Gen Reports Second Quarter Fiscal Year 2025 Results
Gen Digital (NASDAQ: GEN) reported strong Q2 FY2025 results with revenue reaching $974 million, up 3% year-over-year. The company's operating income surged 1,727% to $402 million, with operating margin expanding 39 points to 41.3%. Q2 bookings grew 4% to $964 million, while diluted EPS increased 13% to $0.26. The company raised its FY2025 guidance, now expecting revenue between $3,905-$3,930 million and EPS of $2.18-$2.23. Gen also declared a quarterly dividend of $0.125 per share, payable on December 11, 2024.
Gen Digital (NASDAQ: GEN) ha riportato risultati solide per il secondo trimestre dell'anno fiscale 2025, con un fatturato che ha raggiunto 974 milioni di dollari, in aumento del 3% rispetto all'anno precedente. L'utile operativo dell'azienda è aumentato del 1.727%, arrivando a 402 milioni di dollari, con un margine operativo che si è espanso di 39 punti, raggiungendo il 41,3%. Gli ordini nel secondo trimestre sono cresciuti del 4%, arrivando a 964 milioni di dollari, mentre l'utile per azione diluito è aumentato del 13%, raggiungendo $0,26. L'azienda ha alzato le sue previsioni per l'anno fiscale 2025, ora prevedendo un fatturato compreso tra 3.905-3.930 milioni di dollari e un utile per azione di $2,18-$2,23. Gen ha inoltre dichiarato un dividendo trimestrale di $0,125 per azione, payable il 11 dicembre 2024.
Gen Digital (NASDAQ: GEN) reportó resultados sólidos para el segundo trimestre del año fiscal 2025, con ingresos que alcanzaron 974 millones de dólares, un aumento del 3% interanual. El ingreso operativo de la compañía se disparó un 1,727% a 402 millones de dólares, con un margen operativo que se expandió 39 puntos al 41.3%. Las reservas del segundo trimestre crecieron un 4% a 964 millones de dólares, mientras que el EPS diluido aumentó un 13% a $0.26. La empresa elevó sus proyecciones para el año fiscal 2025, ahora esperando ingresos entre 3,905-3,930 millones de dólares y un EPS de $2.18-$2.23. Gen también declaró un dividendo trimestral de $0.125 por acción, que se pagará el 11 de diciembre de 2024.
Gen Digital (NASDAQ: GEN)는 2025 회계연도 2분기 강력한 실적을 보고하며 매출이 9억7400만 달러에 이르고, 전년 대비 3% 증가했습니다. 회사의 운영 소득은 4억 명 달러로 1,727% 급증했으며, 운영 마진은 39포인트 확대되어 41.3%에 도달했습니다. 2분기 예약은 9억6400만 달러로 4% 증가했으며, 희석주당순이익(EPS)은 13% 증가하여 $0.26에 달했습니다. 회사는 2025 회계연도 가이던스를 상향 조정하며 매출이 39억5000만 - 39억3000만 달러 범위에 이를 것으로 기대하고, EPS는 $2.18 - $2.23로 예상했습니다. Gen은 또한 주당 $0.125의 분기 배당금을 선언하였으며, 2024년 12월 11일 지급될 예정입니다.
Gen Digital (NASDAQ: GEN) a annoncé de solides résultats pour le deuxième trimestre de l'exercice 2025, avec un chiffre d'affaires atteignant 974 millions de dollars, en hausse de 3% par rapport à l'année précédente. Le bénéfice d'exploitation de l'entreprise a bondi de 1.727% à 402 millions de dollars, avec une marge opérationnelle élargie de 39 points à 41,3%. Les réservations du deuxième trimestre ont augmenté de 4% pour atteindre 964 millions de dollars, tandis que le BPA dilué a augmenté de 13% à 0,26 $. L'entreprise a relevé ses prévisions pour l'exercice 2025, prédisant désormais un chiffre d'affaires compris entre 3.905-3.930 millions de dollars et un BPA de 2,18-2,23 $. Gen a également déclaré un dividende trimestriel de 0,125 $ par action, payable le 11 décembre 2024.
