GEN 8-K
Gen Digital Inc. (GEN)
8-K
2022-05-05
For: 2022-05-05
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Added on
April 06, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): May 5, 2022
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification Number) | |||||||||||||||||||||
(Address of principal executive offices and zip code) | |||||||||||||||||||||||
( | |||||||||||||||||||||||
(Registrant's telephone number, including area code) | |||||||||||||||||||||||
___________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol | Name of each exchange on which registered | |||||||||
par value $0.01 per share | |||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Conditions
On May 5, 2022, NortonLifeLock Inc. (the Company) issued a press release announcing financial results for the year ended April 1, 2022. The Company also posted supplemental financial information to its website. A copy of the press release is furnished as Exhibit 99.01 to this Current Report on Form 8-K and is incorporated herein by reference.
The information in this Item 2.02, including Exhibit 99.01 hereto, shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information contained in this Item 2.02, including Exhibit 99.01 hereto, shall not be incorporated by reference into any registration statement or other document filed with the Securities and Exchange Commission by the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits
(d) The following exhibits are being filed herewith:
| Exhibit No. | Exhibit Title or Description | |||||||
104 | The cover page of this Current Report on Form 8-K, formatted in Inline XBRL. | |||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized on this 5th day of May, 2022.
By: | /s/ Natalie Derse | ||||
| Natalie Derse | |||||
| Chief Financial Officer | |||||
NEWS RELEASE
CONTACTS
Investor Contact Mary Lai | Media Contact Spring Harris | |||||||
| NortonLifeLock Inc. | NortonLifeLock Inc. | |||||||
NortonLifeLock Reports Third Year of Growth with Record Revenue for Fiscal 2022
Company delivers double-digit revenue growth and strong profitability for fiscal year 2022
TEMPE, Ariz. – May 5, 2022 – NortonLifeLock Inc. (NASDAQ: NLOK), a global leader in consumer Cyber Safety, today released results for its fiscal year 2022 fourth quarter and full year, which ended April 1, 2022.
FY22 Financial Highlights and Commentary YoY
FY22 GAAP revenue was $2,796 million, up 10% in USD. FY22 GAAP diluted EPS from continuing operations was $1.41, up 22%. FY22 GAAP operating margin was 36.0%, up 90 basis points. FY22 operating cash flow was $974 million, up 38%.
FY22 Non-GAAP YoY
•Revenue of $2.8 billion, up 10% in USD and CC
•Diluted EPS of $1.75, up 22%
•Bookings of $2.9 billion, up 8% in USD and CC
•Operating margin was 52.7%, up 300 bps
•Direct customer count of 23.5 million, up 0.6 million
•Free cash flow of $968 million, up 38%
Q4 Financial Highlights and Commentary YoY
Q4 GAAP revenue was $716 million, up 7% in USD. Q4 GAAP diluted EPS from continuing operations was $0.20, down 43%.
Q4 Non-GAAP YoY
•Revenue of $717 million, up 6% in USD and 8% in CC
•Diluted EPS of $0.46, up 15%
•Bookings of $793 million, up 4% in USD and 6% in CC
“Fiscal 2022 validated our long-term strategy and showed good progress in our transformation journey with accelerated pace of product innovation, global expansion, and a relentless focus on customer experience,” said Vincent Pilette, CEO of NortonLifeLock. “We are further increasing the value we deliver to our customers by making comprehensive Cyber
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Safety available to everyone and utilizing our operational levers to deliver shareholder value despite the macroeconomic challenges.”
“Q4 marked our tenth consecutive quarter of top-line growth,” said Natalie Derse, CFO of NortonLifeLock. “We intend to carry this momentum forward as we drive towards our long-term business objectives, leveraging our multiple growth levers and continued operational discipline.”
Fiscal 2023 Q1 Guidance
•Non-GAAP Revenue is expected to be in the range of $705 to $715 million, translating to approximately 5 to 7% growth YoY in constant currency, with 3 points of FX headwind.
•Non-GAAP EPS is expected to be in the range of $0.42 to $0.44, including $0.03 FX headwind YoY and $0.02 incremental dilution impact from new accounting guidance on convertible debt.
NortonLifeLock and Avast Merger
As previously announced, the merger is in a Phase 2 review with the U.K. Competition and Markets Authority (“CMA”) and anticipated to close in mid-to-late 2022. The Company continues to constructively engage with the CMA and their review. The timeline may be subject to change.
Quarterly Cash Dividend
NortonLifeLock's Board of Directors has declared a quarterly cash dividend of $0.125 per common share to be paid on June 22, 2022, to all shareholders of record as of the close of business on June 8, 2022.
Q4 Earnings Conference Call
Fiscal 2022 Q4 Earnings Call
May 5, 2022
2 p.m. PT / 5 p.m. ET
2 p.m. PT / 5 p.m. ET
Webcast & Dial-In: Investor.NortonLifeLock.com (replay will be posted after the call).
For additional details regarding NortonLifeLock's results and outlook, please see the Financials section of the Investor Relations website at Investor.NortonLifeLock.com.
