Gen Digital Inc. (GEN) Q4 2025 Earnings Call Transcript

Good afternoon, everyone. Thank you for standing by. My name is Tamia, and I will be your conference operator today. Today's call is being recorded, and all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. At this time for opening remarks, I would like to pass the call over to Jason Starr, Head of Investor Relations.

Thanks, Tamia, and good afternoon, everyone. Welcome to Jen's fourth quarter and full fiscal year 2025 earnings call joining me today are vincent pollett ceo and natalie dursey 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-gap and all growth rates are year over year unless otherwise stated a reconciliation of non-gap to gap measures is included in our press release and 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 routinely post investor-oriented information such as news and events and financial filings. Today's call contains statements regarding our business, financial performance and operations, including the impact on our business and industry that may be considered forward-looking statements. And such statements involve risks 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, May 6, 2025. 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 filings with the SEC, and in particular, our most recent reports on Form 10-K and Form 10-Q. And now I'll turn the call over to Vincent.

Thanks, Jason, and good afternoon, everyone. I appreciate you taking the time to be with us today as we share our Q4 results, review our fiscal year 2025's performance, and share our plans for the upcoming year. Fiscal 2025 was a transformative year for Gen, and our results demonstrate the significant progress we have made in driving accelerated growth in a profitable manner. We continued to execute on our strategy to delivering the best cyber safety solutions to our customers, investing to drive innovation across our portfolio, and growing our customer base, all while maintaining strong financial discipline. Q4 marks another quarter of mid-single-digit top-line growth at 5%, a 23rd consecutive quarter of growth, another quarter of customer account growth, and double-digit growth in earnings. Our reliable and consistent execution may seem easy, but it is not, and I'm very proud of our team for their drive to protect our customers with passion and care every day. Natalie will walk you through the details of Q4 in a moment, but I would like to first summarize our fiscal 25 financial results and further expand on our operating plans for this coming fiscal year. In fiscal 2025, total bookings was a record $4 billion, up 4% year-over-year, with revenue above the high end of our annual guidance. The growth was broad-based, driven across our core cyber safety offerings, security and privacy, as well as in identity theft protection, a market-leading trust-based solution. Our accelerating top-line growth was underpinned by a record non-GAAP operating margin of 58.4%, reflecting a strong cost controls and continued operational efficiencies, including leveraging AI in and for our product portfolio. Non-GAAP EPS of $2.22 was also a record at 15% year-on-year and at the high end of our annual guidance. To round out these strong results, our business remains a robust cash flow generator with unlevered free cash flow of nearly $2 billion. Throughout the year, we continue to deliver, finishing Q4 with a net leverage at 3.2 times EBITDA and an interest expense coverage ratio of over 4.5, representing a very comfortable financial debt position, especially considering our exceptionally strong operating margins and free cash flow generation. Mid-single-digit top-line growth, double-digit EPS gains, and net leverage reduced to nearly three times EBITDA, as well as a record direct customer account, all demonstrate the significant progress we have made in achieving the long-term commitments shared at our investor day in 2023. More importantly, and beyond the financial results, consumers need our solutions given the dynamic threat landscape which shows no signs of slowing we are committed to increasing the pace of our innovation and expanding our geographic reach and channels to bring our cyber safety platform and trust-based solutions to everyone during fiscal year 2025 the consumer cyber safety landscape continued to evolve with ai-powered threats becoming increasingly sophisticated and widespread ai is now used to generate scam websites clone voices for scam calls or create deep fakes for impersonation scams like a roman scam hyper personalized scams like deep fake whatsapp video calls from a relative or colleague are fueled by widespread breaches that give the threat actors your personal data in the meantime ransomware attacks are still very active and have evolved with attackers no longer just encrypting data but now also using it to extort their victims our research shows incidents targeting consumers and very small businesses have more than doubled over the past year with scams now accounting for over 80 percent of consumer cyber incidents this underscores the critical need for smarter ai driven anti-scam technologies that can analyze behavior in real time and stop attacks before they impact consumers this year we significantly enhance our ai driven threat detection capabilities with key investments not only in enhancing our existing security engines which now covers all gen brands but also in developing new engines to expand our protection leadership across additional channels like SMS emails or phone calls. In Q4, we launched Gini scam protection in our northern cyber safety products to help defend against phony calls, texts, emails, or websites. Northern Gini has significantly boosted our overall scam detection efficacy by as much as tenfold since its release. Gini marks a significant advancement in our threat detection and defense and is a true ai powered cyber safety companion that not only proactively protects people but also serves as a personal scam ai agent that educates and guides people on how to keep their data and assets safe our northern 360 platform continues to resonate strongly in global markets particularly as we added genie scam protection refreshed our user interface and migrated our technology to our new gen staff these enhancements not only improve the user experience but also enable faster innovation and a unified data set across products and brands allowing us to better personalize communications and product recommendations with the northern migration now essentially complete we will focus on delivering an enhanced experience to avast customers next in parallel our identity theft protection products and solutions have contributed meaningfully to our fiscal year 25 growth with increased demand for lifelog following heightened consumer awareness after major breaches like the national public data breach we give consumers peace of mind by helping protect their personal data by providing real-time alerts and visibility when the data is exposed and lost protection should they need it we enhanced