The paragraph outlines the introduction to Gen's third quarter fiscal year 2025 earnings call. Jayla, the conference operator, initiates the call, mentioning that it is being recorded and will include a Q&A session. Jason Starr, Head of Investor Relations, then welcomes participants and introduces CEO Vincent Pilette and CFO Natalie Derse. He notes that the call includes non-GAAP financial metrics, with a reconciliation available on the company's investor relations website. Jason highlights that the call involves forward-looking statements that involve risks and uncertainties and these statements are based on current beliefs as of January 30, 2025, with no obligation to update them. Investors are encouraged to monitor the website for updates and additional information.

In the earnings call, Vincent Pilette reported solid Q3 results, highlighting the growth in Cyber Safety bookings and revenue, and a record increase in the direct customer base. Despite achieving the fifth consecutive quarter of double-digit EPS growth, the threat landscape remains dynamic, with nearly 15 billion global cyber attacks blocked in 2024 alone. The sophistication of these threats is increasing, with 90% now originating from scams, up from 30% in 2020. The expansion of digital footprints and frequent data breaches, such as the significant National Public Data and PowerSchool breaches, have heightened risks for both individuals and families. Notably, there has been a rise in "scam yourself" attacks, where victims are deceived into compromising their devices through routine actions.

The paragraph discusses the launch and success of Norton Genie, an AI-powered tool designed to detect scams across various digital formats like email, text, and multimedia. With 2 million downloads, it boasts nearly 100% efficacy and is set to be integrated into Norton 360 for comprehensive scam protection. Norton is also collaborating with Qualcomm to enhance scam detection through Neural Processing Units in smartphones, ensuring speedy threat detection while maintaining privacy. Norton remains committed to protecting users' devices and data, backed by accolades from security testing organizations.

The paragraph highlights Avast's recent efforts to address evolving consumer needs related to cybersecurity, identity protection, and financial wellness. It details the expansion of Avast Secure Identity to 15 new countries, which aids in safeguarding personal information against scams and identity theft while offering restoration support and fraud alert features. The introduction of a pilot Digital Vault with ID Advisor Plus in Japan is noted, providing secure storage for sensitive information and access to scam verification and privacy advice. The company's initiatives receive strong customer interest, indicating significant growth potential, and future plans include further expanding their Digital Vault technology.

The paragraph discusses the development and benefits of the new Gen Stack, built following the Avast acquisition, to enhance Cyber Safety infrastructure. The Gen Stack integrates expertise from both teams to offer strong protection and a modern, personalized user experience. It unifies data to make AI-enhanced solutions more effective, drawing from extensive threat telemetry and behavioral data. This allows the company to better protect hundreds of millions of users while continually improving threat protection efficacy. Additionally, it enables a user-centric experience with integrated tools and smart recommendations for products and services, enhancing customer loyalty through tailored cross-sell and upsell campaigns.

The paragraph describes the company's efforts to expand its Cyber Safety platform by integrating advanced machine learning and personalized customer engagement. It highlights the acquisition of MoneyLion to enhance financial wellness offerings, diversify the customer base, and significantly increase the addressable market. This acquisition aims to provide comprehensive financial management tools and improve AI capabilities. The company is focused on addressing customer demands for better financial insights and plans to further develop its financial wellness services through strategic investments. Overall, the company is committed to leveraging its strong Cyber Safety foundation to meet growing consumer needs for data and asset protection.

The paragraph outlines the company's strong Q3 2025 financial performance and growth strategy, including plans for a pending acquisition of MoneyLion to enhance digital trust services and financial wellness offerings. The company's Q3 revenue reached $986 million, marking a 4% year-over-year growth, with notable expansion in its Cyber Safety bookings, Norton cross-sell program, and privacy products. This growth is supported by increased consumer demand for comprehensive Cyber Safety protection amid rising security concerns. The paragraph also highlights the sustained revenue growth, marking the company's 22nd consecutive quarter of growth.

The paragraph discusses the company's growth strategy and financial performance in Q3, highlighting a 4% increase in direct revenue to $869 million. Key to this growth is the expansion of the direct customer base, which grew by 371,000 sequentially and 1.2 million year-over-year to 40.1 million customers. The strategy includes targeting international markets and mobile users, with a focus on early customer engagement and long-term loyalty. The company is optimizing marketing efforts by prioritizing high-demand areas and investing in app store promotions to reduce acquisition costs. They have observed that more Norton mobile customers are subscribing to the higher ARPU Norton 360 membership. The monthly direct average revenue per user (ARPU) increased to $7.27, up from both the previous quarter and year. Overall, the company is confident in enhancing customer lifetime value and meeting growth targets by continued investment in customer acquisition and marketing.

