Gen Digital Inc
For the period ended Dec 27, 2024. Filed Jan 31, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 27, 2024 · Filed Jan 31, 2025
GEN$29.79-2.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-27; filed 2024-10-31.
0000849399-24-000081
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-12-27; filed 2025-01-31.
0000849399-25-000006
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 97 previous paragraphs and 100 current paragraphs.
57 unchanged; 33 reworded; 9 added; 7 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 12 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
Proposed Acquisition of MoneyLion
Current report
On December 10, 2024, we entered into a definitive agreement to acquire MoneyLion Inc. (NYSE: ML). See Note 4 of the Notes to the Condensed Consolidated Financial Statements for further information about the proposed acquisition.
Current report
Subsequent Event
Current report
On January 16, 2025, we notified e-commerce partner B (Refer to Note 17 of the Notes to the Condensed Consolidated Financial Statements for information about e-commerce partner B) of our termination of the agreement and subsequently entered into a legal settlement agreement with them. Refer to Note 19 of the Notes to the Condensed Consolidated Financial Statements for further information about this notice of termination and settlement agreement.
Current report
Fiscal 2025 Acquisition
Current report
Refer to Note 19 of the Notes to the Condensed Consolidated Financial Statements for further information about the acquisition completed on January 28, 2025.
Current report
As a global company, our results of operations and cash flows may be influenced by global macroeconomic conditions, including, but not limited to, foreign currency exchange rate fluctuations, the impact of interest rate fluctuations, inflation, geopolitical conflicts and/or pressures, including the unknown impacts of current and future trade regulations, instability in the global banking sector, economic slowdown and recession risks, any of which may persist for an extended period.
Current report
Cost of revenues increased $11 million, primarily due to a $12 million increase in revenue share costs.
Current report
Sales and marketing, research and development and general and administrative remained relatively flat.
Removed paragraphs (7)
Previous report
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 report
In addition, in early 2022, worldwide inflation began to increase. In response to the heightened levels of inflation, central banks, including the U.S. Federal Reserve and the European Central Bank, raised interest rates significantly in 2022, resulting in an increase in our cost of debt. Although inflation rates slowed in 2023, global inflation currently remains high and has impacted our results due to higher costs. Volatile market conditions related to geopolitical conflicts and other macroeconomic events have, at times, affected our results of operations and cash flows in non-material ways; however, geopolitical conflicts and other macroeconomic events may in the future materially impact our results of operations and cash flows. Due to our subscription-based business model, the effect of recent macroeconomic events may not be fully reflected in our results of operations until future periods, if at all.
Previous report
Cost of revenues increased $14 million, primarily due to a $13 million increase in revenue share costs.
Previous report
Cost of revenues increased $25 million, primarily due to a $22 million increase in revenue share costs.
Previous report
General and administrative expenses decreased $329 million, primarily due to the absence of $335 million in legal costs related to our litigation with the Trustees of Columbia University in the City of New York (Columbia) in the second quarter of fiscal 2024.
Previous report
Sales and marketing remained relatively flat.
Previous report
Research and development decreased $11 million, due to an $8 million decrease in headcount and outside services and a $3 million decrease of stock-based compensation expense.
Reworded paragraphs (33)
Previous 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.
Current wording
We have a 52/53-week fiscal year ending on the Friday closest to March 31. The three and nine months ended December 27, 2024 and December 29, 2023 each consisted of 13 and 39 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 second quarter of fiscal 2025, compared to the corresponding period in the prior year:
Current wording
Below are our financial highlights for the third quarter of fiscal 2025, compared to the corresponding period in the prior year:
Previous wording
•Net revenues increased $29 million, primarily due to higher sales in both our consumer security and identity and information protection products.
Current wording
•Net revenues increased $38 million, primarily due to higher sales in both our consumer security and identity and information protection products.
Previous wording
•Operating income increased $438 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.
Current wording
•Operating income increased $42 million, primarily due to increased net revenues and lower amortization of intangible assets, offset by an increase in revenue share costs.
Previous wording
•Net income increased $8 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.
Current wording
•Net income increased $17 million and net income per share increased $0.04, primarily due to increased operating income discussed above and decreased interest expense associated with our Term B facility. This is offset by an impairment expense on our non-marketable equity investments and increase in income tax expense.
Previous wording
Below are our financial highlights for the first six months of fiscal 2025, compared to the corresponding period in the prior year:
Current wording
Below are our financial highlights for the first nine months of fiscal 2025, compared to the corresponding period in the prior year:
Previous wording
•Net revenues increased $51 million, primarily due to higher sales in both our consumer security and identity and information protection products.
Current wording
•Net revenues increased $89 million, primarily due to higher sales in both our consumer security and identity and information protection products.
Previous 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.
Current wording
•Operating income increased $480 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 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.
Current wording
•Net income increased $25 million and net income per share increased $0.06, primarily due to increased operating income discussed above and decreased interest expense associated with our Term B facility. This is offset by an impairment expense on our non-marketable equity investments and the absence of an income tax benefit in the second quarter of fiscal 2024.
Previous 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.
Current wording
•Cash and cash equivalents increased by $37 million compared to March 29, 2024, primarily due cash generated from operating activities during the first nine months of fiscal 2025. This is partially offset by 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.
Previous wording
•Contract liabilities decreased $57 million compared to March 29, 2024, primarily due to billing seasonality and fluctuations in foreign currency rates.
