Direct Customer Count Increased to 21 Million,
Up 876,000 YoY and Up 334,000 QoQ
NortonLifeLock Inc. (NASDAQ: NLOK), a global leader in consumer
Cyber Safety, today reported results for its fiscal year 2021 third
quarter which ended January 1, 2021.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20210204006093/en/
NortonLifeLock’s Q3 Growth Momentum
Fueled by Cyber Safety Adoption
Q3 GAAP Financial Results YoY
Q3 GAAP revenue was $639 million, up 3% in USD. Q3 GAAP
operating margin was 43.8%, up 33.8 points. Q3 GAAP diluted EPS
from continuing operations was $0.29, down 47%. Q3 operating cash
flow was $293 million.
Q3 Non-GAAP Financial Highlights and Commentary YoY
- Revenue was $639 million, up 6% in USD
- Diluted EPS was $0.38, up 52%
- Operating margin was 51.0%, up 14.8 points
- Consumer reported billings was $700 million, up 10% in USD
- Direct customer count of 21.0 million, up over 876,000
- Average revenue per user of $9.10 per month, up 1%
“Our vision to protect and empower everyone to live their
digital lives safely has never been more relevant than it is
today,” said Vincent Pilette, CEO of NortonLifeLock. “Consumers are
seeing the value of Cyber Safety with nearly 60% of our customers
using Norton 360. We are accelerating our investments in new
products and customer experiences that are driving our growth
momentum, and with the Avira acquisition, we are just getting
started.”
“We delivered another quarter of accelerated top-line growth and
achieved our long-term commitment of $1.50 in annualized EPS,” said
Natalie Derse, CFO of NortonLifeLock. “We are on the path to
generate more than $900 million in annual free cash flow. We have a
strong track record of execution that is built on a foundation of
operational discipline.”
Fiscal 2021 Q4 Guidance
- Non-GAAP Revenue is expected to be in the range of $655 to $665
million, translating to high-single digit growth YoY
- Non-GAAP EPS is expected to be in the range of $0.37 to
$0.39
Quarterly Cash Dividend
NortonLifeLock’s Board of Directors has declared a quarterly
cash dividend of $0.125 per common share to be paid on March 17,
2021 to all shareholders of record as of the close of business on
February 22, 2021.
Avira Acquisition Complete
NortonLifeLock closed the acquisition of Avira in January 2021
(Q4 Fiscal 2021).
Q3 Conference Call Fiscal 2021 Q3 Earnings Call February
4, 2021 2 p.m. PST / 5 p.m. EST Domestic: (833) 970-2458 |
International: (929) 517-9556 Conference ID: 4409529 Live webcast:
Investor.NortonLifeLock.com (replay will be posted after the
conference call) Detailed presentation slides available on
Investor.NortonLifeLock.com
To help readers understand our past financial performance and
our future results, we supplement the financial results that we
provide in accordance with generally accepted accounting
principles, or GAAP, with non-GAAP financial measures. The methods
we use to produce non-GAAP results are not in accordance with GAAP
and may differ from the methods used by other companies. Additional
information regarding our non-GAAP measures are provided below. 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.
For additional details regarding NortonLifeLock’s results and
outlook, please see the Earnings Presentation and the Supplemental
Information on the investor relations page of our 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-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 Year 2021 Q4 Guidance,” including
expectations relating to fourth quarter non-GAAP revenue, non-GAAP
revenue growth and non-GAAP EPS; the statements contained in the
quotations, including expectations related to our growth strategies
and free cash flow; 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; the effect of the sale of
substantially all of the Enterprise Security assets on
NortonLifeLock’s retained businesses and products; 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; 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 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 Consumer revenues, constant currency revenues
and Consumer reported billings, which exclude revenues from our
divested ID Analytics solutions. 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 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 Supplemental Information, on
the investor relations page of our website at
Investor.NortonLifeLock.com.
NORTONLIFELOCK INC.
Condensed Consolidated Balance
Sheets
(In millions,
unaudited)
January 1, 2021
April 3, 2020
ASSETS
Current assets:
Cash and cash equivalents
$
1,046
$
2,177
Short-term investments
27
86
Accounts receivable, net
111
111
Other current assets
394
435
Assets held for sale
270
270
Total current assets
1,848
3,079
Property and equipment, net
70
238
Operating lease assets
80
88
Intangible assets, net
999
1,067
Goodwill
2,606
2,585
Other long-term assets
754
678
Total assets
$
6,357
$
7,735
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
67
$
87
Accrued compensation and benefits
86
115
Current portion of long-term debt
63
756
Contract liabilities
1,090
1,049
Current operating lease liabilities
24
28
Other current liabilities
491
587
Total current liabilities
1,821
2,622
Long-term debt
3,542
3,465
Long-term contract liabilities
45
27
Deferred income tax liabilities
201
149
Long-term income taxes payable
1,096
1,310
Long-term operating lease liabilities
73
73
Other long-term liabilities
71
79
Total liabilities
6,849
7,725
Total stockholders’ equity (deficit)
(492
)
10
Total liabilities and stockholders’ equity
(deficit)
$
6,357
$
7,735
NORTONLIFELOCK INC.
