NLOK - Earnings call transcript Q3 2021

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Operator

Good afternoon, everyone. Thank you for standing by. My name is Ann, and I will be your conference operator today. I would like to welcome everyone to the NortonLifeLock Fiscal 2021 Third Quarter Earnings Call. Today’s call is being recorded and all lines have been placed on mute to prevent any background noise. there a remarks session. speakers’ the will question-and-answer be After would opening to Ms. At for I now to this time over remarks, like call pass the Lai, Investor Mary Head, Relations. may you Miss, begin.

Mary Lai

NortonLifeLock good Welcome Ann, earnings afternoon, you, third quarter and to Thank the fiscal XXXX call. everyone.

review to results QX Natalie today CEO; are CFO. me Pilette, and our Joining Vincent Derse,

to the and this reminder, statements based such our like be references all contains earnings our with there at our statements replay the everyone our only supplemental financial As metrics. is along non-GAAP defining remind which in all A unless to call COVID-XX date. be and uncertainties included are a operations, non-GAAP Those the release IR of website the of actual of cause assumptions expectations. current and the Today’s this materially may business non-GAAP pandemic industry, are press forward-looking performance growth to investor.nortonlifelock.com. otherwise ongoing available release during final on IRwebsite regarding and as that to reconciliation a will differ year-over-year current is press business, expectations, call of may statements impact and results and materials metrics from considered including beliefs, our current on our statements call posted GAAP measures rates and are speak on our that stated. risks on slides, involve and which I’d

XX-K I year our X, our recently annual CEO, quarterly to risk Form For and particular the in on reports with more over the now, and our will Form our SEC And statement in press release information, refer call factors XXXX, for and ended the cautionary XX-Q. Vincent. please filed to fiscal turn the in on April the report filings

Vincent Pilette

and Thank you, all you afternoon, well. and everyone, good hope safe I are Mary,

we exceptional continuing face are of as of since those people XXXX, the happened protecting vision a to and safely. challenges, to the life our sense the society. a challenges while solid individual the On all Despite on earnings. collectively digital have to our issues of to commitment accelerating delivering them of and united. that are employees last of it’s a Boards, priority, or the by I every important drive social, proud and I more one ongoing facing, facing hopeful emerge empowering show being each on for embark and lot we earning Index. utmost that Equality score is live Rights all the we top and well uncertainty and safety thank also we A as Campaign quarter, As our for another deep has will want and our and think our talent economic our stronger to our recognize health some to NortonLifeLock, Foundation I’m team At top adding XXXX we to growth been the recognized Human and

on NortonLifeLock diverse talented our committed happen of proud a December, we an inclusive delivering We know to we first team LifeLock’s by team. are company. building represented vision and at committed, entire the We backgrounds acquisition. In remain announced and that our diverse cannot without

Norton to has deal family. employees, excited and the that are to partners welcome Avira’s we customers Now closed, the

Together of have responsibility XX securing embrace privileged to over protect we We Avira X.X million are really opportunity customers offering. and million paid excited plus Avira’s important consumers globally we over the by Norton digital the now lives. in users are their to benefit as provide the XX million the we help

BullGuard’s look added cybersecurity includes to top deeper our that Avira’s We forward are of year. Avira our company BullGuard, last EMEA, a portfolio. working Europe, and also business extending we into in which presence to also quickly their strong On capabilities reach to Avira’s to U.K.-based adding leverage now

Before From $X.X we company. delivering growing commitments we the standalone the to previously results, dive I say am as customer NortonLifeLock a set QX profitable annualized to I established EPS, to a post-transition growth. to since want sustainable returning over XXXX key that proud trajectory I two company base have revisit and into on at first of

XXX% a protecting are digital cybersafety focused safely. We strongest and consumers their company life to today. empowering on live

achievements, are While portfolio of we stays have these take ahead that to this a tremendous We we deliver proud of lightly. we a don’t know cybercriminal. responsibility

to QX growth work was In growth our for grew XX%. that was accelerated know and will billings innovate first just and solid X% we we quarter Reported XX%, and up getting and safe, richer our we’re we company our be growth. customer of consumer we and reach keep delivered transforming Revenue non-GAAP double-digit As portfolio started. our extended momentum. EPS

and are to is in consumers this particularly revenue strong relates and and closing area dark Retail and strategic growth growth and performing to XX%. meaningful more was sold focus Stay to well the sustainable the solutions, to of safety one to the as double-digit markets. identity through of partners underpenetrated monitoring broaden as business year markets Japan more through in tuned We and ID cyber during retailers. transform out and the to continue company. importantly, our these was it build right more opportunities well momentum, bring developments the growth on our expand Advisor, eTail long-term for areas Internationally, fiscal strong partner our our and strong, as we a such creating Finding reach posted web the partnerships we’re protection way key quarter, in Leading holidays. business. theft