Gen Digital (NASDAQ: GEN) hat starke Ergebnisse für das zweite Quartal des Geschäftsjahres 2025 gemeldet, mit einem Umsatz von 974 Millionen Dollar, was einem Anstieg von 3% im Jahresvergleich entspricht. Das Betriebsergebnis des Unternehmens stieg um 1.727% auf 402 Millionen Dollar, während die Betriebsmarge um 39 Punkte auf 41,3% anstieg. Die Buchungen im zweiten Quartal wuchsen um 4% auf 964 Millionen Dollar, während der verwässerte Gewinn pro Aktie um 13% auf $0,26 stieg. Das Unternehmen hob seine Prognose für das Geschäftsjahr 2025 an und erwartet nun einen Umsatz zwischen 3.905-3.930 Millionen Dollar und einen Gewinn pro Aktie von $2,18-$2,23. Gen hat außerdem eine vierteljährliche Dividende von $0,125 pro Aktie erklärt, die am 11. Dezember 2024 zahlbar ist.
- Revenue increased 3% YoY to $974 million
- Operating income grew dramatically by 1,727% to $402 million
- Operating margin expanded significantly by 39 points to 41.3%
- Bookings increased 4% to $964 million
- Diluted EPS grew 13% to $0.26
- Operating cash flow improved 26% to $158 million
- Company raised lower end of FY2025 revenue guidance
- None.
Insights
A solid quarter for Gen Digital with notable improvements across key metrics. Revenue growth of
The company's raised guidance for FY2025 revenue to
Gen Digital's performance reflects the growing importance of cybersecurity and digital safety services in today's threat landscape. The increase in bookings suggests strong customer acquisition and retention, particularly important given the rising sophistication of cyber threats. The company's strategic focus on security, financial safety and data management services positions it well in a market with expanding threat vectors.
The sustained investment in innovation while maintaining high operating margins (
Gen strengthens its annual guidance driven by strong bookings and customer count growth
"Threats to your information, identity, and financial assets are more dynamic and effective than ever," said Vincent Pilette, CEO of Gen. "That's why we are so focused on innovating and evolving our industry leading portfolio of security, financial safety and data management services that empower people's digital lives. Customers have trusted us for decades and we plan on building on that trust well into the future."
Q2 Fiscal Year 2025 Financial Highlights and Commentary Year-Over-Year
Q2 GAAP Results
- Revenue of
, up$974 million 3% in USD - Operating income of
, up 1,$402 million 727% - Operating margin of
41.3% , up 39 points - Q2 diluted EPS of
, up$0.26 13% - Q2 operating cash flow of
, up$158 million 26%
Q2 Non-GAAP Results
- Revenue of
, up$974 million 3% in USD and in constant currency - Bookings of
, up$964 million 4% in USD and up5% in constant currency - Operating income of
, up$567 million 4% in USD and in constant currency - Operating margin of
58.2% , up 40 basis points - Diluted EPS of
, up$0.54 16% in USD and in constant currency
"As we pass the halfway mark of our fiscal year, we're executing our plan and focusing on strategic investments that align with the real needs of our customers and help drive long-term profitable growth," said Natalie Derse, CFO of Gen. "With the right financial framework in place and clear strategy, we are well-positioned to deliver sustainable and growing value to all of our stakeholders."
Q3 FY25 Non-GAAP Guidance
- Revenue expected to be in the range of
to$980 $990 million - EPS expected to be in the range of
to$0.54 $0.56
Fiscal Year 2025 Non-GAAP Annual Guidance
- Revenue now expected to be in the range of
to$3,905 , compared to the prior range of$3,930 million to$3,890 $3,930 million - EPS now expected to be in the range of
to$2.18 , compared to the prior range of$2.23 to$2.17 $2.23
Quarterly Cash Dividend
Gen's Board of Directors has approved a regular quarterly cash dividend of
Q2 FY25 Earnings Call
October 30, 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.
