Q3 2025 Earnings Summary
- The company's effective cross-sell and upsell strategies are increasing ARPU by $0.09 year-over-year , and enhancing retention rates, with Q3 retention rate approximately 77.5%. This success is driven by strong customer acquisition ROI, particularly in mobile and international markets, leading to net customer growth for the sixth consecutive quarter.
- The ongoing shift to a membership model with high-value products like Norton 360, now adopted by around 50% of desktop customers , and the deployment of the new Gen Stack are expected to enhance customer engagement through AI-driven personalization and drive future growth.
- The pending acquisition of MoneyLion will enhance the company's ability to cross-sell financial wellness offerings to their customer base, providing the back-end architecture for personal financial management features, enriching their AI and personalization capabilities, and is expected to drive future growth.
- Deceleration in Cyber Safety bookings growth from 5% last quarter to 4% this quarter. The previous quarter's growth was boosted by a one-time event (National Public Data breach), indicating underlying growth may be slowing.
- Retention rates may be negatively impacted by a higher mix of mobile year 1 customers, which could affect overall retention moving forward. As the company expands its mobile and international customer base, maintaining high retention rates may become challenging.
- Uncertainty surrounding the pending acquisition of MoneyLion, including potential integration challenges due to different customer demographics , and a pause in capital allocation activities like share buybacks and debt repayment. This could affect shareholder returns and increase execution risk.
| Metric | YoY Change | Reason |
|---|---|---|
Identity & Information Protection | +6% (from $328M to $347M) | Heightened consumer demand from major data breaches, cross-selling of complementary solutions, and broader adoption of Norton 360 with LifeLock led to the rise in revenues. |
Legacy Revenue | -25% (from $16M to $12M) | Continued wind-down of discontinued and maintenance-mode products aligns with the company’s strategic pivot away from older product lines. |
COGS | +978% (from $18M to $194M) | Substantial increase in revenue share costs, integration expenses from the Avast acquisition, and expanded consumer and identity product offerings drove the significant surge in total costs. |
APJ Revenue | +5.3% (from $95M to $100M) | Steady growth from expanded consumer security and identity solutions, bolstered by the Avast acquisition offset partially by unfavorable currency impacts. |
Net Income | +8% (from $149M to $161M) | Growth in operating income (fueled by robust sales and lower legal costs) and reduced interest expense more than offset the absence of the prior year’s tax benefit, resulting in higher net income. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Full-Year Revenue | FY 2025 | $3.905B–$3.93B | $3.915B–$3.93B | raised |
Cyber Safety Growth | FY 2025 | 3%–4% | 4% | raised |
Cyber Safety Bookings | FY 2025 | 4%–5% | 4% | lowered |
Non-GAAP EPS | FY 2025 | $2.18–$2.23 | $2.20–$2.22 | raised |
Non-GAAP Revenue | Q4 2025 | no prior guidance | $990M–$1.005B | no prior guidance |
Non-GAAP EPS | Q4 2025 | no prior guidance | $0.57–$0.59 | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Cross-sell and upsell | Mentioned in every prior call (Q2/Q1 2025, Q4 2024) as a key growth driver, supporting higher bookings, ARPU, and retention. | Q3 2025: Still integral for driving ARPU and retention, with efforts extending to mobile and international markets. | Remains a core lever, consistently emphasized. |
Retention rates | Q2 2025: ~78% direct retention. Q1 2025: 78% record rate. Q4 2024: >77%. | Q3 2025: Held steady at ~77.5%, described as industry-leading and crucial to revenue stability. | Stable across periods, slight QoQ variations. |
AI-driven product innovation | Q2 2025: 1.6M Genie downloads, high efficacy. Q1 2025: Genie over 1M downloads, Gen Stack rollout. Q4 2024: Genie launch hit 1M downloads in 100 days. | Q3 2025: Norton Genie near 2M downloads, ~100% scam-detection; Gen Stack powers unified data for deeper AI deployment. | Momentum building, expanding capabilities each quarter. |
