NLOK - Earnings call transcript Q2 2019

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Operator

Good day. My name is Ian, and I'd like to welcome everyone to the Symantec Second Quarter Fiscal Year 2019 Earnings call. At this time, all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. to of call Investor like Hiponia, to, now President Vice Relations would turn over the Cynthia I at Symantec. begin. may you Cynthia,

Cynthia Hiponia

non-GAAP, Good today's earnings am remarks President Hiponia, at our Cynthia discuss and Nick our to call afternoon. CFO. webpage. Investor prepared of on are and fiscal be to Vice Speakers Symantec's posted This website. I'd Relations year the quarter will Investor via materials XXXX our Noviello, Clark, Vice call Symantec, We've to to pleased President call I everyone second welcome like Executive replay to to webcast and results. references our you and Greg This CEO; is for remind Relations available all that on earnings measures refer non-GAAP in taken for financial call during website. presentation posted further unless measures, supplemental tables our website Please financial supplemental performance We regarding the financial our are definitions measures to posted below. of of comparable discussed GAAP otherwise non-GAAP the referenced stated. on note, non-GAAP the GAAP believe when on to IR our financial for information their supplemental this reconciled release with measures, Please provides metrics our corresponding metrics. operating financial meaningful press reasons together materials and are

current We considered information accordance supplemental annualizing based financial comparisons with and current and the based GAAP. them. a only Today's benefit periods. and, be assessing statements results, facilitate assumptions Those contains non-GAAP understanding currently are see measures as as investors beliefs, from operating are that and on of Non-GAAP our statements date future speak on prior not our conditions expectations, we our forward-looking as call well refer expectations. materially to measures financial measures. in presented for our substitute uses periods to uncertainties information. such, press may in planning, Our as performance the to results in more current our should release involve measures cause statement team when forecasting financial that from management and actual for non-GAAP those non-GAAP of as also believe Please financial differ financial risks and cautionary

in the about and, You will our in XX-K factors particular, find SEC detailed filings Annual Report Form with a in discussion risk XX, for March year fiscal our XXXX. our also on ended the

our the revenue over as review million, investigation, Greg, our Audit income as highlight to management also Audit by the expense revised XXXX, Before year of $XX operating that and information Committee the to fiscal we year during included XXXX the other a of a financial adjustments of audit fiscal These the further investigation; tax and statements. XXXX deferral to and release it the compensation completion quarter and stock-based year fourth the XXXX I of certain our related of for certain of that want adjustments. adjustments from resulting reflect unaudited fiscal transaction subsequent well of reviewed the was completion fiscal first turn I our first financial to financial of to quarter results quarter adjustments Committee to

Clark. quarter call Our the let as quarter that, Greg me over fourth With Investor earnings year Relations reflects the in XXXX. fiscal year turn these XXXX, the website Greg? as revised materials posted to and for now adjustments CEO first now fiscal for the second well quarter and

Gregory S. Clark

afternoon. and for good Thank joining you us,

operating with above we For second guidance. in-line quarter our fiscal XXXX, results posted or

distraction, $XXX cash operating year-over-year. XX%, and our achieved Security strong Enterprise of million Safety driven range business, Our guidance, top business, margins solid performance line our by to up technology the from points in enter X% on We guidance investigation we us renewed investigations of half which high-end of and pleased our investigation FY the September both be operations year-over-year. which second the revenue Audit conclusion leadership above XX. focus and above were allows a of a Digital approximately were from XXXX and of second announce our Committee internally generated revenues XX% X completion results and achieved Consumer with can our grew the quarter, flow Committee Audit both to We execution. externally, of the on

a discussion Turning now to of Security. Enterprise

biggest fiscal the enterprise fiscal Security is illustrated our Enterprise enter of FY sector out in of quarter the our are delivery second point security second seasonally implied half billion that fourth over of third competitive. we our business, The XXXX. XXXX, billings by half the would I quarters quarters and $X.X in As for highly

is important in that Enterprise business industry. Security it to unmatched our the remember is However, scale

the of XXX XX% customers. Global Fortune have We as

over solution threat stops threats Symantec. every global million X,XXX engineers We day. operate XXX with centers over researchers Our response X across and

as gateway, web not the security, that Our managed endpoint experts leader recognized in industry threat us also is scale third-party secure helps by services. prevention, data mobile technology management only and analysts. Industry create leadership security customers, Symantec by rank loss but

commands ownership, Our In Enterprise of and and remains in the protection, for our we have Cloud pipeline half Cyber believe lower second longer capitalize and Security the total challenges divestitures our Symantec the Security the healthy year-over-year base defense adjusted to experience the integration, sufficient platform sales X% capacity on offers a quarter, this the opportunity. multi-product Defense large billings delivering superior in lead Despite first solution. our are Platform economics, cost to platform Generation, more half to acquisitions lowest we experienced prior models. industry overall We implied sales global strategy. of their cyber while realize we ownership as Enterprise we as breadth installed sales. significant cost year, that fiscal that while customers down cycles to adjacencies substantial increase continue Security cyber we a them were the on is consolidate customers our our defense. under are cost better vendors execute our is to Integrated the customers cross-sell endpoint continued strengthening of franchises second budget In to network for in Enterprise for cross-product and the recognizing the existing our effective we recognizing a of enabling of ownership. and