Our up season. growth as our through performance the portfolio, based direct-to-consumer strong X%. business across of the the as broad which was holiday saw well majority We represents revenue,

international push We In is model. Identity international America While products to sequentially global monitoring dark XXX,XXX grew have the strength the XXX the over customer direct and the Avira France, we cyber rate count to considerably quarter, including of close our our This In added rest grew the business total into Germany, consumers. larger with direct QX, direct bringing where business here, we and Norton and offering XXX,XXX freemium double was reach to strategic and extended is digits bring room straight to fifth leveraging to countries, continues with definitely more outpace show Norton web Americas. our our multiple than the world, comprehensive This our our year-over-year, of recently offering. growth across customer will New and synergies million. be net Zealand, especially count add expand sequentially. our to more XX internationally safety quarter of Australia grow and have part the

remained rate retention stable at customer XX%. Our

of average metrics monthly products. effect also Our are ARPU, user indicators geographical value current cyber early see at continue and industry see in offered that strong leading retention per improve to tenure of ARPU remained the journey. mix, we years the our revenue the value the to $X. safety customers customers strong Notwithstanding to our Both and rates, we enrich of opportunities improve to the as especially customer our

comprehensive Norton XX% cyber through QX comprehensive model provide hard customer platform improving This higher installed truly plans continue XXX. easy-to-use new of our an designed the the the our key efforts and provide engagement. protection contributors XXX the functionalities, of adoption and membership our shows combination to our resonates to approach And Norton approximately The safety base marketing and to our count customers. Norton while end safety first the digital membership of protection to of forms offering expansion to success and is customers. we’re using in platform, of the platform, with a One experience. customer the level market. bringing At a This well are driving bringing be of integrated that strategic working international retention cyber growth our simplifying new to constantly XXX to integrated and continues new working user platform shift is

customers months, XX majority we’ve NortonLifeLock, at the back on Looking was to new the approximately million XXX. X which Norton of welcome last

early seeing newer this renewal with in We’re improvements cohort. customer trends,

communicating effectively At nimble all doesn’t and us in scale able We’re e-commerce of accelerated the measuring customers. what this, and alerts, value be our launches pace bringing works, in-house platform. that new with what engaging technologies to differently, customer and of innovation incremental our enabled with heart through more of we’re new it’s to to product this

run failing even translate Sometimes to is own consumer the the safety that to we into but risk may faster learn reward fast, cyber we move we category. the as of that success

on and that at not safety consumer of awareness With cyber news, to product attacks audience. an release have new to the in focus scope raise all digital of service safe and pace crimes to it’s consumers the lives ever years. We the across of expanding in and achieved overall acceleration we numbers plan products and innovation witnessed features to continue keep the help that to we critical know all of the we’ve accelerated cyber

you QX. tell couple launched them a about me Let of in

Norton successfully part As Japan of launched powered by ID we LifeLock. global Advisor our expansion efforts, in

Here providers of specifically and increase targeted the new web we audiences retail value and dark reach on to awareness service monitoring.

a start the help resolve specialist, of a to One ID is to service in dedicated the access from speaking product agent claims differentiators restoration Japanese this to fraudulent finish.

and to app, making and commitment and is from Norton Another dashboard. security, customers example our This safety. single simpler their to online provides identity cyber access their manage tools of easy-to-use example Mobile customers enhanced device bring safety experience, experience it cyber for richer a our through is privacy access which features XXX to one to one easier consumer another

strong entire protect Looking it. hard leverage will third and own and the all and customer credibility back, to We innovate working digital important track you our safely. We our value think to have a we We worth find it. drive fulfill the team We It’s team to and growing creation vision discipline people sustainable scrap grow. empower We live very topline, financial open. our demonstrated and operating behind noting stakeholders. to It’s commitment pursue continued that record. to also performance, first. grow live passionate for me and a to build our quarter leadership

live core We are cyber by. are is we making world what the safe And inspires the These authentic. values us.

brings already contributor are Trust excited to at DocuSign’s an and experience Officer financial privacy, call They and data of leaders, the a for information international on a the in while key little brings both cybersecurity firm. our over Chief global the data Board. digitally the detail now results. Sherrese to security, in in to team. it breach more Heath, me details being extensive Finally, accomplished on passionate trust to Similarly, Security more Natalie, and in Vice And law recent before She addition issues. privacy, I member partner creating additions turn Chair prominent Smith I’m and Natalie experience response let consumer to valuable significant industry. pass Hastings, transform a share Emily is Board to Paul

Natalie Derse

everyone. hello, and Vincent, you, Thank

I with on our starting discussion, strong and then for quarter-over-quarter QX, outlook provide focus today’s non-GAAP We will QX For our year-over-year metrics. in with financials growth QX. across results delivered our performance key and

revenue QX the ending our X-point contract growth $XXX balance. million, and accelerated to end year-over-year above positive FX billings impact high was of our from reported X% up in guidance. including a liability Our XX%, We

Our strength growth by products, driven a as momentum season. and well base holiday geos across all was successful broad as

count to direct customers of customer customer was sequential. XXX,XXX and total consecutive Our net quarter fifth million, year-over-year. quarter-over-quarter adds XX our customers increased This adding XXX,XXX

retention customer metric retention stable remained unit XX%. an Our at rate,

was and average user ARPU up monthly $X Our X% over year-over-year per quarter, this or quarter-over-quarter. stable revenue

lower newly to acquired base, for that note retention to our our it customers year ARPU and continue generally first we our grow is customer total average. is rate important than As

explore our add and mix As can changes. globally, we as ARPU vary business customers more new models

