Good afternoon, everyone. Thank you for standing by. My name is Joel, and I will be your conference operator today. I would like to welcome everyone to Gen's Fourth Quarter and Fiscal Year 2024 Earnings Call. 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 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. You may proceed.

Thank you, Joel. Good afternoon, everyone. Welcome to Gen's Fourth Quarter and Fiscal Year 2024 Earnings Call. Joining me today are Vincent Pilette, CEO; and Natalie Derse, 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-GAAP, and all growth rates are year-over-year unless otherwise stated. A reconciliation of non-GAAP to GAAP measures is included in our press release and earnings presentation, both of which are available on our 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 of our business and industry that may be considered forward-looking statements and such statements of 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 9, 2024. 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 statement 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. Good afternoon, and thank you all for joining our Q4 and fiscal year 2014 earnings call. Fiscal 2024 was our first full year at Gen and what a transformational year it was. We finished the year with strong operating results across the board and deliberative year of organic growth with revenue -- with record revenue, profitability and cash flow. Our Q4 and full year results reinforce our confidence in the tremendous opportunity in consumer cyber safety and put us right on track to meet our long-term aspirations. Natalie will take you through the details of our quarterly and annual financial performance, but I would like to take a moment to talk more about the opportunity in consumer cybersafety and why we are so well positioned to win. You have heard me say it many times, Gen Digital is now just live, but the risks it creates are different. They're bigger, they're more pervasive and are getting more and more sophisticated as quickly as our lives move online, the cyber risk dynamically follow. Everywhere you look nowadays, you hear about data being from telecom providers, health care companies, banks, leading our makers and even government organizations. And those are just from these first few months of 2024. Cyber risk are here to stay, but we know that Gen can bring comprehensive cybersafety protection to everyone in a way no one else can. In an always-on world, bad actors have completed to threaten new privacy, identity and financial assets. We have seen a significant increase in scans delivered through malvertising and malicious browser notifications, the majority of which were social engineered attacks with massive growth in bidding scans, up tenfold year-over-year. The increasing sophistication and entity of fishing campaigns up 40% year-over-year, targeted spearfishing attacks like PII on the dark…

Thank you, Vincent, and hello, everyone. For today's call, I will walk through our full year fiscal 2024, followed by our Q4 results and wrap up with our outlook for Q1 and full year fiscal 2025. I will focus on non-GAAP financials and year-over-year growth rates, unless otherwise stated. Please recall that our acquisition of Avast closed in September fiscal 2023 near the end of our second quarter and therefore, I will break out select financial metrics for relevant annual comparisons throughout today's call. Fiscal year 2024 was a pivotal year for Gen as we integrated Avast, returned our direct customer base to growth and delivered our fifth straight year of organic growth. We finished the year with over $3.8 billion in total revenue, growing 14% in USD and 15% in content currency. When including Avast historical results, cybersafety revenue and bookings increased 3% year-over-year in constant currency with broad-based growth across our and across geographic regions. We delivered nearly $300 million of annual cost synergies within 18 months of the Avast acquisition, $20 million more than our original plan, and we used less cash than previously planned to achieve this. As a result, fiscal 2024 operating income was over $2.2 billion, with full year operating margin of 58% and exiting the year at 59%. This represents seven full points of margin expansion since the close of the transaction, net of partial reinvestment. Driving continued top line growth, our operating discipline and our strong capital allocation strategy enabled us to deliver $1.96 in full year EPS, in line with our guidance and up 8% from the prior year and up 11% in constant currency. We've also made significant progress reducing our net leverage to 3.4 times, down from 3.9 times at the time of the merger. Now with the integration…

Thank you. We will now open the line for the Q&A session. [Operator Instructions] The first question is from the line of Peter Levine with Evercore ISI. Your line is now open.

Hi Peter.

Great. Thank you for taking my question. Natalie, I think one comment that actually stuck out you said was kind of moving into kind of new truck-based adjacencies. Can you maybe just provide a little color there outside of what you already provide?

Hey Peter, I'll take that one. So, I would refer to the AI-infused roadmap that we shared that at AIB, right? We've started with a very strong membership structure, which we upgraded on the VA side and now deploying Norton 360 on the New Gen stack. And so we're warning that out that enable a very strong modularity, scalability, and a much more flexible usage from a customer perspective to which we'll be able to add a lot of different value. We already, over the last two years, have added like reputation management and other services will move Norton Genie into the membership and again going to grow into discover of deep fakes, protecting your financial transactions and progress. So, over the next few years, you'll see us to launch more features into these areas.