Here are the examples second quarter. from five customer

purchased One expansion nation's customer's top enabling further customer security consistent signed across setting, environment seven-figure due to Defense eight-figure XX of experience. our Platform a Symantec's sandbox an their trusting Cyber strategy, our Integrated validates were the direct-to-Internet both security existing an banks was cross-selling and We vendor proxy successfully and Latin to displaced Integrated led customer are Defense This an an oil malware solution. the in industry in This our Symantec products. example Cyber on-premise for stack the by with to provide where deal. proxy our products customers transition the a In a America We cloud and able deal, cloud. services. Endpoint adjacent policies incumbent gas in

CAS, customer cloud In ProxySG, Encryption, VIP, DLP, addition, SSL, proxy. purchased the and

a the salesforce services former competes in geographically firm One and large highly Symantec due Defense environment solution largest incumbent solution, features. migrate U.S. understood a where deal is and investment the back dispersed. in led and in multinational in platform industry their Data endpoint estate integrated Integrated of to world's financial eight-figure After to performance to our adopt our last based This protection the company real an investment displace proxy to follow-on seven-figure of firms the experience re-purchased the this and was the year customer. solutions dispersed dispersed WAN QX. workforce. customer this financial cloud product controlled with and and in highly we Cyber proxy in based our coupled superior with optimization large closed solution. services CASB approach manage same Platform our a After competitor's a services vendor A our deal company a multinational completing short using ProxySG UK, to a with an bank decided customer better the the and DLP DLP ProxySG in customer advantages information U.S. cloud

Platform their displacing our proxy, now discuss purchased two Digital addition Consumer business. capacity, Email of additional in realization installed deployment the incumbent their base. value power our vendors. Protection, for fiscal Integrated our customer within and another XXXX This create opportunity. opportunities Advanced In proxy and great increased The resulted CASB, to successful VIP, purchase and cross-sell Cyber of some in ProxySG, cloud highlights need on-premise Safety example I'll to Threat the Defense is of cross-sell cloud

summary, In year, in to hardware growth our expect recapture quarter. drive platform brings move and life. Consumer second our refresh our we Security they sales Digital customers With security a with transform our resonate traditional enter in business value PC-centric consumer of with Norton of Safety Protection, protection to ARPU cyber as identity continues we as cyber and are by business to the in we transcend enhanced platform, privacy our year-over-year This look customers. fiscal of to allows their device which Enterprise capacity momentum the the integrated category all defense Symantec our leadership. driven half performance and strategy and pleased aspects beyond part sequentially. second And platform seen and tenets Our Endpoint the the core solution cycles have to protect to as we

Safety provide see a to continued adoption grown. base and business, for digital future and have performance solid where retention opportunities. rates renewals factors our Consumer in expect with Digital both We us These safety cross-sell

scale Safety to provides with should detail and enable brand results and deliver Nick in beyond. in half back and FY the financial in our Nick? platform unmatched additional after us results Consumer to of approach Our remarks, outlook. XXXX Security our be I'll both and our discusses second leverage more Digital Enterprise

Nicholas R. Noviello

the references XXXX, our adoption retrospective good non-GAAP Relations well Starting ASC quarter and GAAP we've to standard, recognition our results, All of and information financial Greg, metrics, new Investor the Symantec to any stated. currency reconciliations our year our prior financial accounting tables materials other posted you, first the method. XXXX. supplemental fiscal Due non-GAAP, XXX, method afternoon, this recast adopted we Thank Please fiscal on information in to historical financial under are year to as otherwise website. measures, everyone. transition modified of not as revenue did note to in metrics to financial impacts unless

ASC to materials Relations XXXX performance historic investors to results results, our year supplemental we understand our Investor under select providing in to calculated However, in XXX fiscal help as website. also our are relative

website we of security As products related year a results our and in PKI from included that year three divested QX first XXXX. quarters reminder, fiscal the XXXX fiscal

For and our are rates for comparative organic adjusted purposes, acquisitions growth divestitures.

was ending divestitures. in At contract decline X% company contract year-over-year of $XXX primarily in operating billion negatively liabilities growth total revenue the $X.XXX Operating above the of due by results, the our million of year-over-year products quarter with Security. were up security our of organic for year-over-year year-over-year acquisitions and XX.X%. was impacted for to range, X%. in XXX. adjusted divestiture quarter, QX This Enterprise and guidance constant second impact margin liabilities of end the currency revenue balance Now, growth website The is second to margin and PKI rate attributable was ASC related the

million tax above approximately our compared $X.XX, XX%, and XX.X%. with QX effective $XXX in to QX earnings per was QX ago for in versus guidance. short-term operating ended and CapEx period, year We $XX million flow U.S. Fully of diluted Our in held from with was in activities cash $XXX QX $X.X $X.X the approximately the rate billion billion investments, million. We cash of our share was guidance generated