our offering with credit score insights easier onboarding financial alerts and even introduced access to credit cards and saving accounts based on customers digital and financial replication we have invested in personal data vaults privacy dashboards and proactive security updates lifelogs 4.8 rating across trust pilot and the app store demonstrate the value that our customers see in these offerings and investments. Beyond this strong focus on innovation, we continue to expand our geographic and channel reach by entering new markets. Privacy and identity products were introduced into 15 new markets with encouraging early results and overall identity category grew double digits international. We also doubled down on our partner program, signing up many new accounts, gaining share in Latin America and other emerging markets, as well as expanding our share of wallets in the employee benefit program. As a result of both accelerated innovation and expanded reach, we grew a direct customer count by 1.3 million to over 40 million direct paid customers and a total of over 65 million direct and indirect paid customers in addition to hundreds of millions of freemium users. And now nearly 45% of our direct customers have comprehensive cyber safety memberships reflecting the increasing value of our expanding product portfolio. With our leading and foundational cyber safety platform firmly established, we started to invest in developing additional trust-based adjacencies beyond our core identity protection solutions. After connecting their personal identifiable information and linking their financial accounts for fraud detection, our customers began asking for deeper insight into their financial position and additional ways to benefit beyond just protection, alerts, and restoration. What began as an organic effort to provide more financial insights to our lifelog customers ultimately led to the acquisition of MoneyLion, which closed a couple of weeks ago. This transaction expands our time, accelerates our entry into a financial wellness market, and further enables us to address new consumer needs to accelerate growth. moneylion provides the technology and the architectural backbone of our personal financial management banking and investing solutions and delivers a white label marketplace to match millions of consumers with thousands of financial service offerings from hundreds of partners leveraging our deep consumer insight gen will be their trusted ally empowering them to make well-informed decisions that significantly improve their financial well-being and we're thrilled to welcome Moneyline to the GEM team. Although we just closed the transaction, we're already making progress on integrating Moneyline into GEM. We're applying a proven operational discipline with a continued focus on driving profitable growth. Operational synergies are targeted at funding growth and improving Moneyline operational margin from around 15% a day to over 20% in Fiscal Year 26. To ensure financial prudence, we've structured the business with forward flow model supporting the Instacash product which shifts short-term loans to other financial partners who service them and eliminating any balance sheet exposure to GEM. In parallel, we're embedding key money line capabilities like banking and marketplace into new LifeLock and Northern Financial Wellness features planned to launch throughout fiscal year 2026. This strategic move enables us to accelerate pro-forma growth post-acquisition and we look forward to providing further updates throughout the year. To maintain our pace of innovation, focus, and operational discipline, we are organizing our business around two key segments. A cyber safety platform segment will consist of our award-winning security and privacy offerings. Our mission in the cyber safety platform segment is to provide advanced technology and threat protection that helps customers navigate the digital world securely, privately, and confidently. This segment has a growth potential of mid-single digit and approximately 60% non-GAAP operating margin. We are accelerating the adoption of Gini, our AI-powered anti-scam solution, which is driving membership growth and upgrades to higher tiers plans. Our new GenStat, which features AI-driven dynamic segmentation and a reimagined customer journey, is set to boost customer lifetime value as we move forward our continued solid mid-single digit growth in security and privacy will be supported by key initiatives such as ai powered scam protection mobile and privacy first entry points international expansion and partnerships branded our table our second segment trust-based solutions will include both our identity and financial wellness offerings in this segment our mission is to deliver innovative solutions and insights that empower consumers to manage their identity, reputation, and finances with confidence and freedom. This segment has a high single-digit revenue growth potential and a non-GAAP operating margin target in excess of 30% as we scale up financial wellness. We enter fiscal year 26 with strong momentum in our identity and reputation business, gaining traction by expanding our customer base through increased risk awareness campaigns in both the u.s and international markets through distribution channels like employee benefits and scaling up strategic partnerships we expect to grow our pool and open new channel opportunities to an expanded value proposition that includes embedded financial wellness features the acquisition of money lion presents a powerful opportunity to bring financial wellness to all of gen's 65 million paid customers and hundreds of millions of users initiatives for fiscal year 26 include integrating money lines financial marketplace into our u.s customer base expanding partnership with credit bureaus and financial institutions to deliver personalized solutions and launching our financial wellness company to help our customers make smarter and more informed financial decisions it's definitely an exciting time and we're just getting started when i think about the opportunities our newly formed trust-based solution segment provides and combine them with the growth and momentum exiting fiscal year 2025 i could not be more excited by our prospects as you will hear from natalie we're guiding fiscal year 2026 revenue to be between 4.7 and 4.8 billion representing six to eight percent pro forma growth to sum it all up we're proud of all we accomplished in fiscal year 25 and we're looking forward to building on this momentum in the years ahead gen is very well positioned to lead in a world where digital safety and trust are more important than ever to consumers people are asking to do more with their data so being empowered and enabled by the best in class cyber safety platform and trust-based solutions is even more critical we remain very focused on delivering value to our customers our employees and our shareholders so thank you for your continued support and i will now pass it to natalie who will share more details on our

