The conference call for Gen's First Quarter Fiscal Year 2025 Earnings has begun, led by operator Tamia and with Jason Starr, Head of Investor Relations, as the main speaker. The call will be recorded and a replay will be available on the Investor Relations website. All financial metrics are non-GAAP and all growth rates are year-over-year unless otherwise stated. The call contains forward-looking statements and risks and uncertainties should be taken into consideration. CEO Vincent Pilette will be speaking next.

Fiscal year 2025 has started off well for the company, with growth in cyber safety bookings, record direct customer count, and an increase in ARPU and retention. The company's focus on execution has resulted in a 15% increase in earnings per share. The company's mission is to evolve cyber safety for consumers in a constantly changing threat landscape. As our digital lives continue to grow, it becomes more difficult to protect our personal information, and the number of reported data breaches continues to rise.

Recent global cyber attacks have highlighted the increasing danger of human-targeted scams and the use of generative AI to create more believable scams, including deepfake clones. These threats pose a significant risk to personal data, identity, and financial assets. The team at Gen is dedicated to protecting consumer data and digital identity through constant innovation and a comprehensive product portfolio. Their flagship cyber safety memberships have gained recognition and awards, and they also prioritize providing best-in-class services to their customers.

LifeLock and ReputationDefender offer personal live service to protect and restore your identity and reputation. They have received top ratings and are constantly investing in innovation to protect against potential threats. Norton Ultra VPN, a new product launched by the company, offers comprehensive online protection and is built on a new Gen stack, allowing for faster innovation and improved customer experience. The company plans to combine these capabilities with AI tools to further enhance customer loyalty and engagement.

Gen is working to educate and inform people about cyber risk through their recent campaign, which uses art and psychology to demonstrate the emotional impact of cybercrime. They have also launched a personal data exposure scan and other tools to help individuals protect themselves online. These initiatives have led to a 4% growth in cyber safety bookings and revenue in the first quarter, with strong momentum in the identity and privacy business lines. This success reflects the increasing consumer awareness of identity risk from reported breaches.

In the paragraph, the speaker discusses the expansion of the identity market globally and the introduction of Norton 360 Advance to 8 markets in Europe. They also mention the misconception among consumers that they are not at risk for cyber attacks and the need for comprehensive cyber safety. The speaker is confident in the company's ability to deliver on their goals and increase shareholder value. They then hand it over to Natalie to review the fiscal Q1 results and provide an outlook for Q2 and the full year.

The company's Q1 results were in line with their guidance and showed solid execution, with 20 consecutive quarters of growth. Bookings and revenue both increased, with Cyber Safety bookings and revenue growing in constant currency. The company also saw growth in the US and international markets, driven by demand for privacy and identity protection services. Direct revenue also increased, supported by improvements in key performance metrics such as customer base, average revenue per consumer, and retention rate.

The company is investing in various marketing channels to attract new customers and increase website traffic. They have a diverse set of acquisition channels and are successfully expanding into international markets through their mobile offerings. The company's monthly direct ARPU has increased slightly, but has been affected by negative FX headwinds. They have been able to monetize their customer base through cross sells and upsells, with cross-sell penetration increasing from 15% to 20% in the past year. The company has also improved their retention rate and is working towards a goal of 80%. They are refining their upsell strategies and leveraging better targeting capabilities to create personalized customer experiences and increase lifetime value.

In the first quarter, the company's partner revenue increased by 4% year-over-year and 6% in constant currency, driven by a strong pipeline in the employee benefits channel and strategic partnerships. The company is confident in its progress in scaling the partner business to reach $0.5 billion in annual revenue. Legacy business lines contributed $14 million, but are expected to continue declining. Operating income was $564 million, up 4% year-over-year, with disciplined investments in growth opportunities and technology capabilities. Net income was $335 million, up 11% year-over-year, and diluted EPS was $0.53, up 13% year-over-year. Interest expense related to debt was $146 million.