Now performance. let's segment discuss our QX operating

First, Enterprise Security.

revenue due Enterprise negatively a Security range up impact for contract acquisitions divestitures. year-over-year forecasted. than up-front to was due $XXX contract guidance adjusted of year-over-year our to liabilities sales was revenue growth $X.XXX Enterprise million, yielding had we higher balance liabilities by above and impacted and were the million rate ending XXX. This billion, XX% ASC Security $XXX mix of Our

were Enterprise and our fiscal Our guidance. second of Security XXXX. with the ASC $XXX quarter Security in XX% our X% expectations for implied first XXX, generally Enterprise adjusted down revenue in ratable built in year-over-year the segment QX the was to divestitures, and XX% quarter, billings approximately into compared million, line under year acquisitions our of In as

our operating Security performance under decline just for months ASC to duration XX the performance were compares As our XX% remainder QX, ago revenue QX, plan The obligations we duration months total PKI end an over related period. QX Enterprise of months. approximately for respect approximately year-over-year largely Security XX%, QX project to the be XX% disclose ASC XXX we XXXX. of XX.X on Enterprise metric. earnings year and for call, our year of approximately business months, approximately was basis we of in the ratable website the products This margins our is XX to on in note to and ratable in this quarterly months XX.X under approximately over With year obligations Enterprise was ago Contract our business XX% in in and a over as Please the stated last security as contract XX XX with consistent recognized will Security due XX% months. compared XXX. to period divestiture. as fiscal

Turning Digital and Safety Safety to Digital Consumer metrics. quarterly our

$XXX revenue with currency. in our up slightly of ARPU customer constant Our QX. million XX.X the from and organic increased was Consumer Direct count QX. X% per Digital slightly segment year-over-year from $X.XX in-line growth was was guidance. average second quarter, month, our to direct Safety Revenue million, down In reflected

revenue expect at statistics We these customer of any our direct stream in represent time. approximately point XX% to

the XX% to Finally, Consumer operating year-ago Safety period. Digital compared XX%, was margin in

Turning to ASC guidance, XXX. our under

current business. the view our of reflects guidance Our

the Our rates, not our ending we and impact the related website organic for are exchange for significant divestiture. guidance on adjusted FX forecasting security income operating are from on the PKI revenue growth products or QX of year. rates rest foreign a Based

Now for QX.

in constant of In and organic are million At a to comprised revenue on implied for $XXX a of quarter. expectations our X% year decline million fiscal billings range our to in first million Security reflects our our organic the in the half decline Safely. basis revenue company. a $XXX currency, total We XXXX organic of in $X.XXX and guidance, million $XXX Enterprise third $X.XXX X.X% QX Enterprise Consumer to and an billion billion, year-over-year $XXX performance Digital implies the mid-point, Security, guidance forecasting for

forecasting are driven X% a period, anniversary growth Digital as in we We Consumer breach. the in the quarter Safety, year-ago strong Equifax by

QX in be margin operating to XX%. forecasting are approximately We

our in count rate QX share effective million. to approximately expect approximately We XXX be XX.X% fully to be diluted our tax and

forecast EPS $X.XX XXXX in year fiscal range QX the to of Our is $X.XX.

year fiscal XXXX Now guidance. our to

reiterating for fiscal our XXXX. guidance full are We the year

range in billion, X% Consumer Safety. We the in billion billion are Enterprise decline Security, fiscal forecasting billion to our year $X.XX total mid-point, of for $X.XX to flat $X.XX in in At X% billion XXXX billion Safety. $X.XX the $X.XX Enterprise revenue on the of to and and organic revenue Security $X.XX Digital growth for of and currency, suggests basis for company, Digital constant an a guidance comprised Consumer

XXXX We to be are XX%. forecasting fiscal in approximately operating year margin

count rate tax fully our year XXXX We XXX to approximately to million. be and approximately be expect our effective fiscal in XX.X% diluted share

fiscal We XXXX year are EPS for the in to of range $X.XX forecasting $X.XX.

$X.X We in from are forecasting fiscal for cash of flow range operations billion to the fiscal year be to XXXX in $XXX $X.X compared XXXX. as billion million to year

capital Now, allocation.