financial performance and our financial outlook thank you vincent and hello everyone it's a very exciting time for jen we've made significant progress in transforming our business over the past five years and now we are thrilled to welcome the money line team into our portfolio with the financial wellness capabilities gained through this acquisition we're extending our momentum in the fiscal year 2026. For today's call I will walk through our full year fiscal 2025 results followed by our Q4 results and share our outlook for Q1 and fiscal year 2026. I will focus on non-GAAP financials and year-over-year growth rates unless otherwise stated. Fiscal year 2025 was a defining year for Jen as we posted our sixth straight year of growth while continually delivering on our guidance commitments and now positioning ourselves for further acceleration with our acquisition of MoneyLion. Our results demonstrate the significant progress we're making across the five growth levers that we shared at our 2023 Analyst Day, resulting in broad-based growth across our brands, regions, and expanding product portfolio. Total bookings for the year were $4 billion, up 4% in both constant currency and cyber safety, and up 3% in USD. We finished with $3.935 billion in total revenue, also growing 4% in USD and constant currency. Operating income was $2.3 billion and operating margin was 58.4%. Our robust revenue growth combined with our operating discipline and capital allocation enabled us to deliver $2.22 in full-year EPS. at the high end of our guidance and up 14% year-over-year as reported and up 15% in constant currency. Turning to Q4 performance, Q4 was a record quarter, reflecting our 23rd consecutive quarter of growth, with financial results at or above the high end of our guidance. Q4 bookings was $1.08 billion, up 5% in constant currency. Total Q4 revenue exceeded the billion-dollar hurdle for the first time at $1.01 billion, up 5% in USD and in constant currency. We saw broad-based growth across the product portfolio and markets. Our direct KPIs remain healthy, and our partner channels are scaling through identity adoption. I'll now walk through the results in more detail. Direct revenue was $877 million, up 4% in constant currency. A key ingredient to our growth strategy is driving net new customers. And in Q4, we expanded our customer base for the seventh consecutive quarter, increasing to $40.4 million, up over $300,000 sequentially, and up $1.3 million year-over-year. Our growth is driven by our diverse set of customer acquisition channels, particularly international growth markets and through mobile app stores. While the unit economics vary across channels, our strategy is to reach these customers early in their cyber safety journey and leverage our brands, a comprehensive product set, and leading customer service to drive long-term loyalty and healthy returns. Our playbook is working as customer retention is improving at the cohort level, and our overall retention rate increased slightly year-over-year to 78%. As we continue to provide reliable, comprehensive protection, enhance our Norton 360 memberships, and expand financial wellness features in our identity offerings, we are driving long-lasting customer relationships and increasing customer lifetime value. On monetization, our monthly direct ARPU was $7.27 in USD, in line with the previous quarter, and up five pennies from last year's result. This result absorbs about a penny of negative FX headwinds sequentially, and about two pennies of negative FX headwinds year over year. We are growing ARPU mid-single digits in our online customer base, primarily through increased cross-sell penetration in our Norton base and increased Norton 360 membership adoption. Approximately a quarter of our Norton base now has more than one product, an improvement of five points since last year and progressing towards our goal of 30% penetration. As demand for increased cyber protection grows with the threat landscape, we are well positioned to provide customers with a targeted point solution or provide them with an option to move to a higher tier, comprehensive cyber safety membership offering. Now nearly 45% of our direct customer base has a membership offering that provides even greater peace of mind. This is where the breadth and depth of our portfolio shines, and we will continue to drive higher monetization with our product innovation efforts in our mobile base we are growing our two double digits which has primarily been driven by higher norton 360 membership adoption the recent in product messaging capabilities we have embedded into our mobile products are enabling us to engage more closely with the customer during their purchasing journey driving higher sales conversion and a larger percentage of new mobile customers who purchase our norton 360 membership whether it's through first purchases cross sells upsells we have a proven track record of driving increased share of wallet and customer lifetime value after initial purchase with a tailored growth flywheel and playbook for each diverse customer acquisition channel turning to our partner business partner revenue was 121 million dollars in q4 up 15 percent year over year this acceleration was primarily driven by record growth in our employee benefits channel during open enrollment new sales in open enrollment increased by over 75 driven by the strong and healthy pipeline we've built over time and employers are increasingly turning to our offerings to protect their employees identity and protection we're seeing a substantial increase in employers paying direct for our services as a benefit as opposed to offering it as a voluntary benefit to be elected by their employees which results in higher conversion rates through our telco partnerships we're driving further expansion momentum of our identity offerings internationally we are proud of the traction we we're making as we leverage these partner channels to expand our reach and we look forward to sharing more progress in the coming quarters round the out revenue our legacy business lines contribute about 12 million dollars this quarter down from 15 million dollars in prior year as expected turning to profitability q4 operating income was 590 million dollars translating to an operating margin of 58.4 you will see us continue to invest in product and technology as well as marketing with our consistent disciplined approach we invest to bolster our product portfolio with differentiated solutions to reach new and existing customers to extend our international