About NortonLifeLock Inc.
NortonLifeLock Inc. (NASDAQ: NLOK) is a global leader in consumer Cyber Safety, protecting and empowering people to live their digital lives safely. We are the consumer's trusted ally in an increasingly complex and connected world. Learn more about how we're transforming Cyber Safety at www.NortonLifeLock.com.
Forward-Looking Statements
This press release contains statements which may be considered forward-looking within the meaning of the U.S. federal securities laws. In some cases, you can identify these forward-
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looking statements by the use of terms such as "expect," "will," "continue," or similar expressions, and variations or negatives of these words, but the absence of these words does not mean that a statement is not forward-looking. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, but not limited to: the statements under "Fiscal 2023 Q1 Guidance," including expectations relating to Q1 FY23 non-GAAP revenue and non-GAAP EPS; expectation as to satisfaction or waiver of any regulatory conditions and any risks associated therewith; and any statements of assumptions underlying any of the foregoing. These statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from results expressed or implied in this press release. Such risk factors include, but are not limited to, those related to: the current and future impact of the COVID-19 pandemic on the Company's business and industry; retention of executive leadership team members; difficulties in improving sales and product development during leadership transitions; difficulties in executing the operating model for the consumer cyber safety business; lower than anticipated returns from the Company's investments in direct customer acquisition; the impact of acquisitions and our ability to achieve expected synergies or attendant cost savings; difficulties and delays in reducing run rate expenses and monetizing underutilized assets; general business and economic conditions; matters arising out of our completed Audit Committee investigation and the ongoing U.S. Securities and Exchange Commission investigation; fluctuations and volatility in NortonLifeLock's stock price; the ability of NortonLifeLock to successfully execute strategic plans; the ability to maintain customer and partner relationships; the ability of NortonLifeLock to achieve its cost and operating efficiency goals; the anticipated growth of certain market segments; NortonLifeLock's sales and business strategy; fluctuations in tax rates and foreign currency exchange rates; the potential for corporate tax increases under the Biden Administration; the timing and market acceptance of new product releases and upgrades; and the successful development of new products and the degree to which these products gain market acceptance. Additional information concerning these and other risk factors is contained in the Risk Factors sections of NortonLifeLock's most recent reports on Form 10-K and Form 10-Q. NortonLifeLock assumes no obligation, and does not intend, to update these forward-looking statements as a result of future events or developments.
Use of Non-GAAP Financial Information
We use non-GAAP measures of operating margin, net income and earnings per share, which are adjusted from results based on GAAP and exclude certain expenses, gains and losses. We also provide the non-GAAP metrics of revenues, constant currency revenues, and free cash flow, which is defined as cash flows from operating activities, less purchases of property and equipment. These non-GAAP financial measures are provided to enhance the user's understanding of our past financial performance and our prospects for the future. Our management team uses these non-GAAP financial measures in assessing NortonLifeLock's performance, as well as in planning and forecasting future periods. These non-GAAP financial measures are not computed according to GAAP and the methods we use to compute them may differ from the methods used by other companies. Non-GAAP financial measures are supplemental, should not be considered a substitute for financial information presented in accordance with GAAP and should be read only in conjunction with our
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consolidated financial statements prepared in accordance with GAAP. Readers are encouraged to review the reconciliation of our non-GAAP financial measures to the comparable GAAP results, which is attached to our quarterly earnings release, and which can be found, along with other financial information including the Earnings Presentation, on the investor relations page of our website at Investor.NortonLifeLock.com. No reconciliation of the forecasted range for non-GAAP EPS guidance is included in this release because most non-GAAP adjustments pertain to events that have not yet occurred. It would be unreasonably burdensome to forecast, therefore we are unable to provide an accurate estimate.
UK Takeover Code: Profit Forecast
UK Takeover Code
On August 10, 2021, the boards of NortonLifeLock Inc. ("NortonLifeLock") and Avast plc ("Avast") announced that they had reached agreement on the terms of a recommended merger of Avast with NortonLifeLock, in the form of a recommended offer by Nitro Bidco Limited, a wholly-owned subsidiary of NortonLifeLock, for the entire issued and to be issued share capital of Avast (the "Merger"). The Merger is governed by the UK's City Code on Takeovers and Mergers (the "UK Takeover Code"). In accordance with the rules of the UK Takeover Code, NortonLifeLock is required to publish certain confirmations in connection with the information set out in this press release. These confirmations are set out below.
NortonLifeLock Profit Forecast
The following statement regarding NortonLifeLock’s earnings per share (“EPS”) in this press release (the “NortonLifeLock Profit Forecast”) constitutes an ordinary course profit forecast for the purposes of Rule 28 1(a) and Note 2(b) on Rule 28.1 of the UK Takeover Code:
•Non-GAAP EPS is expected to be in the range of $0.42 to $0.44, including $0.03 FX headwind YoY and $0.02 incremental dilution impact from new accounting guidance on convertible debt.
