Good afternoon. My name is Ian, and I will be your conference operator today. At this time, I would like to welcome everyone to the Symantec's Second Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. I'd now turn the call over to Mr. Nate Pollack. Sir, you may begin.

Good afternoon and thank you for joining our call to discuss our second quarter fiscal year 2018 earnings results. We've posted the earnings materials and prepared remarks to our Investor Relations Events webpage. Speakers on today's call are Greg Clark, Symantec's CEO, and Nick Noviello, Executive Vice President and CFO. This is a live call that will be available for replay via webcast on our website. I'd like to remind everyone that all references to financial metrics are non-GAAP, unless otherwise stated. Please refer to the CFO commentary posted on the Investor Relations website for further definitions of our non-GAAP metrics. Please note, non-GAAP financial measures referenced during this call are reconciled to their comparable GAAP financial measure in the press release and supplemental materials posted on our website. We believe our presentation of non-GAAP financial measures, when taken together with corresponding GAAP financial measures, provides meaningful supplemental information regarding our operating performance for reasons discussed below. Our management team uses those non-GAAP financial measures in assessing our operating results, as well as when planning, forecasting and annualizing future periods. We believe our non-GAAP financial measures also facilitate comparisons of our performance to prior periods and that investors benefit from understanding of the non-GAAP financial measures. Non-GAAP financial measures are supplemental and should not be considered a substitute for financial information presented in accordance with GAAP. Today's call contains forward-looking statements based on the environment as we currently see it. Those statements are based on current beliefs, assumptions and expectations, speak only as of the current date and, as such, involve risks and uncertainties that may cause actual results to differ materially from our current expectations. Please refer to the cautionary statement in our press release for more information. You will also find a detailed discussion about our risk factors in our filings with the SEC and, in particular, on our Annual Report on Form 10-K for fiscal year ended March 31, 2017. Now I'd like to introduce our CEO, Greg Clark. Go ahead, Greg.

Thank you for joining us, and good afternoon. Q2 represented a strong quarter for Symantec and marks an inflection point in our journey of transformation. Our results came in at the mid-point of our revenue guidance and the lower end of our EPS guidance. With that said, we are very pleased with our Q2 results. Let me explain why. First, we completed many critical milestones this last quarter, including our $550 million Symantec and Blue Coat cost reduction and integration synergy program, as well as our year one $30 million LifeLock synergies. These cost reduction milestones were all achieved ahead of schedule and have resulted in significantly improved margins for our Enterprise segment and continued high margins for our Consumer segment. Yesterday, we also completed the divestiture of our Website Security and PKI solutions to DigiCert, which enhances our long-term growth potential and sharpens our focus. After the completion of these transformational initiatives, Symantec is now a profitable and growing business across both its Enterprise and Consumer segments. Our Enterprise business had a strong result in Q2. While Q2 revenue was flat from a year ago on an acquisition adjusted basis, deferred revenue for our Enterprise segment grew 12% year-over-year. We've also delivered 11 points of operating margin improvement in the Enterprise segment from a year ago, moving us towards our longer-term margin targets. Our cross-selling strategy is working. More and more customers are choosing to standardize on our Integrated Cyber Defense platform because of our superior protection, cross-product integration, and lower overall cost of ownership. Adoption of our Integrated Cyber Defense platform is leading to an increase in the number of larger and multi-product deals, which is a strong validation that customers are designing Symantec into their future security architectures. These trends are however also affecting our in-period revenue…

Thank you Greg and good afternoon everyone. I'd like to remind everyone that all references to financial metrics are non-GAAP, unless otherwise stated. Please note we've posted supplemental materials and CFO commentary to our Investor Relations website. There are a set of topics and highlights I would like to walk through with you today. First, I'll review our fiscal Q2 results. Second, we will run through the significant milestone we have reached in our cost reduction and integration synergy initiatives. Third, with the announcement of the divestiture of our Website Security and PKI solutions on our earnings call last quarter, I shared with you a framework around how the financial impact of the divestiture worked. Now, with the transaction closed, I will update you on the impact of the divestiture to our fiscal year 2018 and Q3 guidance. Finally, with all of these elements understood, I will close and reiterate our medium term outlook. Let me start with an overview of our financial results for Q2. Our second quarter revenue was $1.276 billion, at about the midpoint of our prior revenue guidance range, including a slight foreign currency benefit versus our prior guidance. Let me give you the statistics for revenue growth in constant currency adjusted for acquisitions. Total year-over-year revenue growth was flat, at the low end of our prior guidance range. Year-over-year revenue growth was comprised of Consumer Digital Safety segment revenue growth of more than 1%, over the high end of our prior guidance range, and flat revenue in our Enterprise segment, at the low end of our prior guidance range. At the same time, year-over-year deferred revenue adjusted for purchase accounting, acquisitions, and divestitures was flat in our Consumer Digital Safety segment, and up 12% in our Enterprise Security segment. We look at the combination of…