presence especially in identity and privacy and expand into trust-based adjacencies that will touch more parts of the consumer's digital and financial life q4 net income was 366 million dollars up 10 percent year year-over-year. The looted EPS was 59 cents for the quarter, up 12% year-over-year, and up 13% in constant currency. Interest expense related to our debt was approximately $129 million in Q4. Our non-gap tax rate remained steady at 22%, and our ending share count was $624 million, down $13 million year-over-year, reflecting the impact of share repurchases. I'd like to now review a few items related to our balance sheet and cash flow including our recent debt refinancing and material cash activity since our last earnings call including our money line acquisition few four ending cash balance was just over a billion dollars with over 2.5 billion of liquidity when including our 1.5 billion revolver before operating cash flow was 473 million dollars and free cash flow was $470 million, and net leverage was 3.2 times. At the end of February, we issued $950 million in senior unsecured notes with a coupon of 6.25% due in April 2033. And we paid off our $1.1 billion 2025 note with the proceeds. Following our fiscal year end, we secured an additional $750 million of TLB with an interest rate of SOFR plus 175 basis points due April 2032 and paid approximately $1 billion in cash for the money line acquisition. We have no material debt due until fiscal 2028. For more detail about our capital structure, please refer to the appendix slide in our earnings presentation. We paid $77 million to shareholders in the form of our regular quarterly dividend of 12.5 cents per common share. For Q1 Fiscal 2026, the Board of Directors approved a regular quarterly cash dividend of $0.12.5 per common share to be paid on June 11, 2025 for all shareholders of record as of the close of business on May 19, 2025. Since the start of fiscal year 23, we have deployed a total of $1.6 billion of share repurchases, over $2 billion for debt paydown, and $950 million for dividends, totaling $4.6 billion. As a reminder, our current buyback program has $2.7 billion remaining with no expiration date. We will also continue to drive net leverage to less than three times EBITDA by the end of fiscal 2027 for our balanced capital allocation strategy and accelerating growth. Before turning to fiscal 2026, I'd like to sincerely thank the GEN team for your hard work and dedication in all we've accomplished, not only this past fiscal year, but throughout the past five. With the acquisition of lion we're taking the next step in our journey expanding into financial wellness and trust-based solutions which opens an even greater opportunity to drive profitable accelerating revenue growth while maintaining the same operating discipline that will continue to drive increasing value for our customers our employees and our shareholders i couldn't be prouder of the team and i look forward to this next chapter of our journey together. Now let me provide some color on how we will operate and report on our business moving forward. As Vincent mentioned, we will operate with two business segments, cyber safety platform and trust-based solutions. While our top financial priority remains driving accelerating and profitable growth for total gen, this new segmented approach will drive a differentiated focus embedded in our product innovation, resource prioritization, and our go-to-market approach, always keeping the customer at the center of all we do. The two key metrics we will use internally to measure performance in these segments are bookings and non-GAAP operating margin. We prioritize these metrics because bookings reflects all the aspects of our growth framework, be it new customer acquisition, cross-sell, up-sell activity, renewals partner expansion and the value we deliver to our customers every day operating margin reflects our overall efficiency encompassing marketing investments sales activities product innovation and our strong history of delivering profitable growth to provide greater visibility to investors we will report our bookings and operating margin for cyber safety platform and trust-based solutions on a quarterly basis now let me share our q1 and fiscal 2026 outlook and some of the assumptions that underpin it we enter fiscal 2026 in a strong financial position with a strategic growth framework despite general macroeconomic uncertainty our business remains resilient bolstered by a highly recurring revenue base strong customer retention and global diversification we are further supported by the dynamic threat landscape and to an extent the current economic backdrop both of which reinforce the need for a world-class cyber safety platform and trust-based solutions built on top for fiscal year 2026 we expect full year revenue in the range of 4.7 billion to 4.8 billion dollars translating to 6 to 8 percent per forma annual growth we expect non-GAAP EPS to be in the range of two dollars and 46 cents to two dollars and 54 cents per share representing double digit growth of 12 to 15 percent for the year for q1 we expect non-GAAP revenue in the range of 1.18 1.18 billion to 1.21 billion dollars translating to approximately 5 to 7 percent pro forma year-over-year growth we expect q1 non-GAAP eps to be in the range of 59 cents to 61 cents representing double digit growth of 12 to 15 percent in constant currency note that this fiscal year includes an extra week in q1 which will increase our reported q1 and four-year revenue offset by money lion pre-acquisition stub revenue and business model transition this guidance also assumes current fx rates through significant fluctuations uh remain possible given the current volatility in financial markets we will continue to monitor our operating environment and stay focused on what we can control our initial outlook captures a range of outcomes with the midpoint representing our base case in summary fiscal year 2025 was a breakthrough year for jen and we're excited about our plans for fiscal 2026. we're accelerating growth with the same operating discipline you've come to expect our margins remain exceptional enabling disciplined investments in our growth and innovation initiatives to further scale our business and our free cash flow generation is robust creating capacity for ongoing opportunistic share with purchases and further deliver delivering to drive strong returns for our shareholders as always thank you for your time today and i will now turn the call back to the operator to