References to "GAAP" in the NortonLifeLock Profit Forecast are to U.S. GAAP, being the accounting policies applied in the preparation of NortonLifeLock's annual results for the year ended April 1, 2022.
Basis of preparation
The NortonLifeLock Profit Forecast has been prepared on a basis consistent with NortonLifeLock's accounting policies, as summarized in the paragraph entitled "Use of Non-GAAP Financial Information" above. The NortonLifeLock Profit Forecast excludes any transaction costs attributable to the Merger or any other associated accounting impacts as a direct result of the Merger.
Assumptions
The NortonLifeLock Profit Forecast is based on the assumptions listed below.
Factors outside the influence or control of the NortonLifeLock Directors:
•There will be no material changes to existing prevailing macroeconomic or political conditions in the markets and regions in which NortonLifeLock operates.
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•There will be no material changes to the conditions of the markets and regions in which NortonLifeLock operates or in relation to customer demand or the behavior of competitors in those markets and regions.
•The interest, inflation and tax rates in the markets and regions in which NortonLifeLock operates will remain materially unchanged from the prevailing rates.
•There will be no material adverse events that will have a significant impact on NortonLifeLock's financial performance.
•There will be no material adverse events that will have a significant impact on the timing and market acceptance of new product releases and upgrades by NortonLifeLock.
•There will be no business disruptions that materially affect NortonLifeLock or its key customers, including natural disasters, acts of terrorism, cyber-attack and/or technological issues or supply chain disruptions.
•There will be no material changes to foreign exchange rates that will have a significant impact on NortonLifeLock's revenue or cost base.
•There will be no material changes in legislation or regulatory requirements impacting NortonLifeLock's operations or its accounting policies.
•There will be no new material litigation and no unfavorable resolutions of existing material litigation in relation to any of NortonLifeLock's operations.
•The announcement of the Merger will not have any material impact on NortonLifeLock's ability to negotiate new business.
Factors within the influence and control of the NortonLifeLock Directors:
•There will be no material change to the present executive management of NortonLifeLock.
•There will be no material change in the operational strategy of NortonLifeLock.
•There will be no material adverse change in NortonLifeLock's ability to maintain customer and partner relationships.
•There will be no material acquisitions or disposals.
•There will be no material strategic investments over and above those currently planned.
•There will be no material change in the dividend or capital policies of NortonLifeLock.
•There will be no unexpected technical or network issues with products or processes.
NortonLifeLock Directors' confirmation
With the consent of Avast, the Panel on Takeovers and Mergers has granted a dispensation from the UK Takeover Code requirement for NortonLifeLock's reporting accountants and financial advisers to prepare reports in respect of the NortonLifeLock Profit Forecast.
The NortonLifeLock Directors have considered the NortonLifeLock Profit Forecast and confirm that it has been properly compiled on the basis of the assumptions set out in this press release and that the basis of the accounting used is consistent with NortonLifeLock's accounting policies.
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No profit forecasts or estimates
The NortonLifeLock Profit Forecast is a profit forecast for the purposes of Rule 28 of the UK Takeover Code.
Other than in respect of the NortonLifeLock Profit Forecast, no statement in this press release is intended as, or is to be construed as, a profit forecast or estimate for any period and no statement in this press release should be interpreted to mean that earnings or earnings per ordinary share for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per ordinary share.
For the purposes of Rule 28 of the UK Takeover Code, the NortonLifeLock Profit Forecast contained in this press release is the responsibility of NortonLifeLock and the NortonLifeLock Directors.
Publication on website
A copy of this press release will be made available on NortonLifeLock's website (at https://investor.nortonlifelock.com/) by no later than 12 noon London time on the business day following the date of this press release. Neither the contents of that website nor the content of any other website accessible from hyperlinks on such website is incorporated into, or forms part of, this press release.
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NORTONLIFELOCK INC.
Condensed Consolidated Balance Sheets
(Unaudited, in millions)
| April 1, 2022 | April 2, 2021 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 1,887 | $ | 933 | |||||||
| Short-term investments | 4 | 18 | |||||||||
| Accounts receivable, net | 120 | 117 | |||||||||
| Other current assets | 193 | 237 | |||||||||
| Assets held for sale | 56 | 233 | |||||||||
| Total current assets | 2,260 | 1,538 | |||||||||
| Property and equipment, net | 60 | 78 | |||||||||
| Operating lease assets | 74 | 76 | |||||||||
| Intangible assets, net | 1,023 | 1,116 | |||||||||
| Goodwill | 2,873 | 2,867 | |||||||||
| Other long-term assets | 653 | 686 | |||||||||
| Total assets | $ | 6,943 | $ | 6,361 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 63 | $ | 52 | |||||||
| Accrued compensation and benefits | 81 | 107 | |||||||||
| Current portion of long-term debt | 1,000 | 313 | |||||||||
| Contract liabilities | 1,264 | 1,210 | |||||||||
| Current operating lease liabilities | 18 | 26 | |||||||||
| Other current liabilities | 639 | 428 | |||||||||
| Total current liabilities | 3,065 | 2,136 | |||||||||
| Long-term debt | 2,736 | 3,288 | |||||||||
| Long-term contract liabilities | 42 | 55 | |||||||||
| Deferred income tax liabilities | 75 | 137 | |||||||||
| Long-term income taxes payable | 996 | 1,119 | |||||||||
| Long-term operating lease liabilities | 75 | 66 | |||||||||
| Other long-term liabilities | 47 | 60 | |||||||||
| Total liabilities | 7,036 | 6,861 | |||||||||
| Total stockholders’ equity (deficit) | (93) | (500) | |||||||||
| Total liabilities and stockholders’ equity (deficit) | $ | 6,943 | $ | 6,361 | |||||||
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NORTONLIFELOCK INC.