We diversify continue and grow business. retention improve we our to ARPU first as year will opportunities for to look and

take our to are go-to-market efforts but are in We beginning still hold. early the innings,

We business renewable are reach accelerated customers our channels leveraging in our QX, by distribution and base. our globally. direct We driven more to growth growing

points are data we continue XXX retention our with correlated Norton directly and customers, membership add suite. we to As new seeing positive

expand in-demand foster efforts. in our As we we new to to upsell beginning And growth year-over-year. we accelerate in reach launched have and partner innovation cross-sell our products In as opportunity our see loyal our accelerated QX XX% of continue and the business, further, features, have base. audiences pace to our and improvements the to and customer are new revenue we grew

strides make signing partnerships expect we will scale that the long-term. to continue We new internationally over

longer, these year more cycles realize. taking to As in sales are conversations, previous one we years two have noted or to partners’

to We expand partnerships for they strategically these long-term us important as the continue in reach. to for invest are our

to product product portfolio, operating focused XX%. introductions, QX and and our product our increasingly continue growing as driving and margin on of well proposition our diversify we Next, acquisition, international diversified With customer continue to accelerate channels spend consumers. and expanding ensuring and operational for R&D, digital discipline the widen differentiated was investments to We’ve With innovation into and as more pace along marketing. prioritizing we remained effectiveness invest new marketing way. value Measuring to providing the in drive an audience. help

invest quarter, are range. the was $X.XX We at end of in continue up will XX% we growth. Diluted XX% $XXX EPS million, in disciplined up our income our sustainable for the to QX high approach was guidance net year-over-year. and year-over-year and

We are annualized now and a operating strong established above to build EPS have the foundation $XX level upon.

to look taking the growth advantage prioritize sustainable to we opportunities. while continue EPS of As expansion, we future, will the

was flow million. million QX and sheet, Turning to $XXX free was flow operating our cash cash cash balance $XXX flow and

QX annual free capacity. total ended flow, with a few cash and quarters have a $X stranded of billion billion now We of than been undrawn a over in For generating $X million revolver costs. cash excluding more $XXX we

continue to and have approximately X strong liquidity net position a at levered debt. are We times

estate on Mountain for Now interest sale of recently to in buyers activity of a buildings expected to The complete quick properties update our View. in diligence in agreed are our their fourth We a held lot sale. one our for and and the quarter. of see assets real due terms our each of

all and discussions a seen to on an Dublin on in remain we’ve fair and of sale Mountain for assets properties, for View, market continue the active While value remaining interest lot Tucson. we focused achieving be

on the shareholders paid a capital the approximately in and $XXX share. we dividend Despite and active quarter, $XX.X In limited the form quarter the million and million our share a few dividend common of in trading QX, of deployed returned we X purchased last window, per to of Let me were we open million month quarterly spend the shares. $XXX repurchase. In regular specifically minutes allocation.

end million of QX, our deploy there continue in of share billion remaining $XXX to buyback to approximately which As opportunistically. expect the authorization, was $X.X we

March the release, Directors approved press regular to business of a on common the in XXXX all February XXXX. per quarterly for record XX, of of close share described As dividend cash Board on of as paid of XX, $XX.X shareholders the be

provide outlook, me an I our move to on on QX Before let update Avira.

closed As you Avira the quarter. in heard falls we acquisition January, fiscal of our from Vincent, fourth in which

on track While underway to it is the early, integration plan. well process is and

accretive add to and XX% revenue As to achieve points year, margin a within reminder, in targeting X total first the of six expect post-synergies operating to growth we approximately our be financially months.

outlook. to Now turning our QX

translates We expect QX revenue high year-over-year. in the range of $XXX million to single-digit $XXX to million, which growth

to share be buybacks. We the from range dilution EPS stable $X.XX per expect of currency rates count and share non-GAAP $X.XX in to per assuming QX share,

includes qX impact the of Our Avira. outlook partial

and take renewed $XXX your last our more annualized $X.XX. commitments the Achieving with an margin the a and execution record. of the of and proud We to we true testament As track generating building XX%, consistent of growth all momentum on will flow when your long-term we now foundation today we achieved of the the to and to free is fiscal out a question. digits, of I focus accelerating of at million to revenue a the year are enter turn year NortonLifeLock, all tremendous Operator operating and ahead. closing about call we’re annualized quarter stood and XXXX, forward set have we those than including excited opportunities time back up sustainable to for cash Operator? you look mid-single Thank strong fiscal EPS scalable our

Operator

question first of Yes, Moskowitz line Gregg ma’am. [Operator Instructions] from comes Mizuho. the Our from

open. is Your line

Gregg Moskowitz

on All a QX. good guys. right. afternoon, Congratulations much. you very Thank Good

Vincent Pilette

you. Thank Gregg. Hey,

Gregg Moskowitz

and that last results, you’re XX those inclusive on months these more Vincent, lot you’ve that seen clear, a in invested seems good already investments. pretty of -- marketing you’ve over So, it the a really yield

you So how more driving do site see regard looking much forward, increasing to improvement and room the traffic with to monetization? for