In the first quarter of the fiscal year, the company's non-GAAP tax rate remained at 22% and their ending share count decreased by $16 million due to share repurchases. The company's cash balance was $644 million and they have over $2 billion in total liquidity. Operating cash flow was $264 million and free cash flow was $262 million, including $187 million in interest payments. The company successfully repriced their existing Term Loan B and expects Q2 to have the lowest operating cash flow due to tax payments. The company is committed to returning excess free cash flow to shareholders and has paid down $2 billion in debt and deployed $1.6 billion for share repurchases since the start of fiscal year '23. They also paid a regular quarterly dividend of $0.125 per common share and have approved a dividend for Q2 fiscal year '25.

In paragraph 11, the company discusses their plans for achieving EPS growth and reducing debt, as well as their outlook for the second quarter and fiscal year 2025. They reaffirm their prior guidance and mention the impact of foreign exchange on their reported revenue. The company remains on track for their 2025 plan and their key performance indicators are trending positively. They thank listeners for their time and open the call for questions. The first question is about retention initiatives that have been successful for the company.

The company has made significant improvements in retention rates since the merger with Avast, with a target of reaching 80%. Initially, there were some low-hanging fruit that led to a 2-point increase in retention rates, but the remaining improvements will come over the next few quarters with the rollout of the new Gen stack. This new stack is more aligned with a suite and has high engagement in-app communications, which has led to improved retention rates.

The company is focused on improving cross-selling to increase revenue and customer satisfaction. They are using AI and data analytics to provide the right value to customers at the right time. They have successfully cross-sold Avast products to Norton customers and are now focusing on cross-selling Norton products to Avast customers. This strategy will continue to be a priority for the company for the next three years.

The company has a lot of potential for growth in both cross-selling and upselling their products. The guidance for the remainder of the year is in line with their strategic growth framework and the team is focused on gross acquisition, retention, and increasing ARPU. They are continuously working on their product offerings to stay relevant and communicate the value of their cyber safety protection to customers.

The company's strong performance in Q1 has given them confidence in their Q2 and full year guidance. They have seen growth in customer numbers and retention rates, as well as an increase in ARPU. The rollout of their new Gen stack initiative has been successful so far, with positive results in the Asia region and expansion to more countries. They have also rolled out new customer cohorts in the U.S.

The company is being cautious in monitoring the NPS after the first rollout and is on track to meet their timeline for the new stock. They are pleased with the results so far, although there have been some ups and downs. The company is focused on investing in marketing to attract new customers and is seeing growth in customer count. They are also working on cross-selling to existing customers to increase retention and ARPU.

The speaker expresses pride in the teams' performance in increasing cross-sell penetration among Norton customers, but acknowledges there is still room for improvement. They plan to invest in product and technology, promote their brand, and focus on retention. The questioner asks about hedging strategies to protect against the weakening yen. The speaker also discusses the upcoming benefits enrollment season and expresses confidence in the pipeline.

The company's partner business, which makes up 10% of their overall revenue, grew by 6% in constant currency. This is due to their success in selling telco solutions and employee benefit strategic relationships. They have a healthy funnel of potential deals and are aggressively trying to close as many as possible. The operating margin is strong, but there has been a slight decrease in gross margin, possibly due to investments in cost of sales. However, the company still operates at high margins overall.

The company's operating margin has improved significantly over the past few years, and they are committed to maintaining high margins while also investing in areas of growth. While the gross margin for the current quarter may appear flat or down compared to previous quarters, it has remained relatively stable over time. The company will continue to invest in profitable marketing to drive top-line growth. The CEO also mentioned the success of their Gen AI program and the potential for growth in this area due to increased brand awareness.

In the upstream sector, there has been a significant increase in data breaches and scams using social engineering techniques to target consumers. To combat this, the company has launched an AI-based app, Norton Genie, which has over 1 million users and will be integrated into multiple products. In terms of net adds, there has been strong growth across different geographies and channels, with a focus on low penetrated and underdeveloped markets through partner channels.

The company's focus is on balancing acquisition and sustainability through their business model. They are committed to investing in growth and increasing their customer base through net new acquisition and retention. Their goal is to provide digital freedom for everyone through their AI-enabled product roadmap and effective go-to-market strategy. They are well positioned to expand globally with their trusted brands and omnichannel expertise.

The speaker thanks the listeners for their interest and support and concludes the conference call, allowing participants to disconnect their lines.

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