Condensed Consolidated Statements of Operations
(Unaudited, in millions, except per share amounts)
| Three Months Ended | Year Ended | ||||||||||||||||||||||
| April 1, 2022 | April 2, 2021 | April 1, 2022 | April 2, 2021 | ||||||||||||||||||||
| Net revenues | $ | 716 | $ | 672 | $ | 2,796 | $ | 2,551 | |||||||||||||||
| Cost of revenues | 101 | 99 | 408 | 362 | |||||||||||||||||||
| Gross profit | 615 | 573 | 2,388 | 2,189 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Sales and marketing | 156 | 148 | 622 | 576 | |||||||||||||||||||
| Research and development | 59 | 68 | 253 | 267 | |||||||||||||||||||
| General and administrative | 242 | 52 | 392 | 215 | |||||||||||||||||||
| Amortization of intangible assets | 22 | 20 | 85 | 74 | |||||||||||||||||||
| Restructuring and other costs | 7 | 19 | 31 | 161 | |||||||||||||||||||
| Total operating expenses | 486 | 307 | 1,383 | 1,293 | |||||||||||||||||||
| Operating income (loss) | 129 | 266 | 1,005 | 896 | |||||||||||||||||||
| Interest expense | (31) | (35) | (126) | (144) | |||||||||||||||||||
| Other income (expense), net | (2) | 58 | 163 | 120 | |||||||||||||||||||
| Income (loss) from continuing operations before income taxes | 96 | 289 | 1,042 | 872 | |||||||||||||||||||
| Income tax expense (benefit) | (24) | 81 | 206 | 176 | |||||||||||||||||||
| Income (loss) from continuing operations | 120 | 208 | 836 | 696 | |||||||||||||||||||
| Income (loss) from discontinued operations | — | (14) | — | (142) | |||||||||||||||||||
| Net income (loss) | $ | 120 | $ | 194 | $ | 836 | $ | 554 | |||||||||||||||
| Income (loss) per share - basic: | |||||||||||||||||||||||
| Continuing operations | $ | 0.21 | $ | 0.36 | $ | 1.44 | $ | 1.18 | |||||||||||||||
| Discontinued operations | $ | — | $ | (0.02) | $ | — | $ | (0.24) | |||||||||||||||
Net income per share - basic (1) | $ | 0.21 | $ | 0.33 | $ | 1.44 | $ | 0.94 | |||||||||||||||
| Income (loss) per share - diluted: | |||||||||||||||||||||||
| Continuing operations | $ | 0.20 | $ | 0.35 | $ | 1.41 | $ | 1.16 | |||||||||||||||
| Discontinued operations | $ | — | $ | (0.02) | $ | — | $ | (0.24) | |||||||||||||||
Net income per share - diluted (1) | $ | 0.20 | $ | 0.33 | $ | 1.41 | $ | 0.92 | |||||||||||||||
Weighted-average shares outstanding: | |||||||||||||||||||||||
| Basic | 582 | 582 | 581 | 589 | |||||||||||||||||||
| Diluted | 593 | 587 | 591 | 600 | |||||||||||||||||||
(1) Net income per share amounts may not add due to rounding.