Condensed Consolidated
Statements of Operations (1)
(In millions, except per share
data, unaudited)
Three Months Ended
Nine Months Ended
January 1, 2021
January 3, 2020
January 1, 2021
January 3, 2020
Net revenues
$
639
$
618
$
1,879
$
1,876
Cost of revenues
87
103
263
296
Gross profit
552
515
1,616
1,580
Operating expenses:
Sales and marketing
140
178
428
551
Research and development
71
72
199
258
General and administrative
42
85
163
271
Amortization of intangible assets
18
20
54
61
Restructuring and other costs
1
98
142
128
Total operating expenses
272
453
986
1,269
Operating income
280
62
630
311
Interest expense
(32
)
(51
)
(109
)
(146
)
Other income, net
5
399
62
397
Income from continuing operations before
income taxes
253
410
583
562
Income tax expense
80
57
95
133
Income from continuing operations
173
353
488
429
Income (loss) from discontinued
operations
5
2,492
(128
)
3,227
Net income
$
178
$
2,845
$
360
$
3,656
Income (loss) per share - basic:
Continuing operations
$
0.29
$
0.57
$
0.83
$
0.69
Discontinued operations
$
0.01
$
4.01
$
(0.22
)
$
5.20
Net income per share - basic (2)
$
0.30
$
4.58
$
0.61
$
5.90
Income (loss) per share - diluted:
Continuing operations
$
0.29
$
0.55
$
0.81
$
0.67
Discontinued operations
$
0.01
$
3.85
$
(0.21
)
$
5.01
Net income per share - diluted (2)
$
0.30
$
4.40
$
0.60
$
5.68
Weighted-average shares outstanding:
Basic
593
621
591
620
Diluted
597
647
604
644
______________________
(1)
The nine months ended January 1, 2021
consisted of 39 weeks whereas the nine months ended January 3, 2020
consisted of 40 weeks. The impact of the extra week on revenues in
the nine months ended January 3, 2020 is estimated to be
approximately $44 million.
(2)
Net income per share amounts may not add
due to rounding.
NORTONLIFELOCK INC.
Condensed Consolidated
Statements of Cash Flows
(In millions,
unaudited)
Three Months Ended
Nine Months Ended
January 1, 2021
January 3, 2020
January 1, 2021
January 3, 2020
OPERATING ACTIVITIES:
Net income
$
178
$
2,845
$
360
$
3,656
Adjustments:
Amortization and depreciation
28
56
113
307
Impairments of current and long-lived
assets
—
28
88
32
Stock-based compensation expense
21
120
66
270
Deferred income taxes
17
721
47
14
Gain on extinguishment of debt
—
—
(20
)
—
Loss from equity interest
—
9
—
31
Gain on sale of Enterprise Security
assets
—
(5,422
)
—
(5,422
)
Gain on sale of equity method
investment
—
(379
)
—
(379
)
Gain on sale of property
—
—
(35
)
—
Non-cash operating lease expense
6
9
17
32
Other
16
20
54
27
Changes in operating assets and
liabilities:
Accounts receivable, net
(12
)
426
1
537
Accounts payable
1
11
(23
)
(21
)
Accrued compensation and benefits
11
(79
)
(25
)
(99
)
Contract liabilities
46
(34
)
21
(163
)
Income taxes payable
(49
)
2,091
(348
)
2,096
Other assets
15
(89
)
36
(94
)
Other liabilities
15
66
(2
)
81
Net cash provided by (used in) operating
activities
293
399
350
905
INVESTING ACTIVITIES:
Purchases of property and equipment
(2
)
(10
)
(5
)
(86
)
Proceeds from divestitures, net of cash
contributed and transaction costs
—
10,572
—
10,572
Proceeds from maturities and sales of
short-term investments
13
15
60
135
Proceeds from sale of property
—
—
118
—
Proceeds from sale of equity investment
method
—
378
—
378
Other
(4
)
(3
)
(9
)
(8
)
Net cash provided by investing
activities
7
10,952
164
10,991
FINANCING ACTIVITIES:
Repayments of debt and related equity
component
—
(302
)
(1,929
)
(302
)
Proceeds from issuance of debt, net of
issuance costs
—
300
750
300
Net proceeds from sales of common stock
under employee stock incentive plans
6
21
16
109
Tax payments related to restricted stock
units
(27
)
(6
)
(57
)
(71
)
Dividends and dividend equivalents
paid
(113
)
(79
)
(300
)
(177
)
Repurchases of common stock
(133
)
(345
)
(138
)
(904
)
Short-swing profit disgorgement
—
9
—
9
Other
—
(1
)
—
(1
)
Net cash used in financing activities
(267
)
(403
)
(1,658
)
(1,037
)
Effect of exchange rate fluctuations on
cash and cash equivalents
4
4
13
(1
)
Change in cash and cash equivalents
37
10,952
(1,131
)
10,858
Beginning cash and cash equivalents
1,009
1,697
2,177
1,791
Ending cash and cash equivalents
$
1,046
$
12,649
$
1,046
$
12,649
NORTONLIFELOCK INC.