take your questions operator thank you we will now begin the question and answer session if you'd like to ask a question, please press star followed by 1 on your telephone keypad. If for any reason at all you would like to remove that question, please press star followed by 2. Again, to ask a question, please press star 1. The first comes from Andrew Nowinski with Wells Fargo. You may proceed.

Okay, good afternoon and congrats on the solid results. I really like the way you segmented the business between cyber safety and the trust-based solutions. It certainly makes a lot of sense putting that lifelock in the trust-based segment. So I guess my question is, my first one would be on guidance. You know, it looks roughly like your guidance for fiscal 26, as soon as money line growth can kind of stay in that 29 to 30 percent range that they delivered this last fiscal year. How much visibility do you have in that segment relative to your cyber safety platform?

Well, maybe I'll take that one from Steve. I said you wanted to compromise. So you're right that the guidance is basically based on what we had said in the past, which is our cyber safety all-in before Moneyline has a gross potential outbought mid-single digit. And, you know, we delivered Q4 exiting at 5%, Fulio at 4%. You have a similar momentum and a similar trend if you want going into Fiscal Year 26. Next, when we combine Moneylion, Moneylion grew at around 24%, 25% in the last calendar year. There will be a few shifts here. So a few things to keep in mind in your guidance is we close the business at the end of April. So you don't have a full year. And then while we maintain the current momentum in the Moneylion business, we really are focusing on, A, cross-selling into our install base, building a branded version of our cyber safety but financial wellness feature using the money line architecture and then secondly transforming the business from a pure transactional revenue engine today to something that is moving over the years towards a subscription business and so you have those two combination of trends going into the view and so when you combine it all in it It gives the guidance that he gave you a 6% to 8% pro forma.

