Gen Digital Inc.

Good afternoon, everyone. Thank you for standing by. My name is Lauren and I'll be your conference operator today. I would like to welcome everyone to Jen's fourth quarter and full 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'll be a question and answer session. At this time for opening remarks, I would like to pass the call over to Miss Mary Lye, Head of Investor Relations. Miss, you may begin.

Thank you, Lauren, and good afternoon, everyone. Welcome to Jen's fourth quarter fiscal 2023 earnings call. Joining me today to review our Q4 and full year results are Vincent Pellet, 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 in all growth rates or year-over-year, unless otherwise stated. A recon of non-GAAP to GAAP measures is included in our press release, which is available on the IR website. Today's call contains statements regarding our business, financial performance, and operations, including the impact of our business industry. That may be considered forward-looking statements, and such statements involve risks and certainties 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 in the SEC, and in particular, our most recent reports of Form 10-K and 10-Q. And now I will turn the call over to our CEO, Vincent.

Thank you, Mary. Good afternoon, everyone, and welcome to our earnings call. As I reflect on the year, I'm proud of all that we have accomplished, and I'm excited about the tremendous long-term opportunity in front of us. Three years ago, we strategically set out, singularly focused on and redefined cyber safety for the billions of individuals connected to the digital world. We believe then, as we do now, that the complexity of our digital lives call out for someone to help protect people from the myriads of threats with innovative and easy-to-use technology that could seamlessly stitch together solutions across security, identity, and privacy. and then reaching to adjacent trust-based solutions. Well, that someone is us, Jen. We are confident that our reach, innovation capability, and discipline execution can deliver on that strategy and will sustainably deliver long-term profitable growth and increasing shareholder value. Let me quickly recap our year. For fiscal year 23, we delivered another year of organic growth, our fourth consecutive year of growth in consumer cyber safety. We delivered mid-single-digit growth in cyber safety bookings and revenue and exited the year on a 3.7 billion revenue run rate up from 2.4 billion three years ago. During that period, we considerably expanded our scope across our cyber safety pillars, security, identity, and privacy, and became truly global with 60% of our customers now from outside the US. We also expanded our reach with our vast capabilities in freemium and free user base in the hundreds of millions. Gen, with its trusted brands, omnichannel expertise, and rigorous execution, is well positioned to expand the adoption of cyber safety across the globe. We have over 38 million direct paid customers as we exit fiscal year 23, up from 20 million three years ago. Despite the pressure on our direct customer count in a post-COVID environment, which saw a sequential decline of 180,000 in Q4, our direct business actually grew single digit in Q4 and fiscal year 23. Our direct customer retention rate ended the year at 76%, and our annual ARPU was nearly $87 as we exited fiscal year 23. In two quarters since the close of the Avast acquisition, we have increased our overall annual ARPU by $3 and our overall retention rate by one point, a testament of the increased value we are providing our customers with our expanded product portfolio offerings, the membership adoption, and the increased loyalty. Both metrics, ARPU and retention rates, improved sequentially in this last quarter, and our confirmation of the value creation thesis at the core of our merger was avast. In addition to 38 million direct paid customers, we also protect over 26 million indirect customers with solutions sold through partners. In fiscal year 23, indirect customers grew over 1.5 million with about 400,000 sequentially added in Q4. Our partner revenue delivered its third consecutive year of double-digit growth for fiscal year 23, and we continue to see tremendous opportunities to reach more consumers via diversified channels in our partner business. Our employee benefits channel again grew double digits, accelerating in growth as employers recognized the growing demand from the employees. Identity protection is becoming a staple offering in benefits packages, just like health care and life insurance. We also continue to scale our telco relationships in key international markets, working closely with our partners to expand their offerings and provide comprehensive cyber safety protection to millions of customers. Our strategy to diversify the distribution channels and grow the value of the offering with these partners is actually working. On the innovation front, we maintain a strong base throughout fiscal year 23. We introduced more than 10 new products and features, including international privacy monitoring assistance, Norton anti-track, Norton identity advisor, Avast email guidance, Avast identity solution with Avast secure identity and Avast One Platinum, Norton executive benefit program for the C-suite with reputation management features. utility account dollars for US LifeLock and Northern 360 members. Each of these is a step forward in our strategic efforts to rapidly expand capabilities, protection, and geographic reach in privacy and identity. We have accomplished a lot in the business this year, but I would be remiss to not mention the tremendous job the team has done in bringing together Avast and Northern LifeLock. Within six months of close, our sales, GNA, and overall infrastructure processes have been fully integrated. Our single ERP integrated code cash processes, unified go-to-market structure, and functional organizational structures are all in place. We've already realized two-thirds of the cost changes as we exited fiscal year 23. This was no small feat given the size, scale, and complexity of the two businesses. Overall, we have accelerated the integration process, and we are on track to achieve the 300 million-plus annual cost savings exiting fiscal year 24. Our integration efforts helped us deliver another point of sequential operating margin improvement in Q4, reaching 57 percent. In fiscal year 23, we scaled operating profit to 1.8 billion, up 24 percent year-over-year, and more than doubled compared to three years ago. This profit margin and the resulting unlevered free cash flow gives us great confidence that we can navigate through the short-term volatility and uncertainties of the global economy. Product integration, broadly defined, is what remains in front of us and is well on the way. We see it as an opportunity to accelerate our march towards our vision of cyber safety that is digital life-centered, tailored to your needs, and easy to use. This requires a unified and simplified product architecture. Progress on this front will allow us to extend our reach to more people, giving them exactly what they need, while better enabling us to educate them on additional protection and values that we can offer. This is a key enabler of our revenue synergies in fiscal year 24 and 25. We still have work to do here, But with our comprehensive set of products, we believe these changes unlock not only those mid-term opportunities, but also position us perfectly for the long-term in cyber safety and in trust-based adjacencies. You've heard me talk time and time again about all of our opportunities, but let me sum it up briefly. First, we believe cyber safety is much more accessible, engaging, and easy to use for everyone. that will undoubtedly continue to grow our customer appeal and loyalty. To start, and in particular within the Avaz business, we can improve the customer experience and fully integrate our customer journey. Avaz retention improved two points in the last six months, and we believe the potential is at least 10 points improvement as we incorporate user-focused changes. Secondly, customers always focus on value. and we have a tremendous opportunity to show them the value of our cyber safety offering and to continually add to it as the needs evolve and the threats increase. The move towards protection of identity, privacy, and the protection of your full digital footprint will continue. We have increased monthly ARPU 26 cents or 4% in the last six months, and our long-term objective is to move above $8 where we were with Norton LifeLock adjusted for a new geographical mix. Finally, we know that customer count is a critical metric for our long-term success. In addition to continued growth in indirect customers, where a portion of the market is moving to, we know that in the long term, we will grow our customers maturely, and we believe that our initiatives in mobile, emerging markets, and optimizing marketing spend, amongst a few, will help us stabilize the trend in direct customer count and ultimately return it to growth. And with that, let me pass the floor to Natalie, who will talk about our detailed performance.