Certainly. Our first question is from the line of Sarah Hindlian from Macquarie. Sarah Hindlian - Macquarie Capital (USA), Inc.: All right. Thank you very much. Hey, guys. I just wanted to get into the Enterprise segment and deferred revenues a little bit, there are some divergence there, which sounds like is mix shift related, but we'd love some color on what is driving that mix shift description in in-period revenues within the business line? And then, Nick, just as a follow-up, maybe you can help me quantify that impact across some of the reported Enterprise segment results in the period?

Okay. Sarah, thanks for the question. Greg Clark here. So a couple of things that are going. First of all, we're very pleased with the amount of business that we sold in Q2. It was a big step up for us as you can see in the sequential and also, I'd like to underscore the margin increase that we drove. We are seeing an increased commitment to our Integrated Cyber Defense platform. We are seeing a bigger uptake in our subscription product. This is driven by couple of things. We are at a point now where the feature parity between say a virtual client and an appliance is the same. In fact there are some configurations where virtual clients even perform better than some physical appliances as there have been substantial improvements in things like VMware and the hardware underneath these platforms. So this is driving where we are seeing a capacity increase. We're seeing a very strong uptake of our ProxySG refresh. We are seeing a movement to subscription there. We're also seeing as we have in our DLP product, a very powerful instance of the same DLP product cloud delivered. This does create the shift of in-period revenue to subscriptions. We are not cutting abnormal terms. We're seeing normal terms and standard discounting, and this mix shift is driving an increase in deferred revenue. And as you can see from Nick's remarks, we are reaffirming our revenue guide and you noticed in the cash flow comments that we are increasing our fiscal 2018 cash flows. So there is a strong correlation between the deferred revenue and actually selling the right amount of business in the quarter. Nick, anything ...

Yeah. Sarah, let me add a couple of points for you as well. So I indicated in the script that basically $25 million of forecasted in-quarter revenue moved to deferred revenue on the Enterprise side of the fence. So we can all kind of do the math on that. And I think some of the deferred revenue statistics are pretty exciting here, and we've actually disclosed that on our CFO commentary, where we have done a full walk to really work through from GAAP deferred revenue, through purchase accounting, through Veritas, through LifeLock and through the divestiture, really what's going on at the time of deferred revenue lines. And that is the underpinning to my comments about Enterprise deferred revenue growth, which is, let's say, clean of Website Security and PKI. That's up 12%. We've got growth on both the short term and the long-term side of the fence, but we're really excited about that deferred revenue growth. And we look at the combination of in-quarter recognized plus deferred as really giving us a perspective on really the business conditions and the business performance in the quarter.

Also, Sarah, just at the financial Analyst Day, we added to the reporting metrics the deferred revenue because we wanted to be able to give people the ability to get a better handle on growth. Revenue plus deferred is the way to do that. We did anticipate mix shift. It's happening a little faster than we thought. And we're excited about it. It's actually a good news story.

And our next question is from the line of Saket Kalia from Barclays Capital.

Hey, guys. Thanks for taking my questions here. Greg, maybe we'll start with you. Qualitatively if we look at the Enterprise business in the second half of this year excluding SSL, can you just walk us through the drivers for acceleration. And I've got a follow-up for Nick after that.

Yeah, definitely. I think one of the key things and we mentioned this in our comments on Financial Analyst Day. We now have a ramped sales force, and we saw that kick in, in Q2. We also have – the second half is bolstered by the Blue Coat refresh and the cross selling that goes on around that. There were some examples of that in the prepared remarks, and we really have, I think, now seen enough evidence that we can execute the cross-sell in the Integrated Cyber Defense, which really that strategy is working. We talked through a number of larger deals in the prepared remarks to give you some hands-on examples of that, and we have a pipeline now that is really commensurate with that ramped sales force. We're very excited about the size of it, and we still have work to do to close those transactions. As we mentioned, there are some large ones in there, but we believe we'll be successful across all that. The other thing that's happening is competitors don't have the same value proposition. And as you move to the cloud, and now you've got to get some cloud stuff to go, you've to get three or four cloud vendors to work in concert trying to deal with that SLA is really hard. So I think we've got a big leg up on the competitor. And if you try to hold together those point solutions, especially in the cloud era it's very difficult for the CIO to do that, it's expensive, it's fragile. And so we put all that together and we think that we've got ramped capacity, we've got the right product and we've got what we need as we look at our pipeline to deliver the growth in the second half. And that's given us a lot of confidence as you can see today reaffirming our outlook.

