Gen Delivers Fifth Consecutive Year of Organic Growth and Record Profitability in Fiscal 2024

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Gen Digital Inc.'s announcement of sustained organic growth and record profitability indicates a robust financial performance, with a 14% increase in revenue reflecting strong market demand. The company's strategic investments appear to be paying off, as evidenced by the growth in their bookings. However, the decline in GAAP Operating Income by 9%, contrasted with a 21% increase in Non-GAAP Operating Income, suggests that there might be one-time costs or adjustments that investors should be aware of. The discrepancies between GAAP and Non-GAAP measures are not uncommon in the tech industry, yet it's important for investors to understand the nature of these adjustments to assess the company's operational efficiency accurately.

The commitment to consumer Cyber Safety and product innovation positions Gen Digital Inc. favorably within the digital security market. Their increased operating margin and direct customer count signify not only market penetration but also operational effectiveness. Looking ahead, the company's forecast for revenue and EPS demonstrates confidence in its growth trajectory. However, the slight increase in Q4 bookings compared to the full year might indicate a deceleration, which could be a point for investors to monitor.

The announcement of a $3 billion share repurchase program is a significant return of capital to shareholders and is typically viewed positively by the market, as it often leads to earnings per share accretion. Furthermore, the maintenance of a quarterly cash dividend underscores the company's financial health and commitment to shareholder returns, acting as a potential stabilizer for the stock price. However, the absence of an expiration date on the repurchase authorization offers flexibility to the company, which could result in variable execution over time depending on market conditions.

05/09/2024 - 04:05 PM

Gen Board authorizes $3 billion share repurchase program

TEMPE, Ariz. and PRAGUE, May 9, 2024 /PRNewswire/ -- Gen Digital Inc. (NASDAQ: GEN), a global leader dedicated to powering Digital Freedom, released its results for its fiscal year 2024 fourth quarter and full year, which ended March 29, 2024.

"This has been a pivotal year for Gen as we integrated our portfolio and introduced innovative solutions that empower our customers to take full advantage of the digital world with confidence," said Vincent Pilette, CEO of Gen. "Building upon our momentum, we know there is tremendous opportunity that lies ahead in consumer Cyber Safety. In this always-on world, we're committed to continuing to deliver human-centric solutions that protect against the ever-evolving threat landscape."

Fiscal Year 2024 Results

Revenue of $3,812 million, up 14% in USD and 15% in CC
Bookings of $3,861 million, up 15% in USD and 14% in CC
GAAP Operating Income of $1,122 million, down 9%
Non-GAAP Operating Income of $2,221 million, up 21% in USD and 22% in CC
GAAP Diluted EPS of $0.96, down 56%
Non-GAAP Diluted EPS of $1.96, up 8% in USD and 11% in CC
Operating Cash Flow of $2,064 million

Q4 Fiscal Year 2024 Results

Revenue of $967 million, up 2% in USD and 3% in CC
Bookings of $1,044 million, up 2% in USD and 3% in CC
GAAP Operating Income of $400 million, up 12%
Non-GAAP Operating Income of $569 million, up 5% in USD and 6% in CC
GAAP Diluted EPS of $0.21, down 85%
Non-GAAP Diluted EPS of $0.53, up 15% in USD and 16% in CC
Operating Cash Flow of $1,398 million

"We closed our fiscal year 2024 delivering record revenue, growing direct customer count, and increasing operating margin," said Natalie Derse, CFO of Gen. "As we look forward, we'll continue to drive our growth strategy through focused execution. We're confident that the disciplined investments in our product innovation and go-to-market strategy will drive further success and accelerate revenue growth."

Non-GAAP Q1 Fiscal Year 2025 Guidance

Q1 FY25 Revenue expected to be in the range of $960 million to $970 million
Q1 FY25 EPS expected to be in the range of $0.52 to $0.54

Non-GAAP Fiscal Year 2025 Guidance

FY25 Revenue expected to be in the range of $3,890 million to $3,930 million
FY25 EPS expected to be in the range of $2.17 to $2.23

Share Repurchase Authorization Raised to $3 Billion
Gen's Board of Directors has approved the share repurchase authorization to $3 billion, inclusive of the current $429 million authorization remaining. The authorization has no expiration date.

