Gen Digital Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the fiscal 1Q21 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this time, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded, and if you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Suwan Kim, Head of Investor Relations. Please go ahead, sir.

Thank you. I'm pleased to welcome you to our call to discuss our first quarter fiscal 21 earnings results. We've posted the earnings materials and slides to our Investor Relations Events web page. Speakers on today's call are Vincent Pellet, Norton Leiflock's Chief Executive Officer, and Natalie Durr's Chief Financial Officer. This call will be available for replay via webcast on our website. I'd like to remind everyone that all references to the final metrics are non-GAAP unless otherwise stated. Please refer to the supplemental materials on the Investor Relations website for further definitions of our non-GAAP metrics. Please note non-GAAP financial measures referenced during this call are reconciled to comparable GAAP financial measures in the press release and supplemental materials posted on our website. We believe our presentation of non-GAAP financial measures when taken together with corresponding GAAP financial measures provide meaningful supplemental information regarding our operating performance for reasons discussed below. Our management team uses the non-GAAP financial measures in assessing our operating results as well as when planning and forecasting future periods. We believe our non-GAAP financial measures also facilitate comparison of our performance to prior periods and that investors benefit from understanding our non-GAAP financial measures. Non-GAAP financial measures and supplementals should not be considered a substitute for financial information presented in accordance with GAAP. Today's call contains four looking statements based on conditions we currently see. Those statements are based on current beliefs, assumptions, and expectations and speak only as of the current date. And as such, involve risks and uncertainties that may cause actual results to differ materially from our current expectations. In particular, our statements regarding the impact of the ongoing COVID-19 pandemic on our business and industry are sale of our enterprise security assets to Broadcom. Any participated benefits from such sale and cost reductions associated with this transaction are related to subject to a variety of risks. Please refer to the cautionary statement in our press release for more information. You will also find detailed discussions of our risk factors and our filings with the SEC, and in particular, our annual report on Form 10-K for the fiscal year ended April 3, 2020, and recently filed quarterly reports on Form 10-Q. Let me now return the call over to Vincent.

