Q4 2024 Earnings Summary
- Deployment of the new Gen stack: The company is rolling out its new Gen stack, which utilizes AI for personalization and improved user experience. This scalable platform allows for flexible usage, modularity, and the ability to add new features without launching new apps. Early testing in three countries has shown positive signs, and the company plans to deploy it fully in fiscal year 2025.
- Improved retention rates and cross-sell penetration post-merger: Since merging with Avast, retention rates for Avast customers have increased by nearly 5 percentage points, reaching over 70%, contributing to an overall retention rate of 77.5%. The company has also achieved cross-sell penetration nearing 20%, up approximately 5 points over the past two quarters, boosting customer engagement and revenue growth.
- Positive financial outlook with bookings growth expected: For fiscal year 2025, the company expects bookings to grow by 3% to 5%, driven by its 5-for-5 growth strategy, which includes customer acquisition, cross-selling, upselling to higher-tier memberships, and expanding partner channels. This strategy is expected to drive revenue growth and higher retention rates throughout the year.
- Limited Bookings Growth Guidance: GEN's guidance for bookings growth in fiscal 2025 is only 3% to 5%, indicating limited growth prospects.
- Delayed Benefits from Gen Stack Rollout: The deployment of the new Gen stack will take the full fiscal year 2025, delaying potential benefits and showing cautiousness in the rollout.
- Flat Retention Rates in Core Brands: Retention rates for Norton and LifeLock combined brands remained flat, revealing challenges in improving customer retention in their main segments.
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Fiscal '25 Bookings Growth
Q: How will bookings grow in fiscal '25?
A: GEN expects 3% to 5% bookings growth in fiscal '25, driven by a mix of strategies including new customer acquisition, cross-sell, and upsell initiatives across brands and geographies. Management is committed to investing in marketing to drive healthy ROI and scaling bookings throughout the year. -
Avast Retention Rate Improvement
Q: How is the retention rate for Avast improving?
A: Since the merger 18 months ago, Avast's retention rate increased by close to 5 points, reaching over 70%, up from around 65-66%. GEN plans to further improve retention by focusing on customer journeys, leveraging data for personalized communications, and enhancing cross-sell and upsell pathways. -
Capital Deployment Strategy
Q: Has the macro environment changed your capital deployment plans?
A: GEN continues to balance share buybacks, share repurchases, and accelerated debt repayment. Despite macro uncertainties, they have made notable progress on both fronts in fiscal '24 and plan to maintain a disciplined approach to capital allocation, leveraging strong cash flow generation. -
Gen Stack Rollout Plans
Q: What are the plans for rolling out the Gen stack?
A: GEN is deploying the new Gen stack over fiscal '25, currently testing in three countries with positive early signs. The stack offers AI-driven personalization and improved user experience without needing new apps, allowing scalable addition of features based on membership levels. -
Monetization of Norton Genie
Q: What's the plan for monetizing Norton Genie?
A: Currently, Norton Genie focuses on growing adoption, and monetization is not included in the model. Future plans include integrating it into membership tiers and eventually developing a monetized version called Genie Pro, but this is down the line. -
Modular Approach Reception
Q: How are users responding to the modular approach of Avast One?
A: The modular approach allows users to tailor their coverage, and GEN is excited about its flexibility and scalability. As they migrate the Avast installed base to the new stack, they anticipate progress similar to the Norton 360 migration. -
New Adjacencies
Q: Can you provide more color on new adjacencies?
A: GEN is adding features like reputation management, discovery of deepfakes, and protection of financial transactions. Over the next few years, they plan to launch more features, enhancing modularity and value for customers.