Quarterly Cash Dividend
Gen's Board of Directors has approved a regular quarterly cash dividend of $0.125 per common share to be paid on June 12, 2024, to all shareholders of record as of the close of business on May 20, 2024.

Leadership Update
The Company today announced that Ondřej Vlček is stepping down from his role as president following the successful integration of the company. Vlček assumed his role as president following the merger of Avast and NortonLifeLock in 2022. He will continue to be involved with the Company, maintaining his position on the Gen Board of Directors.

Q4 Fiscal Year 2024 Earnings Call
May 9, 2024
2 p.m. PT / 5 p.m. ET

Webcast & Dial-in instructions at Investor.GenDigital.com. A replay will be posted following the call. For additional details regarding Gen's results and outlook, please see the Financials section of the Investor Relations website at Investor.GenDigital.com.

About Gen
Gen™ (NASDAQ: GEN) is a global company dedicated to powering Digital Freedom through its trusted Cyber Safety brands, Norton, Avast, LifeLock, Avira, AVG, ReputationDefender and CCleaner. The Gen family of consumer brands is rooted in providing safety for the first digital generations. Now, Gen empowers people to live their digital lives safely, privately, and confidently today and for generations to come. Gen brings award-winning products and services in cybersecurity, online privacy and identity protection to nearly 500 million users in more than 150 countries. Learn more at GenDigital.com.

Forward-Looking Statements
This press release contains statements which may be considered forward-looking within the meaning of the U.S. federal securities laws. In some cases, you can identify these forward-looking statements by the use of terms such as "expect," "will," "continue," or similar expressions, and variations or negatives of these words, but the absence of these words does not mean that a statement is not forward-looking. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, but not limited to, the quotes under "Fiscal Year 2024 Results" and "Q4 Fiscal Year 2024 Results" including expectations relating to achievement of long-term objectives, and the statements under "Non-GAAP Q1 Fiscal Year 2025 Guidance" and "Non-GAAP Fiscal Year 2025 Guidance" including expectations relating to Q1 Fiscal Year 2025 and Fiscal Year 2025 non-GAAP revenue and non-GAAP EPS, and any statements of assumptions underlying any of the foregoing. These statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from results expressed or implied in this press release. Such risk factors include, but are not limited to, those related to: the consummation of or anticipated impacts of acquisitions (including our ability to achieve synergies and associated cost savings from the merger with Avast); divestitures, restructurings, stock repurchases, financings, debt repayments and investment activities; difficulties in executing the operating model for the consumer Cyber Safety business; lower than anticipated returns from our investments in direct customer acquisition; difficulties in retaining our existing customers and converting existing non-paying customers to paying customers; difficulties and delays in reducing run rate expenses and monetizing underutilized assets; the successful development of new products and upgrades and the degree to which these new products and upgrades gain market acceptance; our ability to maintain our customer and partner relationships; the anticipated growth of certain market segments; fluctuations and volatility in our stock price; our ability to successfully execute strategic plans; the vulnerability of our solutions, systems, websites and data to intentional disruption by third parties; changes to existing accounting pronouncements or taxation rules or practices; and general business and macroeconomic changes in the U.S. and worldwide, including economic recessions, the impact of inflation, fluctuations in foreign currency exchange rates, changes in interest rates or tax rates, and conflicts including Russia's invasion of Ukraine and the Israel-Hamas conflict. Additional information concerning these and other risk factors is contained in the Risk Factors sections of our most recent reports on Form 10-K and Form 10-Q. We encourage you to read those sections carefully. There may also be other factors that have not been anticipated or are not described in our periodic filings, generally because we did not believe them to be significant at the time, which could cause actual results to differ materially from our projections and expectations. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. We assume no obligation, and do not intend, to update these forward-looking statements as a result of future events or developments.

