Gen Digital Inc.

My name is Joel and I will be your conference operator today. I'd like to welcome everyone to Jen's fourth quarter and fiscal year 2024 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 Jason Starr, head of investor relations. You may proceed.

Thank you, Joel. And good afternoon, everyone. Welcome to Jen's fourth quarter and fiscal year 2024 earnings call. Joining me today are Vincent Pellet, CEO, and Natalie Dursey, CFO. As a reminder, there will be a replay of this call posted on the investor relations 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 and earnings presentation, both of which are available on our IR website at investor.gendigital.com. We encourage investors to monitor this website as we routinely post investor-oriented information such as news and events and financial filings. Today's call contains statements regarding our business, financial performance, and operations, including the impact of 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 as of today's date, May 9th, 2024. We undertake no obligation to update these statements as a result of new information or future events. 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'll turn the call over to Vincent.

Thanks Jason. Good afternoon and thank you all for joining our Q4 and Fiscal Year 24 earnings call. Fiscal 24 was our first full year as GEN and what a transformational year it was. We finished the year with strong operating results across the board and delivered our fifth year of organic growth with record revenue, profitability and cash flow. Our Q4 and full year results reinforce our confidence in the tremendous opportunity in consumer cyber safety and put us right on track to meet our long-term aspirations. Nathalie will take you through the details of our quarterly and annual financial performance, but I would like to take a moment to talk more about the opportunity in consumer cyber safety and why we are so well positioned to win. You have heard me say it many times, digital life is now just life, but the risks it creates are different. They're bigger, they're more pervasive, and are getting more and more sophisticated. As quickly as our lives move online, the cyber risks dynamically follow. Everywhere you look nowadays, you hear about data being stolen from telecom providers, healthcare companies, banks, leading apparel makers, and even government organizations. And those are just from these first few months of 2024. Cyber risks are here to stay But we know that GEN can bring comprehensive cyber safety protection to everyone in a way no one else can. In an always-on world, bad actors have countless ways to threaten your privacy, identity, and financial assets. We have seen a significant increase in scams delivered through malvertising and malicious browser push notifications, the majority of which were social engineer attacks with massive growth in dating scams up tenfold year-over-year. The increasing sophistication and intensity of phishing campaigns up 40% year-over-year targeted spear phishing attacks, leaked PII on the dark web, and the emerging use of generative AI technologies by threat actors are all accelerating the shifting focus from device to user-centric security. And as the threat landscape continues to rapidly evolve, so do the cyber safety needs of consumers, providing a compelling and dynamic market opportunity. Many others will try to convince consumers that their safety is important to them, but most have other substantial interests in delivering their core services or even monetizing your data. At GEN, cyber safety is not something on the side that can be at odds with another business model. It is our mission and the most important thing we do. Unlike many other players, we have teams dedicated to uncovering, researching, and stopping new threats in their tracks. In fiscal year 24, we blocked over 12 billion attacks using threat telemetry data from those to update our models 500 times a day and train them on data sets that are six petabytes large. In our labs, our researchers and AI scientists are catching up with anomalies and patterns to deliver insights to consumers and our product teams so we can keep up with the dynamic threats. The combination of those, people plus our technology, results in us having developed and deployed on all major platforms and devices an engine and technology stack that is second to none. And when you add in our AI capabilities in consumer cyber safety, alongside with our market-leading visibility across the entire ecosystem, we expect to continue to lead the way with the strongest, most relevant protection that delivers value and peace of mind for millions of loyal customers. Our people and technology are the foundation of the most complete and comprehensive product portfolio in the industry. We have our customers covered on all fronts. whether they are facing a threat to the online security, privacy, identity, or reputation. And just as important as all those features that we deliver, we also demand that our engineers, product managers, designers, and other specialists find ways to make our offering fit the real-world needs of consumers. We were the first to come up with the all-in-one cyber safety membership because we believed it was what consumers wanted and needed And we were right. Today, over 40% of our customers have adopted a cyber safety membership, and we continue to see that grow as we expanded the membership's value through offering identity and privacy features internationally and into the Avast offering, along with the launch of Avast Identity and the release of new Avast One membership tiers, enabling customers to tailor their security, privacy, or performance coverage based on their own needs, preferences, or risk profile. While we strongly believe in the