Thanks, Johan, and good afternoon, everyone. Thanks for joining us today. Since we closed the sales of the enterprise business, we committed to return to customer growth, drive sustainable revenue growth, complete an overhaul of the cost structure, and deliver a healthy profit. In just our second full quarter at Northern LifeLock, our first quarter of fiscal year 2021, we delivered better-than-expected results with strong reported billing growth of 9%, revenue growth of 4%, and EPS growth of 48% year-over-year. As we created Northern LifeLock, we believed in the potential of a business solely focused on building personal cyber safety for consumers. We initially set our sights on sustainably and meaningfully growing customer count and delivering revenue growth in the mid-single digits. In Q1, we delivered both sequential and year-over-year 400,000 net new customers, a first since 2014. Revenue growth was 4%, meeting the long-term objective of mid-single digits in just our second full quarter. At the end of June, we eliminated 95% of the stranded costs, and we expect to be done this month, one quarter ahead of plan. In Q1, included stranded costs, we reached 47% operating margin for the company, up 15 points year-over-year, and expect to reach 50%. by September, another one of our commitments. If you exclude the stranded cost, the consumer business has been running above 51%, better than our operating margin target of 50%. Our Q1 EPS was $0.31, which included a $0.04 impact from stranded cost and is up $0.10 year over year. By the end of this fiscal year, we expect to run the business at our target of $1.50 annualized EPS, which can be achieved by virtue of mid-single-digit revenue growth, operating margin of both 50% or utilizing our remaining $600 million share buyback program, or some combination of any or all of them. Finally, we projected to run the company at $900 million annualized free cash flow after the transition period While we have been and are running at that level in Q1, excluding cash spent on stranded costs, we are tracking for those levels to be reflected in our cash flow statement once our financials are clean of stranded costs in the second half of this fiscal year. As we demonstrated the operational discipline with which we want to continue to operate, we made it a priority to build out our post-transition leadership team. This quarter, we welcomed new and accomplished leaders with deep experience in consumer technology. Natalie, who you will hear from in a minute, brings operational skills with a growth mindset. Overall, we added seasoned leaders from very successful consumer technology companies. These leaders are joining us for our mission to bring cyber safety to every consumer around the world. We believe the company is uniquely positioned to seize that tremendous growth opportunity. Our initial lever to restart the growth was to increase our marketing spend, which, as you know, is our main way to reach new consumers and educate them on the benefits of our solutions. As we maintain a consistent messaging level in the market, we saw increased efficacy. Our overall customer acquisition costs continue to benefit not just from lower ad rates related to COVID, but also from our own initiatives to shift marketing spend to new digital channels, including search, social media, and digital video. In terms of reach, despite the global strength of the Northern brand, we had not invested in international marketing in recent years. We reversed that in Q3 fiscal year 20, and we are beginning to see the results from those investments. The strategic shift in our marketing efforts have broadened our reach and we are making steady progress in reaching younger and international customer cohorts. As of the end of Q1, we counted 20.6 million customers who buy our products or services directly through our e-commerce platform. This represents an increase in net customer by 379,000 sequentially and 416,000 year-over-year. Our Q1 growth was broad-based. with growth across both the portfolio and the geographies. We grew both in the U.S. and internationally across all regions. The increase in international customer count outpaced that in the U.S., another first in a long time here. Supported by trends like work from home, virtual meetings, and online shopping and transacting, we saw both our security and identity product categories grow sequentially and year over year, another first in a very long time. Our average revenue per user, or ARPU, remains strong at $9.03 per month, even as we recorded strong net additions. Our retention remains very strong as well, at around 85%, suggesting that customers recognize the value and stay with us for a long time. In addition to our direct business, which accounts for about 90% of our revenue, we also have a partner organization, developing new ways of distributing our offering to individuals. In Q1, we grew our indirect revenue 11% year-over-year. In retail, our performance on Amazon and other e-tailers offset the weakness from traditional stores being shut down or operating with limited hours. Our indirect sales also benefited from the strong performance of employee benefit programs, our faster-growing partner channels. we are seeing strong growth from new employer acquisitions and greater participation within existing employers. Furthermore, while we're still in the early stages, I'm also pleased to report progress in our long-term partnerships with organizations like TELUS and AARP. Although it takes time to develop and ramp up new relationships, we believe in the long-term potential to expand our reach and continue to grow. Growing through new marketing channels, and various forms of partnerships, and consistently messaging our value proposition to them is extremely important. Our new Chief Commercial Officer, Robert Clarkson, has significant experience building out global partners and platforms over his tenure at PayPal. His passion is around consistently delivering the customer experience throughout their customer journey and lifetime. That is the reason we regrouped our direct, indirect, and renewal sales organization under his leadership. Our vision is to keep people around the world cyber safe. We believe it is our responsibility to provide everyone with innovative products and solutions to protect and control their digital lives. That vision was the impetus for creating the Nolan 360 integrated platform and we believe customers are starting to see it. The vast majority of new customers are now coming directly to Nolan 360 And as of the end of Q1, over 40% of our installed base was on Norden 360, up from approximately 25% at the end of Q4. This penetration is important as it enables us to offer comprehensive cyber safety and the one common experience to seamlessly upgrade our platform with new features like home title protection and to increase the engagement and with that the retention of our customers. Some of our platform features might need to be offered as standalone products, where it makes sense for our customers and helps accelerate the growth of our company. Last quarter, we talked about Surf Easy VPN as an example of a standalone product. This quarter, I want to share a new example that demonstrates how we constantly are looking at new ways to protect people and their highly dynamic digital lives. Some customers want help limiting the public availability of their own personal data. serve the web, and you will likely see that a lot of your personal information that you may not want out there is readily available, such as name, age, addresses, phone numbers. Privacy Monitor, which is available as a feature with Nolan 360 with LifeLog, scans for personally identifiable information, or PII, accessible on the most popular people search websites. But taking control of this data is tedious at best. and often too complex. Recognizing this consumer need, we developed and beta tested a product called Privacy Monitor Assistant. It's a white glove service where our agents, assisted by software, find and delete all your PII on this data broker website. Wouldn't you pay for a reasonable fee to secure your personal information? It's still early, but we have seen positive response so far and we think this capability has tremendous value for our customers. This is a good example of how we can continue to fulfill our vision by protecting our customers and enhancing the control they have over their digital lives. It's also a good example of how our service capability, combined with software, can differentiate us from competitors. We have a large customer base that constantly uses our service and provide us with insights we can turn into new features or products. Growing through innovative products and solutions is key to fulfill our mission. That is why we have put product management and R&D under our new Chief Product Officer, Gargan Singh. Gargan has a passion for technology, and in particular, how artificial intelligence and machine learning can help build cutting-edge products. He was particularly interested in our internal research team and their capabilities. This June, our research team released BotSight, which can be downloaded for free as a browser extension or iOS app in a targeted effort to enable people to identify disinformation on their Twitter feed. BotSight's technology is based on machine learning and leading-edge algorithms. It looks at over 20 different distinguishing features, such as age of the account and tweet frequencies. to detect Twitter bots and show them directly on feed in real time. We are now looking to advance this technology and extend this capability to other use cases and threats. Before I pass it to Natalie, let me take a minute to step back and talk about our vision to deliver cyber safety to every person across the globe. Even before the world was tossed into turmoil, our mission was relevant as the digital world is taking over how we work, learn, shop, and basically live our lives. Now with COVID-19, our mission is more important than ever. Clearly, this pandemic has accelerated people's reliance on technology, and we are seeing the impact of that increased activity online to the number and variety of attacks on consumers. Attackers have elevated their techniques on stealing information, disrupting sites, and cascading malware, through phishing attacks, camouflage-less tracing apps, social engineering portraying COVID vaccines, and poisoned websites emulating stimulus benefits, all resulting in an increased need for security, identity protection and restoration, and privacy solutions. These are just a few of examples of the many threats facing us now that more of our everyday activities are done digitally. So while there is a lot of uncertainty at the macro level, one thing is certain. there is a real need for cyber safety for individuals, families, and homes. Through innovative products and expanding distribution channels, our mission is to meet that need and provide cyber safety to everyone. And with that, let me pass it to Natalie to give you more details on our Q1 financials.

