McAfee Corp.

Good day. Thank you for standing by. Welcome to America Fee First Quarter 2021 Earnings Conference Call. At this time, our participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during a session, you will need to press star 1 on your telephone. Please be advised that today's conference has been recorded, and if you require any further assistance, please press star 0. I would like to hand that conference over to your speaker today, Eduardo Felaitis. Vice President of Investor Relations, please go ahead.

Thank you, Operator. Good afternoon, and thank you for joining us today to discuss McAfee's first quarter earnings results for the period ended March 27, 2021. Participating on today's call are Peter Leith, President and CEO, Venkat Bamidipati, Executive Vice President and Chief Financial Officer, and Ashish Agarwal, Senior Vice President of Strategy and Corporate Developments. Earlier this afternoon, McAfee issued a press release announcing its financial results. While this call will reflect items discussed within those documents, for complete information about our financial performance, we encourage you to read our 2020 annual report on Form 10-K for the fiscal year ended December 26, 2020, and our quarterly report on Form 10-Q for the fiscal quarter ended March 27, 2021, which we plan to file this week with the Securities and Exchange Commission. Before we begin, I want to remind you that matters discussed on today's call may include forward-looking statements related to our operating performance, financial goals, and business outlook, which are based on management's current beliefs and assumptions. These forward-looking statements reflect our opinions as of the date of this call and we undertake no obligation to revise this information as a result of new developments that may occur. Forward-looking statements are subject to various risks uncertainties, and other factors that could cause our actual results to differ materially from those expected and described today. For a more detailed description of our risk factors, please review our most recent annual report on Form 10-K and our quarterly report on Form 10-Q to be filed this week with the Securities and Exchange Commission, where you will see a discussion of factors that could cause the company's actual results to differ materially from those statements. A replay of this conference call will be available on our website under the investor relations section. I would also like to remind you that during the call we will discuss some non-GAAP measures in talking about McAfee's performance. You can find a reconciliation of these measures to the nearest comparable GAAP measures in our earnings release. Before I pass the call over to Peter, I would like to remind everyone that due to the announced sale of certain assets together with certain liabilities of our enterprise business, On March 8, 2021, the related assets, liabilities, and financial results of the enterprise business were classified as discontinued operations in our condensed consolidated financial statements and are thus excluded from continuing operations for all periods presented. As such, we will focus on continuing operations on our consumer business on this and future calls. I will now turn the call over to Peter Leith, McAfee's President and CEO.

Thank you, Eduardo, and good afternoon. Q1 was a very strong quarter for McAfee, as we significantly increased revenue, profitability, and free cash flow. We delivered robust top-line consolidated results, which include both continuing operations and discontinued operations, with total company revenue of $773 million, growing 13% year-over-year. We also improved profitability, with total company adjusted EBITDA of $316 million, a 41% margin, and growth of 29% versus last year, clearly a solid quarter for both segments. We had a strong start to the year with double-digit year-over-year growth for both revenue and adjusted EBITDA. Moving to continuing operations, or our consumer business, our team executed well, with our Q1 net revenue, profitability, and free cash flow beating expectations. We delivered net revenue of $442 million, an increase of 25% year-over-year. Adjusted EBITDA closed the quarter at $199 million, up 25% versus the same period last year, with EBITDA margins of 45% in the quarter. The adjusted EBITDA for the period included stranded and dis-energy costs of $22 million. We continue to drive double-digit growth along with improved profitability through our differentiated omnichannel go-to-market strategy. In Q1, we added another industry-leading 885,000 net new core direct-to-consumer subscribers, or DTC, to the platform, closing the quarter at a cumulative 18.9 million versus 15.7 million core DTC subscribers in the same period last year. a strong start to fiscal 2021, marking another terrific quarter of revenue growth, and this marks our 14th consecutive quarter of sequential and year-over-year core direct-to-consumer subscriber ads. In addition to these strong operating results, Q1 highlights included the following, a multi-year extended agreement with Fujitsu Client Computing to deliver best-in-class consumer security solutions to Fujitsu device users. a renewal agreement with the U.K. electrical retailer Dixon's Carphone, and an extension and expansion agreement with the consumer division of Lumen, a U.S.-based service provider. Our unique omni-channel go-to-market strategy allows McAfee to outpace the competition, attracting subscribers at the emanation point and throughout their digital journey. Furthermore, from a product perspective, on April 15th, McAfee's total protection was again awarded the highest possible ranking of three stars advanced plus by the Austrian-based anti-malware test lab AV Comparatives. Our plan is to balance the need to execute and deliver results while simultaneously investing to capture the tremendous market opportunity in front of us. We continue to invest in our product portfolio, go-to-market engine, and subscriber acquisition and retention motions to maintain a double-digit long-term revenue growth rate. We remain confident in the sustainability of this trajectory, driven by the positive market forces tied to digital transformation, the proliferation of personal devices, educational and professional use adoption, and the increased public awareness of the importance of privacy and security. As we look out over the rest of 2021, we are confident that the flywheel effect of our business will continue to benefit from a larger renewal base associated with the trailing 12-month cohort increasing to 3.2 million from 2.8 million net new DTC subscribers in Q1. We understand the mission-critical role we play in securing the digital transformation wave that is sweeping the world. The acceleration in digitization that has taken place over the past year has only served to compound that urgency. McAfee's expertise in bringing differentiated security solutions to consumers has never been more timely. New conveniences in the realm of work, learn, shop, bank, exercise, stream, and telemedicine have gone from nice-to-haves to must-haves. These digitally-enabled experiences have become permanently woven into consumers' daily lives as they expect every interaction to be secure. McAfee is there to provide that peace of mind. Thank you once again to our McAfee team members for your dedication and hard work, which has allowed us to focus on customer and partner success, execute on our strategy, and deliver very strong Q1 results. I will now turn the call over to Venkat to discuss our financial results in further detail.