The paragraph discusses the company's financial performance and strategic initiatives. It highlights a slight negative impact on metrics due to foreign exchange headwinds but emphasizes strong performance at the cohort level, particularly in online and mobile segments with increased ARPU due to effective cross-sell and upsell efforts. The company plans to enhance its product offerings, such as scam protection, to maintain strong customer retention rates, which stood at 77.5% in Q3. The Partner business grew, with revenue reaching $105 million, driven by a strategy to expand identity and privacy services, including internationally. Additionally, employee benefits are seeing double-digit growth, and new reputation and privacy services have been introduced to boost expansion. Mobile products have also achieved double-digit growth, especially in Japan, through innovative offerings like digital Vault.

The company is enhancing its value proposition to partners and aims to generate $0.5 billion in partner revenue in the coming years. Legacy business lines contributed $12 million this quarter, a decline from the previous quarter, and are expected to represent only around 1% of total revenue as they continue to decline. Q3 operating income rose 4% to $577 million, with an operating margin of 58.5%. The company is investing in R&D and marketing to support innovation and growth, particularly in its core Cyber Safety business, aiming for mid-single-digit growth. Q3 net income increased by 11% to $350 million, with a diluted EPS of $0.56, marking the fifth consecutive quarter of double-digit EPS growth. Interest expense was $134 million, and the non-GAAP tax rate remained at 22%. The share count decreased by 22 million due to share repurchases. The company's Q3 cash balance was $883 million, supported by $2.4 billion in total liquidity, including a $1.5 billion revolver.

In Q3, the company generated $326 million in operating cash flow and $318 million in free cash flow, including $180 million in cash interest payments. The debt-to-EBITDA net leverage stood at 3.3 times. Looking ahead, they plan to refinance a $1.1 billion senior unsecured note in Q4 of fiscal 2025. Capital allocation for the quarter included $59 million in mandatory debt payments and a $77 million dividend to shareholders. They announced a $1 billion acquisition of MoneyLion, with additional shares conditional on trading conditions, affecting their debt and stock repurchase activities. For Q4 fiscal 2025, a dividend of $0.125 per share is set for March 12th. Since fiscal 2023, over $2 billion in debt has been paid down, and $1.6 billion has been spent on share repurchases. Post-acquisition, the strategy will focus on returning excess free cash flow to shareholders, maintaining dividends, managing debt paydown, and pursuing disciplined M&A opportunities. The company aims to achieve its long-term objectives with its strong cash flow.

The company is increasing its revenue and EPS guidance for the year due to strong performance, anticipating full-year revenue between $3.915 billion and $3.93 billion and non-GAAP EPS between $2.20 and $2.22 per share. This reflects growth expectations in Cyber Safety and is aligned with their objectives. They project Q4 non-GAAP revenue of $990 million to $1,005 million and EPS of $0.57 to $0.59. The management expresses satisfaction with current performance, noting alignment with their 2025 plan and confidence in achieving long-term goals. During a follow-up Q&A, Roger Boyd from UBS inquires about retention rates and their impact on ARPU, asking about future retention expectations given the high mix of first-year mobile customers. Natalie Derse responds, emphasizing retention as a key performance indicator and stating that Q3 retention trends align closely with Q2.

The paragraph discusses the company's strong retention rates, which are leading to confidence in their revenue guidance. The company highlights the importance of various key performance indicators (KPIs) such as retention rate, customer count, and average revenue per user (ARPU) in driving revenue growth. The company achieved a revenue growth increase from 3% last quarter to 4% this quarter. They are focused on capturing global demand across different products and platforms in a return on investment (ROI) positive manner. The KPIs are performing as expected, contributing to the revenue acceleration, and they continue to monitor these metrics closely.

The paragraph discusses the impact of a recent National Public Data Breach on Cyber Safety bookings growth, which was strong at 4% but slightly down from 5% the previous quarter. Natalie Derse explains that while it’s hard to precisely attribute increases to the breach, it did raise awareness and drive demand, contributing about a one-point boost to Q2 bookings. Although the breach's impact is one-time, it created lasting awareness and demand, supporting future revenue and customer retention. Andrew Nowinski then seeks more information on the pending MoneyLion acquisition, noting that details are limited due to its ongoing status.