Got it. That's very helpful. And for my follow-up maybe for you, Nick, can you just remind us how you recognize sales commissions? We talked about the $25 million that moved to the balance sheet, but can you remind us are you amortizing those sales commissions? Or do we have a little bit of a mismatch with upfront commissions and more ratable revenue?

Those are amortized over time. So we see that and that is a policy that's been in effect at Symantec and it's something that any, in fact, any acquisition we do we move to that policy.

And our next question is from the line of Joel Fishbein from BTIG.

Good afternoon, guys. Just two quick ones, a question and a follow-up. Greg, obviously, the Integrated Cyber Defense is resonating here with the customers. Are there any areas in that you think that you're falling short or where you need to augment the Cyber Defense platform going forward? And how are you feeling about current valuations that are out there right now?

So I think we are very pleased with the portfolio that we have, both on the Enterprise Integrated Cyber Defense side and also on the Digital Safety side on Consumer, there are very strong portfolios. We have also driven a lot of integration with third parties, as well. So we do have a really strong ecosystem of other ISVs that we work with in our portfolio. But right now, I think we like the product set that we have. And to talk about valuations, I think they change all the time. We're very disciplined around M&A. We do small acquisitions, as you saw a few through the year that we can absolutely control our destiny and we really work out with our customers, make sure we can sell those. Those are definitely not going to upset anything in our finances. And then we also are very disciplined around doing things that are good for our equity, as we mentioned in the past. We're disciplined around M&A and we like the setup we have right now, and we're totally able to execute our plans with what we have.

Great. And then just as a quick follow-up. You talked about the threat environment driving some adoption of proxy. Can you just tell us where you think we are with proxy refresh? And if you think the threat environment will be driving quicker adoption there?

I think I'll answer your refresh question first. We are seeing a strong adoption of the next platform in the new set of technologies in the refresh. Those rates are consistent with the last refresh. There may be some (46:46) running around for some of our competitors that are saying that's not going well. That's going very well. And you can see in the deferred revenue build a lot of the cloud-based stuff is in the deferred revenue build and deferred revenue is larger than the whole world of many of those other competitors. And so we're doing extremely well in cloud, and that is driven by the physical form factor moving to our virtual appliances which support software defined which is what a lot of our major customers and telecom players like. And in addition to that, the pure cloud offering is growing very strong and we've got some great partnerships around the world on that. So we do think that that is happening and there's a very, very strong bright spot in our Cloud Access Broker, in our CASB front, that is posting some very impressive growth rates and some wins. Again, it's all ratable to cloud delivered. And the threat environment, we are seeing some pretty strong reasons in the cryptography. The Internet as reported by sort of the conservative folks, is 50% encrypted, and I've had some telecom companies telling me and say, they think it's more like 85% encrypted right now. And proxies and isolation, and there's the Fireglass acquisition, really deliver around being able to really hunt these threats down out of there and protect against that. So proxy demand is strong. It does not require infrastructure ownership to deploy, which means if you're using cloud and someone else is running it, you can still put proxy in. So we do see strong demand for proxy, and that part of our business is alive and well. Again, there is a delivery platform that is ratable in the refresh. And we are excited about that because we are being designed into the future networks. And so as I mentioned before, this is something that we are excited about that mix shift. It is not an issue.

And our next question is from the line of Brad Zelnick from Credit Suisse. Brad Alan Zelnick - Credit Suisse Securities (USA) LLC: Thanks very much, guys. I've have got one for Greg and a follow-up for Nick. So Greg, on the Consumer business, I think it's stronger than any of us would've imagined, even just a year ago. Given that strength, would you consider spinning that business out to unlock value for shareholders and open it up to additional partnership opportunities?