Vincent Pilette

we We’ve a spend new a bunch also Yeah. done introduced and markets. the that half new vacuum, note our we the international certain penetration started in a functionalities least XXX to products year your into right? ago, portfolio, and of overall it’s at And important marketing or accelerate never investment and is of a launched Norton to

to spend, Avira, levers, to marketing including acquisition think growth with I continue continue the we’ll a if and we to forward. we it play may show be of as move you growth good all able three the want, be accelerated an on as

Gregg Moskowitz

with typically of that’s right. first first and course All -- challenging. you interesting, mentioned the newer then prepared Perfect. customer And renewals, seeing early renewal that improvements because course, year is, rate you’re your that year the cohorts in most remarks of

extremely is, stable of get but question I has improvements is XX%. higher? seeing, retention it’s So know your to the some been that there early, at you’re given my that retention And potential

Vincent Pilette

I achieve. those year the we the second a still achieved most at think have first it’s If we in as unit full portfolio, are the for plus the mentioned, look you on basis. who retention XX% year is and the retention where years, early, the out to improvement I

but of product in the you the users. rate early to seen between say, year cross by the many and And the The first so show. full numbers category functionalities. we We’ve still results show retention is better adding the We’re has increasing encouraged what values the new to improvement we than have early the Norton we’re see first right? operations, that XXX, XX% It ability on of want engagement, XXX, showing the adopters if the I when potential the early mainly very is in to standalone renewing year phase still needed. Norton different and mentioned value,

Gregg Moskowitz

All Natalie. Maybe one quick Thanks. right. Terrific. just for one

deferred confirm Avira you. Thank X% how also, that in XXst? wanted as reported of much includes Jan of Avira, revenue XX% is constant that of to I So then none of currency. the billings and sitting growth just

Natalie Derse

the for Thanks question. Yeah.

in Just all. QX quickly, Avira at really is not results our

liability be until And our not whether you to about financials any so that growth about think in think you QX. or it’s balance the going of

Gregg Moskowitz

though end on Even at of balance all, Okay. at it the right? is fitting at sheet the was in the January, it’s closed not that

Vincent Pilette

correct. That’s

Gregg Moskowitz

the job. Okay. Fantastic. clarification. Nice for Thanks

Vincent Pilette

you. Thank

Operator

Your next question line comes Barclays. Saket the of from Kalia from

Saket Kalia

here for the congrats Thanks taking quarter. my guys. on Hey, questions and

Vincent Pilette

Saket. Thanks,

Saket Kalia

just maybe bit we sort out a you offers? freemium just that bit, Avira’s Norton for business and model about a zooming of how what little you, see Vincent talk little Sure. maybe currently first complementing can

Vincent Pilette

Yeah.

seen more even accelerated here out activities zoom see are and moving safety stay. that, Let an as cyber organically we’ve a and a are me We increase definitely feel We think than to has you adapting that movement lot I more. investing both cybercriminals activity as standpoint the one And a pandemic know, in protection the relevant only more discussed online, the we with organically. in and and consumer Along about there’s. from is to where consumer is more company a have we as awareness ever. good

have then We Nolan going the we continue platform with and the accelerate by things. three that, identity of along said, penetration to a we’re three growth we’ve And XXX, pillars platform, integrated safety One markets. launched, and privacy, accelerating protection and doing cyber restoration. covering our security, international is,

cyber We three, new asset. build and functionalities. came like et we models. to Avira go-to-market we Canada in Germany penetrate second while market to to, on internationally, that. three penetrate some go-to-market model, the partner continue Obviously, plan markets with many to market Avira, dimensions accelerate with Europe. membership companies explore And We are new Europe. doubled Western safety. new in in explore all first to direct-to-consumer the is was a third And business the terrorists one they will or We’ll think share were across those one for The adding was models, one our number a in we [ph] I with strong be cetera. number very Avira in When three different moved internationally, title, obviously, expanding growth plays on

is to mentioned, market one, important. model, the which second in is different The very ways you free going which

the We have premium direct-to-consumer model.

in combined We bring are C free one The to trying our toolbox. tool us to to and doing for more BXB is model activities solutions just consumers.

offer functionalities in could cyber the using to commoditized, we then converting become of safety and freemium all and the for upselling an time. first more and cross-selling of access can full model As muscle portfolio those consumers over to a some have using

there’s had and that a XXX. you technology. marketing. Bulgaria. is mentioned, So it’s acquiring few then value those more some nuggets and safety of creative functioning an element gaming on And their the to spending third a from in on way if booster into that’s We They -- experience without eyeballs, a have they cyber we like integrate want additions very can in of our later demonstrated gaming Norton the nimble engineering functionalities, teams of

enrich at experience. we’ll their a perspective So our to to look capabilities portfolio continue from overall

growth So our Avira that’s how plays into forward. moving

Saket Kalia

Maybe bit follow-up for open-ended rate ads my you, the surprised anything guess it. there the conversion see renewal at quarter. of Got on quarter. look I that to was question you I changed back sounds in That’s as What looking helpful. better, a like maybe net rates sort there cohorts? but uptick adds the is, sort for Natalie. versus this really of at the it you, quarter tea this the renewing that Great especially little last mean, leaves? was was or anything

Natalie Derse

the for Yeah. Thanks question.