MoneyLion acquisition | Not mentioned in Q2/Q1 2025 or Q4 2024 [no references to MoneyLion]. | Q3 2025: New, major focus. ~$1B in cash plus stock to expand financial wellness offerings and AI personalization. | Recently introduced, significant strategic move. |
Foreign exchange risk (yen) | Q1 2025: Company does not hedge yen, expected FX headwind to revenue. Q4 2024: Mentioned yen’s depreciation impacting Q1 2025. | Q3 2025: No specific yen mention; FX impact deemed minimal overall. | Dropped from commentary after Q1 2025. |
Bookings growth sentiment | Q2 2025: Strongest at 5% since Avast deal, no mention of future deceleration. | Q3 2025: Decelerated from 5% to 4%, attributed to one-time breach-driven bump in Q2. | Shift from acceleration to mild slowdown. |
Customer acquisition costs | Q2 2025: CAC stable to up, balanced by higher-value customers. Q1 2025: ROI-focused spend; minimal margin impact. Q4 2024: Positive ROI, lower opex ratio. | Q3 2025: Disciplined ROI approach; stable 58.5% operating margin despite marketing investments. | Remains a focus; sentiment on ROI efficiency is positive. |
Membership model expansion (Norton 360) | Recurring theme in Q2/Q1 2025, Q4 2024: Driving up-sell/cross-sell, global rollout, and higher-value tiers. | Q3 2025: ~45%-46% adoption (incl. mobile), key to ARPU and retention gains. | Consistently highlighted, core to strategy. |
Partner channel deals | Q1 2025: Discussed lumpiness in partner EB/telco deals with a notable funnel but variable timing. | Q3 2025: No mention. | Stopped referencing after Q1 2025. |
AI and personalization initiatives | Q2 2025: AI for scam detection, user-tailored marketing. Q1 2025: Genie AI, data-driven personalization. Q4 2024: Gen stack enabling AI personalization. | Q3 2025: High priority, AI used for hyper-personalized offers and in-product messaging. | Major future impact, consistently gaining prominence. |
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MoneyLion Acquisition Synergies
Q: What are the synergies expected with MoneyLion acquisition?
A: Vincent explained that MoneyLion will enhance their Cyber Safety platform by adding Personal Financial Management features, enabling cross-selling opportunities to their customer base. This will enrich their AI and personalization capabilities and allow offering financial wellness services, making the platform richer for customers. -
Capital Allocation After MoneyLion Acquisition
Q: How will capital allocation balance debt and buybacks post-acquisition?
A: Natalie stated they plan to resume both debt paydown and share buybacks once the MoneyLion deal closes. They aim to strike the right balance, as they've done historically, and will enter the refinancing market soon to refinance the unserved note. -
Revenue Growth and NPD Breach Impact
Q: Was bookings growth deceleration due to last quarter's NPD breach?
A: Natalie noted that last quarter's bookings growth had about a 1-point boost from increased awareness due to the National Public Data breach. The deceleration from 5% to 4% this quarter reflects the normalization after that one-time event. -
Retention Rates and ARPU Trends
Q: How are retention rates and ARPU trending with mobile growth?
A: Natalie highlighted that retention rates are stable to up across cohorts, with an overall retention rate up 1 point year-over-year, and ARPU up $0.09. Cross-sell and upsell are driving success across regions, and despite mobile's different starting points, behaviors are consistent, leading to confidence in revenue acceleration from 3% to 4% quarter-over-quarter. -
Norton 360 Membership Adoption
Q: What's the current adoption rate of Norton 360 memberships?
A: Vincent shared that about 50% of desktop customers are on Norton 360 memberships. Including mobile, adoption is around 45-46%. The aim is to have the majority of customers on the membership structure in the future. -
Personalization Initiatives and AI
Q: How are you progressing on personalization efforts using AI?
A: Vincent explained they are deploying the new Gen Stack, enabling AI-powered in-product messaging and hyper-personalization using LLMs. This will allow tailored experiences based on customer behaviors once migration is complete. -
FX Impact on Guidance
Q: How is FX impacting full-year revenue guidance?
A: Natalie indicated that FX impact on the full-year revenue guidance is relatively immaterial.