Current wording
•Contract liabilities decreased $35 million compared to March 29, 2024, primarily due to billing seasonality and fluctuations in foreign currency rates.
Previous wording
Inflation, interest rates and foreign exchange rates remained volatile in 2023 and fluctuations in these indicators continue to remain uncertain and could result in further adverse impacts to our reported results. For a further discussion of the potential impacts of the global macroeconomic conditions on our business, please see Part I, Item III and “Risk Factors” in Part II, Item 1A below.
Current wording
We continue to monitor the direct and indirect impacts of these global macroeconomic or other geopolitical factors. The broader implications of these events on our business, results of operations, and overall financial position remain uncertain and could result in further adverse impacts to our reported results. For further discussion of the potential impacts of global macroeconomic conditions on our business, please see Part 1, Item III and “Risk Factors” in Part II, Item 1A below.
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 and six months ended September 27, 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 nine months ended December 27, 2024.
Previous 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.
Current wording
Net revenues increased $38 million, due to a $21 million increase in sales of our consumer security products and a $20 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.
Previous wording
Net revenues increased $29 million, due to a $19 million increase in sales of our identity and information protection products and a $14 million increase in sales of our consumer security products. This was partially offset by a $4 million decrease in our legacy product offerings. This is inclusive of $1 million of foreign exchange headwinds, in our consumer security solutions.
Current wording
Net revenues increased $89 million, due to a $54 million increase in sales of our identity and information protection products and a $45 million increase in sales of our consumer security products. This was partially offset by a $10 million decrease in our legacy product offerings. This is inclusive of $9 million of foreign exchange headwinds, in our consumer security solutions.
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 and six months ended September 29, 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 nine months ended December 29, 2023 where we aligned allocation methodologies across similar product categories.
Previous wording
Percentage of revenue by geographic region in the three and six months ended September 27, 2024 remains primarily in the Americas.
Current wording
Percentage of revenue by geographic region in the three and nine months ended December 27, 2024 remains primarily in the Americas.
Previous wording
Amortization of intangible assets decreased $17 million, primarily due to certain intangible assets being fully amortized during fiscal 2024.
Current wording
Amortization of intangible assets decreased $18 million, primarily due to certain intangible assets being fully amortized during fiscal 2024.
Previous wording
Restructuring and other costs decreased $14 million, due to a $13 million decrease in 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.
Current wording
Restructuring and other costs remained flat. See Note 12 of the Notes to the Condensed Consolidated Financial Statements for details of the fiscal 2025 restructuring activities.
Previous wording
General and administrative expense decreased $333 million, primarily due to the absence of $335 million in legal costs related to our litigation with Columbia in the second quarter of fiscal 2024.
Current wording
General and administrative expense decreased $335 million, primarily due to the absence of legal costs related to our litigation with Columbia in the second quarter of fiscal 2024.
Previous wording
Amortization of intangible assets decreased $35 million, primarily due to certain intangible assets being fully amortized during fiscal 2024.
Current wording
Amortization of intangible assets decreased $53 million, primarily due to certain intangible assets being fully amortized during fiscal 2024.
Previous 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.
Current wording
Restructuring and other costs decreased $32 million, primarily due to a $30 million decrease in severance, termination benefits, contract cancellation costs and other exit and disposal costs in connection with the September 2022 Plan. See Note 12 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 $22 million in expense, primary due to a $18 million decrease in interest expense related to our Term B facility.
Current wording
Non-operating income (expense), net, increased by $12 million in expense, primary due to a $30 million impairment expense on our non-marketable equity investments. This was partially offset by a $19 million decrease in interest expense related to our Term B facility.
Previous wording
Non-operating income (expense), net, decreased by $39 million, primarily due to a $32 decrease in interest expense related to our Term B facility.
Current wording
Non-operating income (expense), net, decreased by $27 million, primarily due to a $51 million decrease in interest expense related to our Term B facility. This was partially offset by a $30 million impairment expense on our non-marketable equity investments.
Previous 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.
Current wording
Our effective tax rate for the three and nine months ended December 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 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.
Current wording
Our effective tax rate for the three and nine months ended December 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
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.
Current wording
Our cash flows provided by operating activities increased $82 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 legal payments compared to the first nine months of fiscal 2024.
Previous 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.
Current wording
Our cash flows used in financing activities decreased $256 million, primarily due to a $320 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. This was partially offset by a $131 million increase in repurchases of common stock under our repurchase program as compared to the first nine months of fiscal 2024.
Previous 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.
Current wording
As of December 27, 2024, we had cash and cash equivalents of $883 million, of which $386 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 $1,490 million, net of our letters of credit, which expires in September 2027.
Current wording
We have an undrawn revolving credit facility of $1,495 million, net of our letters of credit, which expires in September 2027.
Previous 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.
Current wording
During the nine months ended December 27, 2024 and December 29, 2023, we executed repurchases of 11 million and 7 million of our common stock under our existing stock repurchase program for an aggregate amount of $272 million and $141 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 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.
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 nine months ended December 27, 2024, we made $21 million in cash payments related to the September 2022 Plan. As of December 27, 2024, we have incurred costs of $128 million related to the September 2022 Plan. See Note 12 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 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.
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 December 27, 2024, we are unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities. Therefore, $1,384 million in long-term income taxes payable has been excluded from our quarterly review of timing of contractual obligations.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Cost of revenues increased $36 million, primarily due to a $34 million increase in revenue share costs.