Gen Digital Inc

Previous wording

We have a 52/53-week fiscal year ending on the Friday closest to March 31. The three months ended June 28, 2024 and June 30, 2023 each consisted of 13 weeks. Our 2025 fiscal year consists of 52 weeks and ends on March 28, 2025.

Current wording

We have a 52/53-week fiscal year ending on the Friday closest to March 31. The three and six months ended September 27, 2024 and September 29, 2023 each consisted of 13 and 26 weeks, respectively. Our 2025 fiscal year consists of 52 weeks and ends on March 28, 2025.

Previous wording

Below are our financial highlights for the first quarter of fiscal 2025, compared to the corresponding period in the prior year:

Current wording

Below are our financial highlights for the second quarter of fiscal 2025, compared to the corresponding period in the prior year:

Previous wording

•Net revenues increased $22 million, primarily due to higher sales in both our consumer security and identity and information protection products.

Current wording

•Net revenues increased $29 million, primarily due to higher sales in both our consumer security and identity and information protection products.

Previous wording

•Operating income increased $58 million, primarily due to increased net revenues, decrease in restructuring costs related to our acquisition of Avast and lower amortization of intangible assets.

Current wording

•Operating income increased $380 million, primarily due to increased net revenues, decrease in legal costs related to ongoing litigation, lower amortization of intangible assets, and restructuring costs related to our acquisition of Avast.

Previous wording

•Net income decreased $6 million, primarily due to increased income tax expense, partially offset by increased operating income discussed above and decreased interest expense associated with our Term B facility.

Current wording

•Net income increased $14 million and net income per share increased $0.03, primarily due to increased operating income discussed above and decreased interest expense associated with our Term B facility. This is offset by the absence of an income tax benefit in the second quarter of fiscal 2024.

Previous wording

•Cash and cash equivalents decreased by $202 million compared to March 29, 2024, primarily due to repurchases of our common stock, cash interest paid, dividends paid to shareholders, voluntary prepayments of our Term B facility, and mandatory principal amortization payment of our Term A facility. This is partially offset by cash generated from operating activities during the first quarter of fiscal 2025.

Current wording

•Cash and cash equivalents decreased by $109 million compared to March 29, 2024, primarily due to repurchases of our common stock, cash interest paid, dividends paid to shareholders, voluntary prepayments of our Term B facility, and mandatory principal amortization payments of our Term A and B facility. This is partially offset by cash generated from operating activities during the first six months of fiscal 2025.

Previous wording

•Contract liabilities decreased $65 million compared to March 29, 2024, primarily due to billing seasonality and fluctuations in foreign currency rates.

Current wording

•Contract liabilities decreased $57 million compared to March 29, 2024, primarily due to billing seasonality and fluctuations in foreign currency rates.

Previous wording

Our results of operations and cash flows are subject to fluctuations due to inflation, changes in foreign currency exchange rates relative to U.S. dollars, our reporting currency, changes in interest rates, as well as recession risks, any of which may persist for an extended period. Additionally, our international results are impacted by the economic conditions in the foreign markets in which we operate and by fluctuations in foreign currency exchange rates, although volatility did not have a significant impact on our reported results for the first quarter of our fiscal year 2025. We conduct business in numerous currencies throughout our worldwide operations, and our entities hold monetary assets or liabilities, earn revenues, or incur costs in currencies other than the entity’s functional currency. As a result, we are exposed to foreign exchange gains or losses, which impact our operating results. As part of our foreign currency risk mitigation strategy, we have entered into monthly foreign exchange forward contracts to hedge certain foreign currency balance sheet exposure.

Current wording

Our results of operations and cash flows are subject to fluctuations due to inflation, changes in foreign currency exchange rates relative to U.S. dollars, our reporting currency, changes in interest rates, as well as recession risks, any of which may persist for an extended period. Additionally, our international results are impacted by the economic conditions in the foreign markets in which we operate and by fluctuations in foreign currency exchange rates, although volatility did not have a significant impact on our reported results for the second quarter of our fiscal year 2025. We conduct business in numerous currencies throughout our worldwide operations, and our entities hold monetary assets or liabilities, earn revenues, or incur costs in currencies other than the entity’s functional currency. As a result, we are exposed to foreign exchange gains or losses, which impact our operating results. As part of our foreign currency risk mitigation strategy, we have entered into monthly foreign exchange forward contracts to hedge certain foreign currency balance sheet exposure.