So I think the Consumer business, you're right, is fixed. It is a very strong growth engine and we are seeing that even outside of the influence of the Equifax breach that definitely had some very strong tailwinds. As I mentioned in the prepared remarks, there's a number of vectors in there. They're all going well. And we are ahead on the integration. And we're ahead on that case and, as such, we're raising our outlook for that piece of the business. Also Financial Analyst Day, we talked about margins in the low 40s, and you can see they're coming in at the numbers that we're posting in the last couple of quarters. So I would – if we go back a year and we took a look at what the overhang was on Symantec, it was that we had double-digits and high-single digit declines in a very big piece of the cash flow. That is fixed. We are now forecasting strong growth rates in that business at the size of business that it is. Moving to your question as to would we spin it off, we like it right where it is. It is doing a good work. It is – we have two organizations in the business, one that focus on Enterprise, and one that focuses on Consumer, but I am extremely excited about this. And as people work from home and mobile really sets in, in the world, even more than it is now, and work in business process, we think the clean home is a clean enterprise, and we definitely see a strong correlation between what we're doing in Norton Core and a much safer enterprise network. And so we are excited about this, and we also have conversations in the service provider industry about what we're doing in digital safety that are very encouraging. And so I'm very happy to report that after a year, if you take a look at the Consumer business when, last August, and you take a look at it today, that is a completely different situation. And I'm proud of the company and the team and the partners that helped us really deliver to that outcome. Brad Alan Zelnick - Credit Suisse Securities (USA) LLC: That's helpful color. And for Nick, just a follow-up on Joel's question, if we think about the shift to more cloud and virtual adoption for ProxySG and then we relate back to the Analyst Day expectation that you threw out for $1 billion refresh opportunity, now as the take rate, as we shift to more cloud and virtual, how should we be thinking about that? Or perhaps if you can't size it that way, just remind us when you think about the trade-off and the impact to what can be recognized in revenue to what gets deferred, how do we think that opportunity through?

So I'd say, first of all, we laid out at our Financial Analyst Day, actually a couple of slides that showed the difference between the physical, the virtual and the cloud delivery model just in business in general, but certainly that refresh could be a perfect example for that. Look, we knew actually in Q4 of last year before that Financial Analyst Day, and we hit that parity point on the engineering side between those platforms as well. So as we came into this year, we expected that this was going to be the case, and as it goes though, we have to expect a little bit of variability. We saw a little bit of variability this quarter in business in terms of what we expected in-quarter versus deferred. We look at that go forward, we expect a little bit of variability go forward. At the end of the day, and I think we've said this in a couple of different forms, at the end of the day, we have to be able to and we want to be able to help customer in whichever delivery mechanism they want. We have built in a move towards more ratable into our forecast and into our guidance for the year as it happens. There could always be a little bit of variability, which we will give you full transparency on. I actually would also say around that full transparency point, if you go to that CFO commentary and you look at deferred revenue, actually taking out $300 million of WSS and PKI helps you see Enterprise all by itself. So you have full transparency as to what's going on there, and we'll show you that quarter-after-quarter including all of the pieces from GAAP to non-GAAP. So I hope that's helpful. But built into this year was a view that the refresh would be occurring. We talked about that for the second half. In fact, we also had indicated that front half of the year was going to be impacted by integration. We'd be ramping up the new combined sales force in the first half. We'd be ramping them up on all the new products, new relationships with the channels, et cetera, and that would be coming to pass and coming through in top line, business and bookings growth and revenue growth in the second half, and we are on that path. We feel very good about it.

And our next question is from the line of Keith Weiss from Morgan Stanley. Keith Eric Weiss - Morgan Stanley & Co. LLC: Thank you, guys, for taking the question. I'm actually going to do a one-two punch, similar to my colleague, Mr. Zelnick, there. Starting off on the Consumer side of the equation, it seemed like you guys got a really nice bounce from Equifax. Fran was out talking very bullishly about the impacts we saw, I think it was like six days after the subscriber adds that came from that breach. How should we think about kind of the curve of that impact? Obviously, it's going to be most front end loaded like when it happened, you guys try all the search terms, and we got shunted to LifeLock. But how durable is that spike going to be? Or how quickly does it peter out and become normalized? And then longer term, does LifeLock or I'm sorry, Equifax having to give away more credit monitoring for free? Does that impact you negligibly long term or is that not really an issue?

So, yeah, good questions, Keith. There was a ton of questions on Equifax. First of all Equifax didn't impact the Q2 revenues. It happened towards the end of the quarter, and the ratable recognition of that stuff didn't impact those results. It was de minimis in the Q2 results. So a couple thoughts for you, and I went into some details in the prepared remarks. Equifax was good, and it definitely increased member counts in a significant way. But what we also saw when we would offer the combined Digital Safety bundle that we've been talking about for a number of quarters to the Norton cohort when it came up for subscription or even in period work we were doing with them, we're seeing a much better uptake than we had modeled in our acquisition case of Norton folks just taking up for more money the LifeLock value proposition. You also saw if you look at the search terms that people searched for LifeLock in substantial passion when they just think about identity. So the strength of that brand is big, and we do think that there is a new normal for uptake in identity protection following Equifax, and that is more, it was very strong at the beginning but even weeks later it is sustained in a way that's different than some of the other big breaches like Anthem. So something else happened, which also I think drives to the power of the digital safety concept. When the KRACK vulnerability came out and everybody talked about how dangerous roaming around on Wi-Fi was, now you could have pretty much easy access to traffic on the Wi-Fi through that vulnerability. So if you were sitting in a Starbucks and some kid had some software and knew how to do it…

