Gen Digital Inc.

Good afternoon, everyone. Thank you for standing by. My name is Frances and I will be your conference operator today. I would like to welcome everyone to Jen's third quarter fiscal year 2023 earnings call. Today's call is being recorded and all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. At this time for opening remarks, I would like to pass the call over to Ms. Mary Lai, Head of Investor Relations. Ms., you may begin.

Thank you, Frances, and good afternoon, everyone. Welcome to Jen's Fiscal 2023 Third Quarter Earnings Call. Joining me today to review our Q3 results are Vincent Poulet, CEO, and Natalie Dursey, CFO. As a reminder, there will be a replay of this call posted on the IR website, along with our slides and press release. I'd like to remind everyone that during this call, all references to the financial metrics are non-GAAP and all growth rates are year-over-year unless otherwise stated. A reconciliation of non-GAAP to GAAP measures is included in our press release, which is available on our IR website at investor.gendigital.com. Today's call contains statements regarding our business, financial performance, and operations, including the impact on our business and industry. That may be considered forward-looking statements. and such statements involve risks and uncertainties that may cause actual results to differ materially from our current expectations. Those statements are based on current beliefs, assumptions, and expectations and speak only as of the current date. For more information, please refer to the cautionary statement in our press release and the risk factors in our filings with the SEC, and in particular, our most recent reports on Form 10-K and Form 10-Q. And now I will turn the call over to our CEO, Vincent.

Thank you, Mary. Good afternoon, everyone, and welcome to our Q3 earnings call. To start, I want to first thank each Gen employee for their contributions in 2022. Merging two companies is never easy, and I'm proud of their dedication and the tremendous progress we have made. Quickly getting the integration done right creates the foundation for Gen to keep empowering millions to live their digital lives safely. We are at the intersection of a digital transformation that touches all aspects of our lives and an ever-evolving threat landscape that threatens our digital security, identity, and privacy. Although malware is still one of the biggest threat vectors, hackers and scammers continue to shift to attacking individuals and their data, not just the device anymore. The shift to the individual means that your information needs to be protected in all the digital places where it lives. In today's world, protecting a device from malware is often not enough. Information, whether it's usage, discovery, or manipulation, is more damaging financially and to your reputation than malware has ever been. The threat volume, landscape, and sophistication have grown, not reduced. Whether it is test identity, fraud, privacy, or fake news, people's financials, their reputation, and overall digital safety are under threat. We are committed to fulfilling consumers' immediate needs and giving every person connected to the digital world a path towards total cyber safety. Gen brings together trusted brands such as Norden, Avast, and LifeLock and combines many capabilities. A combination of technology, products, marketing, and sales channels creates a strong foundation for GEN's long-term growth plan. It strengthens our product innovation efforts, diversifies our business, increases global scale, and opens new go-to-market opportunities. We set a strategy to be the best cyber safety platform for consumers and we have the growth levers to get us there. As we shared on the last call, the growth levers are extending global reach by leveraging our omnichannel strategy, increasing value for customers, expanding to identity and privacy solutions, and growing loyalty from customers by improving user experience and retention. Before I highlight our Q3 results and pass it to Natalie, let me share the progress made on the integration. As you would expect, we've hit the ground running fast. In the first three months, we've integrated our backend systems and processes and deployed a unified go-to-market structure, enabling us to optimize our investments across all brands. We identified and eliminated about 700 duplicative jobs or activities. We are in the process of deploying our new location strategy, leading to facility reductions, and this week we're integrating our code to cash processes. Product integration will be the long pole where we are striving to not only maintain but accelerate our phase of innovation which supports our revenue synergies and broader growth objectives. In this case, we are strategically driving the integration of our technology and engineering teams to ensure that we continue delivering innovative products that address the dynamic threats people face every day. Overall, you can see our progress in the expanding operating margin. We are on track to achieve the $300 million plus annual cost savings exiting fiscal year 2024. Our integrated teams are now coming together across continents, sharing knowledge and adopting best practices and technological know-how with a focus on driving customer loyalty, platform adoption, cross-selling activities, which are at the core of our revenue synergy plans for the next two years. Let's turn to Q3 results. The market trends we saw in Q3 were consistent with what we have been seeing in the last few quarters, persistent pressure on global e-commerce traffic and lackluster overall consumer demand and inflationary pressures. We believe that consumers have taken a more cautious approach to their spending in this challenging environment. Despite the macro factors, we delivered our 14th consecutive quarter of growth. And when we look at our direct and partner business combined, which we call now cyber safety, our Q3 bookings and revenue were both up 4% in constant currency, including a vast historical result in the base. Growth was spread across regions, brands, and product lines. We expanded our operating margin by three points year-over-year and four points sequentially. EPS grew 2% with the negative impact of currency and interest expense, masking the strong execution and operational strength of our business. Our direct business grew 3%, similar to last quarter's growth rate. In this soft environment, we continue to strategically deploy our marketing spend to achieve the highest returns and efficiency, prioritizing higher ARPU and customer retention but not taking our eyes off the ball on the top of the funnel. Growth was supported by strong cross-sell, especially with double-digit growth in our privacy offerings and slight sequential improvement in Avaz retention, while our direct cyber safety customers count declined by slightly over 200,000 quarter-over-quarter. On the partner business side, we continue to make strong traction with our diversified and omni-channel approach, delivering another double-digit growth quarter. Growth this quarter was primarily driven by what it shared against some existing partners as we continue to demonstrate our value proposition. As you've heard me say many times, the core of GenSuccess is product innovation, and the integration of the two companies will only accelerate our combined capabilities. In Q3, we introduced several new products, We launched Northern Executive Benefits Program, which is a product that includes both LifeLock and Reputation Defender solutions and is designed for employers that want personalized concierge support for their C-suite executives and other high-profile individuals. We continued to expand our identity business internationally with the launch of credit monitoring features in the UK market. In the U.S., we launched two new products. First, Avast Identity Secure was launched in December, which includes identity theft protection, alerts, assistance, and loss reimbursement. Additionally, LifeLock added an industry-first feature called Utility Alerts, which monitors new utility or telco accounts that are opened in customers' names. In privacy, we have launched a mobile app for our Norton Anti-Track product to extend our reach. And we've also expanded our global reach with the launch of Northern Privacy Monitor Assistant to Canada for the very first time. Our strategy in the short and mid-term is to expand the value offered to our current customers through new product launches and an improved user experience that comes within our platform that we've developed. We believe these focuses will grow loyalty and retention. Innovation is a top priority, and we will continue to invest to have the strongest portfolio that keeps our customer cyber safe. Let me wrap up my comments here by saying that our growth strategy remains intact. We will continue to execute to drive profitable growth in this challenging environment and create long-term value for all stakeholders. And now let me turn the call over to Natalie to cover our results in detail. Natalie?