Previous wording

Our critical accounting policies and estimates were disclosed in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended March 29, 2024. There have been no material changes in the matters for which we make critical accounting estimates in the preparation of our Condensed Consolidated Financial Statements during the three months ended June 28, 2024.

Current wording

Our critical accounting policies and estimates were disclosed in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended March 29, 2024. There have been no material changes in the matters for which we make critical accounting estimates in the preparation of our Condensed Consolidated Financial Statements during the three and six months ended September 27, 2024.

Previous wording

Net revenues increased $22 million, primarily due to a $10 million increase in sales of our consumer security products and a $15 million increase in sales of our identity and information protection products. This was partially offset by a $3 million decrease in our legacy product offerings. This is inclusive of $7 million of foreign exchange headwinds, in our consumer security solutions.

Current wording

Net revenues increased $51 million, due to a $34 million increase in sales of our identity and information protection products and a $24 million increase in sales of our consumer security products. This was partially offset by a $7 million decrease in our legacy product offerings. This is inclusive of $8 million of foreign exchange headwinds, in our consumer security solutions.

Previous wording

We define direct customer count as active paid users of our products and solutions who have a direct billing and/or registration relationship with us at the end of the reported period. Average direct customer count presents the average of the total number of direct customers at the beginning and end of the applicable period. We exclude users on free trials from our direct customer count. Users who have indirectly purchased and/or registered for our products or solutions through partners are excluded unless such users convert or renew their subscription directly with us or sign up for a paid membership through our web stores or third-party app stores. The methodologies used to measure these metrics require judgment and are subject to change due to improvements or revisions to our methodology. From time to time, we review our metrics and may discover inaccuracies or make adjustments to improve their accuracy, which can result in adjustments to our historical metrics. Our ability to recalculate our historical metrics may be impacted by data limitations or other factors that require us to apply different methodologies for such adjustments. We generally do not intend to update previously disclosed metrics for any such inaccuracies or adjustments that are deemed not material.

Current wording

We define direct customer count as active paid users of our products and solutions who have a direct billing and/or registration relationship with us at the end of the reported period. We exclude users on free trials from our direct customer count. Users who have indirectly purchased and/or registered for our products or solutions through partners are excluded unless such users convert or renew their subscription directly with us or sign up for a paid membership through our web stores or third-party app stores. The methodologies used to measure these metrics require judgment and are subject to change due to improvements or revisions to our methodology. From time to time, we review our metrics and may discover inaccuracies or make adjustments to improve their accuracy, which can result in adjustments to our historical metrics. Our ability to recalculate our historical metrics may be impacted by data limitations or other factors that require us to apply different methodologies for such adjustments. We generally do not intend to update previously disclosed metrics for any such inaccuracies or adjustments that are deemed not material.

Previous wording

(1) From time to time, changes in allocation methodologies cause changes to the revenue by geographic area above. When changes occur, we recast historical amounts to match the current methodology, such as for the three months ended June 30, 2023 where we aligned allocation methodologies across similar product categories.

Current wording

(1) From time to time, changes in allocation methodologies cause changes to the revenue by geographic area above. When changes occur, we recast historical amounts to match the current methodology, such as for the three and six months ended September 29, 2023 where we aligned allocation methodologies across similar product categories.

Previous wording

Percentage of revenue by geographic region in the three months ended June 28, 2024 remains primarily in the Americas.

Current wording

Percentage of revenue by geographic region in the three and six months ended September 27, 2024 remains primarily in the Americas.

Previous wording

Cost of revenues increased $11 million, primarily due to a $9 million increase in revenue share costs.

Current wording

Cost of revenues increased $14 million, primarily due to a $13 million increase in revenue share costs.

Previous wording

Amortization of intangible assets decreased $18 million, primarily due to certain intangible assets being fully amortized during fiscal 2024.

Current wording

Amortization of intangible assets decreased $17 million, primarily due to certain intangible assets being fully amortized during fiscal 2024.

Previous wording

Restructuring and other costs decreased $18 million, primarily due to a $17 million decrease in severance, termination benefits and other exit and disposal costs in connection with the September 2022 Plan. See Note 11 of the Notes to the Condensed Consolidated Financial Statements for details of the fiscal 2025 restructuring activities.

