Gen Digital Inc.

Ben Liu, Head of Investor Relations

Thank you, Jen, and good afternoon, everyone. Welcome to Jen's second quarter fiscal year 2027 earnings call. Joining me today are Vincent Pilette, CEO, and Natalie Derse, 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. 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 post investor-oriented information such as news, events, and financial filings. Today's call contains statements regarding our business, financial performance, and operations, including impact on our business and industry that may be considered forward-looking statements, and such statements involve risk 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, October 28th, 2026. 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 statements in our press release and the risk factors in our filing with the SEC, and in particular, our most recent reports are Form 10-K and Form 10-Q. And now, I will turn the call over to Vincent.

Thanks, Ben, and good afternoon, everyone. Q2 was another beat and raise quarter for Gen. Our revenue and bookings grew double digits and non-GAAP EPS increased 19% year over year. Our cyber safety foundation continues to be strong while trust-based solutions is fueling our next phase of profitable growth. We ended the quarter with 83 million paid customers, up 2 million sequentially and 6 million from a year ago. And with this momentum, We are raising, again, our full year guidance. Cyber safety revenue grew 5%, led by the adoption of comprehensive memberships and continued customer upsells and upgrades. Lauren 360, our flagship product, provides the broadest, most advanced protection for consumers in the market and has scaled to over 1.7 billion run rate, growing consistently at or above mid-single digits. We also continue to deploy our customer lifecycle playbook, delivering the highest renewal list in several quarters. Trust-based solutions grew 26%, driven by financial wellness adoption and engine diversified partner and vertical strategy. Partner channels grew double digits in both segments as carriers and employers increasingly embed our full suite protection into their solutions and our marketplace continues to expand its partnership and distribution. These results advance our mission to protect digital lives and help people manage financial needs online. The team at GEN has long prided itself on driving our business with discipline and creating lasting value. That means we manage for durable growth and profitability. We invest where customers' demand and returns are the strongest. We constantly improve efficiency and apply shared capabilities across the entire portfolio. This operating model delivers best-in-class margins in our segments, 62% in cyber safety and 30% in trust-based solutions for a 50% blended margin this quarter. In financial wellness, we are focused on margin quality as we scale, simplifying pricing, writing more advances to our own spent accounts, and shifting engine mix towards higher margin first party demand. The different profiles of our two segments fund continued investments and support our mid to high teams EPS growth outlook for fiscal year 27. And we see plenty of opportunities to apply our model. Looking ahead to the second half, we are prioritizing our efforts where customer demand and flywheel economics are strongest. We are redesigning Northern 360 with next-gen VPN, scam protection, and safe AI. We're building new LifeLock experiences that connect breach alerts with on-demand AI-driven resolution. And we are expanding Moneyline customer acquisition with a focus on monthly active users, higher income cohorts, and a deeper product relationship. Early results are encouraging. Northern 360 beta user engagement increased double digits, and LifeLock's redesigned site lifted mobile conversion also by double digits. We are relentlessly enhancing our portfolio because people increasingly need help. AI makes sophisticated attacks easier to launch and harder to distinguish. The recent PHP vulnerabilities show how advanced AI is accelerating vulnerability exploitation from discovering flaws to turning longstanding weaknesses into practical exploits across digital services consumers rely on every day. Our latest Thread report found scams made up more than half of everything we blocked. Attacks grew more personal and local, from family impersonation text to AI-generated scam videos in local language. Our real-time telemetry shows email, text, and call scam protection up 30% sequentially. And now as consumers adopt AI and give agents their credentials, Each interaction creates risks that consumers feel even if many don't understand or know how to control them.