Got it. And then maybe a question on capital allocation. I guess, how are you thinking about share repurchases this year while you're balancing the dividend and driving down the net leverage ratio?

Yeah, thanks for the question. We'll get right back to it. You know, the last couple quarters, we've been on pause because of the pending acquisition activity. so we couldn't really get out there. We very much look forward to getting back into a balanced capital allocation application or allocation, and we'll do that with a mixed bag of accelerated debt pay down as well as opportunistic share buyback, given the different factors that we use to make those decisions. We're high cash flow generation. Q2, keep in mind, we do have to have that, you know, elevated level in Q2 of tax payments, but outside of that, very much looking forward to leveraging the cash flow generation that we will build and then allocating in a disciplined way. In terms of the balance and how we'll decide, I would just say, you know, very much going to continue a balanced approach.

You see the balanced approach we've had the last couple years between opportunistic share buyback and accelerated debt pay down, and our plan is to continue that playbook as we look forward got it thank you thank you thank you the following comes from the second kalia with barclays you may proceed great hey guys thanks for taking my hey vincent uh hey natalie thanks for taking my questions here and congrats on closing money line yes thank you um vincent for sure vincent maybe for you you know, Moneyline, and you touched on this in prepared remarks, Moneyline really brings a big network of potential customers to cross-sell to. And maybe one question around that is, how does that network maybe change the type of potential subscribers that you can go after? Does that make sense?

Yeah, it does. And if you don't mind, let me first step back on the strategy, So we have a big platform, cyber security, cyber safety platform, where we extend it to almost all aspects of an online, safe and confident digital life. And, you know, as the world, digital world expands, the first need for everyone is to be safe. And so we offer that. And following our consumer demands, we said, OK, now what do you do in that safe environment? You have your data that are protected, you empower them, control your data. What else can you do? And obviously, as we discussed, protecting your identity, of course, is next, having a good digital reputation. What do you do with that reputation? You also maximize your financial potential and do best financial decisions. And that's how we entered first organically and not inorganically into financial wellness. And that's how I would look at it. Cyber safety as a foundation and then and then trust based solutions on top. So the first view is to use the Moneylion architecture, the engine they've developed, the PFM features they have, to embed that into the solutions and cater it for our current 65 million-plus customers and cross-sell into that install base. So that's the number one focus. You'll hear more about product and feature launch as we progress to Fiscal Year 26. It does evolve and follow that consumer need, if you want, into better financial vision. The second one that it's providing as a benefit is it gets us the ability to improve Moneyline itself in terms of offerings. There have been essentially a premium with a transactional revenue stream. As you know, we're very strong into subscription, customer retention, and basically applying the gen overall consumer internet platform skills, if you want, to the Moneyline business. And then the third one, which is a little bit further down the line, is to offer the full life cycle of a cyber safety and financial wellness offering. so think about in the past we were only offering uh protection and restoration of your credits monitoring system if you want and moneylion was offering you different um uh banking um uh in investment or lending solutions and now you're going to have the full spectrum from building new credits to leveraging new credit to then protecting it and then expanding it and and In that full cycle, if you want, as the customer moves from different cycles of their journey, we will be the trusted brand, whatever brands you take, to follow you in that digital journey. So those three steps will be as we deploy Gen over the next few years. And that's why when Natalie says this is a new chapter and we're excited by all those opportunities, I think that truly reflects it.

Yeah, absolutely, that's helpful. Natalie, maybe the follow-up for you and kind of related to sort of that big customer base that Moneyline brings, you know, you've always been very thoughtful just around customer acquisition costs and sort of individual kind of customer economics. How does Moneyline maybe change that customer acquisition cost or how you think about that I talk it.