Board, just fiscal five geos, the product in back and year, first-half, seen quarters in take adds across with holiday. XXX,XXX QX, across take the new growth from across positive at ads XXX,XXX look consistent contribution we’ve a I and a with a lines I now If -- net row. look look customer step So if this in

say the renewal platform gaining now definitely It’s renewal to us. helping early, XX% and early traction good base. we look related around rates our Now our our to answer Norton of would with Yes, conversion. in cohorts. but is customer new XXX it’s your And I are improvements now nearly seeing question

that that’s so overall retention. sustain helping all of all XX% us to And in strong

Saket Kalia

Thanks helpful. guys. Got it. Very

Natalie Derse

Thank you.

Vincent Pilette

Thank you.

Operator

Suisse. Our next from question comes Zelnick Credit the Brad of from line

line open. is Your

Vincent Pilette

Hey, Brad.

Brad Zelnick

quarter. Vincent. so you Thank Great. on Congratulations Hey, a great much.

Vincent Pilette

you. Thank

Brad Zelnick

from touch hear wanted hoping to nice team understand bit better was success Japan. international having you’re And And It’s opportunity I as the better away more. the prop value to that just there how you you on think that we with about about cost broadly more lot theaters just the to a reach. competition help asset Avira, translate to international in freemium -- that and where can just I the best, should too us of well. reaching a which does gives In the these obviously the be might get you markets? much

Vincent Pilette

Yeah. think the of about our business When you international. international, is XX% in still U.S., XX%

So see look at market, when it’s you underpenetrated to the geographical mix of internationally. the clear are we overall that

positive core our from So first security when so now some, a strong We the to point and that protecting is there. definitely will to claims we be adding But expertise a Avira were is bring and if a in lot from consumers want, a digital when differentiator multiple to privacy we a have identities help. which a definitely very differentiator. entry also where and web you real add and LifeLock a the always management trying activities, bought it was really with the we we an make late and good come, find to identity intent from helping international web as monitoring, restoration is out but first LifeLock, when proposal, consumers a your it’s value-add form you of in restore was restoration it and dark which monitoring that feedback see the of there dark angle

big first will into U.K. got Japan markets. international many we the touching the Germany, Zealand, we’ll and broad Identity Norton across interesting continue France we New is Australia, one where to the opportunity which was countries with actively real, think we that to of penetrate all and one. expanded I start push

Brad Zelnick

their to just you. follow-up understand And deal. how you it Thank sense. of January in in have much so can us a duration you a in might of just with Thanks. Avira assumed contribution guidance what’s lot of and makes mix did Natalie, and what’s the if share specific the it as of a deferred exactly Can speak maybe well, That portfolio? write-down, And going terms for we when to forward? close, the QX can in contribution like, in this

Natalie Derse

on Yeah. January Xth. The Avira closed deal

And so, it that’s when closed. yeah,

definitely In guide, in. we Avira partial impact terms of the have

perspective. a with you then We we’ve really just -- have over perspective, we to six get will months. communicated from from folded to you and business next revenue look them hard have to shared the growth And we’ll on the an synergistic drive we the EBITDA in contribution the savings

Brad Zelnick

Okay. Thank you.

Operator

of Your question Fatima from UBS. comes the from next Boolani line

line Your open. is

Natalie Derse

Fatima. Hey,

Vincent Pilette

you on mute. Fatima might be

Operator

your open. line is Boolani, Ms.

Fatima Boolani

Hey.

Sorry you’ve about that. base. I’ll introducing Avira I freemium Vincent. of some start you, you that the LifeLock with respect maybe premium very about prepared Maybe things with just some your functionality into the brand around, and freemium. in Norton categorical and Avira premium And been mentioned keeping remarks to know the brand

a around the follow-up you I’m And please. Natalie, I of Norton that of then so gap And branding the curious capability the the have some with for bridge how goodness LifeLock without diluting pricing LifeLock. and power

Vincent Pilette

we great news with a the our experiments. digital lot can -- And Yes. of business business, run

for discussed, to And freemium cross-selling premium consumer of value today introducing commoditized, are address the functionalities offered there And functionality and we is past it’s market. all to concluding get that perspective. about not the either are definitely the consumers that time. So our brand a is upselling the at different based pace or differentiators then mainly commoditized. on the certain innovation, adding a with long-term as a model, But has way new functionalities, new provided which yet from or we on success

funnel of dark monitoring very that protection evolving, As on restoration next web consumers, ideas focus we have all level to rich overall new continue is of working cyber from identity, criminality privacy to a increase services, for level. the the on. we We obviously

want to one value to then closely freemium the portfolio. if you see way, And access is the so more the the get overall of first

going side, the keep other separate as way in mentioned, to as brand branding. but of you different the For terms and short-term obviously Norton Avira testing on we we’re one

