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01/11 11:29
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reflects strong financial performance with record bookings, impressive revenue growth, and operational efficiency, particularly from the MoneyLion acquisition. The guidance is optimistic, with double-digit EPS growth expected. The Q&A section highlights positive trends in MoneyLion's growth and cross-sell opportunities, although some responses were vague. Overall, the strategic moves and financial metrics indicate a positive outlook, likely leading to a stock price increase in the short term.
Bookings and Revenue In Q1, bookings and revenue grew over 30% year-over-year on a reported basis and 10% on a pro forma or adjusted basis. The growth was driven by the inclusion of MoneyLion and an extra fiscal week, which contributed approximately 9 points to reported top-line growth. Excluding these factors, Gen revenue increased 5% year-over-year.
Non-GAAP Operating Margins Non-GAAP operating margins remained robust at 52%. This reflects operational efficiency and disciplined resource allocation.
Non-GAAP EPS Non-GAAP EPS exceeded the high end of guidance, coming in at $0.64, up 20% year-over-year. This was driven by strong revenue growth and operational efficiency.
Cyber Safety Platform Revenue The Cyber Safety Platform represented 2/3 of Q1 revenue and grew 11% on a reported basis and 4% when normalizing for the extra week. Growth was broad-based across global markets, with accelerated growth in comprehensive membership offerings.
Trust-Based Solutions Revenue Trust-Based Solutions represented 1/3 of revenue this quarter and grew over 100% on a reported basis and 25% when normalized for the extra week and MoneyLion baseline. Growth was driven by steady performance in LifeLock and the integration of MoneyLion.
MoneyLion Revenue MoneyLion revenue grew 45% pro forma, driven by momentum in personal financial management offerings and its AI-powered financial marketplace. This growth reflects strong customer engagement and partner adoption.
Operating Income Q1 operating income was $650 million, translating to a 52% operating margin. This was in line with expectations and reflects strong operational performance.
Free Cash Flow Q1 free cash flow was $405 million, up 55% year-over-year. This increase was driven by strong revenue growth and operational efficiency.
Direct Revenue Direct channels grew 25% as reported and 6% pro forma. Growth was broad-based across channels, geographies, and product portfolios, supported by strong customer retention and cross-selling.
Partner Revenue Partner channels grew 68% as reported and 38% pro forma. Growth was driven by employee benefits channels, international strategic partnerships, and the inclusion of MoneyLion's financial marketplace.
Norton Genie: Evolved from an AI-powered scam tool into a comprehensive cyber safety assistant, handling a wide range of cyber safety inquiries and driving strong engagement.
Norton Deepfake Detection: Introduced early access in Norton 360 mobile app to detect manipulated visuals and audio, providing real-time alerts and guidance.
Norton Neo: Launched as an AI-native browser designed for secure, personalized digital experiences.
MoneyLion Integration: Successfully integrated core infrastructure and operating systems, with the first integrated product under Gen's brands expected by fall.
International Expansion: Secured a major distribution deal in Japan for Norton ID Advisor, enhancing global reach.
AI-Powered Renewal Engine: Automated renewal processes, reducing costs, improving customer experience, and increasing retention.
AI-Enabled Customer Support: Transitioned 40% of customer issues to autonomous handling, improving resolution times and customer satisfaction.
AI-First Strategy: Focused on building AI-native products and leveraging AI for operational efficiency and innovation.
Segment Reporting: Introduced two distinct operating segments: Cyber Safety Platform and Trust-Based Solutions, providing better visibility into growth trajectories and margin profiles.
Cyber Threat Landscape: Attackers are rapidly integrating artificial intelligence into their toolkit, making threats such as AI-assisted ransomware more adaptive and harder to detect. Consumer data remains a central target with breaches continuing to rise, and personal identifiers like social security numbers are increasingly exposed. Cybercrime is accelerating across the board, including sophisticated scams and localized social engineering tactics.
AI-Driven Scams and Deepfakes: AI-generated deepfake audio and manipulated visuals are becoming nearly indistinguishable from reality, posing significant risks to consumers. Scammers are leveraging this technology to exploit trust and emotions.
Integration of MoneyLion: While the integration of MoneyLion is on track, it represents a significant operational challenge, including workforce alignment, system integration, and product portfolio unification. Any delays or missteps could impact strategic objectives.
Economic Uncertainty: Approximately 60% of Americans live paycheck to paycheck, which could impact the adoption of financial wellness products like Instacash and other offerings.
Regulatory and Compliance Risks: The expansion into financial wellness and partnerships with credit bureaus and other financial institutions may expose the company to increased regulatory scrutiny and compliance risks.
AI-Driven Operational Changes: The transition to AI-powered systems for customer support and renewal processes, while improving efficiency, could face challenges such as system errors, customer dissatisfaction, or unforeseen operational issues.
Annual Revenue Guidance: Gen Digital has raised its annual revenue guidance by $100 million, now expecting revenue to range between $4.8 billion to $4.9 billion for fiscal year 2026.
Non-GAAP EPS Guidance: Non-GAAP EPS is expected to be in the range of $2.49 to $2.56, representing 12% to 15% annual growth.
Q2 Revenue Guidance: Non-GAAP revenue for Q2 fiscal 2026 is expected to range between $1.18 billion to $1.21 billion.
Q2 Non-GAAP EPS Guidance: Non-GAAP EPS for Q2 fiscal 2026 is expected to range between $0.60 to $0.62.
MoneyLion Growth Expectations: MoneyLion is expected to grow over 30% for fiscal year 2026, contributing significantly to overall growth.
Core Business Growth: The core business is expected to continue mid-single-digit growth.
AI and Platform Investments: The company plans to fund targeted long-term growth investments in the Gen platform and AI capabilities.
Dividend Payment: We paid $82 million to shareholders in the form of our regular quarterly dividend of $0.125 per common share.
Future Dividend Plan: For Q2 fiscal 2026, the Board of Directors approved a regular quarterly cash dividend of $0.125 per common share to be paid on September 10, 2025 for all shareholders of record as of the close of business on August 18, 2025.
Share Repurchase Program: During Q1, we repurchased nearly 5 million shares as part of our ongoing share repurchase program.
The earnings call highlights several positive factors: raised annual revenue guidance, strong customer base growth, and strategic investments in AI and platform development. The Q&A section reveals optimism in revenue synergies and cross-sell opportunities, despite some unclear management responses on seasonality and macro impacts. The company's focus on capital efficiency and shareholder returns, along with a balanced capital allocation strategy, further support a positive outlook. The combination of these factors suggests a likely positive stock price movement in the short term.
The earnings call reflects strong financial performance with record bookings, impressive revenue growth, and operational efficiency, particularly from the MoneyLion acquisition. The guidance is optimistic, with double-digit EPS growth expected. The Q&A section highlights positive trends in MoneyLion's growth and cross-sell opportunities, although some responses were vague. Overall, the strategic moves and financial metrics indicate a positive outlook, likely leading to a stock price increase in the short term.
The earnings call reflects a positive outlook with strong financial performance, including 4% revenue growth and a 15% EPS increase. The acquisition of MoneyLion and strategic expansions in cyber safety and identity offerings contribute to optimism. Although there are integration risks and macroeconomic concerns, the company's resilience and strong cash flow provide stability. The Q&A highlights confidence in durable demand and strategic market approaches. The shareholder return plan, with substantial dividends and share repurchases, further bolsters sentiment. Overall, the comprehensive growth and strategic initiatives suggest a positive stock price movement.
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