need for and the value delivered with our membership tiers, we also know that not everyone lives their digital life in the same way, or that each person understands all the cyber threats at the same level. Still today, many customers are only looking for a specific solution, and we are hard at work on delivering innovation in our point products to meet the needs of those consumers. In January, we launched our first AI-driven anti-scam app called Norton Genie. With this free anti-scam assistant in your pocket, customers can determine if a text or social media post is a scam, featuring conversational UI for additional insights. At the end of April, we crossed 1 million downloads in just 100 days, and customer satisfaction was high, with Norton Genie rated 4.7 stars. It's a good start, if you ask me, And the great thing is that the more it is used, the better it gets. Another innovation that we are proud of is Total Radius, which we fully launched in January 2024. Total Radius is a 360-degree reputation defender tool that fully and automatically analyzes your online information to help you quickly take actions on content to protect your digital reputation. Our consumer-centric approach combines key consumer trends with deep insight about the threat landscape and emerging technologies. We want to simplify your digital life, protect your ever-growing number of online transactions, bring your visibility to the privacy risk, and do it seamlessly and in real time through deployment of generative AI consumer use cases. No one can bring these things together like Gen. And now, with our new GenStack, which I will talk more about later, we will be able to adapt to and more quickly meet the needs of our customers. Truly has been a transformational year for Gen, and I can't tell you how proud I am of what this team has accomplished. Some things were out of our control that definitely changed the world and our business. Conflicts in multiple regions, volatile microeconomic conditions with spiking interest rates, and dramatic currency fluctuations. Despite those very real challenges, this team delivered. For the full fiscal year and for the last three consecutive quarters, we returned to our customer count to grow. We now have in total over 65 million paid customers, 39 million of which are direct, and hundreds of millions of users. More importantly, our customers are showing greater engagement and satisfaction across all of our brands. With respect to the commitments we made when we acquired Avast, we delivered on those as well, despite the very material change to the cost of our debt. In terms of cost synergies, we beat and raised on that front, and we did it faster than expected. On top of that, we didn't just reduce costs. We worked together the best assets of Northern LifeLock and Avast. We laid the foundation to tackle cyber safety by tightly integrating the fabric of two industry leaders to create things like our integrated technology stack, which delivers the full suite of our capabilities to our customers in a more modern and accessible way. We call it the GenStack. And over the last 18 months, our engineers, designers, and product managers have worked tirelessly to consolidate a tech portfolio into a single, scalable, and modular platform. This quarter, we released Northern 360 for Windows and Mac on the new stack in selected countries, with the majority of our customers to experience our new platform in a phased approach as we move through this new fiscal year. With our new GenStack, we are marching towards our vision of increased personalization and empowerment through natural, tailored, contextual communication that is unobtrusive. AI enhancements and innovation will lead to a better customer experience and we believe improve loyalty and value add cross-sells and upsell. AI has been and will only become more pivotal for us. We will continue to enhance our portfolio to address new threats. We will also keep investing in AI to expand the types of new solutions and the way we bring them to our customers. We know that as we keep addressing this growing set of needs, our growth will accelerate over time. Our AI-infused roadmap, which addresses security, financial safety, personal data control, and verification, combined with our insight into the threat landscape and AI technology, enables us to deliver on a mission of protecting and empowering people's digital lives. And we're just getting started. Before I pass it to Natalie, I do want to thank the team and our loyal customers for another strong year. We delivered a fifth year of organic growth a strong adoption of our offering with almost 1 million net direct customer ads, and establish the identity and mission-driven culture of GEN in our first full year together. We are confident that our reach, customer centricity, innovation, and of course discipline execution will enable us to deliver on our strategy to accelerate long-term and profitable revenue growth and increase shareholder value. I could not be prouder of what we have accomplished together and more excited about our prospects. Finally, I would be remiss if I didn't thank Andrei Volchek for his contributions in putting Gen on this trajectory. Three years ago, Andrei and I dreamt about bringing two industry leaders together to transform consumer cyber safety. Three years have now passed, along with a successful integration, and Andrei has decided to step down as president. Andre will still be a big part of Jen's future, as I know he will remain a trusted sounding board and supporter of our leadership team. And of course, he will continue to help shape the strategy from his seat on our board of directors. And with that, let me pass it to Natalie to review our performance in greater detail and our guidance for the next fiscal year and quarter.