Fatima Boolani

enough. gears maybe the the to of strength partner Natalie, shifting segment business. Fair around you in the

strengths partner that drivers I’m that’s wondering some around the this the and partner off Thank You an largest what we the very what in to are within some about area business investment forward? you. But -- helpful it’s me. these and thinking quarter partnerships should some about take the get the key should in it And think how be of ground we of you. going business gave of of longer color components for for

Natalie Derse

Yeah. Thanks.

a partnership really but we that great overall -- those of all pretty as and audience, Overall, overall perspective, really about stroke relatively year-over-year really different one XX% a those book got the so channels to employee of is different saw excited is Employee from are close our benefit across that. benefits. So strengths we But quarter, plays growth strengths partnership have and direct channel business diverse. lot customers and the with broad to about excited is channels. broad-based speaking or grew those our very the the We’ve for within users that -- very a we’re across brings users The of really, side. relationship just widens we distribution it’s really partner business. just our we generally

Fatima Boolani

you Very so much. helpful. Thank

Operator

Our Matt Capital. next Hedberg RBC comes question of from from line the

Your line is open.

Matt Logan

Logan… Great. Yeah, thanks. This is Matt

Vincent Pilette

Matt. Hey,

Matt Logan

year that Fatima’s question. kind Natalie, talk kind if benefit that for follow-up just the quarter little you I in segment. … could QX employee I this strongest to about you’re Hedberg. would think that filling from for area? trends bit of is on more Could seeing Matt be a of going just

Natalie Derse

the come of on I out as people what the to started Most course got partners we’ve employee understanding would et annual cetera, say, going timing benefits to do those with, business calendar. terms, I later Yeah. from get really year. in in they’re hear figure enrollments an you

So consistent. channel for us employee we hard. been pretty are The has definitely working benefits

and to take just working make the benefits advantage really the is out when widened perspective employee working we’re there of are want partners the more to get now. we that types the the really just and the are. partners and to look Norton There’s employee mean lot a channel pay get to XXX And we excited sure way. we and right, gain you’re channel. across we with and and size can love to benefits audiences attention proposition our employee and again, the in of to value We -- really I to of have But enrollments benefits as go really from opportunity. time annual a this you then different have forward, we partners growth reiterate, education after the right really those been channel through that

we’re it for So trying sure. to get after

Vincent Pilette

most And a QX to of traditionally Matt, tax channel, has the and aligned if identity. I more has our outside been then back the can business of that, U.S., been Norton is add the quarter to a LifeLock of more of protecting where season in QX quarter taking

So this from expect side guidance. into perspective quarter we into strong quarter, identity on here Natalie’s the very that coming a built

Norton Avira Identity doubling we Now, are internationally. down also on closing and

season, it’s markets not positioning, if continue our linked the for but whether tax accelerate to that’s product or is to you areas, want new So it growth. definitely to us

Matt Logan

mind when place. over impact page That’s a What really is security that you’re the do awareness maybe around in environment? security of that when the helpful. and consumers and and for far being Vincent, news you terms share demand not major And does breaches? from but base of about company front core kind customer Sunburst, Just obviously, center all as think like for first breach the front then as thinking your

Vincent Pilette

right. I think you probably

three tell awareness we as portfolio want identity, The a the rest adapting ahead breach play I now. And had I than your in. first it’s a the -- show you And and have of is consumer if have devices, about are help to is breach when two what or those your continue that risk personal scope restore of your they long, company, to breach it’s just customer a same an your the criminals the wider to the rate data and not move cyber staying to been long to activity data up who customers time. have access think increase a as it’s building relevance level identities or old digital then And and that them really pandemic, but a continue for it’s Norton and faces. when they’ve we we LifeLock upon or and highest awareness. of step mentioned to can you retention with that us, build or as more online, the

Matt Logan

you the for time. Thank

Operator

of the Weiss Stanley. from Our Keith question line Morgan comes next from

open. is line Your

Keith Weiss

Excellent. Thank you guys for taking the questions.

been of clarification if I a most you of my questions, couple have answered, will. just think questions

average terms that any should like be the In go is differentiation keeping there international of significant we U.S. ARPU, a the between and on ARPUs mind in forward basis?

Vincent Pilette

Yeah.

So into of has I if also customers membership access, think value the three pillars obviously security ARPU. subscribe you VPN Norton are right? XXX a by it’s The level a -- level password markets changes, that the changes. the value managers, that level also one perceived by to most perceived you

identity getting into… ARPU If you protection ARPU LifeLock And perspective, U.S., mainly and you a add therefore we if add that are in as then being will from in higher U.S. move restoration, and the identity grow. protection And the you the

Keith Weiss

Okay.

Vincent Pilette

of ARPU. then grow … identity move than all it really to into APRU, is you a Europe, by levers lower by it of able less market. have international closer restoration, we combined Western if we’ll way emerging aggregate. protection so some to about about although The and we is those to And cohort and start set markets, we’ve add think our more

by continue aggregate, have as long our but retention improve in pressure cohort rate, may by we grow customers as to the a we deliver to continue and ARPU we the or more value markets to on So customers.

moving We’re right the into direction.