So, if I think about Norton Genie, 1 million downloads to-date, what's the monetization -- what's the trajectory in terms of monetization for that product? What do you think customers are willing to pay? And how do you think that kind of baked into your model longer term?

Yes. And today, we don't have anything in our model. That's not how we see it. We first wanted to develop our air models using the vast data that we have building this new generative AI interface for people to interact with their security officer in the pocket, if you want and we continue to develop the model. The goal was really grow the adoption first and foremost, and that's our strategy. The second aspect is to add new features. So moving from text, e-mail, scans to voice and others and progressing towards the value add. The third item is to move that feature as part of the membership. Remember, 545 from Natalie is of course, to acquire new customers, retain them with great features, cross-sell where you can, but mainly moving up into the membership, full protection. So at some level of our membership level, it will be integrated into the price. And as you know, we price for value. And then only -- and only then, will then come up with the Gene Pro, which is our project name, which would be a monetized version. But it's down the line and not in our model today.

And last one more quick. Natalie is for you. Obviously, the rate environment, I don't think anyone can predict at this point. But given what we've seen on the macro front these past three, three weeks, does that change your appetite in terms of capital deployment, debt repayment or focused more on debt repayment versus buybacks, I'm curious to know if the environment today -- and then while rate cuts potentially go over the next, call it, 12 months to 24 months. Does that change your appetite here in the near term?

I don't think we've seen too much change in terms of what people -- what the external community rates. I mean we've talked about number of cuts, et cetera. Of course, I don't know what's going to happen, but we're tracking right along with the latest and greatest in the news. And from our business model and the way we choose to allocate our capital, the beauty of it is we've got a lot of cash flow generation, which frees up a lot of deployment opportunity. And every time we deploy our capital, we're looking at the most competitive option, the most profitable thing that creates the most shareholder value. And so you're going to see us continue to strike the right balance across share buyback our share repurchases and accelerated debt paydown. But we've made notable progress in fiscal year 2024 on both fronts. And I would encourage you to expect the same disciplined approach that cash flow generation and turning that into the most advantageous capital deployment for our business.

Thank you for taking my questions.

Thank you, Peter. The next question is from the line of Dan Bergstrom with RBC. Your line is now open.

Hey, It's Dan Bergstrom on for Matt Hedberg. Thanks for taking our questions. Say the launch of Gen Stack, obviously, exciting congratulations on that. Vincent, you talked to a phased approach there, maybe more thoughts around Labana, you plan to go about the rollout?

Yes. We won't share the full road map, obviously, but we're super excited, right? Part of the opportunity in this merger was to be able to write a client and a full stack that can use AI for more personalization that can have a better user experience, as you know, the product in security were built a couple of decades ago with the idea that it would run in the back end. And then over the years, it evolved to become much more of a partner in new security and becoming front end. So the user experience also is tremendously improved the way we communicate in that, which is contextual and personalized is all opportunities. And then it's fully scalable. So we don't have to a new app or something else we can roll up new features. And based on your membership or price level you sign up for, you will have or can activate different future. We will take full fiscal year 2025 to deploy it. Obviously, you want to be very cautious if it goes smoothly, we may accelerate that. But so far, we have three countries testing it -- and it's early, we have April under our belt and very positive signs. So we'll progress that. We'll move into a little bit more global countries. Some countries open here at the end of the quarter. And then we'll move as fast as we can depending on what we see.

Thanks. And then you mentioned consumers kind of choosing their own features. You also had some comments in the prepared remarks around making offerings fit real world needs of consumers. I noticed a slide of a vast one in the deck realizing it's still kind of early there, but what's been the reception around that modular approach and letting users really kind of tailor their coverage to their needs and upgrade what they want where they want it.

Yes, absolutely. And as part of the new tax structure and deployment coming with the Avast 1 free concept and deploying it's part of it. So for the Avast installed base, it's still vast majority is on contract -- and as we migrate to the new stock, we'll for the opportunity to upgrade. So we have the same way that 2.5, three years ago, we moved Norton 360 and reach 60% in the Northern installed base. We have progress to make on that side. But we have no doubt that's where it's coming or going, especially with an agile stack that can really mimic a single product, if you pay only for a single feature or benefit from the value of the full stack. It's that flexibility of scalability, if you want, that we're super excited about.

Thank you.

Thank you, Dan.

Our final question comes from Saket Kalia with Barclays. Your line is now open.

Hey, great. Hey, Vincent and hey, Natalie. Thanks for taking my questions. You have nice progress of the year.

Yes. Thanks, Saket.