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
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 (1) (Unaudited, in millions) | ||||||||
September 27, | March 29, 2024 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ 737 | $ 846 | ||||||
Accounts receivable, net | 164 | 163 | ||||||
Other current assets | 297 | 334 | ||||||
Assets held for sale | 24 | 15 | ||||||
Total current assets | 1,222 | 1,358 | ||||||
Property and equipment, net | 60 | 72 | ||||||
Intangible assets, net | 2,442 | 2,638 | ||||||
Goodwill | 10,235 | 10,210 | ||||||
Other long-term assets | 1,512 | 1,515 | ||||||
Total assets | $ 15,471 | $ 15,793 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ 99 | $ 66 | ||||||
Accrued compensation and benefits | 74 | 78 | ||||||
Current portion of long-term debt | 1,391 | 175 | ||||||
Contract liabilities | 1,749 | 1,808 | ||||||
Other current liabilities | 509 | 599 | ||||||
Total current liabilities | 3,822 | 2,726 | ||||||
Long-term debt | 7,137 | 8,429 | ||||||
Long-term contract liabilities | 78 | 76 | ||||||
Deferred income tax liabilities | 248 | 261 | ||||||
Long-term income taxes payable | 1,396 | 1,490 | ||||||
Other long-term liabilities | 692 | 671 | ||||||
Total liabilities | 13,373 | 13,653 | ||||||
Total stockholders' equity (deficit) | 2,098 | 2,140 | ||||||
Total liabilities and stockholders' equity (deficit) | $ 15,471 | $ 15,793 | ||||||
_______________ | ||||||||
(1) | During the first quarter of fiscal year 2025, we identified and made a revision to our historical practice of when we recognize revenue from certain customers. We concluded that the impact of the revision was an immaterial correction to prior period financial statements. However, for comparative purposes we have corrected for this in prior periods reported above. | |||||||
GEN DIGITAL INC. Condensed Consolidated Statements of Operations (1) (Unaudited, in millions, except per share amounts) | ||||||||
Three Months Ended | Six Months Ended | |||||||
September 27, | September 29, | September 27, | September 29, | |||||
Net revenues | $ 974 | $ 945 | $ 1,939 | $ 1,888 | ||||
Cost of revenues | 194 | 180 | 384 | 359 | ||||
Gross profit | 780 | 765 | 1,555 | 1,529 | ||||
Operating expenses: | ||||||||
Sales and marketing | 184 | 187 | 367 | 368 | ||||
Research and development | 83 | 85 | 164 | 175 | ||||
General and administrative | 64 | 393 | 116 | 449 | ||||
Amortization of intangible assets | 44 | 61 | 87 | 122 | ||||
Restructuring and other costs | 3 | 17 | 2 | 34 | ||||
Total operating expenses | 378 | 743 | 736 | 1,148 | ||||
Operating income (loss) | 402 | 22 | 819 | 381 | ||||
Interest expense | (149) | (173) | (302) | (343) | ||||
Other income (expense), net | 5 | 7 | 17 | 19 | ||||
Income (loss) before income taxes | 258 | (144) | 534 | 57 | ||||
Income tax expense (benefit) | 97 | (291) | 192 | (277) | ||||
Net income (loss) | $ 161 | $ 147 | $ 342 | $ 334 | ||||
Net income (loss) per share - basic | $ 0.26 | $ 0.23 | $ 0.55 | $ 0.52 | ||||
Net income (loss) per share - diluted | $ 0.26 | $ 0.23 | $ 0.55 | $ 0.52 | ||||
Weighted-average shares outstanding: | ||||||||
Basic | 616 | 640 | 618 | 640 | ||||
Diluted | 622 | 644 | 624 | 644 | ||||
________________ | ||||||||
(1) | During the first quarter of fiscal year 2025, we identified and made a revision to our historical practice of when we recognize revenue from certain customers. We concluded that the impact of the revision was an immaterial correction to prior period financial statements. However, for comparative purposes we have corrected for this in prior periods reported above. | |||||||