Thanks, Vincent. Before I dive into our results, let me first say how excited I am to join Norton LifeLock. I am inspired by our mission to bring cyber safety to consumers worldwide. and I'm energized to help drive that mission in my new role. Over the course of my career, I've chosen to join companies where the mission and the brand are focused on helping people in their everyday lives. From GE to Black & Decker to eBay and now Norton LifeLock, albeit leaders in different industries, these brands were all built on establishing trust with and delivering intrinsic value to their customers. Here at Norton LifeLock, we must continue to deliver on our commitment to keeping consumers safe and in control of their digital lives. This commitment, combined with our incredible business model and opportunity to drive accelerating growth, is what drew me to Norton LifeLock. I look forward to working with our team to achieve our strategic aspirations. Now let me share our Q1 performance, focusing on non-GAAP results. Q1 revenue was better than expected at $614 million, up 4% year-over-year. Q1 reported billings was up 9% year-over-year, with a two-point positive impact from FX in our ending contract liability balance. Billings growth was supported by growth in customer count, increasing approximately 400,000 both quarter-over-quarter and year-over-year. This was our third consecutive quarter of net customer ads, and our first quarter of year-over-year growth in customer count in over five years. Diluted EPS was 31 cents, up 48% year-over-year, and exceeded our guidance range, driven by strong execution on top-line growth and removal of stranded costs. For the quarter, total company operating margin from continuing operations was 47%, burdened by approximately $30 million of stranded costs. Therefore, excluding stranded costs, the business is operating at over 51% operating margin with headcount below 2,500. With approximately 95% of total stranded costs removed through Q1, we are lowering our estimate for cumulative cash stranded costs to $650 million, down from our $750 million projection last quarter. Q2 will be the last quarter with notable transition-related costs in our non-GAAP financials. When the company first started this process eight months ago, we said cash sales proceeds will fund cash-stranded costs. With strong execution on both costs and asset sales, we are now projecting to deliver over a billion dollars more cash than initially forecasted. As for the remaining sale of underutilized assets, we remain confident in our ability to reach our goal of $1.5 billion total cash proceeds. We are pleased to announce the recent sale of our Culver City real estate, which closed on July 27th for $120 million. As for remaining underutilized assets, we remain focused yet patient on monetizing and realizing fair market value. We had another strong quarter of operating cash flow. We generated $170 million of cash flow from operations and spent only $1 million in CapEx. Cash flow was burdened by some one-time items this quarter, most significantly about $100 million of stranded cash costs, which were partially offset by the timing of certain tax payments. Adjusting for these non-recurring items, the business is generating approximately $900 million of free cash flow on an annualized basis. We believe we are well capitalized with our Q1 ending cash balance at $1.1 billion and another billion dollars in our undrawn revolver. With our strong balance sheet and cash flow, we continued to return cash to shareholders this quarter. We cash settled the principal and conversion rates of our $625 million convertible note, which lowered our debt to $3.625 billion and reduced the looted share count by over 30 million shares based on our Q1 average stock price. As a reminder, we still have approximately $600 million left of our $1.6 billion share buyback authorization and will continue to use it opportunistically. Now turning to our Q2 outlook, we expect Q2 non-GAAP revenue in the range of $615 to $625 million, representing 3% to 5% growth after normalizing for the ID analytics divestiture. We expect Q2 non-GAAP EPS to be in the range of $0.31 to $0.35 per share, with the business operating at approximately 50% profit margin when excluding stranded costs. Finally, I would like to thank Matt Brown for his leadership through the interim period and thank the entire team for their execution over the past eight months. I look forward to building on the strong financial foundation we have and delivering consistent results for our shareholders. Now, let me turn the call back to Vincent for closing comments.