It makes me very, very excited. We just have so much opportunity ahead of us to take the existing Moneyline customers and that scaling base and that scaling business model, combine it with our growing customer population, our growing ARCU, our growing retention, now bring them together in a synergistic way. And we just have in an environment where financial wellness demand has never been greater. And so now we just have the opportunity to leverage all of the strength in our cyber safety business, combine it with the money line assets like their proven model and their proven penetration and customer base of the financial wellness tools, their proven AI recommendation engine, and just even further expanding us into customer lives maybe earlier in their financial journey. And so it just allows us even more breadth and depth, more opportunity, a wider range of portfolio of products to go to market with. And in just such a data-driven way with a recommendation engine on top of all of the data that we have for our existing customers, the world's our oyster, quite frankly. And so with that will come efficiencies. In terms of the dollars that we can free up to invest in the capacity to drive that growth, yes, the efficiency should go along with it. You know, we typically say cash is king. Here, its volume is king. And so, we'll leverage that volume from a margin appreciation or accretion perspective, always trying to free up as much capacity as we can to invest behind that growth. But when you think about the actual tax, we should be seeing efficiencies with that additional expansion.

Very helpful. Thanks, guys.

Thanks, Dr. Thank you. The next question comes from Tomer Zilberman with Bank of America. You may proceed.

Hi, guys. I appreciate the comment earlier that you said that the business remains resilient despite some macro uncertainty, but I wanted to ask, as you look at the remainder of the year, especially in the second half of the calendar year where the tariff pause kind of goes away, are you seeing or what I should say like this what what signs of demand are you seeing that gives you confidence that the business remains durable and maybe the second part to that question as we think about money lion is there any concerns that that could be more macro sensitive versus other parts of your business hey this is Vincent I'll take that one and you and I have not told

but we did a lot of study around our business the resilience of our business the curve during difficult moment, whether it was 2008 or the COVID period, and frankly, with a high level of subscription, a high level of auto-renewal, so a business model, if you want, is extremely resilient. In an environment where the threat landscape continues to be as active as ever, we don't see a direct correlation to the overall macro environment. I would not say we're immune. Obviously, it serves with it, but the demand is there for, frankly, a cyber safety product that is, in my opinion, very cheap in terms of giving you full confidence to serve in a secure way on the digital world. So from that perspective, we feel confident that we have a good grasp on our business. We exited March on a strong note, as you've seen by our results, but March was actually a stronger month within the quarter. And frankly, April is in line to that. So from that perspective, we feel good. When you add MoneyLion, maybe you introduce a little bit more volatility, but again, remember that the number one opportunity in this transaction is to offer those features to our current customers that have asked for more PFM and marketplace features, and I think we feel good about that view. And then if really the environment gets a little bit more tense, frankly, people will need to make even better financial decisions in a tight environment. And I think that's where the Moneyline offering fits right in that overall view.

Got it. Thank you. Maybe just a quick follow-up.

Given your experience maybe in past market downturns, is there anything that you're doing in terms of go-to-market or any marketing programs to kind of get ahead of a weaker macro? um you know we we uh paranoid bunch here on the table i can tell you that so so we're always looking at okay what can we roll what do we have i think when you look at the diversification of our business whether that is geographical diversification product and needs that we address diversifications or channels diversifications or marketing channels diversifications We feel really, really well balanced to be able to play and leverage any opportunity we see in the market, while we have a very good grasp on our business being a data-driven team.

And I'd just supplement that or complement that with we keep our customer right at the center. And so whether it's using our products as customers, understanding what macro or any kind of economic factors our customers are facing and navigating through, we really challenge ourselves to keep that customer at the center, whether it's through our products, whether it's the way we talk to them, engage them, or service them, or what they're going through. And we had such a diverse set of product solutions and now such a wider breadth of solutions that we can go to market to help our customers. That's what we're going to stay committed to. No matter what comes our way, what comes our customer's way, we have a way to go to market and figure out ways and solutions and products that can help them through that.

Got it. Thank you very much.

Thank you. As a quick reminder, if you'd like to ask a question, please press star one. The next question comes from Roger Boyd with UBS. You may proceed.

Thanks for taking the questions. And, again, congrats on a strong quarter and closing the acquisition. A nice quarter of subscriber ads. And we've gotten a couple of questions from investors around Google AI overviews might impact your business. I'd love to hear about how you're thinking about this potentially impacting your SEO lead gen strategy.

Any assumptions you're making around click-through rates or customer acquisition costs or anything on on that side of the lead gen yeah maybe i can take it first so so first of all as you know right we have a very diversified um reach to market if you want and whether it's desktop or or online whether it's uh on long form or short form marketing there is a lot of diversification and we almost play in every dimension that you could think of um definitely AI is changing the landscape. We have not seen any current immediate change. And it's all about contextual marketing, adapting as you go and trying to make sure you're right where the context is right. So maybe AI will bring maybe some efficiencies and different ways of doing certain things. But we stay in touch with how the market moves. We're not too worried about it. Actually, it might even be an opportunity.