Use of Non-GAAP Financial Information
We use non-GAAP measures of operating margin, operating income, net income and earnings per share, which are adjusted from results based on GAAP and exclude certain expenses, gains and losses. We also provide the non-GAAP metrics of revenues, and constant currency revenues. These non-GAAP financial measures are provided to enhance the user's understanding of our past financial performance and our prospects for the future. Our management team uses these non-GAAP financial measures in assessing Gen's performance, as well as in planning and forecasting future periods. These non-GAAP financial measures are not computed according to GAAP and the methods we use to compute them may differ from the methods used by other companies. Non-GAAP financial measures are supplemental, should not be considered a substitute for financial information presented in accordance with GAAP and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. Readers are encouraged to review the reconciliation of our non-GAAP financial measures to the comparable GAAP results, which is attached to our quarterly earnings release, and which can be found, along with other financial information including the Earnings Presentation, on the investor relations page of our website at Investor.GenDigital.com. No reconciliation of the forecasted range for non-GAAP revenues and EPS guidance is included in this release because most non-GAAP adjustments pertain to events that have not yet occurred. It would be unreasonably burdensome to forecast, therefore we are unable to provide an accurate estimate.

GEN DIGITAL INC.
Condensed Consolidated Balance Sheets
(Unaudited, in millions)

	March 29, 2024	March 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$ 846	$ 750
Accounts receivable, net	163	168
Other current assets	334	284
Assets held for sale	15	31
Total current assets	1,358	1,233
Property and equipment, net	72	76
Intangible assets, net	2,638	3,097
Goodwill	10,210	10,217
Other long-term assets	1,494	1,324
Total assets	$ 15,772	$ 15,947
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$ 66	$ 77
Accrued compensation and benefits	78	102
Current portion of long-term debt	175	233
Contract liabilities	1,730	1,708
Other current liabilities	599	729
Total current liabilities	2,648	2,849
Long-term debt	8,429	9,529
Long-term contract liabilities	76	80
Deferred income tax liabilities	261	395
Long-term income taxes payable	1,490	820
Other long-term liabilities	671	74
Total liabilities	13,575	13,747
Total stockholders' equity (deficit)	2,197	2,200
Total liabilities and stockholders' equity (deficit)	$ 15,772	$ 15,947

GEN DIGITAL INC.
Condensed Consolidated Statements of Operations
(Unaudited, in millions, except per share amounts)

	Three Months Ended		Year Ended
	March 29, 2024	March 31, 2023	March 29, 2024	March 31, 2023
Net revenues	$ 967	$ 947	$ 3,812	$ 3,338
Cost of revenues	190	190	731	589
Gross profit	777	757	3,081	2,749
Operating expenses:
Sales and marketing	181	176	733	682
Research and development	80	88	332	313
General and administrative	45	61	604	286
Amortization of intangible assets	50	61	233	172
Restructuring and other costs	21	14	57	69
Total operating expenses	377	400	1,959	1,522
Operating income (loss)	400	357	1,122	1,227
Interest expense	(161)	(168)	(669)	(401)
Other income (expense), net	(24)	(25)	6	(22)
Income (loss) before income taxes	215	164	459	804
Income tax expense (benefit)	81	(751)	(157)	(545)
Net income (loss)	$ 134	$ 915	$ 616	$ 1,349

Net income (loss) per share - basic	$ 0.21	$ 1.43	$ 0.97	$ 2.20
Net income (loss) per share - diluted	$ 0.21	$ 1.42	$ 0.96	$ 2.16

Weighted-average shares outstanding:
Basic	630	639	637	614
Diluted	637	644	642	624



GEN DIGITAL INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in millions)