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NORTONLIFELOCK INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in millions)
| Three Months Ended | Year Ended | ||||||||||||||||||||||
| April 1, 2022 | April 2, 2021 | April 1, 2022 | April 2, 2021 | ||||||||||||||||||||
| OPERATING ACTIVITIES: | |||||||||||||||||||||||
| Net income | $ | 120 | $ | 194 | $ | 836 | $ | 554 | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
| Amortization and depreciation | 32 | 37 | 140 | 150 | |||||||||||||||||||
| Impairments and write-offs of current and long-lived assets | 5 | 2 | 13 | 90 | |||||||||||||||||||
| Stock-based compensation expense | 19 | 15 | 70 | 81 | |||||||||||||||||||
| Deferred income taxes | (46) | (5) | (62) | 42 | |||||||||||||||||||
| Loss (gain) on extinguishment of debt | (2) | — | 3 | (20) | |||||||||||||||||||
| Gain on sale of properties | — | (63) | (175) | (98) | |||||||||||||||||||
| Non-cash operating lease expense | 4 | 5 | 20 | 22 | |||||||||||||||||||
| Other | (7) | (2) | 1 | 52 | |||||||||||||||||||
| Changes in operating assets and liabilities, net of acquisitions: | |||||||||||||||||||||||
| Accounts receivable, net | (11) | 2 | (9) | 3 | |||||||||||||||||||
| Accounts payable | (19) | (21) | 10 | (44) | |||||||||||||||||||
| Accrued compensation and benefits | 1 | 15 | (26) | (10) | |||||||||||||||||||
| Contract liabilities | 66 | 97 | 67 | 118 | |||||||||||||||||||
| Income taxes payable | (11) | 49 | (78) | (299) | |||||||||||||||||||
| Other assets | (55) | 108 | (26) | 144 | |||||||||||||||||||
| Other liabilities | 230 | (77) | 190 | (79) | |||||||||||||||||||
| Net cash provided by (used in) operating activities | 326 | 356 | 974 | 706 | |||||||||||||||||||
| INVESTING ACTIVITIES: | |||||||||||||||||||||||
| Purchases of property and equipment | (2) | (1) | (6) | (6) | |||||||||||||||||||
| Payments for acquisitions, net of cash acquired | — | (344) | (39) | (344) | |||||||||||||||||||
| Proceeds from the maturities and sales of short-term investments | 6 | 8 | 15 | 68 | |||||||||||||||||||
| Proceeds from the sale of property | — | 100 | 355 | 218 | |||||||||||||||||||
| Other | 6 | 4 | 1 | (5) | |||||||||||||||||||
| Net cash provided by (used in) investing activities | 10 | (233) | 326 | (69) | |||||||||||||||||||
| FINANCING ACTIVITIES: | |||||||||||||||||||||||
| Repayments of debt and related equity component | (150) | (12) | (541) | (1,941) | |||||||||||||||||||
| Proceeds from issuance of debt, net of issuance costs | — | — | 512 | 750 | |||||||||||||||||||
| Net proceeds from sales of common stock under employee stock incentive plans | 6 | 8 | 14 | 24 | |||||||||||||||||||
| Tax payments related to restricted stock units | — | (1) | (15) | (58) | |||||||||||||||||||
| Dividends and dividend equivalents paid | (73) | (73) | (303) | (373) | |||||||||||||||||||
| Repurchases of common stock | — | (166) | — | (304) | |||||||||||||||||||
| Other | — | (1) | — | (1) | |||||||||||||||||||
| Net cash provided by (used in) financing activities | (217) | (245) | (333) | (1,903) | |||||||||||||||||||
| Effect of exchange rate fluctuations on cash and cash equivalents | (3) | 9 | (13) | 22 | |||||||||||||||||||
| Change in cash and cash equivalents | 116 | (113) | 954 | (1,244) | |||||||||||||||||||
| Beginning cash and cash equivalents | 1,771 | 1,046 | 933 | 2,177 | |||||||||||||||||||
| Ending cash and cash equivalents | $ | 1,887 | $ | 933 | $ | 1,887 | $ | 933 | |||||||||||||||
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NORTONLIFELOCK INC.
Reconciliation of Selected GAAP Measures to Non-GAAP Measures (1) (2)
(Unaudited, in millions, except per share amounts)
| Three Months Ended | Year Ended | ||||||||||||||||||||||
| April 1, 2022 | April 2, 2021 | April 1, 2022 | April 2, 2021 | ||||||||||||||||||||
| Operating income | $ | 129 | $ | 266 | $ | 1,005 | $ | 896 | |||||||||||||||
| Contract liabilities fair value adjustment | 1 | 5 | 11 | 5 | |||||||||||||||||||
| Stock-based compensation | 19 | 13 | 70 | 71 | |||||||||||||||||||
| Amortization of intangible assets | 29 | 31 | 124 | 105 | |||||||||||||||||||
| Restructuring and other costs | 7 | 19 | 31 | 161 | |||||||||||||||||||
| Acquisition and integration costs | 8 | 3 | 37 | 4 | |||||||||||||||||||
| Litigation settlement charges | 198 | 4 | 202 | 29 | |||||||||||||||||||
| Other | — | 1 | — | — | |||||||||||||||||||
| Operating income (Non-GAAP) | $ | 391 | $ | 342 | $ | 1,480 | $ | 1,271 | |||||||||||||||
| Operating margin | 18.0 | % | 39.6 | % | 35.9 | % | 35.1 | % | |||||||||||||||
| Operating margin (Non-GAAP) | 54.5 | % | 50.5 | % | 52.7 | % | 49.7 | % | |||||||||||||||
| Net income | $ | 120 | $ | 194 | $ | 836 | $ | 554 | |||||||||||||||
| Adjustments to income from continuing operations: | |||||||||||||||||||||||
| Contract liabilities fair value adjustment | 1 | 5 | 11 | 5 | |||||||||||||||||||