GEN DIGITAL INC. Condensed Consolidated Statements of Cash Flows (1) (Unaudited, in millions) | ||||||||
Three Months Ended | Six Months Ended | |||||||
September 27, | September 29, | September 27, | September 29, | |||||
OPERATING ACTIVITIES: | ||||||||
Net income (loss) | $ 161 | $ 147 | $ 342 | $ 334 | ||||
Adjustments: | ||||||||
Amortization and depreciation | 105 | 125 | 211 | 250 | ||||
Impairments and write-offs of current and long-lived assets | 3 | — | 3 | — | ||||
Stock-based compensation expense | 33 | 35 | 64 | 72 | ||||
Deferred income taxes | (27) | (917) | (37) | (976) | ||||
Gain on sale of property | — | — | — | (4) | ||||
Non-cash operating lease expense | 4 | 5 | 7 | 11 | ||||
Other | 10 | (1) | 8 | 17 | ||||
Changes in operating assets and liabilities, net of acquisitions: | ||||||||
Accounts receivable, net | (7) | (4) | 2 | 16 | ||||
Accounts payable | 12 | (3) | 29 | (15) | ||||
Accrued compensation and benefits | 16 | 1 | (5) | (41) | ||||
Contract liabilities | (15) | (28) | (71) | (93) | ||||
Income taxes payable | (250) | 389 | (169) | 417 | ||||
Other assets | 47 | 5 | 64 | (23) | ||||
Other liabilities | 66 | 371 | (26) | 386 | ||||
Net cash provided by (used in) operating activities | 158 | 125 | 422 | 351 | ||||
INVESTING ACTIVITIES: | ||||||||
Purchases of property and equipment | (2) | (5) | (4) | (9) | ||||
Purchase of non-marketable equity investments | (4) | — | (4) | — | ||||
Proceeds from the sale of property | — | 13 | — | 13 | ||||
Other | (2) | 1 | (2) | (1) | ||||
Net cash provided by (used in) investing activities | (8) | 9 | (10) | 3 | ||||
FINANCING ACTIVITIES: | ||||||||
Repayments of debt | — | (58) | (88) | (266) | ||||
Net proceeds from sales of common stock under employee stock incentive plans | 6 | 6 | 6 | 6 | ||||
Tax payments related to vesting of stock units | (1) | (2) | (25) | (20) | ||||
Dividends and dividend equivalents paid | (77) | (81) | (159) | (164) | ||||
Repurchases of common stock | — | — | (272) | (41) | ||||
Net cash provided by (used in) financing activities | (72) | (135) | (538) | (485) | ||||
Effect of exchange rate fluctuations on cash and cash equivalents | 15 | 7 | 17 | 10 | ||||
Change in cash and cash equivalents | 93 | 6 | (109) | (121) | ||||
Beginning cash and cash equivalents | 644 | 623 | 846 | 750 | ||||
Ending cash and cash equivalents | $ 737 | $ 629 | $ 737 | $ 629 | ||||
_______________ | ||||||||
(1) | During the first quarter of fiscal year 2025, we identified and made a revision to our historical practice of when we recognize revenue from certain customers. We concluded that the impact of the revision was an immaterial correction to prior period financial statements. However, for comparative purposes we have corrected for this in prior periods reported above. | |||||||
GEN DIGITAL INC. Reconciliation of Selected GAAP Measures to Non-GAAP Measures (1) (2) (3) (Unaudited, in millions, except per share amounts) | ||||||||
Three Months Ended | ||||||||
September 27, | September 29, | |||||||
Operating income (loss) | $ 402 | $ 22 | ||||||
Stock-based compensation | 33 | 35 | ||||||
Amortization of intangible assets | 102 | 119 | ||||||
Restructuring and other costs | 3 | 17 | ||||||
Acquisition and integration costs | 2 | 6 | ||||||
Litigation costs | 25 | 347 | ||||||
Operating income (loss) (Non-GAAP) | $ 567 | $ 546 | ||||||
Operating margin | 41.3 % | 2.3 % | ||||||
Operating margin (Non-GAAP) | 58.2 % | 57.8 % | ||||||
Net income (loss) | $ 161 | $ 147 | ||||||
Adjustments to net income (loss): | ||||||||
Stock-based compensation | 33 | 35 | ||||||
Amortization of intangible assets | 102 | 119 | ||||||