	Three Months Ended		Year Ended
	March 29, 2024	March 31, 2023	March 29, 2024	March 31, 2023
*OPERATING ACTIVITIES:*
Net income	$ 134	$ 915	$ 616	$ 1,349
Adjustments:
Amortization and depreciation	111	126	485	329
Impairments and write-offs of current and long-lived assets	(2)	30	(3)	25
Stock-based compensation expense	31	39	138	134
Deferred income taxes	(21)	(95)	(991)	(145)
Loss (gain) on extinguishment of debt	—	—	—	9
Gain on sale of properties	—	—	(9)	—
Non-cash operating lease expense	3	6	18	23
Impairment on non-marketable equity investments	40	—	40	—
Other	(3)	17	22	2
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net	—	3	7	11
Accounts payable	6	2	(12)	(8)
Accrued compensation and benefits	14	(6)	(24)	(6)
Contract liabilities	75	57	35	(5)
Income taxes payable	105	(3)	446	(128)
Other assets	906	(734)	864	(696)
Other liabilities	(1)	(33)	432	(137)
Net cash provided by (used in) operating activities	1,398	324	2,064	757
*INVESTING ACTIVITIES:*
Purchases of property and equipment	(3)	(1)	(20)	(6)
Payments for acquisitions, net of cash acquired	—	—	—	(6,547)
Proceeds from the maturities and sales of short-term investments	—	—	—	4
Proceeds from the sale of properties	—	—	25	—
Other	1	—	(3)	2
Net cash provided by (used in) investing activities	(2)	(1)	2	(6,547)
*FINANCING ACTIVITIES:*
Repayments of debt and related equity component	(658)	(309)	(1,183)	(3,047)
Proceeds from issuance of debt, net of issuance costs	—	—	—	8,954
Net proceeds from sales of common stock under employee stock incentive plans	6	6	12	12
Tax payments related to vesting of stock units	(1)	—	(26)	(20)
Dividends and dividend equivalents paid	(78)	(80)	(323)	(314)
Repurchases of common stock	(300)	—	(441)	(904)
Net cash provided by (used in) financing activities	(1,031)	(383)	(1,961)	4,681
Effect of exchange rate fluctuations on cash and cash equivalents	(8)	(2)	(9)	(28)
Change in cash and cash equivalents	356	(62)	96	(1,137)
Beginning cash and cash equivalents	490	812	750	1,887
Ending cash and cash equivalents	$ 846	$ 750	$ 846	$ 750



GEN DIGITAL INC.
Reconciliation of Selected GAAP Measures to Non-GAAP Measures ^{(1) (2)}
(Unaudited, in millions, except per share amounts)

	Three Months Ended		Year Ended
	March 29, 2024	March 31, 2023	March 29, 2024	March 31, 2023
Operating income (loss)	$ 400	$ 357	$ 1,122	$ 1,227
Contract liabilities fair value adjustment	—	1	—	2
Stock-based compensation	31	36	138	123
Amortization of intangible assets	107	119	462	308
Restructuring and other costs	21	14	57	69
Acquisition and integration costs	4	6	24	77
Litigation costs	6	8	418	29
Operating income (loss) (Non-GAAP)	$ 569	$ 541	$ 2,221	$ 1,835

Operating margin	41.4 %	37.7 %	29.4 %	36.8 %
Operating margin (Non-GAAP)	58.8 %	57.1 %	58.3 %	54.9 %

Net income (loss)	$ 134	$ 915	$ 616	$ 1,349
Adjustments to net income (loss)
Contract liabilities fair value adjustment	—	1	—	2
Stock-based compensation	31	36	138	123
Amortization of intangible assets	107	119	462	308
Restructuring and other costs	21	14	57	69
Acquisition and integration costs	4	6	24	77
Litigation costs	6	8	418	29
Other	(1)	22	—	11
Non-cash interest expense	7	7	27	17
Loss (gain) on extinguishment of debt	—	—	—	9
Loss (gain) on equity investments	40	7	40	7
Loss (gain) on sale of properties	—	—	(9)	—
Total adjustments to GAAP income (loss) before income taxes	215	220	1,157	652
Adjustment to GAAP provision for income taxes	(13)	(839)	(512)	(880)
Total adjustment to income (loss), net of taxes	202	(619)	645	(228)
Net income (loss) (Non-GAAP)	$ 336	$ 296	$ 1,261	$ 1,121

Diluted net income (loss) per share	$ 0.21	$ 1.42	$ 0.96	$ 2.16
Adjustments to diluted net income (loss) per share:
Contract liabilities fair value adjustment	—	0.00	—	—
Stock-based compensation	0.05	0.06	0.21	0.20
Amortization of intangible assets	0.17	0.18	0.72	0.49
Restructuring and other costs	0.03	0.02	0.09	0.11
Acquisition and integration costs	0.01	0.01	0.04	0.12
Litigation costs	0.01	0.01	0.65	0.05
Other	(0.00)	0.03	—	0.02
Non-cash interest expense	0.01	0.01	0.04	0.03
Loss (gain) on extinguishment of debt	—	—	—	0.01
Loss (gain) on equity investments	0.06	0.01	0.06	0.01
Loss (gain) on sale of properties	—	—	(0.01)	—
Total adjustments to GAAP income (loss) before income taxes	0.34	0.34	1.80	1.04
Adjustment to GAAP provision for income taxes	(0.02)	(1.30)	(0.80)	(1.41)
Total adjustment to income (loss), net of taxes	0.32	(0.96)	1.00	(0.37)
Incremental dilution effect	—	—	—	0.01
Diluted net income (loss) per share (Non-GAAP)	$ 0.53	$ 0.46	$ 1.96	$ 1.81