Thanks, Natalie. In the last eight months, we have turned Northern LifeLock into a growing leader with distinct competitive advantages. We have eliminated stranded costs We have built a consumer-centric leadership team. We have reinvested into our go-to-market model and reinvigorated our product development team. I am proud to say we have delivered on all of our initial commitments. But as we have increased our execution capabilities, our ambitions have also grown. We have our sights set on our mission. Consumers are beset by constantly evolving cyber threats. Our current platform is just scratching the surface of what can be done, and we're now singularly focused on innovating on our consumer cyber safety vision. We have a large engaged customer base, terrific technology capabilities, an innovation pipeline, and significant financial resources. Combine these things with recurring revenue, high margins, and significant cash flow, and you can see why I'm super optimistic about our future and long-term growth potential. And with that, we're now happy to take your questions. Operator?

At this time, if you would like to ask an audio question, press star and the number one on your telephone keypad. The star followed by the number one on your telephone keypad. Your first question comes from the line of Keith Wise.

Hey, Keith. Excellent. How's it going? Good, good. Excellent. So very nice quarter. And the headline number, from my perspective, of course, is the almost 400,000 new subscribers added to the platform. That's the biggest sequential increase that we've seen in quite some time. And so maybe to start out with, can you help us understand, to a certain extent, is this – just like the programmatic stuff that you guys put into place on the marketing side of the equation and particularly expanding to international, or is this kind of like a delayed reaction from work from home? Because you guys would see it a little bit later than kind of other people because you don't do the sort of the bundling with OEM. So it's more about getting sort of more PCs out there and you guys do your marketing against them. So you kind of help us understand kind of where that strength came from and how much of it you guys think is going to be durable on a go forward basis in terms of just adding customers to the platform.

