Gen Digital Inc (NASDAQ:GEN), previously known as NortonLifeLock Inc., stock fell 7.60% (As on May 12, 11:02:40 AM UTC-4, Source: Google Finance) after the company forecast first-quarter revenue below Wall Street estimates as customers hit by higher borrowing rates and sticky inflation cut spending on cybersecurity products. Gen Digital said its bookings rose 29% year-over-year, to $1.02 billion, while operating income rose 38%, to $541 million. When including Avast’s historical financials, cyber safety bookings grew 2% year-over-year in constant currency. The company’s operating margin of 57.1% was up 2.6 percentage points. In Q4, the company has reduced the overall operating expense profile from 31% to 29% of revenue sequentially while maintaining gross margins above 86%. Exiting Q4, the company achieved approximately 2/3 of the annual cost synergy target from a run rate perspective, with the remaining integration efforts focused on product and engineering. The company remains well on track to achieve cost synergies of over $300 million as it exit fiscal year 2024. Q4 net income was $296 million, up 9% year-over-year.
GEN in the fourth quarter of FY 23 has reported the adjusted earnings per share of 46 cents, beating the analysts’ estimates for the adjusted earnings per share of 44 cents. The company had reported the adjusted revenue growth of 32 percent to $948 million in the fourth quarter of FY 23, beating the analysts’ estimates for revenue of $940 million. Direct revenue was $831 million, up 32% in USD and up 3% when including Avast historicals. The monthly direct ARPU is USD 7.24, an expansion of $0.15 quarter-over-quarter driven by the cross-sell and upsell efforts and as the identity and privacy offerings grew double digits in the quarter. Ending direct customer count was 38.2 million, a decline of 183,000 customers quarter-over-quarter. Partner revenue was $100 million in Q4, delivering 35% growth year-over-year as reported in USD and 9% growth when including Avast historical results. The legacy business lines contributed $17 million this quarter and now make up less than 2% of the revenue. The company expects legacy to continue its decline at a similar pace as Q4.
Additionally, Gen’s Board of Directors has approved a regular quarterly cash dividend of $0.125 per common share to be paid on June 14, 2023, to all shareholders of record as of the close of business on May 22, 2023.
Gen Digital expected first-quarter revenue to be between $940 million and $950 million, below Wall Street estimates of $954.2 million.