Diluted weighted-average shares outstanding	637	644	642	624
Incremental dilution impact of ASU 2020-06 ⁽³⁾	—	—	—	(5)
Diluted weighted-average shares outstanding (Non-GAAP)	637	644	642	619

________________________
(1)	This presentation includes non-GAAP measures. Non-GAAP financial measures are supplemental and should not be considered a substitute for financial information presented in accordance with GAAP. For a detailed explanation of these non-GAAP measures, see Appendix A.
(2)	Amounts may not add due to rounding.
(3)	Excludes the dilutive impact of ASU 2020-06 (Debt with Conversion and Other Options) under GAAP. For a detailed explanation of this adopted guidance, see Appendix A.

GEN DIGITAL INC.
Revenues and Cyber Safety Metrics
(Unaudited, in millions, except per user data and percentages)

Revenues (Non-GAAP)
	Three Months Ended			Year Ended
	March 29, 2024	March 31, 2023	Variance in %	March 29, 2024	March 31, 2023	Variance in %
Revenues	$ 967	$ 947	2 %	$ 3,812	$ 3,338	14 %
Contract liabilities fair value adjustment ⁽¹⁾	—	1		—	2
Revenues (Non-GAAP)	967	948	2 %	3,812	3,340	14 %
Exclude foreign exchange impact ⁽²⁾	7	—		25	—
Constant currency adjusted revenues (Non-GAAP)	$ 974	$ 948	3 %	$ 3,837	$ 3,340	15 %

Cyber Safety Metrics
	Three Months Ended			Year Ended
	March 29, 2024	December 29, 2023	March 31, 2023	March 29, 2024	March 31, 2023
Direct customer revenues	$ 847	$ 837	$ 831	$ 3,353	$ 2,933
Partner revenues	$ 105	$ 99	$ 100	$ 396	$ 341
Total Cyber Safety revenues	$ 952	$ 936	$ 931	$ 3,749	$ 3,274
Legacy revenues ⁽³⁾	$ 15	$ 15	$ 17	$ 63	$ 66
Direct customer count (at quarter end)	39.1	38.9	38.2	39.1	38.2
Direct average revenue per user (ARPU) ⁽⁴⁾	$ 7.24	$ 7.21	$ 7.24	$ 7.25	$ 7.10
Retention rate	77 %	77 %	76 %	77 %	76 %

__________________________
(1)	Contract liabilities fair value adjustment represents the Avira deferred revenue haircut amortization recognized.
(2)	Calculated using year ago foreign exchange rates.
(3)	Legacy revenues includes revenues from products or solutions from markets that we have exited and in which we no longer operate, have been discontinued or identified to be discontinued, or remain in maintenance mode as a result of integration and product portfolio decisions.
(4)	Due to the timing of the close of the acquisition in the second quarter of fiscal 2023, the fiscal 2023 ARPU is based on the average ARPU for second, third, and fourth quarter of fiscal 2023, but excludes the first quarter of fiscal 2023.

GEN DIGITAL INC.
Appendix A
Explanation of Non-GAAP Measures and Other Items

Objective of non-GAAP measures: We believe our presentation of non-GAAP financial measures, when taken together with corresponding GAAP financial measures, provides meaningful supplemental information regarding the Company's operating performance for the reasons discussed below. Our management team uses these non-GAAP financial measures in assessing our performance, as well as in planning and forecasting future periods. Due to the importance of these measures in managing the business, we use non-GAAP measures in the evaluation of management's compensation. These non-GAAP financial measures are not computed according to GAAP and the methods we use to compute them may differ from the methods used by other companies. Non-GAAP financial measures are supplemental and should not be considered a substitute for financial information presented in accordance with GAAP and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.

