Gen Digital Inc. ((GEN)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The earnings call of Gen Digital Inc. was characterized by an overwhelmingly positive sentiment. The company showcased robust revenue growth, a significant expansion in its customer base, and notable advancements in product innovation, particularly in AI integration. Despite some concerns regarding a slight deceleration in bookings growth and a downturn in legacy business, these issues were overshadowed by the company’s accomplishments and strategic acquisition of MoneyLion.
Cyber Safety Bookings and Revenue Growth
Gen Digital reported a 4% growth in Cyber Safety bookings in constant currency, with revenue reaching $986 million. This represents a 4% increase in both USD and constant currency terms, driven primarily by strong growth in the United States.
EPS Growth and Financial Performance
The company achieved its fifth consecutive quarter of double-digit EPS growth, with an impressive 15% year-over-year increase. Operating income rose to $577 million, marking a 4% increase, and the operating margin stood at a healthy 58.5%.
Direct Customer Base Expansion
Gen Digital’s direct customer base expanded to a record 40.1 million, reflecting a sequential increase of 371,000 and a year-over-year growth of 1.2 million.
Product Innovation and AI Integration
The launch of Norton Genie, an AI-powered scam detection tool, was a resounding success, with 2 million downloads. The AI engine demonstrated nearly 100% efficacy in detecting scams, and the company is integrating this technology into smartphones through a collaboration with Qualcomm.
International and Mobile Market Growth
The company experienced strong customer growth in international markets and mobile, with a notable rise in Norton 360 memberships among new mobile users.
Acquisition of MoneyLion
Gen Digital’s acquisition of MoneyLion aims to bolster its financial wellness offerings, potentially more than doubling its addressable market to over $50 billion.
Slight Deceleration in Cyber Safety Bookings Growth
There was a slight deceleration in Cyber Safety bookings growth, which stood at 4% this quarter compared to 5% in the previous quarter, partly due to a one-time boost from the National Public Data Breach.
Legacy Business Decline
Revenue from Gen Digital’s legacy business lines declined to $12 million, down from $15 million in the previous quarter, with expectations of continued double-digit year-over-year declines.
Interest Expense Impact
The company faced a significant interest expense of $134 million related to debt, which impacted net income.
Forward-Looking Guidance
For fiscal year 2025, Gen Digital forecasts revenue between $3.915 billion and $3.93 billion. The company anticipates an EPS range of $2.20 to $2.22, representing a growth of 14% to 15%. With the direct customer base reaching a record 40 million and the successful launch of Norton Genie, Gen Digital aims to navigate the dynamic threat landscape effectively.
In summary, Gen Digital Inc.’s earnings call highlighted strong financial performance, significant growth in its customer base, and successful product innovations, particularly in AI integration. Despite minor setbacks, the company’s strategic moves, including the acquisition of MoneyLion, position it well for future growth and expansion.