Reconciliation of Selected
GAAP Measures to Non-GAAP Measures (1) (2)
(In millions, except per share
data, unaudited)
Three Months Ended
January 1, 2021
January 3, 2020
Operating income
$
280
$
62
Stock-based compensation
21
36
Amortization of intangible assets
24
28
Restructuring and other costs
1
98
Acquisition and integration costs
1
—
Other
(1
)
—
Operating income (Non-GAAP)
$
326
$
224
Operating margin
43.8
%
10.0
%
Operating margin (Non-GAAP)
51.0
%
36.2
%
Net income
$
178
$
2,845
Adjustments to income from continuing
operations:
Stock-based compensation
21
39
Amortization of intangible assets
24
28
Restructuring and other costs
1
98
Acquisition and integration costs
1
—
Other
(1
)
—
Non-cash interest expense
2
7
Gain on sale of equity method
investment
—
(379
)
Loss from equity method investment
—
9
Total adjustments to GAAP income from
continuing operations before income taxes
48
(198
)
Adjustment to GAAP provision for income
taxes
8
3
Total adjustment to continuing operations,
net of taxes
56
(195
)
Discontinued operations
(5
)
(2,492
)
Net income (Non-GAAP)
$
229
$
159
Diluted net income per share
$
0.30
$
4.40
Adjustments to diluted net income per
share:
Stock-based compensation
0.04
0.06
Amortization of intangible assets
0.04
0.04
Restructuring and other costs
0.00
0.15
Acquisition and integration costs
0.00
—
Other
(0.00
)
—
Non-cash interest expense
0.00
0.01
Gain on sale of equity method
investment
—
(0.59
)
Loss from equity method investment
—
0.01
Total adjustments to GAAP income from
continuing operations before income taxes
0.08
(0.31
)
Adjustment to GAAP provision for income
taxes
0.01
0.00
Total adjustment to continuing operations,
net of taxes
0.09
(0.30
)
Discontinued operations
(0.01
)
(3.85
)
Diluted net income per share
(Non-GAAP)
$
0.38
$
0.25
Diluted weighted-average shares
outstanding
597
647
Incremental dilution
—
—
Diluted weighted-average shares
outstanding (Non-GAAP)
597
647
______________________
(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.
NORTONLIFELOCK INC.
Consumer Revenues, Consumer
Reported Billings and Consumer Cyber Safety Metrics
(In millions, except per user
data, unaudited)
Consumer Revenues (Non-GAAP)
Three Months Ended
January 1, 2021
January 3, 2020
Variance in %
Revenues
$
639
$
618
3
%
Exclude revenues from ID Analytics (1)
—
(15
)
Consumer revenues (Non-GAAP)
639
603
6
%
Exclude foreign exchange impact (2)
(10
)
—
Constant currency adjusted consumer
revenues (Non-GAAP)
$
629
$
603
4
%
Consumer Reported Billings
(Non-GAAP)
Three Months Ended
January 1, 2021
January 3, 2020
Variance in %
Revenues
$
639
$
618
3
%
Add: Contract liabilities (end of
period)
1,135
1,047
Less: Contract liabilities (beginning of
period)
(1,074
)
(1,016
)
Reported billings (Non-GAAP)
700
649
8
%
Exclude revenue from ID Analytics (1)
—
(15
)
Consumer reported billings (Non-GAAP)
$
700
$
634
10
%
Consumer Cyber Safety Metrics
Three Months Ended
January 1, 2021
October 2, 2020
January 3, 2020
Direct customer revenues
$
569
$
563
$
542
Partner revenues
$
70
$
63
$
61
Revenues from ID Analytics
$
—
$
—
$
15
Average direct customer count
20.8
20.6
20.1
Direct customer count (at quarter end)
21.0
20.7
20.1
Direct average revenue per user (ARPU)
$
9.10
$
9.10
$
8.99
______________________
(1)
In the three months ended April 3, 2020,
we divested our ID Analytics solutions. We present consumer
reported billings and consumer revenues to enhance comparability of
the reported billings and revenues of our remaining solutions to
the year ago period.