Contract liabilities adjustment: Our non-GAAP net revenues eliminate the impact of contract liabilities purchase accounting adjustments. Prior to our adoption of ASU 2021-08 in fiscal 2022, GAAP required an adjustment to the liability for acquired contract liabilities such that the liability approximates how much we, the acquirer, would have to pay a third party to assume the liability. We believe that eliminating the impact of this adjustment improves the comparability of revenues between periods. Also, although the adjustment amounts will never be recognized in our GAAP financial statements, we do not expect the acquisitions to affect the future renewal rates of revenues excluded by the adjustments. In addition, our management uses non-GAAP net revenues, adjusted for the impact of purchase accounting adjustments to assess our operating performance and overall revenue trends. Nevertheless, non-GAAP net revenues has limitations as an analytical tool and should not be considered in isolation or as a substitute for GAAP net revenues. We believe these adjustments are useful to investors as an additional means to reflect revenue trends of our business. However, other companies in our industry may not calculate these measures in the same manner which may limit their usefulness for comparative purposes. Our acquisition of Avira during the fourth quarter of fiscal 2021 was the last acquisition pre-adoption of the new literature.

Stock-based compensation: This consists of expenses for employee restricted stock units, performance-based awards, stock options and our employee stock purchase plan, determined in accordance with GAAP. We evaluate our performance both with and without these measures because stock-based compensation is a non-cash expense and can vary significantly over time based on the timing, size, nature and design of the awards granted, and is influenced in part by certain factors that are generally beyond our control, such as the volatility of the market value of our common stock. In addition, for comparability purposes, we believe it is useful to provide a non-GAAP financial measure that excludes stock-based compensation to facilitate the comparison of our results to those of other companies in our industry.

Amortization of intangible assets: Amortization of intangible assets consists of amortization of acquisition-related intangibles assets such as developed technology, customer relationships and trade names acquired in connection with business combinations. We record charges relating to the amortization of these intangibles within both cost of revenues and operating expenses in our GAAP financial statements. Under purchase accounting, we are required to allocate a portion of the purchase price to intangible assets acquired and amortize this amount over the estimated useful lives of the acquired intangible assets. However, the purchase price allocated to these assets is not necessarily reflective of the cost we would incur to internally develop the intangible asset. Further, amortization charges for our acquired intangible assets are inconsistent in size and are significantly impacted by the timing and valuation of our acquisitions. We eliminate these charges from our non-GAAP operating results to facilitate an evaluation of our current operating performance and provide better comparability to our past operating performance.

Restructuring and other costs: Restructuring charges are costs associated with a formal restructuring plan and are primarily related to employee severance and benefit arrangements, contract termination costs, and assets write-offs, as well as other exit and disposal costs. Included in other exit and disposal costs are costs to exit and consolidate facilities in connection with restructuring events. We exclude restructuring and other costs from our non-GAAP results as we believe that these costs are incremental to core activities that arise in the ordinary course of our business and do not reflect our current operating performance, and that excluding these charges facilitates a more meaningful evaluation of our current operating performance and comparisons to our past operating performance.

Acquisition-related and integration costs: These represent the transaction and business integration costs related to significant acquisitions that are charged to operating expense in our GAAP financial statements. These costs include incremental expenses incurred to affect these business combinations such as advisory, legal, accounting, valuation, and other professional or consulting fees. We exclude these costs from our non-GAAP results as they have no direct correlation to the operation of our business, and because we believe that the non-GAAP financial measures excluding these costs provide meaningful supplemental information regarding the spending trends of our business. In addition, these costs vary, depending on the size and complexity of the acquisitions, and are not indicative of costs of future acquisitions.

Litigation costs: We may periodically incur charges or benefits related to litigation settlements, legal contingency accruals and third-party legal costs related to certain legal matters. We exclude these charges and benefits when associated with a significant matter because we do not believe they are reflective of ongoing business and operating results.