Keith Weiss

number growth QX is sense. makes an points it of on give of X for Avira QX And as contribution for That in yet? percentage it. the explicitly, did Got explicit then not you or QX

Vincent Pilette

Yeah.

our overall the contribute points So basis X about revenue will on if annual grows. business at an

Keith Weiss

Okay.

Vincent Pilette

Call it XX…

Keith Weiss

particular in your in QX about terms contribution? think we should of How

Vincent Pilette

closed somewhat the It’s mentioned, Avira of are Understand. in if exactly you quarter of you Yeah. the it, every also January. same we Natalie in that same early seasonality. modeled And not a bit Yeah. But level. months the

Keith Weiss

Okay. much. very quarter, That Great Got Thank helps. it. guys. you

Vincent Pilette

you. Thank

Operator

comes of Our from Pritchard line Walter question from next Citi. the

line open. Your is

Walter Pritchard

questions… Two Hi.

Vincent Pilette

Walter. Hi,

Walter Pritchard

Hi. How you are Vincent? doing,

Vincent Pilette

Good.

Walter Pritchard

mobile you on if and as better? sort things put the there thought strategy -- on you side. of into a you the attached so next back curious that and some here what channels, might channel you’re on, how update as as device channels you us the focus customer I’m those the forth understood move and benefit dollars acquisition on other kind security markets marketing you’ve, thinking run of you direct how of you’ve seeing the conversions circling about product and that sales can to into product, sort of for And One the questions here relative PCs on lot channels Identity, channels, attach year? and you’re Two traditional then phones of into and about and tablets

Vincent Pilette

Yeah.

Let me first. take product the

Forgot again product? question. question on the What is the

Natalie Derse

Mobile.

Walter Pritchard

On mobile.

Vincent Pilette

Yeah. Mobile. Mobile. Yeah.

Sorry.

Yeah. Yeah. Sorry. Yeah.

moved in the then the then experience multiple acquire also So simplifying on using cyber And mobile, I to core very desktop, on experience on to for well, often the very phone, answer our from boards which includes mobility on mobile. question dashboard also security that cell we we we’ve continue safety and a investments. customers a as stuff channels. safety, of a our value important us, tools, user know then security And the phones. perspective cyber privacy. is hugely device, important started is element view I new a enrich cell centric to on tablet see identity a therefore through user of moved as on a you experience, and of, and And past their moved user or but right? get security, this is we lot example? to And of do laptop, need the the

anything use, very So that to it offering, to combining value-add cyber is taking user to Natalie, centric to user device offering mind. it’s that their giving situations. BXB provide our only know the other peace And work important you perspective full I continue world if we want the direct-to-customer is a Natalie. you’ll angle, consume In centric term a second of I’ll see on and and easy approach. have have safety taking approach. consumer simplifying I as And channels, hardware total really a one consumers, but that’s making an full add to us protection to on. we on It don’t to more of pass think partnership. with depending not C service we we to which to It’s around world, for

Natalie Derse

add, going eyes We a efficient audiences, perspective. about Norton. effective Yeah. to And about versus reach, say, just acquisition it’s I look, an plan in from I necessarily was it’s way, in about of would expanding LifeLock it’s to just it way. the customer an don’t doing

in trying focused diversify. really the from year, So our last channel perspective to reach we

the got or get new we can We’ve that and market strengthen there. got brand form strong coming radio. attract we’ve there relevant product the the to get out our Of diversify are long content platform. we can and course, TV really strengths We the into and build innovation historically, our suite. will introductions brand been well we and try Norton product and all as out to of continue as on diversifying XXX the channels online so been diversify really digital We’ve we as strengthen really, as really that that leverage on more customer in awareness. We’ve acquisition, and interesting users word

Walter Pritchard

Great. you. Thank

Operator

of from coming Fu Lee line Yi is question Oppenheimer. the Next with

Yi Fu Lee

question taking congrats for guys my set you of for Vincent or and strong question you on Thank A another Natalie. Hi. results.

is terms look number allocation of other in on was plans. remind the further through that just the capital you million us the I flow, if $XXX cash capital million that, like areas front, about know each the to just you But to in I you $XXX acquisitions. quarter. on wondering allocation free then any Just to now went could to

flow heads Just get how spend want this cash around generation? to your to

Natalie Derse

question. take for the it. Thanks Yeah. I’ll

been we the said, perspective, on what right relatively unchanged. million -- the opportunistic from couple strategy track in dividend tenants, $XXX are main said And a of we three it -- of allocation I we we And capital as pertain dividend, flow. we generate been quarters capital last about And talked paid which we quarter. progress, we’ve to buyback to one for remains being analyzed we’ve balance by regular have this the first mean approach Our share strike and the acquisition. is, the would cash as the that allocation then

guys in back going themselves, to we terms why think the know on. you speak think actions things for November, And in activity QX, back considered, now necessarily, if the you and had of, and all acquisition I didn’t so we look you approximately

bought we As opportunistically was buyback soon as of the share window extent the to our open, $XXX million. trading

so, ratio in value and allocation say-do -- And you account -- tenants. it’s our would unchanged. of maximizing our of that as leveraging terms And going you I high into capital forward, remains take the strategy look

not for quarterly been with activity, M&A dividend look But that opportunities. opportunistic and to the as and then shy interested forward continue on right We growth look sustainable are say those we especially buyback. we’ve will share we in strike balance that