consistently with financial capital driving allocation and options, of preserving flexibility strategy shareholder strategic including our to M&A. balancing have about managing talked our risk returns We pursue

completes rates. rising the the intend the in We of execution actively our volatility will of I share after an $XXX $X.X that $X.XXX have loans share. its Furthermore, are at our currently prepayable outstanding billion existing you we under of implement With equity our Committee of such board investigation is this in Audit allocation of manner of are light commence market interest dividend as review. million market now board remind conditions, that directors and recent strategy term the which currently our quarterly par. outstanding evaluating authorization regular capital repurchase our valuation stock, complete, we of directors changing to continuing per we program and

our Now outlook. year turning to fiscal XXXX

organic year revenue grow year-over-year will single to We digits expect that company total mid in the XXXX. in high fiscal

year-over-year. to segment low Enterprise revenue expect will single the We organic in high grow Security double-digits

existing grow half are expectations fiscal of year-over-year; the in Safety factors, expect we has including: increased three, low year in and mid-single year contract organic for Digital fiscal we to built And which our the growth digits second significantly year-over-year. performance on will of XXXX. from liabilities, the Consumer expectations XXXX; combination one, two, Our a in the expect roll-off separately, revenue

expected the margin revenue as Our on Consumer operating largely operations expect fiscal our XXXX. we efforts margins and actions growth we year With operating as in mid-XXs, in outlook Digital growth call. the and our year both is from for Security Safety reflects margins segments, XXXX This net outlook low growth operating mid-XXs. announced the cost of total reduction cash set in growth above Enterprise as well EPS work in our through digits in earnings at the we flow transformation transition restructuring, and or double income fiscal last company

let some Now over the me Greg? remarks. turn back call for to Greg closing

Gregory S. Clark

you, Thank Nick.

of half. moving in guidance Enterprise reiterating achieved a cautious second the full-year are momentum both we loss counts we half. And Safety about our our second fiscal Digital XXXX the customer year revenue stance sequentially While each were In in QX view the guidance we above direct Security, into in in as the our quarter, Consumer QX maintain slightly concerned and year-over-year. first and we business, are our down

side, On business, the seasonality back by in have Security of pipeline a we healthy supported the in positive half our Enterprise year. this the which is

As year. stated our base. beginning Safety and Enterprise do our we business, retention billings demonstrated cross-sell, to increases deliver ability for this last the QX as direct Consumer seeing expect in by year our Security at rate successful are call, Digital in ARPU I we to increases well and And QX of part in again of customer driven as the so industry-leading results

flow our remain forward, Looking we strategy to creation shareholders. cash focused and for growth, our on drive value operating

installed ability strategy customer our growth leverage and base our drive Our to our opportunities, expanding by upsell base. growing cross-sell to is underpinned while

enable to threat enterprises on technology focus consumers customers protect and laser leadership Our increasing Symantec environment. our and an from

and over over a businesses, has WannaCry to X over date, threats day million XXX blocked technology XXX,XXX Our and blocks attacks. protects billion

identity, customers' our data, is and technology for businesses protecting Our critical reputation.

Catastrophic have reported to take about what do to been crisis place from XXXX, attacks in the has saw happens. the less malware customers minutes. time we think in don't malware attack than X when calendar damage of to As

matters, preventing very pleased take Thank effective for questions. Operator? are to Nick for I risk. you Symantec We your a that technology deliver cyber-attacks. and this addresses much time. directly very and Prevention be platform to happy would is your

Operator

Goldman question line from is Gabriela from the Sachs. first Borges Our of

Gabriela Borges

through, see as being any given Committee for little in you activity you the about? on the end close taking sales then my that albeit the And come wondering healthy closing deals of any commentary up I announced risk that did talked complete? Audit taking Thank to last afternoon. Thanks. how pipeline to XH take on cycles. a investigation for Greg, longer in the Good is, your close wanted the saw actually change about longer some if I'm question. XQ rates that you up took follow deals XQ, areas was longer? question the Did bit actually in close after that is pipeline in you longer to the there part thinking are you of

Gregory S. Clark

morning this well, question. good Gabriela. as job CNBC Good Yeah, on

there. the do did That's deals QX. You it of close good of length the case. and on out close We had time believe did still QX we're them. takes definitely cautious that slipped to I

you deals as back as go we investigation a half healthy our of the call. complex. our that on, competed have They're September is deals, of the than there's deals lot are sometimes large is prepared into was of pieces they're I do and there Those the remarks. taking a close is bigger going pipeline believe on examples to that more bit XX, you pipeline the There And because these longer it which just days chunk as end commented in we good before the exampled of I huge it in little a a year difficult of more sets be was it's on completion quarter. end involved, it conference think product more are As to times. gave of for, the prior five we the and I and know, announced we September, very was more the

think as time longer in planning we QX we that And to are so close. a about talked planning, I for are pipeline the we

reach and I that the outlook, in that's pipeline sales think do like to longer place the we sales getting place in consideration cycle. we the to taking delivered similar year, and numbers into last capacity have You're

Gabriela Borges

normalized for over that you. rate we that the helpful. which mentioned, is lot about think XXXX, That's The on is we've just balance as of And Thank quarters? Thank the for given you you. billings revenue growth is volatility for Nick. follow-up growth, guess coming I last fiscal the guidance the billings few seen sheet. can the off specifically How a right

Nicholas R. Noviello

Thanks, Gabriela.