Non-cash interest expense and amortization of debt issuance costs: In accordance with GAAP, we separately account for the value of the conversion feature on our convertible notes as a debt discount that reflects our assumed non-convertible debt borrowing rates. We amortize the discount and debt issuance costs over the term of the related debt. We exclude the difference between the imputed interest expense, which includes the amortization of the conversion feature and of the issuance costs, and the coupon interest payments. We extinguished our remaining convertible debt on August 15, 2022. During fiscal 2023, we also started amortizing the debt issuance costs associated with our senior credit facilities, which were secured upon close of the acquisition with Avast. We believe that excluding these costs provides meaningful supplemental information regarding the cash cost of our debt instruments and enhance investors' ability to view the Company's results from management's perspective.

Gain (loss) on extinguishment of debt: We record gains or losses on extinguishment of debt. Gains or losses represent the difference between the fair value of the exchange consideration and the carrying value of the liability component of the debt at the date of extinguishment. We exclude the gain or loss on debt extinguishment in our non-GAAP results because they are not reflective of our ongoing business.

Gain (loss) on equity investments: We record gains or losses, unrealized and realized, on equity investments in privately-held companies. We exclude the net gains or losses because we do not believe they are reflective of our ongoing business.

Gain (loss) on sale of properties: We periodically recognize gains or losses from the disposition of land and buildings. We exclude such gains or losses because they are not reflective of our ongoing business and operating results.

Income tax effects and adjustments: We use a non-GAAP tax rate that excludes (1) the discrete impacts of changes in tax legislation, (2) most other significant discrete items, (3) unrealized gains or losses from remeasurement of foreign currency denominated deferred tax items and uncertain tax benefits, and (4) the income tax effects of the non-GAAP adjustment to our operating results described above. We believe making these adjustments facilitates a better evaluation of our current operating performance and comparisons to past operating results. Our tax rate is subject to change for a variety of reasons, such as significant changes in the geographic earnings mix due to acquisition and divestiture activities or fundamental tax law changes in major jurisdictions where we operate.

Diluted GAAP and non-GAAP weighted-average shares outstanding: Diluted GAAP and non-GAAP weighted-average shares outstanding are generally the same, except in periods when there is a GAAP loss from continuing operations. In accordance with GAAP, we do not present dilution for GAAP in periods in which there is a loss from continuing operations. However, if there is non-GAAP net income, we present dilution for non-GAAP weighted-average shares outstanding in an amount equal to the dilution that would have been presented had there been GAAP income from continuing operations for the period.

Additionally, on April 2, 2022, we adopted ASU 2020-06, Debt with Conversion and Other Options. Under GAAP, we are required to apply the if-converted method to our calculation of diluted earnings per share. As such, our GAAP calculation adjusts for the dilutive effect of the maximum number of potential shares to be issued upon settlement of our outstanding convertible notes. For our Non-GAAP measure, we exclude the impact of this adoption, which is consistent with our intent to settle in cash and consistent with our prior maturing convertible note transactions. As of July 5, 2022, we communicated our intent to the convertible note holders to settle the principal and conversion rights in cash upon maturity in August 2022. We believe it is reasonable to exclude the potential shares as these adjustments provide useful supplemental information to investors and facilitates the analysis of our operating results and comparison of operating results across reporting periods. Additionally, it is consistent with our past practice of cash settling these instruments.

Bookings: Bookings are defined as customer orders received that are expected to generate net revenues in the future. We present the operational metric of bookings because it reflects customers' demand for our products and services and to assist readers in analyzing our performance in future periods.

Free cash flow: Free cash flow is defined as cash flows from operating activities less purchases of property and equipment. Free cash flow is not a measure of financial condition under GAAP and does not reflect our future contractual commitments and the total increase or decrease of our cash balance for a given period, and thus should not be considered as an alternative to cash flows from operating activities or as a measure of liquidity.

(Unlevered) Free cash flow: Free cash flow is defined as cash flows from operating activities less purchases of property and equipment. Unlevered free cash flow excludes cash interest expense payments. Free cash flow is not a measure of financial condition under GAAP and does not reflect our future contractual commitments and the total increase or decrease of our cash balance for a given period, and thus should not be considered as an alternative to cash flows from operating activities or as a measure of liquidity.