Restructuring and other costs | 3 | 17 | ||||||
Acquisition and integration costs | 2 | 6 | ||||||
Litigation costs | 25 | 347 | ||||||
Other | 1 | (1) | ||||||
Non-cash interest expense | 6 | 6 | ||||||
Total adjustments to GAAP income (loss) before income taxes | 172 | 529 | ||||||
Adjustment to GAAP provision for income taxes | 3 | (375) | ||||||
Total adjustment to income (loss), net of taxes | 175 | 154 | ||||||
Net income (loss) (Non-GAAP) | $ 336 | $ 301 | ||||||
Diluted net income (loss) per share | $ 0.26 | $ 0.23 | ||||||
Adjustments to diluted net income (loss) per share: | ||||||||
Stock-based compensation | 0.05 | 0.05 | ||||||
Amortization of intangible assets | 0.16 | 0.18 | ||||||
Restructuring and other costs | 0.00 | 0.03 | ||||||
Acquisition and integration costs | 0.00 | 0.01 | ||||||
Litigation costs | 0.04 | 0.54 | ||||||
Other | 0.00 | (0.00) | ||||||
Non-cash interest expense | 0.01 | 0.01 | ||||||
Total adjustments to GAAP income (loss) before income taxes | 0.28 | 0.82 | ||||||
Adjustment to GAAP provision for income taxes | 0.00 | (0.58) | ||||||
Total adjustment to income (loss), net of taxes | 0.28 | 0.24 | ||||||
Diluted net income (loss) per share (Non-GAAP) | $ 0.54 | $ 0.47 | ||||||
Diluted weighted-average shares outstanding | 622 | 644 | ||||||
Diluted weighted-average shares outstanding (Non-GAAP) | 622 | 644 | ||||||
_______________ | ||||||||
(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) | During the first quarter of fiscal year 2025, we identified and made a revision to our historical practice of when we recognize revenue from certain customers. We concluded that the impact of the revision was an immaterial correction to prior period financial statements. However, for comparative purposes we have corrected for this in prior periods reported above. | |||||||
GEN DIGITAL INC. Constant Currency Adjusted Revenues and Cyber Safety Metrics (1) (Unaudited, in millions, except per user data) | ||||||||
Constant Currency Adjusted Revenues (Non-GAAP) | ||||||||
Three Months Ended | ||||||||
September 27, | September 29, | Variance in % | ||||||
Revenues | $ 974 | $ 945 | 3 % | |||||
Exclude foreign exchange impact (2) | 1 | — | ||||||
Constant currency adjusted revenues (Non-GAAP) | $ 975 | $ 945 | 3 % | |||||
Cyber Safety Metrics | ||||||||
Three Months Ended | ||||||||
September 27, | September 29, | |||||||
Direct customer revenues | $ 860 | $ 834 | ||||||
Partner revenues | $ 102 | $ 95 | ||||||
Total Cyber Safety revenues | $ 962 | $ 929 | ||||||
Legacy revenues (3) | $ 12 | $ 16 | ||||||
Direct customer count (at quarter end) | 39.7 | 38.5 | ||||||
Direct average revenue per user (ARPU) | $ 7.26 | $ 7.25 | ||||||
Retention rate | 78 % | 77 % | ||||||
_________________ | ||||||||
(1) | During the first quarter of fiscal year 2025, we identified and made a revision to our historical practice of when we recognize revenue from certain customers. We concluded that the impact of the revision was an immaterial correction to prior period financial statements. However, for comparative purposes we have corrected for this in prior periods reported above. | |||||||
(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. |
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.
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 of 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.
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.
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.
Investor Contact Jason Starr | Media Contact Audra Proctor |
Gen | Gen |
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