(2)
Calculated using year ago foreign exchange
rates.
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 required by GAAP. GAAP
requires 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.
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 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.
Gains on divestiture and sale of equity
method investment: We periodically recognize gains on
divestitures. In the third quarter of fiscal 2020, we recognized a
gain of $379 million related to the sale of our DigiCert equity
interest. In the fourth quarter of fiscal 2020, we recognized a
gain of $250 million related to the divestiture of our ID Analytics
solutions. We have excluded these gains for purposes of calculating
our non-GAAP results. We believe making these adjustments
facilitates a better evaluation of our current operating
performance and comparisons to past operating results.
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) from equity method
investment: We record gains or losses in equity method
investments representing net income or loss attributable to our
noncontrolling interest in companies over which we have limited
control and visibility. We exclude such gains and losses in full
because we lack control over the operations of the investee and the
related gains and losses are not indicative of our ongoing core
results.
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) certain unique GAAP reporting requirements under
discontinued operations 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. In June 2019,
the U.S. Court of Appeals for the Ninth Circuit Court issued an
opinion in Altera Corp. v. Commissioner which reversed a United
States Tax Court decision regarding the treatment of share-based
compensation expense in a cost sharing arrangement. As a result, we
recorded a cumulative income tax expense of $23 million for
continuing operation in fiscal 2020, which has been excluded from
our non-GAAP tax provision.
Discontinued operations: On
November 4, 2019, we completed the Broadcom sale. In January 2016,
we completed the sale of assets related to our Veritas operations.
The results of our divested operations that were subject to these
divestitures 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.
Reported billings: We define
reported billings as total revenue plus the change in adjusted
contract liabilities. The change in contract liabilities excludes
the change related to discontinued operations that does not
amortize to revenue from continuing operations. We consider
reported billings to be a useful metric for management and
investors because it facilitates an analysis of changes in contract
liabilities balances that are an indicator of the health and
visibility of our business. There are several limitations related
to the use of reported billings versus revenue calculated in
accordance with GAAP. First, reported billings include amounts that
have not yet been recognized as revenue. Second, our calculation of
reported billings may be different from other companies in our
industry, some of which may not use reported billings, may
calculate reported billings differently, may have different
reported billing frequencies, or may use other financial measures
to evaluate their performance, all of which could reduce the
usefulness of reported billings as a comparative measure. We
compensate for these limitations by providing specific information
regarding GAAP revenue and evaluating reported billings together
with revenue calculated in accordance with GAAP.
Consumer reported billings: We
define consumer reported billings as total revenue plus the change
in adjusted contract liabilities excluding amounts related to our
ID Analytics solutions. ID Analytics solutions were divested in the
fourth quarter of fiscal 2020. We are presenting consumer reported
billings to provide readers with a better understanding of the
impact from the divestiture of ID Analytics solutions on the
historical performance of our consumer business and to assist
readers in analyzing our performance in future periods. This metric
is subject to the same limitations as reported billings discussed
above.
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 foreign exchange impact,
calculated by translating current period revenue using the year ago
currency conversion rate.
Consumer revenues: Consumer
revenues exclude revenues from our ID Analytics solutions, which
was divested in the fourth quarter of fiscal 2020. We are
presenting consumer revenues to provide readers with a better
understanding of the impact from the divestiture of ID Analytics
solutions on our historical results and to assist readers in
analyzing results in future periods.
Consumer Cyber Safety 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. Users with multiple products
or entitlements are counted for based on which solutions they are
subscribed. We exclude users on free trials and promotions and
users who have indirectly purchased our product or services through
partners unless such users convert or renew their subscription
directly with us. Average direct customer count presents the
average of the total number of direct customers at the beginning
and end of the fiscal quarter.
Consumer Cyber Safety 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.
Annual retention rate: Annual
retention rate is defined as the number of direct customers who
have more than a one-year tenure as of the end of the most recently
completed fiscal period divided by the total number of direct
customers as of the end of the period from one year ago. We monitor
annual retention rate to evaluate the effectiveness of our
strategies to improve renewals of subscriptions.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210204006093/en/
Investor Contact Mary Lai NortonLifeLock Inc.
IR@NortonLifeLock.com
Media Contact Spring Harris NortonLifeLock Inc.
Press@NortonLifeLock.com
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