we So guidance, don't walk couple XXXX. of billings through few FY pieces but give let things and obviously you as me a know specific for you

three there's of is four. important the all supplemental And of I of off exists scripted to of what of of the time end roll consider. period quarter. terms Number in see and already a you'll really one first materials pieces the what have performance as those about commentary, in supplemental exists and of performance talked very as second that So on this become obligations in and disclosure our page our obligation the

to you're start that. first So going with

which FY those our In talked we is the when ago guidance as of two indicated we fiscal addition, have incorporates year, the we're then XX then this that what business for to so our and XXXX and we be expect guidance, in – cycles business for longer the sales you are going it's Enterprise, Greg business. which that about And pieces. set days back in in included the half

of that this in the how set FY the then second a moderate frankly through built to those low existing revenue; roll So when half billings double-digit Enterprise you finally off; to XXXX revenue versus FY one, can year and calculate and into is off deferred into single two, assumptions. the growth in XXXX high balance growth rolls pretty of we our three that sheet think pieces, year, and the in-period what low about of

outlook into and that have we've for XXXX. down FY So there, pieces but the outlook the three we for rate growth there's given that Enterprise ground revenue

Gabriela Borges

you. Thank helpful. That's

Operator

And our from next Saket question is the from Barclays. line Kalia of

Saket Kalia

or like, couple the sales Greg, can talk some call, you outside but here. financials? is look rates Enterprise other starting close of or turnover quarter pipeline, from quarters? looked you metrics the sales about questions any you, we things maybe that (XX:XX) metrics that different the quarter, you my taking look other versus this qualitatively strong mentioned else that for thanks whether of a guys, just Obviously but Hi, anything that's at at on pretty prior with straightforward,

Gregory S. Clark

of Saket, to take watch mind. on a capacity. close come we things couple do sales a So

And so need sure tenured back making our have the that we in to enough amount the business function we go-to-market sales of that for capacity quarter.

intolerance our our have We on sales capacity calculations in force good sales are and attrition for our guidance. forward

is happy the So we something that. really We're sales about of view care that we our of shape that what bottom's is is right couple what pipeline. force our And with is with the now. up that

We at our are what's do large force amount a up point the half of from pipeline for the to happening. have happy we we and second opportunity of with a view bottom's pipeline and in sales that's the look back

have the come reasonable the a I close the in close, our before, of time that's We our we and the – a for longer see larger half think pipeline in we to softness as has took amount first do did the in slowdown mentioned from. where deals. those

forward, then So we in seasonality QX and our bigger talked QX the like quarters business about we also – looking of prepared us. seasonally for being remarks and the do we

calendar a year is as our quarter, the of fourth the the and deals budgets. by beginning time I also Enterprise the calendar of of first the end underpinned for think next which new quarter year that's good is

give business in some QX, guidance. QX also and do higher which us levels strength we towards And so see our

Saket Kalia

are helpful. lot with in follow-up think leading versus I mix proxy guess talked appliance? for is very Got overall in can about it. examples about customer where from question of cloud going ratable And where cloud there the of business some Nick, of kind of the a talk you you proxy. perhaps maybe That's the you, beginning long-term? about we we in that talk terms was my about Enterprise the a the

Nicholas R. Noviello

Okay.

What from the and Greg. I revenue going it going that terms that course cloud of talked have of better to we over So I'm for to much across mix those at substantially. out look guy and bet important to going be to about is to that I Greg by year me obviously is to look be the in supplemental before hand roll the proxy moving and last it's that how would you're ratable think that in articulated materials going moving Enterprise. But is point

of we the as comes business billings and the another. and about XXX we basically of year, is gave everything that you talk which this top for and about So basically transitioning implied mix metric fact talked on duration, duration one this we've

it your of proxy, going are hope We're same let that me give revenue growth to bunch helpful. billings of over We're you question the growth and hope I and and to cloud statistics to Greg. So helpful give those ultimately. your the your be a supplemental in transition. ratable trying it are around I are materials on But

Gregory S. Clark

question. good Saket,

– form proxy to for how of in is an a important our have get Network it. So we cloud we number one. factors Solution, Pure

cloud inside in substantial substantial pure an account. stacks of offer of proxy event proxies. are We the we our is and even sales of our are refreshing those some our business business in cloud also We three are or also proxies proxy branch a element proxy We have amount included to hardware transactions our the and cloud our hardware that these usually appliance attacking our virtual still offices where customers in of of and all substantial days. users most of a roaming our

in a for being factor very definitely long our have most we got And it our of is we in cloud-based an and focus solution company. space that important the essential it for it very the So a competitive think I bids. of see that definitely win to investment offering term. in That's

Saket Kalia

it, you. very Got Thank helpful.

