The operator, Joel, welcomes everyone to Gen's Fourth Quarter and Fiscal Year 2024 Earnings Call. Jason Starr, Head of Investor Relations, introduces the speakers, CEO Vincent Pilette and CFO Natalie Derse. Non-GAAP financial metrics and year-over-year growth rates will be discussed. The call may contain forward-looking statements and risks and uncertainties that could affect actual results. The company encourages investors to monitor their website for updates.

In the second paragraph, the speaker highlights the importance of consumer cyber safety and the growing threat of cyber risks. They mention Gen's strong operating results and their confidence in their ability to meet long-term aspirations. The speaker also discusses the increasing sophistication of cyber attacks and how Gen is well-positioned to provide comprehensive protection. They mention the rise in malicious attacks and the need for protection against them.

The increasing sophistication of fishing campaigns, targeted spearfishing attacks, and the use of AI by threat actors are shifting the focus from device to user-centric security. This creates a growing market for Cyber Safety solutions, and Gen is dedicated to this mission. They have teams dedicated to uncovering and stopping new threats, using threat telemetry data and AI technology. Their researchers and AI scientists work to stay ahead of dynamic threats and provide insights to consumers and product teams. Gen has developed and deployed a strong engine and technology stack across all major platforms and devices, making them a leader in consumer Cyber Safety. With their AI capabilities and market-leading visibility, they aim to provide the strongest and most relevant protection for their customers.

The company prioritizes meeting the real-world needs of consumers and offers a Cyber Safety membership that has been adopted by over 40% of customers. They have also expanded their membership value internationally and into the Avast offering. However, they also recognize that not everyone uses their digital life in the same way and continue to innovate in their point products. They recently launched an AI-driven anti-scam app called Norton Genie, which has received high customer satisfaction ratings and has over one million downloads in just 100 days. The more it is used, the better it becomes.

Gen is proud of their innovation, Total Radius, which helps protect digital reputation. They use a consumer-centric approach and generative AI to simplify online transactions and address privacy risks. Despite challenges such as conflicts and economic volatility, they have successfully grown their customer base and delivered on their commitments, including cost synergies. They have also combined the best assets of NortonLifeLock and Avast.

The company has made significant progress in integrating two industry leaders to create a more modern and accessible technology stack, called the Gen Stack. This new platform will allow for increased personalization and empowerment through AI enhancements. The company will continue to invest in AI to address new threats and expand its solutions. The goal is to protect and empower people's digital lives. The company has seen strong growth and adoption of its offerings and has established a culture of innovation and mission-driven focus.

In this paragraph, the speaker expresses confidence in the company's ability to achieve long-term growth and increase shareholder value. They thank a colleague for their contributions and announce their departure as President. The speaker then passes it off to another speaker who will review the company's performance for the fiscal year and provide guidance for the upcoming year. The focus will be on non-GAAP financials and year-over-year growth rates, with a breakdown of select metrics for comparison. The fiscal year was considered pivotal for the company due to the integration of Avast, returning to direct customer growth, and achieving organic growth for the fifth consecutive year. The company's total revenue for the year was over $3.8 billion, with a growth of 14% in USD and 15% in constant currency.

In the last quarter, Avast's financial results were in line with their guidance, with a 2% increase in bookings and a 3% increase in revenue in constant currency. The acquisition of Avast has led to a 3% increase in cybersafety revenue and a 2% increase in total revenue. The US market has been a key driver of this growth, with a 3% increase in revenue due to increased adoption of privacy and performance offerings and higher-tier memberships. The integration of Avast has also led to significant cost synergies and improved operating margin and EPS. Going forward, Avast plans to focus on driving strategic priorities in fiscal 2025.

In our developed markets, we saw mid- to high single digit growth due to our identity partnerships, while our emerging markets experienced double-digit growth. Our direct revenue also increased by 3%, and our installed base is healthier compared to last year. We have been successful in acquiring new customers and have expanded our customer base for the third consecutive quarter. We continue to invest in diverse marketing strategies to reach new audiences and generate more traffic. Our monthly direct ARPU increased slightly, but was impacted by negative FX headwinds. We expect these headwinds to continue affecting our reported ARPU in the next fiscal year.

In Q4, the ARPU for online customers in the Norton, LifeLock, and Avast brands has increased due to cross-selling efforts and stable ARPU for mobile customers. There is a growing demand for cyber safety products and the company aims to increase retention rates to 80% through offering additional products and upselling to higher tier memberships. The company has already seen an increase in retention rates since the merger and plans to further improve through personalized customer experiences.