Yeah, and as I do that, we have to go back to where we're coming from, right? When we broke out and decided to focus solely on the consumer business, our thesis has been that cyber safety will become more and more important for everyone as we move more and more of our activities online. And cyber safety doesn't just mean security, security for your device, security for your data. It also means privacy, protecting your identity, and including services to restore when it can't be prevented. So it's an overall umbrella that we know we are building in the long term. There are a lot of applications and fields that we still need to fill in that portfolio and build up the category. So we believe the thesis, if you want, is a long structural one. So that's number one. Number two is the division at the time under Symantec had not invested in marketing as we discussed in the past, and we re-accelerated marketing as a way to communicate our message to consumers. We raised our marketing envelope by $100 million on an annual basis. We also said that the efficacy of that marketing investment, if you want, has to show up over time as we consistently deliver and spend market and then we started to tweak that marketing investment moving to new channels of marketing moving to new regions and starting to market in in Europe for example where we had not marketed in the past so so those are contributors if you want for the return to growth then we said hey the most important is product in April 19 we launched the first version of Nolan 360 an integrated platform that addressing four pillars, security, privacy, identity, protection and restoration, and you're entirely family and homes if you want. And we still are in the process of rolling that out. I believe it's very attractive for consumers to adopt that overall umbrella for a membership fee, having access to all of those areas and having a peace of mind. And then the last one is then COVID-19 happened, and definitely it changed the way people operate online. Is it a peak change or is it a step function? I don't know, but we believe in the long-term view of building a portfolio and creating awareness to drive growth.

Got it. And then on the – underutilized asset sales, can you just remind me what the, like the remaining, I guess it's 600 million is in terms of the expected proceeds. Like what are those assets left to be sold?

Yeah, Keith, this is Natalie. I'll take that one. We have a few assets held for sale on our balance sheet, including the three campuses that we have here in Mountain View, as well as one in Dublin. We have active discussions with interested parties. And albeit it's very hard to predict the timing of these sales, especially given current conditions, please know we're focused on striking the right balance between value, price, and timing of those sales.

Got it. And then on the operating side of the equation, how should we think about the pace of hiring for you guys through FY21? Like, where are you guys looking to sort of make the investments? Where should we expect to see hiring? And any kind of indications on the pace would be great.

Yeah, no, absolutely. So before the pace, I want to say we put a business model out there and we say, hey, we're going to grow at mid-single digit and operate the business at 50% operating margin. And I don't have to remind you that eight months ago, I think the majority of people were doubters. We delivered on that business model at least a quarter ahead of plan. I think we've proven we can operate at these levels. We reduced the headcount from the Simon Tech company, 12,000 people, to today where our business model should be around 2,500. And for the first time in a long time, we shifted from restructuring to hiring talent where it makes sense. And I can tell you it's definitely energizing for the entire company to talk about hiring the right talent, the right skill set. We are hiring engineers in Dublin. We're trying to create a prototype lab over there. We're hiring in threat analytics. So we definitely are building up the functions. We have a few new leaders. I mentioned Gargan and his passion around machine learning. Robert came in and has a passion around the customer lifecycle. Both of them are coming up with proposals for investment to accelerate the growth. And I can tell you I'm super happy to have Nathalie here. I found my match in terms of CFO skill set, and she and I will partner to prioritize those investments to accelerate our performance.

Outstanding.

Very nice for the guys. Thank you. Thank you.

And your next question comes from the line of Fatima Ulani from UBS. Please go ahead.

Hi, Fatima.

Good afternoon. Hi, Vincent.

How are you? Good.

Great. Well, good afternoon and thank you for taking the questions and welcome, Natalie. We look forward to working with you. Maybe just to start, if I can drill in on to the strength on the indirect side. You specifically called out strengths from the employee benefits vertical. I'm wondering what were some of the steps you took to actually revitalize that channel and what investments or mechanisms or programs you have in place to sort of have this continue to sustainably help drive subscriber growth? And then I have a couple of follow-ups.