In the paragraph, Vincent Pilette explains how their company is expanding from core security services to offering comprehensive "Cyber Safety" by including identity and financial protection. As customers increasingly demand financial insights and management tools, the company is enhancing its products to provide features like credit insights and financial wellness. To achieve this, they are partnering with MoneyLion to develop Personal Financial Management (PFM) features and an embedded marketplace for better financial decision-making. The focus is on integrating these capabilities into their existing brands, such as LifeLock, Norton, and Avast, leveraging MoneyLion's backend architecture for improved service offerings.

The paragraph discusses MoneyLion's financial and credit journey, focusing on protection and asset management for customers. The goal is to offer a comprehensive set of financial services, including asset protection, to enhance their AI and personalization capabilities. The expansion will also include global reach and feature development, particularly in cyber safety and financial wellness. The dialogue then shifts to a Q&A session, where the question about the impact of FX movement on full-year revenue guidance is addressed, stating it's immaterial. Another question relates to innovations like Genie and Norton 360, inquiring about the current usage and future trends of Norton 360 among the customer base.

In this paragraph, the speaker discusses the evolution of their company's cybersecurity offerings, highlighting a shift from traditional antivirus products to tools designed to combat scams. The company is integrating these new features into a membership-based platform to better protect customers from threats like scams and data exposure on the dark web. They also note the progress in adopting this membership model across their customer base, mentioning specific adoption rates on desktop and mobile platforms. The discussion includes a mention of acquiring Avast and how it impacted their membership structure.

The paragraph discusses Norton 360's success in mobile adoption and the strategies used to drive that growth. Vincent Pilette highlights that Norton 360 was launched on mobile about two years ago, and its sales have since dominated the platform. Recently, they've incorporated new products like Ultra VPN into their Gen architecture, which offers a membership structure allowing users to upgrade features for enhanced cybersecurity. They also introduced the IPM in-product message tool to gather real-time feedback on consumer behavior. This approach has improved key performance metrics such as ARPU, retention, and cost efficiency. Additionally, Pilette mentions ongoing efforts in customizing and personalizing offerings, highlighting the importance of smoothly transitioning customers to the new Gen Stack for a seamless experience.

The paragraph discusses the progress and plans of a company utilizing AI-enabled IPM platforms for in-product messaging to achieve hyper-personalization based on user behaviors. A team is working on refining data models for this purpose. Additionally, there is a discussion about capital allocation strategies, particularly concerning debt reduction and share buybacks, amid the pending acquisition of MoneyLion. Natalie Derse from the company indicates that once the acquisition deal progresses, the company will resume market activities related to debt and buybacks, aiming to strike a balance and consider both strategies valuable.

The paragraph discusses the company's approach to refinancing a note in Q4, maintaining consistency in their capital allocation strategy since the speaker's arrival, and focuses on delivering additional value. The conversation then shifts to a question from Tomer Zilberman of Bank of America about a $0.01 sequential improvement in ARPU (Average Revenue Per User), which was impacted by currency exchanges, suggesting a $0.02 normalized improvement. Zilberman inquires whether the improvement is broad-based or specific to certain actions like increased mobile customer adoption of Norton 360. Natalie Derse responds by emphasizing the importance of evaluating metrics year-over-year to see improvements, noting a 1% increase in retention rate and a $0.09 increase in ARPU in the Cyber Safety segment.

The paragraph discusses the consistent growth and successful strategies of a company, particularly focusing on cross-selling and upselling within the Norton customer base across various regions. This approach has led to increased Average Revenue Per User (ARPU) and improved customer retention rates. New products are being introduced to enhance membership offerings and drive further upsell opportunities. The company has seen strong ROI from international mobile customer acquisition and is leveraging a flywheel effect where customer acquisition at the top of the funnel leads to a tailored experience through cross-sell and upsell efforts. As a result, customer performance indicators are trending positively, signaling a favorable outlook.

In the paragraph, Vincent Pilette, the CEO, delivers closing remarks during a conference call. He emphasizes the company's commitment to consumer Cyber Safety and discusses the progress made with new products and technologies, including Genie, the new Gen Stack, and AI technologies. Pilette also mentions that the upcoming acquisition of MoneyLion will enhance the company's strategy to support customers' financial wellness, and he looks forward to future discussions. The call is then concluded by the operator.

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