In the fourth quarter, the company's partner revenue increased by 5% year-over-year and they have a record pipeline and employee benefits. They are focused on building strategic partnerships and have seen success with the launch of Norton Private Browser. Their legacy business lines contributed $15 million, but they expect this to continue to decline. Operating income was $569 million, up 5% year-over-year, with an operating margin of 59%. They have reduced their overall operating expenses and right-sized their organization. They plan to continue investing in marketing, product and technology, international presence, and trust-based adjacencies to accelerate revenue growth to mid single digits over the next three years.

In the fourth quarter, the company's net income and diluted EPS increased year-over-year. They have a steady non-GAAP tax rate and a decreasing share count due to share repurchases. Their cash balance is $846 million and they have over $2.3 billion in total liquidity. They returned 100% of excess free cash flow to shareholders and have paid down $600 million of their TLB debt. They also deployed $300 million for share repurchases and have expanded their buyback program to $3 billion. They paid a regular quarterly dividend of $0.125 per common share.

In Q1 fiscal 2025, the Board of Directors approved a regular quarterly cash dividend of $0.125 per common share to be paid on June 12, 2024. The company plans to use its strong cash flow to pay down debt and buy back shares, with the goal of achieving EPS growth of 12% to 15% and reducing net leverage. The company has successfully merged two large companies and is now focused on driving revenue growth and improving cost structure. For fiscal year 2025, the company expects revenue growth of 3% to 4% and non-GAAP EPS growth of 12% to 15%. In Q1, the company expects revenue growth of approximately 3%. However, there may be FX headwinds impacting reported revenue due to the depreciation of the Japanese yen.

The company has set expectations for Q1 non-GAAP EPS and is focused on delivering long-term growth. Their strategy is working and their financial model is resilient. They plan to invest in their business to drive sustainable and profitable growth and create shareholder value. They mentioned moving into new truck-based adjacencies, which may involve AI technology and upgrading their membership structure to offer more value to customers.

Norton Genie is a new product that has already been downloaded 1 million times and will continue to add new features such as reputation management and protection against deep fakes and financial transactions. The company's strategy is to first focus on growing adoption and then add new features before eventually monetizing the product through membership and a potential paid version. The company is not currently factoring in any revenue from Norton Genie in their model.

The speaker is asking if the current macro environment will affect the company's capital deployment and debt repayment strategies. The company's CFO responds by saying that there hasn't been much change in the external community's rates and they will continue to balance share buybacks and debt paydown. They have made progress in both areas and will continue to have a disciplined approach to capital deployment. Another speaker asks about the launch of Gen Stack and the speaker says they are excited and will have a phased approach to the rollout of Labana, but won't share the full roadmap.

The merger provided an opportunity to improve user experience and personalize it with AI. The security product has evolved from being a back-end tool to a front-end partner. The new product will be fully scalable and will offer different features based on the user's membership or price level. It will take until 2025 to fully deploy, but initial tests have been positive. The company plans to continue testing and expanding globally. The Avast 1 free concept will allow users to tailor their coverage to their needs and upgrade as desired. The majority of Avast's installed base is still on contract, but the new stock will offer the opportunity to upgrade.

The company is expecting 3-5% bookings growth for fiscal year 2025, which is driven by a mix of their 5 for 5 growth strategy. This includes acquiring new customers in a healthy ROI way and driving new customer acquisition growth.

NortonLifeLock is committed to investing in customer acquisition through diverse marketing strategies and focusing on cross-selling and upselling to increase engagement and retention rates. The company also plans to invest in its partner business to drive awareness and revenue. These five levers will come together in fiscal year 2025 and will continue to build throughout the year.

The company has seen an improvement in retention rates since the merger, with a 2.5 point increase in the overall portfolio and a record retention rate of over 70% for Avast. This improvement is attributed to centralized operations and a focus on retention activities from the customer onboarding process to renewal. The company expects retention rates to continue to improve with the implementation of the same techniques and operations across the entire portfolio.

The paragraph discusses the progress of Gen's brands in terms of customer satisfaction and retention. The company has seen improvement in these areas, but the merger with NortonLifeLock has had a minimal impact. The company plans to continue improving these metrics by focusing on customer journeys, using data and AI, and improving cross-selling and upselling. This is a key aspect of Gen's plan for the future.

In fiscal year 2025, the company is expected to see the results of their efforts in the consumer cybersafety market. They have a strategy to drive growth and have a history of investing in technology and innovation for their customers. The conference call has now ended.

This summary was generated with AI and may contain some inaccuracies.