Constant currency adjusted revenues (Non-GAAP): Non-GAAP constant currency adjusted revenues are defined as revenues adjusted for the fair value of acquired contract liabilities and foreign exchange impact, calculated by translating current period revenue using the year ago currency conversion rate.

Revenues (Non-GAAP): Revenues (Non-GAAP) excludes the Avira deferred revenue haircut amortization recognized during the quarter. We are presenting revenues (Non-GAAP) to provide readers with a better understanding of the impact from the Avira deferred revenue haircut on our historical results and to assist readers in analyzing results in future periods.

Direct customer count: Direct customers is a metric designed to represent active paid users of our products and solutions who have a direct billing and/or registration relationship with us at the end of the reported period. Average direct customer count presents the average of the total number of direct customers at the beginning and end of the applicable period. We exclude users on free trials from our direct customer count. Users who have indirectly purchased and/or registered for our products or solutions through partners are excluded unless such users convert or renew their subscription directly with us or sign up for a paid membership through our web stores or third-party app stores. While these numbers are based on what we believe to be reasonable estimates of our user base for the applicable period of measurement, there are inherent challenges in measuring usage of our products and solutions across brands, platforms, regions, and internal systems, and therefore, calculation methodologies may differ. The methodologies used to measure these metrics require judgment and are also susceptible to algorithms or other technical errors. We continually seek to improve our estimates of our user base, and these estimates are subject to change due to improvements or revisions to our methodology. From time to time, we review our metrics and may discover inaccuracies or make adjustments to improve their accuracy, which can result in adjustments to our historical metrics. Our ability to recalculate our historical metrics may be impacted by data limitations or other factors that require us to apply different methodologies for such adjustments. We generally do not intend to update previously disclosed metrics for any such inaccuracies or adjustments that are deemed not material.

Direct average revenues per user (ARPU): ARPU is calculated as estimated direct customer revenues for the period divided by the average direct customer count for the same period, expressed as a monthly figure. We monitor ARPU because it helps us understand the rate at which we are monetizing our consumer customer base.

Retention rate: Retention rate is defined as the percentage of direct customers as of the end of the period from one year ago who are still active as of the most recently completed fiscal period. We monitor the retention rate to evaluate the effectiveness of our strategies to improve renewals of subscriptions.

CONTACTS

Investor Contact

Jason Starr

Media Contact

Audra Proctor

Gen

IR@GenDigital.com

Press@GenDigital.com

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SOURCE Gen Digital Inc.

FAQ

What was Gen Digital Inc.'s revenue in fiscal year 2024?

Gen Digital Inc. reported revenue of $3,812 million in fiscal year 2024, representing a 14% growth in USD.

What was Gen Digital Inc.'s Non-GAAP Operating Income in fiscal year 2024?

Gen Digital Inc.'s Non-GAAP Operating Income increased by 21% to $2,221 million in fiscal year 2024.

What is the amount authorized for Gen's share repurchase program?

Gen's Board authorized a $3 billion share repurchase program.

What is the regular quarterly cash dividend approved by Gen's Board?

Gen's Board approved a regular quarterly cash dividend of $0.125 per common share.

When is the Q4 Fiscal Year 2024 Earnings Call scheduled?

The Q4 Fiscal Year 2024 Earnings Call is scheduled for May 9, 2024, at 2 p.m. PT / 5 p.m. ET.

Gen Delivers Fifth Consecutive Year of Organic Growth and Record Profitability in Fiscal 2024

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What was Gen Digital Inc.'s revenue in fiscal year 2024?

What was Gen Digital Inc.'s Non-GAAP Operating Income in fiscal year 2024?

What is the amount authorized for Gen's share repurchase program?

What is the regular quarterly cash dividend approved by Gen's Board?

When is the Q4 Fiscal Year 2024 Earnings Call scheduled?

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Gen Delivers Fifth Consecutive Year of Organic Growth and Record Profitability in Fiscal 2024

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FAQ

What was Gen Digital Inc.'s revenue in fiscal year 2024?

What was Gen Digital Inc.'s Non-GAAP Operating Income in fiscal year 2024?

What is the amount authorized for Gen's share repurchase program?

What is the regular quarterly cash dividend approved by Gen's Board?

When is the Q4 Fiscal Year 2024 Earnings Call scheduled?

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