Yeah, no, absolutely. So first of all, the employee benefit program has been a growing channel for us for a few quarters. This quarter was a very strong performance that offset the physical retail weakness, of course, The overall proposal, I think, is the number one attractivity. Northern 360 is an overall that offers with you identity protection. Also, the security element is a big one. Today, if you take employee benefit, right, at a very macro level, U.S. companies spend $37 billion on employee benefits. There's 5.6 million employers, and today our programs address a few thousand employees. So we want to bring our new and unique solutions to more employers. And at a very basic level, after obviously upgrading the platform, it's really about sales and sales coverage. So you'll see us continue to invest in that area.

Fair enough. And then just on the subscriber count growth both sequentially and year over year, I wanted to get a better understanding of the demographic in terms of the age, potentially socioeconomic backdrop, and how that factors into your retention rate assumptions as we move forward, provided that a lot of these more subs are very new to the Norton family. So just wanted to get a better understanding of this profile of the new subscriber that's coming into the Norton ecosystem relative to the subscribers you had in the past outside of some of the comments you made earlier. with strength for the international front. And that's it for me. Thank you.

Thank you. No, absolutely. So we set it now for a few courses. Our number one objective was to return the company to growth, and the number one priority in our metrics was to attract more customers so they can experience this cyber safety program. Moving into new demographies in terms of age, if you want, pyramids, as well as new geographies was an important objective. As you know, we're now marketing in Europe. We partner with Stellis in Canada. And then in terms of demography and reaching out, we're moving from traditional form of marketing into newer forms, social media, digital videos. I was looking, obviously, quarter in, quarter out. You cannot always map it, but I was looking at the long trend, two-year trend. If you look at 2018, our Gen X plus baby boomers were over 70% of our total customers. Today, that group is around 55%, and the rest into newer cohorts. So we'll continue in that trend. We'll continue with that effort. We launched a gaming edition of Nolan 360, and as we develop programs, we're going to have in mind this need to reach out to all cohorts.

Very helpful. Thank you for the details.

And your next question comes from the line of Saket Kalia from Barclays. Please go ahead.

Awesome. Hey, Vincent, and welcome, Natalie, as well. Thanks for taking my questions here. Vincent, maybe first for you, I think you've touched on this in a couple of your other questions, but can we just drill into subscriber activity? acquisition outside the US just a little bit more. What markets are doing well and do you typically lead internationally with Norton or with LifeLock or with the bundle? Just put a little bit more meat on the bone in terms of what's working internationally.

We're still refining our approach, but I would say over the last couple of quarters, specific last quarter, mature countries in Asia, Japan, Australia, New Zealand, in Europe, Germany, France, UK, We're a high performer for us. We're definitely pushing one message when it comes to marketing awareness, and it's on the Northern 360. The ability and unique competitive advantage to offer a cyber safety blanket for consumers is our main value prop. This is our way to build that vision to ensure that everyone can get that digital life safe. There are some cases where we lead with specific standalone products, and that's market-specific. We can go into more details, but overall, we charge with Northern 360.

Got it, got it. And maybe for my follow-up for you, Vincent, I guess the question is, how are you thinking about market share in both the antivirus and sort of identity protection parts of the business, separately or together, however you want to talk about it? And more importantly, do you feel like the changes that we're making at the company here are sort of sustainable in terms of market share?

Yeah, so I'm not obsessed by market share, especially because today markets, the way they are defined, are by pillars. You have the traditional security pillar. Then you have the identity pillar. You have still forming ones, ways, privacy. Is privacy the new frontier of security or its own standalone set of markets? Frankly, we're really working, as we said, about acquiring new customers and delighting those that we have, and you've seen that we've done somewhat of a good job with our retention of 85%, but we're going to improve there, and that's our major focus. If we continue to focus on innovation, building up the portfolio, and trying to build that cyber safety vision, I think that's the race we want to run.

Makes a lot of sense. Thanks very much, guys.

And just as a reminder, if you would like to ask a question, press star 1 on your telephone keypad. And your next question comes from the line of Walter Pritchard from Citi. Please go ahead.