Yi Fu Lee

now. our that for taking in I the know just one areas Thanks well like look like Vincent there’s you’re heads now talked me of terms opportunity you Maybe intend about area one, to at. which of opportunity of like, that like, as quick just care gave like, focus are that next? international

Vincent Pilette

yet. to we live empower, and fulfill to a not connected safely. and all digital right? everyone Yeah. of opportunities with to both wide us gives that That’s Well, have a that’s the vision, started protect want our life it We vision range internet that to fulfilled their

when number safety security, look platform, up. strategy, building would overall scale to up privacy, our identity, and I at say, three the continue cyber and today, so you pillars is one that And

address functionalities that of functionalities the into important with increasing we integrating not the interesting. guard do some the and As to is new services digital that, continue we’ll bull really adding gaming it that to do continue verticals vision very are

list so want have out that of continue in of outside product long engineers are to truly opportunities if global internet And on line. to connected I’ve digitalized to U.S. that working be third been we the reach and everyone, element you our a if the expand is the have And people. then to our course of we a with

Yi Fu Lee

that Natalie. Vincent and for Thanks

Vincent Pilette

Yeah.

Operator

of next The question be from Mizuho. the Moskowitz will coming line with Gregg

open. is Your line

Gregg Moskowitz

for calls, earlier for apologies related many all many of follow-up. And quarters. you Thank first simultaneous earnings your Great. billings ending Okay. question, so so of that January

So have Natalie. a a for for follow-up got But there. thrown did I moment

or I’m could are business data-driven data know into seat given I is background that guess just a in I months. LifeLock? potentially you in you’re executive way you’ve now been a for leverage there that and this So translate wondering, more that several for your think Norton to translating opportunities

Natalie Derse

I would Oh! how have that Absolutely. and I say answer everywhere. No, opportunities question. I just know don’t would we

journey we we value can to and are we whether analytics talked just to of Vincent understand perspective. to first, way the in and that where I in security to customer I in of get value the life as have in you that expanding can the consumers you’re if showcases opportunities to products think think efficient so a and diverse just in about think put whether their platform use from to just data analytics value that they their closer top integrated the the customer understand use that customer, in value many proposition. their out. silo. XXX so an to the journey. at can of behaviors, culture and in at many we step bring suite can funnel, take get find analytics, out a really the are are and closer that in terms from and new and our life, many to Everything wants we identity the opportunities we There to way, marketing to analytics, and from in globally the side the very When and there about ways you’re in every making an we the you and build sure back so to will about course, serve we’ve best. I into next the how sure how your marketing existing perhaps, our brand explain close customer can needs continue Norton their get or that on a out bring it’s audiences an to share but not understanding got really predict, opportunities If talk the to our where we specifics, of analytics customer as funnel, and it’s content has that I need are customer the of we -- build expanding There’s and about making possible,

Gregg Moskowitz

very Natalie. great, That’s much. Right. Thanks

Natalie Derse

we one for more Operator, time have question.

Operator

the question from of line Oppenheimer. with that be will Shaul Eyal And coming

Your line is open.

Shaul Eyal

much so to of you Vincent, I for me have a of question, addition in. technology more prior Thank question. squeezing related And in use

Thank you your capabilities it also Advisor it web facilitated the Do launch. these related that. web home industry, and I at there’s capabilities. through for dark the with ID note is look definitely think your of I your is Are own and some or in you grown? sensors Japan dark actually to third-parties? When use your gaming solutions associated plenty

Vincent Pilette

Yeah.

as algorithm on and had of -- that technologies integrated have a builds we mix LifeLock So top. own third-party

two So to that in to it’s not a upon mix it only continue of across we’ll the offer build Japan, but all countries. and

you relevant and data if Japan, in for want to launch countries in in adapt you exactly hey, reason, that and to it sensors Someone don’t your was each you internationally, launch why because all approach your your data country. asking, architecture, the country the that’s

country And taking so, to country build-up solution. a by we approach the and

Shaul Eyal

Thank you.

Vincent Pilette

you. Thank

Operator

are the closing questions. time, remarks. will for Pilette, this turn Vincent no there I more call At back CEO to

Vincent Pilette

activities cyber leaving to of aspect Thank left protected physical moving more our almost are for open Unfortunately, of and are weakly every world shopping you, life between socializing, grow. or from the criminals. doors More best continues has Ann. digital overlap component. at and unprotected a world to activities those the digital many online many The

focus since to Our leading our launched just Norton accomplished our and technologies started. over while live ago, digital portfolio, plan focus experience, leverage we’re to vision we is LifeLock on relentless year safely. to getting have protect life a people product a in empower We already their and Thank as And to lot, we integrated customer words, forward very I future global for for your to four our joining and you say, scale well growth unmatched financial our If we with a model. in bright. trusted soon. would and you look connecting brand, is as our distribution, I have summarize it support, direct

Operator

today Thank participation. conference. everyone This concludes you your for

may now disconnect. You

Gen Digital (GEN) 5 Feb 212021 Q3 Earnings call transcript