Well, we had more ratable coming into the entirety of the year. So in terms of the first half/second half, I think that we have $25 million in Q2 that showed up as deferred revenue on the balance sheet. We have strong business activity and business activity on track to plan and guidance. So as we go into the second half, we have a very, very strong pipeline. We feel very good about it. In terms of that ratable recognition, there's a significant amount of ratable business already happening here. We know that that can be a little bit variable or on the edges. So we have to be conscious of that. We've tried to guide appropriately for those types of things in the second half of the year. And in terms of the Website Security business, and the Website Security and PKI solutions, in that second half guide, there's really no difference versus what we had talked about before on a full-year basis. But you just have to remember that we're taking it out for the month of November through March. So in terms of walking prior guidance to current guidance, it is pretty basic in terms of just the two pieces, the divestiture and a little bit of FX rolling through there.

I think Nick makes a good comment. Looking at the second half, it's a big ramp in the second half. We understand that. We've got a pipe to support it. We've got capacity to support it. We have to execute the closure of that pipe. We feel good about our ability to do that. We do have a good mix of transactions in there. Some are very large because the Integrated Digital Safety platform is working which is driving deal size up. There may be some timing in there, but we are definitely confident about the outlook, and especially the long-term outlook for what we're up to.

And our next question is from the line of Michael Turits from Raymond James. Michael Turits - Raymond James & Associates, Inc.: Hey guys. Two quick ones if I can squeeze in. First of all, Greg, you talked a lot about SEP 14 and ATP and the new versions there. So what if any the impact that we see on renewal rates and/or ASPs, and I have a second question.

Yeah, it's a very good question. So first of all, I'd like to just remind everybody that we said we were, and I think predictability is extremely important in what we're doing. And a year ago, we said we were going to come after these gaps in our unified converged endpoint around EDR. And some of these other things we actually innovated some more there and delivered a deception blade in there as well. But we have completed with SEP 14.1 a very solid piece of work around EDR and flight recorders. We believe we have now reached feature parity with the point solutions that did that and we have one major footprint with that. We have 7 million odd deployments now of the EDR capability. So it is being battle hardened, and we believe that that is a huge footprint, and if you look at some of the folks that just specialize in that, I think we are going past their installed bases already. So we do think that we have a very strong upsell capability around those value propositions that are delivered in SEP 14.1. SEP 14 also has been doing extremely well. And as we mentioned, we got a really good conversion rate in SEP 14 in our installed base. And we do see strong improvement in what was less than acceptable renewal rates in prior periods before SEP 14 for the SEP agent. We've absolutely turned that around, and I think we are leading even in these advanced zero-day malwares, our AI detected WannaCry, stopped it, no signatures. So we've got the proof that that's working and we continue to innovate that. And I think it's just a testament to the capacity and engineering that we have behind that problem. We shut that gap down in…

In terms of the overall business, say on Enterprise, or what specific things you're talking about there, Michael? Michael Turits - Raymond James & Associates, Inc.: Yeah. Total numbers on revenue. A little bit...

Total numbers on revenue? Yeah. So, first of all, you do have to adjust for that Website Security and PKI in Q3. So we're talking about taking out and leaving in one month, basically. The overall revenues for the back half are pretty much what we expected them to be for that side of the business. So there's really not much difference there in the terms of build-up versus our original view of the year. Obviously, we never gave like specific Q2, Q3 type of ramp. But as we look at the revenue stream for the second half, we're very satisfied and feel very strong in our position there. As you may have seen, we tweaked a bit the Enterprise down basically by the Consumer. I'm sorry, by the second quarter $25 million Consumer up, basically the same amount inside of that overall revenue guidance for the year. That's pretty much all we've done to it. So we feel on track for what we're planning to do. We feel like we've got the pipeline on the Enterprise side, the position, as Greg indicated, the sales capacity in place. And then, obviously, the consumer metrics as well supporting that side of the fence. So we feel quite good about it.

Okay.

And at this time I'm showing that we are at time. Presenters, do you have any closing remarks?

I'd just like to thank everybody for joining our calls and thanks for your support. And I look forward to next time. Thank you very much.