| Stock-based compensation | 19 | 13 | 70 | 70 | |||||||||||||||||||
| Amortization of intangible assets | 29 | 31 | 124 | 105 | |||||||||||||||||||
| Restructuring and other costs | 7 | 19 | 31 | 161 | |||||||||||||||||||
| Acquisition and integration costs | 8 | 3 | 37 | 4 | |||||||||||||||||||
| Litigation settlement charges | 198 | 4 | 202 | 29 | |||||||||||||||||||
| Other | (2) | 5 | 7 | 2 | |||||||||||||||||||
| Non-cash interest expense | 2 | 2 | 8 | 9 | |||||||||||||||||||
| Loss (gain) on extinguishment of debt | (2) | — | 3 | (20) | |||||||||||||||||||
| Gain on sale of properties | — | (63) | (175) | (98) | |||||||||||||||||||
| Total adjustments to GAAP income from continuing operations before income taxes | 260 | 19 | 318 | 267 | |||||||||||||||||||
| Adjustment to GAAP provision for income taxes | (109) | 7 | (120) | (97) | |||||||||||||||||||
| Total adjustment to continuing operations, net of taxes | 151 | 26 | 198 | 170 | |||||||||||||||||||
| Discontinued operations | — | 14 | — | 142 | |||||||||||||||||||
| Net income (Non-GAAP) | $ | 271 | $ | 234 | $ | 1,034 | $ | 866 | |||||||||||||||
| Diluted net income per share | $ | 0.20 | $ | 0.33 | $ | 1.41 | $ | 0.92 | |||||||||||||||
| Adjustments to diluted net income per share: | |||||||||||||||||||||||
| Contract liabilities fair value adjustment | 0.00 | 0.01 | 0.02 | 0.01 | |||||||||||||||||||
| Stock-based compensation | 0.03 | 0.02 | 0.12 | 0.12 | |||||||||||||||||||
| Amortization of intangible assets | 0.05 | 0.05 | 0.21 | 0.18 | |||||||||||||||||||
| Restructuring and other costs | 0.01 | 0.03 | 0.05 | 0.27 | |||||||||||||||||||
| Acquisition and integration costs | 0.01 | 0.01 | 0.06 | 0.01 | |||||||||||||||||||
| Litigation settlement charges | 0.33 | 0.01 | 0.34 | 0.05 | |||||||||||||||||||
| Other | (0.00) | 0.01 | 0.01 | 0.00 | |||||||||||||||||||
| Non-cash interest expense | 0.00 | 0.00 | 0.01 | 0.02 | |||||||||||||||||||
| Loss (gain) on extinguishment of debt | (0.00) | — | 0.01 | (0.03) | |||||||||||||||||||
| Gain on sale of properties | — | (0.11) | (0.30) | (0.16) | |||||||||||||||||||
| Total adjustments to GAAP income from continuing operations before income taxes | 0.44 | 0.03 | 0.54 | 0.45 | |||||||||||||||||||
| Adjustment to GAAP provision for income taxes | (0.18) | 0.01 | (0.20) | (0.16) | |||||||||||||||||||
| Total adjustment to continuing operations, net of taxes | 0.25 | 0.04 | 0.34 | 0.28 | |||||||||||||||||||
| Discontinued operations | — | 0.02 | — | 0.24 | |||||||||||||||||||
| Diluted net income per share (Non-GAAP) | $ | 0.46 | $ | 0.40 | $ | 1.75 | $ | 1.44 | |||||||||||||||
| Diluted weighted-average shares outstanding | 593 | 587 | 591 | 600 | |||||||||||||||||||
| Diluted weighted-average shares outstanding (Non-GAAP) | 593 | 587 | 591 | 600 | |||||||||||||||||||
(1) This presentation includes non-GAAP measures. Non-GAAP financial measures are supplemental and should not be considered a substitute for financial information presented in accordance with GAAP. For a detailed explanation of these non-GAAP measures, see Appendix A.
(2) Amounts may not add due to rounding.
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NORTONLIFELOCK INC.
Revenues and Consumer Cyber Safety Metrics
(Unaudited, in millions, except per user data)
| Revenues (Non-GAAP) | |||||||||||||||||||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||||||||||||||||||
| April 1, 2022 | April 2, 2021 | Variance in % | April 1, 2022 | April 2, 2021 | Variance in % | ||||||||||||||||||||||||||||||
| Revenues | $ | 716 | $ | 672 | 7 | % | $ | 2,796 | $ | 2,551 | 10 | % | |||||||||||||||||||||||
Contract liabilities fair value adjustment (1) | 1 | 5 | 11 | 5 | |||||||||||||||||||||||||||||||
| Revenues (Non-GAAP) | 717 | 677 | 6 | % | 2,807 | 2,556 | 10 | % | |||||||||||||||||||||||||||
Exclude foreign exchange impact (2) | 15 | — | 15 | — | |||||||||||||||||||||||||||||||
| Constant currency adjusted revenues (Non-GAAP) | $ | 732 | $ | 677 | 8 | % | $ | 2,822 | $ | 2,556 | 10 | % | |||||||||||||||||||||||
| Consumer Cyber Safety Metrics | |||||||||||||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||||||||||||
| April 1, 2022 | December 31, 2021 | April 2, 2021 | April 1, 2022 | April 2, 2021 | |||||||||||||||||||||||||
| Direct customer revenues | $ | 627 | $ | 622 | $ | 602 | $ | 2,476 | $ | 2,286 | |||||||||||||||||||
| Partner revenues | $ | 90 | $ | 82 | $ | 75 | $ | 331 | $ | 270 | |||||||||||||||||||
| Average direct customer count | 23.5 | 23.4 | 22.8 | 23.3 | 21.2 | ||||||||||||||||||||||||
| Direct customer count (at quarter end) | 23.5 | 23.4 | 23.0 | 23.5 | 23.0 | ||||||||||||||||||||||||
| Direct average revenue per user (ARPU) | $ | 8.90 | $ | 8.87 | $ | 8.80 | $ | 8.87 | $ | 9.01 | |||||||||||||||||||
(1) Contract liabilities fair value adjustment represents the quarterly Avira deferred revenue haircut amortization recognized during the quarter.
