt Peter, you then cylinders. And thing -- it as all in geo, additional more it maybe results, about think on or be one you or year think dollars strong and allocating another this

think Just sort of about incremental of investment better to from here? curious it how drive on sort that you maybe Is even results?

Peter Leav

Right. And right, Matt. absolutely you're

I think view matters think as deal. about team, a very as element through we a go a it each we it great because balanced with

demographic And really sustained internally continue from a of invest think think standpoint, long-term differentiation. you're I going these that to to team continue it's really over this and looking an different not only beyond expansion see well. consumers as a consumers of can have is a will us provide the over to what invest level much that as broaden, to in of market R&D perspective, in like So and as time that number working to we what with balance as from different about but commercial are time, we frankly, we relationships, see but sense. areas on and is needs so assess the continues with go-to-market Obviously, the things we together today, market our partners,

we'll being operate well business. to decisions continue pace sequence and investment go. we continue the we made fronts both So as And reenergize on and to as

Matt Hedberg

Super a lot. guys. Thanks. it, Got thanks helpful

Peter Leav

You bet. Thanks, Matt.

Operator

next Bank. Our Deutsche Patrick line instructions] the from Colville question come will of from [Operator

begin. may You

Patrick Colville

for the dead XQ, I flog want correct. to just guidance to want I've but got don't horse I on Sorry, this make sure a

So as Gregg mentioned, in it implies decline revenue. a sequential

issue. an that is churn You mentioned not

consider why revenue? in to as factors might should be sequential what there we decline So a

Peter Leav

was it. guided that about Venkat and is thoughtful seasonally we the And we've It's it how to been a transition clear, are it quarter, get He as in think quarters. the we're seeing making continues very COVID been think the a we've a sure -- cohort that expected, which cessation I we've increase. again. very of a we've last such as in churn far, absolutely talked few And nor guidance gauge look, over tough a to really thus But light that compare. jump seeing Well, pragmatic But market can we want in I hopefully, as this about pleased continues said, a way performed gone do. also, on it's grow, we not are to I with.

So at is bit point increasing. or the the a a you case. absolutely of concern hopefully, That's sense. But churn that that no on not gives this

Venkat Bhamidipati

very I XX%. grown annual even from a to XX%. And the guidance right positive. the feel midpoint midpoint, little at mean did the annual, we an guidance And just that, add to around is QX Patrick, We at give over

to So the of -- weaker with last and to a compared perspective, And -- quarters and from revenue is grower from growth. seasonally, XX% very tough the tends a XX% thoughtful. last which one that's being be growth year for a us But QX. clearly, QX year, positive full-year this we're

Patrick Colville

Okay. million can calculations revenues, I just that MS, it's the the And mean I not the nicely. to non-DTC kind search, or I've up the correctly, to revenue kind And continue of mistaken, in of pretty I seems around I'm mean, quarter. $XXX roughly base? around ask if that channel-led, tick MISP, done if

really business performing and well? that So on been has because what's going there humming

Peter Leav

double piece They're Venkat we're well. growing we can on jump areas digits -- very as in. very geo each all geographically those performing won't say this is well. point to also other grew enumerate of Every And It's performing well. well. than at each

jump across please. channels, But So Venkat, it's in, and across it's geographies.

Venkat Bhamidipati

right. it Yeah. said Peter exactly

The we've We're in different investing mobile only been momentum in across across of each I in not particularly different across providers partnerships been business, deeper providers. growth multiple QX our providers pleased mobile think channels, see the with is opportunity geographies. the which where mobile the new new users. in geographies, the we investing in big the space -- across attracting going is with with across do mobile also but has

clearly, results we're the indirect well. and as overall, the has with direct-to-consumer. pleased growing that So very show certainly nicely But partner-led been the

Patrick Colville

Thank so you much.

Venkat Bhamidipati

Thanks, Patrick.

Operator

to any the speakers turn any showing Thank like you. I'd in questions I'm closing over call the to back not further remarks. the queue. for

Peter Leav

next our to joining. forward healthy much. hope We you and Thanks thank updating you Bye-bye. everyone call very I on Thank stays for and and look safe. you all

Operator

This conference for Thank call. participating. concludes today's you

disconnect. now may You

McAfee (MCFE) 7 May 212021 Q1 Earnings call transcript