Operator

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

Fatima Boolani

level a Good category taking afternoon. question. the have I Thank you questions. for

on if with then dynamics start us new Consumer the wondering business, I the on? and give there can the Enterprise follow-up just Nick, you more performance renewal you billings there's could was help delineate context I've maybe any So side. And if Enterprise another business. between business versus

Nicholas R. Noviello

Sure.

to billings. of over overall retention was the numbers interested and hard minus the very we the who at in those So Coat. all Fatima, but important implied the into look done work we on the the and XXX information Blue good between of about through Because place together amount the on Symantec and first billings. everybody in is of pieces we and very in machine ASC of is terms keep machine, even on line, base renewal so installed for very are XXX versus working feel you're year work at the one focuses renewal businesses Those built a new Enterprise those our times (XX:XX) side, team base versus our break us a say, a on ASC are the it's total the there the with many the bringing large implied equally compare don't for new those a where has important and the been given side. working that We've that. obviously, out, the installed work have of those that for good and the of team Suffice to X and to balances actually renew able we times which to and through our the has are installed we base last short-term course terms

Fatima Boolani

programmatic in here? for and place with updates so update side, talk the Fair to have LifeLock just the you And much. to as you you would to shifting us? you've seen help it into any cross-sell base, relates you enough. your Consumer really the Norton be helpful extent or that Thank have levers to any about from expand can initiative And the ARPU any increase progress

Gregory S. Clark

Good question.

we in the total members So in ARPU slight prepared in opportunity members the cross-sell what is reported in report and but we've remarks, that a is, also from number decrease did had our the that from of in an business have. driven we we there is increase

traditional business it'd privacy and we're that the that one folks good between did of important do offering a bundle, of for times strong us, a are these which increase. rate driving we're cross-sell that find protection and happy uptake privacy LifeLock, acquisition we a the we conversion obviously the have LifeLock had very so a and safety seeing managed seeing ARPU they So topic is when a renewal in as an case where working some that we're be And bundle that cyber very malware, Norton of for now that as in and we these we whether at in look also. the offering, case is thing, identity is or we purchasing cross-sell with product

Fatima Boolani

Thank Appreciate the you. context.

Operator

Keith And from is our line Stanley. Morgan question from next the of Weiss

Keith Eric Weiss

for One question. Nick. the taking for and one guys you, Greg Thank for Excellent.

this And flowed was highlight much Was to the If might sort chunk, For into – comfortable go-forward about Greg, one feel $X.XX, slowed some good topic, of think margin $X.XX ARPU do we is or it bit, QX we ability future guys little temper like into of pretty Or last outperformance the on staying you're of you be upsell this taken down expectations you safety for was of on quarter-on-quarter. that at we should that's on a get it the or have your – quarters, if outperformance? it versus from year like I our the down back type quarter, the maybe to kind that then operating in that increasing This really to seeing basis look the the really, Nick, some terms guide? $X.XX Consumer did margin year, reaching a that margin we're we last the thinking base any broader $X.XX saturation perhaps quarter. solution progress? was increases should Are points digital expenses it that quarter I performance. it on programmatic? purposeful strong going that continue

Gregory S. Clark

pass let and the take it to then first me on I'll So, one Nick.

conversion set acquisition in So, see Keith, also our with even a upsell. business of offer still is of being that rates and our very have very we we feel do well offering resonating new, that offering with that with combined and the in are we place base very net budget happy and our installed still across Consumer is competitive our strong we

way got to So, ARPU base. own we to our grow of our a long go able customer within being

going partnering growth we get the look customer with go from and market more to we're to energy think we future on able some have to base. also as other can think And also making that their world with partnerships renewed I memberships. we to the I other sure companies in address being a

identity business continue attention today very So, our big the protection world ability with the strong, is Consumer and consumer around that's we think grow that piece privacy to to we like haul and a the for being in that. of the long especially positioning cyber our happening safety

in way got So, long we've we a go think that business. to

Nicholas R. Noviello

how on quarter Keith, specific we think so margins. costs call will on from recognized versus focused one as side costs – margins guidance we've and specific that those the this terms in as margin move been mind about on well made beat I of couple pretty we've a for over the margins of of There the out keep we're always that on revenue as going costs the in things another. Hi, prior. commitments forward. of I is terms we in business, growth I a of we've in on past, And the just versus consistent to about we're be anything QX. to the focused much taken think the wouldn't as of have benefit a Obviously, talk see elements we the quarter the

business, as what the we XXXX, as build restructuring, at line we're we from benefit So, we're the that the in for see year, which for a full think FY top to of is the talk about is the guiding we'll in rest well. the as we as And benefits the well in what which base. of see as we look we in guiding cost effect really

Keith Eric Weiss

guys. you, Thank Excellent.

Operator

is (sic) James. line And Raymond our Turits] next question Michael from the [Michael of Turtis from

Michael Turits

It's guys. financial one on going rates then what question. change have those? talk how in James. I Hey, have endpoint, Michael retention and and about in you the enterprise been Turits from any evening. Raymond Can And you if that's renewal Good competition

Gregory S. Clark

Yes.

the endpoint think I So, is a hotly contested environment.

in there's and venture-backed are defense As cyber we're away that all chipping heavily start-up of it. a funded lot at companies aware, organizations

We are product with effectiveness. our pleased

we best, our best business context protecting the And rated enterprise last not We we also technologies side, the AI. vision but period as be been on size of the are to Gartner and have well execute, around ability have against our been whether on effective through malware in by as in through it very in rated endpoint, endpoints. the as prevention also the traditional in the detection signature-based the just

so talked remarks. in been in are well we we cyberattacks think Endpoint on powerful preventing I some we've in extremely good I of that about and there. asked From a think our the prepared detecting rates, Our has had that competing and question AI – you renewal wins some

and We with renewal are others we're our from pleased taking accounts away rates.