(2) Calculated using year ago foreign exchange rates.
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NORTONLIFELOCK INC.
Appendix A
Explanation of Non-GAAP Measures and Other Items
Objective of non-GAAP measures: We believe our presentation of non-GAAP financial measures, when taken together with corresponding GAAP financial measures, provides meaningful supplemental information regarding the Company’s operating performance for the reasons discussed below. Our management team uses these non-GAAP financial measures in assessing NortonLifeLock’s performance, as well as in planning and forecasting future periods. Due to the importance of these measures in managing the business, we use non-GAAP measures in the evaluation of management’s compensation. These non-GAAP financial measures are not computed according to GAAP and the methods we use to compute them may differ from the methods used by other companies. Non-GAAP financial measures are supplemental and should not be considered a substitute for financial information presented in accordance with GAAP and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.
Contract liabilities adjustment: Our non-GAAP net revenues eliminate the impact of contract liabilities purchase accounting adjustments. Prior to our adoption of ASU 2021-08 in fiscal 2022, GAAP required an adjustment to the liability for acquired contract liabilities such that the liability approximates how much we, the acquirer, would have to pay a third party to assume the liability. We believe that eliminating the impact of this adjustment improves the comparability of revenues between periods. Also, although the adjustment amounts will never be recognized in our GAAP financial statements, we do not expect the acquisitions to affect the future renewal rates of revenues excluded by the adjustments. In addition, our management uses non-GAAP net revenues, adjusted for the impact of purchase accounting adjustments to assess our operating performance and overall revenue trends. Nevertheless, non-GAAP net revenues has limitations as an analytical tool and should not be considered in isolation or as a substitute for GAAP net revenues. We believe these adjustments are useful to investors as an additional means to reflect revenue trends of our business. However, other companies in our industry may not calculate these measures in the same manner which may limit their usefulness for comparative purposes. Our acquisition of Avira was the last acquisition pre-adoption of the new literature.
Stock-based compensation: This consists of expenses for employee restricted stock units, performance-based awards, bonus share programs, stock options and our employee stock purchase plan, determined in accordance with GAAP. We evaluate our performance both with and without these measures because stock-based compensation is a non-cash expense and can vary significantly over time based on the timing, size, nature and design of the awards granted, and is influenced in part by certain factors that are generally beyond our control, such as the volatility of the market value of our common stock. In addition, for comparability purposes, we believe it is useful to provide a non-GAAP financial measure that excludes stock-based compensation to facilitate the comparison of our results to those of other companies in our industry.
Amortization of intangible assets: Amortization of intangible assets consists of amortization of acquisition-related intangibles assets such as developed technology, customer relationships and trade names acquired in connection with business combinations. We record charges relating to the amortization of these intangibles within both cost of revenues and operating expenses in our GAAP financial statements. Under purchase accounting, we are required to allocate a portion of the purchase price to intangible assets acquired and amortize this amount over the estimated useful lives of the acquired intangible assets. However, the purchase price allocated to these assets is not necessarily reflective of the cost we would incur to internally develop the intangible asset. Further, amortization charges for our acquired intangible assets are inconsistent in size and are significantly impacted by the timing and valuation of our acquisitions. We eliminate these charges from our non-GAAP operating results to facilitate an evaluation of our current operating performance and provide better comparability to our past operating performance.
Restructuring and other costs: Restructuring charges are costs associated with a formal restructuring plan and are primarily related to employee severance and benefit arrangements, contract termination costs, and assets write-offs, as well as other exit and disposal costs. Included in other exit and disposal costs are advisory fees incurred in connection with restructuring events and facilities exit costs. Separation costs primarily consist of consulting costs incurred in connection with the divestiture of our Enterprise Security business (the Broadcom sale). We exclude restructuring and other costs from our non-GAAP results as we believe that these costs are incremental to core activities that arise in the ordinary course of our business and do not reflect our current operating performance, and that excluding these charges facilitates a more meaningful evaluation of our current operating performance and comparisons to our past operating performance.