Hey, Walter. Hi. Hey, Vincent. And good to talk to you for the first time here, Natalie. On the international, can you help us understand – You know, your marketing effectiveness, what you're seeing in terms of measurement of marketing effectiveness internationally versus domestically. In other words, I assume it still lags. How much does it lag relative to the sort of effectiveness you're seeing in the U.S.?

I think if you're interested in an FP&A role, we have a job for you. You're totally right. You've seen it. We first invested in the U.S. We matured our CAG. We have good return. We're now moving from traditional form to digital form. We're playing our heads. Two quarters ago, we started to do international. International, we started directly more digital and social media, leading the charge with Northern 360, as I mentioned. We're still building up new identity feature and privacy features and dark web monitoring being extended into new countries in Asia, next quarter into Europe. So we definitely are behind the U.S., but it's faster growing, and we're very focused on building up that international presence. I think it's a huge opportunity for us moving forward.

And how are you thinking about from a higher level? You know, you've achieved the goal, I mean, as you noticed earlier in terms of getting to the mid-single digits growth at 50% margin. How are you thinking about the next step? Is it To push harder on the growth? Is it to preserve that margin as that's the optimal sort of marginal cost? I'm just curious how you're thinking about just philosophically the next step.

So you have a new leadership team. For them, achieving mid-single digit was the entry point. They're like, okay, what's next? Where can we go? What do we do? This vision is fantastic and full of opportunity. And so we discussed and we agreed that accelerating the growth and making our solutions more complete and available to more consumers is our number one mission. Now, we're running the consumer business slightly above the current operating margin target. I'm not going to change it, so we still intend to run the business at 50%, and some quarter will find operational efficiencies. We don't have an immediate reaction to spend it, but we have plenty of new ideas to fund to try to accelerate the growth. If we're able, and I think we will be in the long term, to accelerate that growth, I would say growing EPS faster than revenue is our second metric. We won't be bounded by ratio or percentages. It's really about accelerating the top line growing and growing EPS faster than revenue.

Great. Very clear. Thank you.

And your next question comes from the line of Yefu Lee from Oppenheimer. Okay. Please go ahead.

Thank you. Thank you for taking my question. Congrats on the strong results. Welcome, Natalie, and hope everybody's safe. I guess my question is just follow up from the last question, Vincent. In terms of going in the international theater presence, I understand you invested in TELUS. I was wondering which market, whether it be AMIA, APAC, Latin America, would you say is the most critical for NLOC to invest at this juncture?

Well, I think we're global leaders. I have to invest in developing the portfolio and developing the marketing and sales channel. I have to invest in direct digital media and building up on the opportunity in the employee programs. And with Natalie's help, and I can tell you she has a gross mindset, but it's very analytical. So we'll use data to prioritize those investments. Canada is a huge opportunity penetrating the identity space internationally where digital identity and I would say are growing very fast. All huge opportunities for us.

Okay. And then maybe one more follow-up, whether it be Natalie or Vincent. In terms of, I don't understand, you know, the restructuring process, again, it's really ahead of plan and ahead of target. If you were to spend your investment dollars in the future, right, in terms of other M&As or other investments you want to add to the NLAC portfolio, where would the dollar be spent on? Which areas?

Should I give you a name to, I guess? Look, we've earned the credibility of looking at also growth inorganically or organically. So our process really starts with the portfolio and the market to build up cyber safety. What are the gaps in the other applications we can build on? And then we have real-time assessment on organic capabilities or time-to-market needs versus what already exists, whether it's a prototype, a product, or a fully developed business. And then at the end of the day, if all matches, it becomes a financial decision. So I think we've earned the credibility. We have the operational charts from the whole management team, leadership team, and company, including the board, is focused on growth from all sides.

Makes sense. Thanks for taking my questions, and congrats on the quarter. Talk soon.

Sure.

And just as a reminder, that would be star one for your question on your telephone keypad. That's star one. And I have no further questions at this time in queue. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.