if we in lot well think some the other seeing believe bigger we're you are that out a coming better so executing and of people's are that look the other lot, I other of companies of at the I players effectiveness endpoint, of maybe share. in start-up some is growth reasonably

Michael Turits

on I this could expect if Nick, you year And just what update us wondering the directionally you Thanks, at year. restructuring charges Great. next for then, into was least Greg. and cash

Nicholas R. Noviello

Sure.

in and release. you the I X-K give that we earnings P&L in best actually to at think our at materials Michael, a for well know, our look supplemental as world, is look way the the you as So, as

costs a in and transition the non-GAAP XXXX, to and you're from And reconciliation $XXX transition million. then about that for to the that's to going restructuring of restructuring X-K, operating of supplemental GAAP other income materials costs million. to called attached EPS line you're other So, see the FY going an in and in of impact to addition $XXX see

about which future to of costs So of need into set have see exact, reducing think a we off from some go just we I okay? XXXX. we of that the So, cash a because of consider the we the up think thing, cash that roll into is going calculation, that's show set a going we'll transition you completion to when follow what to is flow types that And days we've what saying this will that our roll FY XXXX. type be cash. and XXXX in in into that It's go benefit always by perspective P&L are benefit year, cash is not to and of restructuring means fiscal saying largely pretty from expenses we expect P&L and that coming transition-type been restructuring months a see consistently close in a those to events but as for as

Michael Turits

Great. Thanks very much, Nick.

Operator

about me is Zelnick prepared line you Securities in the in (USA) Zelnick what Can Credit especially you're market, you it Fantastic. feel performed, having the Symantec appetite you federal the U.S. Credit talk seeing? completed and don't from I U.S. question Brad but missed Suisse of remarks, so federal fiscal anything more if I heard little mention Brad you seeing much. - just security forgive from of in generally I which maybe year. about solutions next the and a type what from Greg, bit just the you for Suisse. Thank Alan that And how market you're LLC our is believe

Gregory S. Clark

Brad. the thanks question, for Yes, so

the and think U.S. both side. sector the across defense government footprint, we also have substantial a I federal civilian

federal. our happy we're base installed with in very So,

a factors outperformance was I for that in the was this extension there. I in think spend federal to federal of consider some think an pressure a timeframe see granted alleviated first September did not to half an year. and prior annual used everything in year-end in the few to be budget to the area the two-year We and periods budget exist

some Consumer noticed positioned also about pick Zelnick of And in that forward, forward. how we're for about market the did not recent just Suisse quarter, partnership sense revenue the I feel we Going up our Nick, in adjacencies with the government, Securities the as we Nick. States, Protection but as in XX-K (USA) good in LLC the quick And Brad federal globally. you one filing. - as a Identity think Credit very us just Thanks give that government especially much, Can of go one very your think United Equifax breach? to Greg. breakdown lapping well I the you in relevance we our Alan federal disclosed

Nicholas R. Noviello

saw. the once that do in Identity a that to the related tables all year disclosure of pieces are that are So and the we yeah there Protection XX-K you in

as final soon. the to that terms our subscribers a Suisse business. And is et pretty we won't those for retention a we privacy file, significant back had of And good it amount or of bring - Suffice look shortly we Zelnick cross-sell built for because you platforms of tables, occur also talk our the to ago for that or Protection the the to in QX forward are annual a that from. the quite there disclosure the Greg we've get other of Nick, say quarter. very side Identity we those as the looks alluded than Alan trajectory year of on to suffice and Credit are paying pieces to seeing of continues have do So as we to especially like We LLC now both seen exactly coming in the well Equifax QX that here. came the it about hope quarter Excellent. are Brad or and we the good I'd part, earlier event Securities Qs about and say business in. feel cetera, in (USA) event

Operator

And Karl question next line of from is from Deutsche Bank. Keirstead our the

Karl E. Keirstead

the operating Thank one but on opportunities I'm the assuming most you. just Thank you. investors what Enterprise and time specific, do I this you achievable you any Nick view improvement Starboard's maybe maybe their secondly, new then Symantec bit weigh is, XX% Two differently? you CEO, in the effort come could focused on and margin side, the in. guess first the are questions past. board has involved and curious, potential it's think quite obviously as view do can't equity little will Enterprise speak on stake had how I biggest for to assuming And as Symantec a margin of side? seats. from that over playbook, improvement, more margins

Gregory S. Clark

So, directors. I and our very directors excellent to experienced your executives to first board question, just are the think added answer we that

of happy Starboard. that directors in very the we're the addition from So, with came

on of they resume experience, They nothing in Dale nothing Peter Rick deep is an So, experienced the there also, Hill, have someone – is And Enterprise both Fuller who that Feld no for and think own. their and Security contribution their people. are Consumer but I stand make. – has accolades and domain and seasoned as example I very

feel think we I we a So, that very strong have board.