Acquisition-related costs: These represent the transaction and business integration costs related to significant acquisitions that are charged to operating expense in our GAAP financial statements. These costs include incremental expenses incurred to affect these business combinations such as advisory, legal, accounting, valuation, and other professional or consulting fees. We exclude these costs from our non-GAAP results as they have no direct correlation to the operation of our business, and because we believe that the non-GAAP financial measures excluding these costs provide meaningful supplemental information regarding the spending trends of our business. In addition, these costs vary, depending on the size and complexity of the acquisitions, and are not indicative of costs of future acquisitions.
Litigation settlement: We may periodically incur charges or benefits related to litigation settlements. We exclude these charges and benefits when associated with a significant settlement because we do not believe they are reflective of ongoing business and operating results.
Non-cash interest expense and amortization of debt issuance costs: In accordance with GAAP, we separately account for the value of the conversion feature on our convertible notes as a debt discount that reflects our assumed non-convertible debt borrowing rates. We amortize the discount and debt issuance costs over the term of the related debt. We exclude the difference between the imputed interest expense, which includes the amortization of the conversion feature and of the issuance costs, and the coupon interest
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payments because we believe that excluding these costs provides meaningful supplemental information regarding the cash cost of our convertible debt and enhance investors’ ability to view the Company’s results from management’s perspective.
Gain (loss) on extinguishment of debt: We record gains or losses on extinguishment of debt. Gains or losses represent the difference between the fair value of the exchange consideration and the carrying value of the liability component of the debt at the date of extinguishment. We exclude the gain or loss on debt extinguishment in our non-GAAP results because they are not reflective of our ongoing business.
Gain (loss) on equity investments: We record gains or losses, unrealized and realized, on equity investments in privately-held companies. We exclude the net gains or losses because we do not believe they are reflective of our ongoing business.
Gain (loss) on sale of property: We periodically recognize gains or losses from the disposition of land and buildings. We exclude such gains or losses because they are not reflective of our ongoing business and operating results.
Income tax effects and adjustments: We use a non-GAAP tax rate that excludes (1) the discrete impacts of changes in tax legislation, (2) most other significant discrete items, (3) unrealized gains or losses from remeasurement of a foreign currency denominated deferred tax asset with no cash tax impact and (4) the income tax effects of the non-GAAP adjustment to our operating results described above. We believe making these adjustments facilitates a better evaluation of our current operating performance and comparisons to past operating results. Our tax rate is subject to change for a variety of reasons, such as significant changes in the geographic earnings mix due to acquisition and divestiture activities or fundamental tax law changes in major jurisdictions where we operate.
Discontinued operations: On November 4, 2019, we completed the Broadcom sale. Certain costs associated with this divestiture are presented as discontinued operations in our statements of operations and thus have been excluded from non-GAAP net income for all reported periods.
Diluted GAAP and non-GAAP weighted-average shares outstanding: Diluted GAAP and non-GAAP weighted-average shares outstanding are the same, except in periods that there is a GAAP loss from continuing operations. In accordance with GAAP, we do not present dilution for GAAP in periods in which there is a loss from continuing operations. However, if there is non-GAAP net income, we present dilution for non-GAAP weighted-average shares outstanding in an amount equal to the dilution that would have been presented had there been GAAP income from continuing operations for the period.
Bookings: Bookings are defined as customer orders received that are expected to generate net revenues in the future. We present the operational metric of bookings because it reflects customers' demand for our products and services and to assist readers in analyzing our performance in future periods.
Free cash flow: Free cash flow is defined as cash flows from operating activities less purchases of property and equipment. Free cash flow is not a measure of financial condition under GAAP and does not reflect our future contractual commitments and the total increase or decrease of our cash balance for a given period, and thus should not be considered as an alternative to cash flows from operating activities or as a measure of liquidity.
Non-GAAP constant currency adjusted revenues: Non-GAAP constant currency adjusted revenues are defined as revenues adjusted for the fair value of acquired contract liabilities and foreign exchange impact, calculated by translating current period revenue using the year ago currency conversion rate.
Revenues (Non-GAAP): Revenues (Non-GAAP) excludes the quarterly Avira deferred revenue haircut amortization recognized during the quarter. We are presenting revenues (Non-GAAP) to provide readers with a better understanding of the impact from the Avira deferred revenue haircut on our historical results and to assist readers in analyzing results in future periods.
Direct customer count: Direct customers are defined as active paid users of our consumer solutions who have a direct billing relationship with us at the end of the reported period. We exclude users on free trials and users who have indirectly purchased our product or services through partners unless such users convert or renew their subscription directly with us, or sign up for a paid membership through our web store. Average direct customer count presents the average of the total number of direct customers at the beginning and end of the fiscal quarter. Full year average direct customer count is calculated as an average across the quarters.
Direct average revenues per user (ARPU): ARPU is calculated as estimated direct customer revenues for the period divided by the average direct customer count for the same period, expressed as a monthly figure. We monitor ARPU because it helps us understand the rate at which we are monetizing our consumer customer base.
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