Good to hear. And then maybe just to circle back to indirect revenue, a really nice acceleration there. Natalie, I know you noted strong traction with employee benefits, but any guardrails for how we should be thinking about indirect growth in your initial outlook for fiscal 26? Anything to keep an eye on in terms of potential revenue timing around open enrollment? And then I think you also brought in a new partnership leader there.

Any any specific changes they're making or new opportunities that you're thinking about for fiscal 26 thanks yeah our indirect channel is just uh for you know just to kind of uh uh circle around is about 10 share of our revenue 15 growth for the quarter very very happy to see that that growth came from broad based uh we've got a lot of channels that make up the indirect revenue we saw broad-based growth across all of them uh the leaders i i always try and call out the bulk of the growth is going to be coming from employee benefits and telcos they're not the only ones that grew but those are the those are the heavier contribution to the growth and that's a pretty consistent growth profile uh it's a growth trend that we've seen the acceleration employee benefits was exactly what we talked about during the script which was we do see just a change of behavior we see the investments that we've put into building those pipelines for multi years now Whether it's through our direct sales or it's through the brokers that we use in the employee benefits channel, just the quality and the effectiveness of those sales channels have really built a very, very profitable, very robust pipeline. And we see the fruit coming from those labors. And then from a telco perspective, we just continue to have those strong partnerships, increase the expansion. And with that expansion is coming, increased demand. And we have a great new sales leader over the overall partner channels. He brings a ton of expertise in the market, a ton of experience. And, you know, with any new leader, they have the opportunity and the privilege to have a clear-eyed approach. And so we very much have very high expectations for the indirect channel under his leadership. But keep in mind, too, let's go back to AID. Back in our fiscal year 2023, AID looked forward. We said that we wanted to scale a high single-digit rate of growth in overall partner. Of course, you know, we're not limiting ourselves to that. We'll take scaling double digits all day long. But in terms of as we look forward, especially in the next year, we're looking to a sustainable, profitable, high single-digit rate of growth for all partner.

That's really helpful. Thank you both.

Thank you. The final question comes from Dan Bergstrom with RBC. You may proceed.

Hey, it's Dan Bergstrom from ATHedberg. Thanks for taking our questions. Congrats on the MoneyLion close. I guess, you know, maybe on those two new segments, sounds like we're going to get bookings and operating margins. Are there any other KPIs for those trust-based solutions that we should be thinking about? Anything that maybe MoneyLion brings in that was either maybe disclosed historically or it might make sense to disclose from time to time?

Let me take that one from a business perspective, and I tell you one supplement she can, but we're very strong in making sure we align. How we talk to you about the business is also how we, of course, share the results with our board and how we drive internally, and it's how we organize around the consumer needs at the core, core, core. I think that's a super important one. And the way we look at our business and the strategies I mentioned is looking at that cyber safety platform as the opportunity to then upgrade your needs to then want to manage your identity, your reputation, and all the way to your financial oneness. And that's how we've organized the innovations and the approach all the way to the market communications or marketing and go-to-market activities. And so we'll report in those segments for you to better understand because we see different dynamics and we see different opportunities in those two segments. Operationally, we'll supplement with some KPIs. We're still refining exactly how we're going to position the KPIs, so I'm not sure I want to hear on the call already say exactly what we will report, but we will share more at our Q1 results at the end of July, early August, and we'll make sure that every investor understands how we look at the business and how those KPIs support the things. Otherwise, But they will be part of the classic KPIs, obviously, that you already probably have in mind on the core business.

That's great. Very helpful. And then the presentation talked to stronger growth here in the U.S. Just any any thoughts or could you drill down into that stronger domestic growth?

Say, look, we saw broad based growth across the different product lines and the global markets. So we we saw, you know, mid single digit rate of growth in the U.S. That was propped up by, you know, a couple quarters ago, we had that MPD breach really brought in a lot of lifelock awareness, additional lifelock customers. Those identity offerings and the scaling of the identity offerings, as well as the increase of membership adoption, all is helping to drive the growth in the United States as well, of course, the membership adoption helping across the world.

Thank you. Hey, everyone, thank you for this concludes our conference call today. Thank you very much for joining me.

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