see of We XX-Q. have set as decent you board of can our a view diverse points on governance from our and very excellent an

Nicholas R. Noviello

Karl, terms me make comment a let And on there in question margins. your of

margins comes on the margin there points mid-XXs commentary, or terms of in way, impact impact. in of of operating divestiture X side. the set from points it's quarter-over-quarter X the like scripted margins As a margin just something that we at and total the focus And Enterprise FY that we XXXX look, and the in you we company heard by growth for significant the year, talked Enterprise our with of as and the on certainly last have about there outlook is a

flow earnings We've here top opportunity continued growth. of that, in get leverage is but and terms So, for that and margin, about work business where the line. talked restructuring and have than doing. XXXX margins like further we as We've line line that, two the obviously platform talking top look the elements to, feel of mid-XXs a gone We've not elements, about we we talked talked operating about from the benefits. that the may the about between that has we've opportunity for we're leverage elements cash in have to top

Karl E. Keirstead

All right.

Okay. you both. Terrific. Thank

Operator

And our line Oppenheimer. from the Shaul next from of Eyal question is

Shaul Eyal

also transactions, force Thank that sales question U.S. perspective? that disclose Quick couple of better taking from talk to you dynamics wishing for on happening differentiate gentlemen. demand just the did sizable you from to did the you between to seeing trying afternoon, understand place customer – what and mention, can a but you Greg, Europe. you good is perspective that. – some and of Hi, you. Thank us a

Gregory S. Clark

Yes.

going in think the the of strong. And are performance, history think covered I was Europe slowdown in not that is in on prepared seeing in in I European European. Europe, So, a if remarks what's look we I example at substantial any we demand cyber defense

in of the is very is feel in problems, our major of and brand all spot Europe economies positive pipeline the strong the our cyber execute ability European in great with and Our especially in companies in to Europe backdrop extremely territory. we size a about the

I experienced that not experienced to So, the has softness go further in in would say first half Europe. been

Shaul Eyal

on the Anything U.S.?

Gregory S. Clark

So, as about is pipeline strong. the U.S., think we very

the that an in best into of we best to have – that be product be integrated three can't We the with Defense cloud category things from would need business a set of a customer products individually That strong integrated and of themselves. they total United is and the to and States. when buy integrate value in cost case of go Cyber arguably have together. in is those business the a view We ignored point have the case long-haul a proposition, which both effectiveness very sustainment, a

We healthy have is the very pipeline a in and half that – in we U.S. the the majority in slowdown saw the first

Shaul Eyal

you Thank much. very

Operator

And Ken of ISI. from is our line Talanian last Evercore question from the

Fenn Hoffman

just on talk Fenn this Could is Hi, with you're little ATP what renewals? a upselling seeing SEP the Ken. bit about you Hoffman questions. success for on Thanks for

Gregory S. Clark

Yes.

powerful advanced us. element a on it's platform That for success all a an that's threat for powerful well is extremely as with story for works EDR that Endpoint. very been question but Symantec great good a the line. So, of the has ATP folks portfolio,

Symantec very base. We a the Endpoint to installed have strong ATP attach

Fenn Hoffman

have sense great. pipeline of give hardware-based the And, us Okay, how you could into Gateways? for Web much you Secure a visibility

Gregory S. Clark

So, is our website base get installed pipeline, the of see the definitions have signatures hardware visibility can very from them, they time. visibility bad how all good. and we say, I'd much into We and us virus

are where like we they situation in footprint. So, we our and know our hardware

to with forward, before. quite our we and network few cloud And on talked and where to we we cloud. enjoy easy a migrate offered up some very have customers they of them a of pure some from As that that footprint of we have us But them many attach. our a pleased environment are move path as take that hybrid about

I in that gave pretty footprint in some examples. you'll network see remarks, prepared at those substantial examples look five you the the proxy If

Fenn Hoffman

Great. Thank you. Okay.

Operator

have this no now at it we turn Cynthia time, showing I'm further And closing back I'll for to questions. remarks.

Cynthia Hiponia

Thank updating this forward we you and call. next everyone, for look again afternoon joining you, to on our us

Operator

for you call. We Ladies conference and gentlemen, this thank conclude your participation. today's does greatly

disconnect. now may You

Cynthia Hiponia	Symantec Corp.
Gregory S. Clark	Symantec Corp.
Nicholas R. Noviello	Symantec Corp.
Gabriela Borges	Goldman Sachs & Co. LLC
Saket Kalia	Barclays Capital, Inc.
Fatima Boolani	UBS Securities LLC
Keith Eric Weiss	Morgan Stanley & Co. LLC
Michael Turits	Raymond James & Associates, Inc.
Brad Alan Zelnick	Credit Suisse Securities (NYSE:USA) LLC
Karl E. Keirstead	Deutsche Bank Securities, Inc.
Shaul Eyal	Oppenheimer & Co., Inc.
Fenn Hoffman	Evercore Group LLC

Gen Digital (GEN) 1 Nov 182019 Q2 Earnings call transcript