Current wording

Restructuring and other costs decreased $32 million, due to a $31 million decrease severance, termination benefits, contract cancellation costs and other exit and disposal costs in connection with the September 2022 Plan and a $1 million decrease in stock-based compensation expense. See Note 11 of the Notes to the Condensed Consolidated Financial Statements for details of the fiscal 2025 restructuring activities.

Previous wording

Non-operating income (expense), net, decreased by $17 million in expense, primary due to a $15 million decrease in interest expense related to our Term B facility.

Current wording

Non-operating income (expense), net, decreased by $22 million in expense, primary due to a $18 million decrease in interest expense related to our Term B facility.

Previous wording

Our effective tax rate for the three months ended June 28, 2024 differs from the federal statutory income tax rate primarily due to state taxes, changes in unrecognized tax benefits and related interest and penalties, and the U.S. taxation on foreign earnings.

Current wording

Our effective tax rate for the three and six months ended September 27, 2024 differs from the federal statutory income tax rate primarily due to state taxes, changes in unrecognized tax benefits and related interest and penalties, and the U.S. taxation on foreign earnings.

Previous wording

Our effective tax rate for the three months ended June 30, 2023 differs from the federal statutory income tax rate primarily due to tax benefits related to the set up and write-off of deferred tax items from an internal restructuring, partially offset by state taxes and the U.S. taxation on foreign earnings.

Current wording

Our effective tax rate for the three and six months ended September 29, 2023, differs from the federal statutory income tax rate primarily due to tax benefits related to the set up and write-off of deferred tax items resulting from an internal restructuring, partially offset by state taxes, changes in unrecognized tax benefits and related interest and penalties, and the U.S. taxation on foreign earnings.

Previous wording

Based on past performance and current expectations, we believe that our existing cash and cash equivalents, together with cash generated from operations and amounts available under our Revolving Facility, will be sufficient to meet our working capital needs, support on-going business activities and finance the expected synergy costs related to the acquisition of Avast through at least the next 12 months and to meet our known long-term contractual obligations. We are currently not aware of any trends or demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in our liquidity increasing or decreasing in any material way that will impact our capital needs during or beyond the next 12 months. However, our future liquidity and capital requirements may vary materially from those as of June 28, 2024, depending on several factors, including, but not limited to, economic conditions; political climate; the expansion of sales and marketing activities; the costs to acquire or invest in businesses; and the risks and uncertainties discussed in “Risk Factors” in Part II, Item 1A below.

Current wording

Based on past performance and current expectations, we believe that our existing cash and cash equivalents, together with cash generated from operations, amounts available under our Revolving Facility and our future refinancing plans related to our upcoming maturities, will be sufficient to meet our working capital needs, support on-going business activities and finance the expected synergy costs related to the acquisition of Avast through at least the next 12 months and to meet our known long-term contractual obligations. We are currently not aware of any trends or demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in our liquidity increasing or decreasing in any material way that will impact our capital needs during or beyond the next 12 months. However, our future liquidity and capital requirements may vary materially from those as of September 27, 2024, depending on several factors, including, but not limited to, economic conditions; political climate; the expansion of sales and marketing activities; the costs to acquire or invest in businesses; and the risks and uncertainties discussed in “Risk Factors” in Part II, Item 1A below.

Previous wording

Our cash flows provided by and used in operating activities increased $38 million, primarily due to increased cash collection from our cyber safety billings and higher profit before taxes adjusted by non-cash items compared to during the first three months of fiscal 2024.

Current wording

Our cash flows provided by operating activities increased $71 million, primarily due to higher profit before taxes adjusted by non-cash items, increased cash collection from our cyber safety billings and an increase in accounts payable as a result of the timing of payments. This is partially offset by increased cash taxes paid compared to during the first six months of fiscal 2024.

Previous wording

Our cash flows provided by and used in financing activities decreased $116 million, primarily due to a $231 million increase in repurchases of common stock under our repurchase program. This was partially offset by a $120 million decrease in voluntary prepayments of our Term B Facility as compared to during the first three months of fiscal 2024.