Hey, Natalie, maybe -- absolutely. Natalie, maybe just to start with you, I think the guide for fiscal 2025, we said 3% to 5% bookings growth, great to see. I think that implies a little bit of a pickup in bookings growth compared to fiscal 2024. So do you just maybe have a general rule of thumb on how much of that can be driven by subscribers or ARPUs? Is a mix of growth? How do you sort of think about that growth formula for next year?

Hi, Saket, good to hear from you. Yes, the bookings of 3% to 5% as we look into 2025, we're super excited about. But nothing's really changed from what we talked to you guys about back in November at AID. It's going to be a mix of our 5 for 5 growth strategy. And those levers are going to be all equally important, but scaling it to a different magnitude as we kick off 2025 and continue down that three-year journey. I'll just give you a bit of color. So we're committed to driving the acquisition of new customers in a healthy ROI way. We'll continue to stay committed to that. Of course, our aspiration is to drive new customer acquisition growth. Quarter in, quarter out, the absolute number of customer acquisition will vary, but we definitely stay steadfast and committed to investing our marketing dollars doing that in a healthy way and doing that very, very diverse geographically and across brands. And then the other levers that are going to drive the installed base and both in scale and quantity, as well as scale and value is cross-sell and upsell. Cross-sell, I mean being able to close the year in fiscal year 2024 and approaching 20% penetration of cross-sell is something that we're very, very proud of and is significant progress even over the last two quarters. So you guys should look at those as real, real proof points, measured proof points that we will continue to successfully drive cross-sell and therefore, increase the engagement with our existing customers. Now Pepper-in [ph], our prioritized growth lever in upsell. And what we mean by that is getting more and more of our customers, both new and existing in higher-tiered, higher-valued Norton 360 membership offerings. And so the mix of those…

Got it, got it. That's super helpful. And maybe that's a good segue into the follow-up for you, Vincent. I think you said we expanded retention rates on the Avast customer base by more than two points since the deal, which has been great to see. How are you may be thinking about that retention rate for next year? And maybe relatedly, is it the same blocking and tackling that's going to just continue to lift that retention rate, higher as the years go on? Or are there other parts to the playbook around improving that retention rate for Avast.

Yeah. Let me take that one on. So just to ride out a few numbers to put everybody on the same page. When we closed the merger 18 months ago, our aggregated retention rates for the full portfolio was around 75% as we mentioned. You remember at the NortonLifeLock combined business were around 84% and Avast was around 65%, 66%. First, as we discussed, centralized our operations around the center of expertise for process management, same techniques, same set of operations as we drive these retention activities that really start on day one when the customer onboard for the first time all the way to the day 365 when they renew -- and we closed Q4 here after 18 months on an aggregated basis, at 77.5% retention, 2.5 points improvements in the merger. But Avast itself closed at a record retention rate of over 70%, with close to 5 points improvement in 18 months, while Norton and LifeLock combined stayed somewhat flat. All of the brands slightly trending up on customer satisfaction and improving on retention, even though NortonLifeLock combined, it was immaterially perceptible. So I call it flat. We still have a good in my opinion. As you remember, we had said, maybe Avast he 20-point delta we can improve half of it operationally. So we've done half in 18 months will now over the next 18 months, drive the other half, at least that's how we linearly are projecting it. And now the approach is not different. We're shifting from having centralized the operations, standardize the operations to working on three areas. The first one is defining the customer journeys within the customer life cycle. Life cycle is you onboard for the first time all the way to when you try to leave, it could be a multiyear view and then you have many different steps in your cybersafety journey, and you have different journeys. We've done a lot of work and beefed up our team and our for to buy a very integrated part of the journey into our product. The second one is really what the new Gen stack will enable a will enable us to use a vast amount of data and use our data scientist and AI modeling to improve this, what I call contextual communications, personalized communications. And the second one is really being able to offer a better path between the cross-sell, upsell and the membership side. So all of which leads to better retention on those three access, the whole company that touches the customer journey is mobilized behind that, and we know it's a very, very important aspect of our plan moving forward.

Thanks, guys. Appreciate the time.

Absolutely, Saket.

Thank you, Saket. That concludes our Q&A session. I'd like to turn the call back over to Vincent Pilette, CEO of Gen.

Thank you, operator, and of course, thank you all for joining our call. I started this call by saying that fiscal year 2024 was a transformational and pivotal year for Gen. In fiscal year 2025, we're putting the company in a position to reap the benefits of the hard work we put in. As the leader in consumer cybersafety market, we are well positioned to succeed in transforming the industry. We have a strategy to accelerate growth. And while it is not always a smooth journey, it is working. We have a long and proven track record of investing in technology and innovation to best serve our customers, and we will continue to do so. Thank you.

That concludes today's conference call. Thank you for your participation. You may now disconnect your lines.