Current wording

Our cash flows used in financing activities increased $53 million, primarily due to a $231 million increase in repurchases of common stock under our repurchase program. This was partially offset by a $120 million decrease in voluntary prepayments of our Term B Facility and a $58 million decrease in mandatory principal prepayments of our Term A and B Facilities as compared to during the first six months of fiscal 2024.

Previous wording

As of June 28, 2024, we had cash and cash equivalents of $644 million, of which $359 million was held by our foreign subsidiaries. Our cash, cash equivalents and short-term investments are managed with the objective to preserve principal, maintain liquidity and generate investment returns. The participation exemption system under current U.S. federal tax regulations generally allows us to make distributions of non-U.S. earnings to the U.S. without incurring additional U.S. federal tax, however, these distributions may be subject to applicable state or foreign taxes.

Current wording

As of September 27, 2024, we had cash and cash equivalents of $737 million, of which $400 million was held by our foreign subsidiaries. Our cash, cash equivalents and short-term investments are managed with the objective to preserve principal, maintain liquidity and generate investment returns. The participation exemption system under current U.S. federal tax regulations generally allows us to make distributions of non-U.S. earnings to the U.S. without incurring additional U.S. federal tax, however, these distributions may be subject to applicable state or foreign taxes.

Previous wording

We have an undrawn revolving credit facility of $1,500 million, which expires in September 2027.

Current wording

We have an undrawn revolving credit facility of $1,490 million, net of our letters of credit, which expires in September 2027.

Previous wording

During the three months ended June 28, 2024 and June 30, 2023, we executed repurchases of 11 million and 3 million of our common stock under our existing stock repurchase program for an aggregate amount of $272 million and $41 million, respectively.

Current wording

During the six months ended September 27, 2024 and September 29, 2023, we executed repurchases of 11 million and 3 million of our common stock under our existing stock repurchase program for an aggregate amount of $272 million and $41 million, respectively.

Previous wording

In connection with the acquisition of Avast, our Board of Directors approved a restructuring plan (the September 2022 Plan) to realize cost savings and operational synergies, which became effective upon the close of the acquisition on September 12, 2022. We have incurred and expect to incur cash expenditures for severance and termination benefits, contract terminations, facilities closures, and the sale of underutilized facilities as well as stock-based compensation charges for accelerated equity awards for certain terminated employees. We expect that we will incur total costs up to $150 million following the completion of the acquisition. These actions are expected to be completed by the end of fiscal 2025. During the three months ended June 28, 2024, we made $11 million in cash payments related to the September 2022 Plan. As of June 28, 2024, we have incurred costs of $124 million related to the September 2022 Plan. See Note 11 of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further cash flow information associated with our restructuring activities.

Current wording

In connection with the acquisition of Avast, our Board of Directors approved a restructuring plan (the September 2022 Plan) to realize cost savings and operational synergies, which became effective upon the close of the acquisition on September 12, 2022. We have incurred and expect to incur cash expenditures for severance and termination benefits, contract terminations, facilities closures, and the sale of underutilized facilities as well as stock-based compensation charges for accelerated equity awards for certain terminated employees. We expect that we will incur total costs up to $150 million following the completion of the acquisition. These actions are expected to be completed by the end of fiscal 2025. During the six months ended September 27, 2024, we made $15 million in cash payments related to the September 2022 Plan. As of September 27, 2024, we have incurred costs of $126 million related to the September 2022 Plan. See Note 11 of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further cash flow information associated with our restructuring activities.

Previous wording

Our principal commitments consist of principal and interest payments related to our debt instruments, obligations under our purchase agreements, repatriation tax payments under the Tax Cuts and Jobs Acts and obligations under various non-cancellable leases. Due to the uncertainty with respect to the timing of future cash flows associated with our unrecognized tax benefits and other long-term taxes as of June 28, 2024, we are unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities. Therefore, $1,364 million in long-term income taxes payable has been excluded from our quarterly review of timing of contractual obligations.

Current wording

Our principal commitments consist of principal and interest payments related to our debt instruments, obligations under our purchase agreements, repatriation tax payments under the Tax Cuts and Jobs Acts and obligations under various non-cancellable leases. Due to the uncertainty with respect to the timing of future cash flows associated with our unrecognized tax benefits and other long-term taxes as of September 27, 2024, we are unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities. Therefore, $1,395 million in long-term income taxes payable has been excluded from our quarterly review of timing of contractual obligations.