Symantec Reports Fiscal Fourth Quarter and Full Year 2019 Results

Symantec Reports Fiscal Fourth Quarter and Full Year 2019 Results
May 09 12:12 2019 Print This Article

Q4 GAAP revenue of $1.189 billion and non-GAAP revenue of $1.195 billion

Fiscal year 2019 GAAP revenue of $4.731 billion and non-GAAP revenue of $4.762 billion

Cash flow from operating activities for fiscal year 2019 was $1.495 billion, up 57% year-over-year

Company repurchased 11 million shares and retired $600 million in debt during the fourth quarter 2019

MOUNTAIN VIEW, Calif.–(BUSINESS WIRE)–Symantec Corp. (NASDAQ: SYMC) today reported results for its fourth quarter and full fiscal year 2019 ended March 29, 2019.

“We achieved company revenue in the fourth quarter in line with guidance and generated strong cash flow from operating activities,” said Richard S. Hill, Symantec Interim President and CEO. “Our Consumer Cyber Safety segment continued to deliver solid results, and we were pleased with increases in average revenue per user, both year-over-year and sequentially. However, our Enterprise Security revenue was below our guidance range due to lower than expected bookings, which led to year-over-year reported billings declining greater than we anticipated. Despite this weakness, we remain confident in our Integrated Cyber Defense strategy, which has produced a strong and competitive product portfolio. Moving forward, in Enterprise Security we are focused on operational discipline, increasing sales productivity, expanding operating margins and managing the shift to our ratable cloud delivered solutions. In Consumer Cyber Safety we will continue to execute on multiple initiatives to drive revenue growth. With industry-leading solutions across both our enterprise and consumer businesses, we are optimistic that we are well positioned to execute against a growing opportunity in the cyber defense market.”

To help readers understand our past financial performance and our future results, we supplement the financial results that we provide in accordance with generally accepted accounting principles, or GAAP, with non-GAAP financial measures. The methods we use to produce non-GAAP results are not in accordance with GAAP and may differ from the methods used by other companies. Additional information regarding our non-GAAP measures are provided below.

Fourth Quarter Fiscal 2019 Financial Highlights

  • GAAP revenue was $1.189 billion, non-GAAP revenue was $1.195 billion
  • GAAP operating margin of 9%, non-GAAP operating margin of 29%
  • GAAP diluted EPS was $0.05, non-GAAP diluted EPS was $0.39
  • Cash flow from operating activities of $547 million

Fiscal Year 2019 Financial Highlights

  • GAAP revenue was $4.731 billion, non-GAAP revenue was $4.762 billion
  • GAAP operating margin of 8%, non-GAAP operating margin of 30%
  • GAAP diluted EPS was $0.05, non-GAAP diluted EPS was $1.59
  • Cash flow from operating activities of $1.495 billion

Leadership Changes

In a separate press release issued today, Symantec announced that Richard S. Hill has been named Interim President and CEO, effective immediately. Mr. Hill succeeds Greg Clark, who has stepped down as President and CEO and as a member of the Symantec Board, also effective immediately. The Company will commence a search process to find a permanent CEO.

Vincent Pilette, CFO of Logitech and former VP of Finance for Hewlett Packard Enterprise’s server, storage and networking business, has been appointed Executive Vice President and Chief Financial Officer of Symantec, effective May 21, 2019. Mr. Pilette’s appointment follows a comprehensive search process initiated in connection with Nicholas Noviello’s departure as EVP and CFO to pursue other opportunities, as announced on January 31, 2019.

     

First Quarter and Fiscal Year 2020 Guidance

           
First Quarter Fiscal 2020     GAAP   Non-GAAP
Revenue     $1.171B – $1.201B   $1.175B – $1.205B
Operating Margin     5% – 7%   25% – 27%
EPS (Diluted)     $0.01 – $0.05   $0.30 – $0.34
Fiscal Year 2020      
Revenue     $4.750B – $4.890B   $4.760B – $4.900B
Operating Margin     13% – 15%   31% – 33%
EPS (Diluted)     $0.57 – $0.73   $1.65 – $1.80
 

Symantec’s Board of Directors has declared a quarterly cash dividend of $0.075 per common share to be paid on June 26, 2019, to all shareholders of record as of the close of business on June 10, 2019.

For additional details regarding Symantec’s results and outlook, please see the Supplemental Information on the investor relations page of our website at: http://www.symantec.com/invest.

Conference Call

Symantec has scheduled a conference call for 5:00 p.m. ET / 2:00 p.m. PT today to discuss its results for its fourth quarter and full year fiscal 2019 ended March 29, 2019 and to review guidance. Interested parties may access the conference call through Symantec’s Investor Relations website at http://investor.symantec.com/investor-relations/events-calendar/. For telephone access to the conference, call (877) 475-6198 within the United States or (970) 297-2372 from outside the United States. Please call 15 minutes early and give the operator conference ID number 4593466.

A replay and our prepared remarks will be available on the investor relations home page shortly after the call is completed.

About Symantec

Symantec Corporation (NASDAQ: SYMC), the world’s leading cyber security company, helps organizations, governments and people secure their most important data wherever it lives. Organizations across the world look to Symantec for strategic, integrated solutions to defend against sophisticated attacks across endpoints, cloud and infrastructure. Likewise, a global community of more than 50 million people and families rely on Symantec’s Norton and LifeLock product suites to protect their digital lives at home and across their devices. Symantec operates one of the world’s largest civilian cyber intelligence networks, allowing it to see and protect against the most advanced threats. For additional information, please visit www.symantec.com or connect with us on Facebook, Twitter, and LinkedIn.

NOTE TO EDITORS: If you would like additional information on Symantec Corporation and its products, please visit the Symantec News Room at http://www.symantec.com/news. All prices noted are in U.S. dollars and are valid only in the United States.

Symantec, the Symantec logo and the Checkmark logo are trademarks or registered trademarks of Symantec Corporation or its affiliates in the U.S. and other countries. Other names may be trademarks of their respective owners.

Forward-Looking Statements: This press release contains statements which may be considered forward-looking within the meaning of the U.S. federal securities laws, including the information contained under the caption “First Quarter and Fiscal Year 2020 Guidance” and the statements regarding Symantec’s leadership changes and Symantec’s prospects for growth and value creation, Symantec’s planned cash dividend, as well as other projected financial and business results, including demand for its products and services, Symantec’s enhanced capabilities, and Symantec’s continued cost and operating efficiencies. These statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from results expressed or implied in this press release. Such risk factors include those related to: retention of existing executive leadership team members; difficulties in improving sales execution and product development during leadership transitions; general business and economic conditions; our ability to integrate acquired businesses and realize the expected benefits of the acquisitions; matters arising out of our completed Audit Committee investigation and the ongoing U.S. Securities and Exchange Commission investigation; fluctuations and volatility in Symantec’s stock price; the ability of Symantec to successfully execute strategic plans; the ability to maintain customer and partner relationships; the ability of Symantec to achieve its cost and operating efficiency goals; the anticipated growth of certain market segments; Symantec’s sales pipeline and business strategy; fluctuations in tax rates and foreign currency exchange rates; the timing and market acceptance of new product releases and upgrades; and the successful development of new products and the degree to which these products gain market acceptance. Actual results may differ materially from those contained in the forward-looking statements in this press release. Symantec assumes no obligation, and does not intend, to update these forward-looking statements as a result of future events or developments. Additional information concerning these and other risk factors is contained in the Risk Factors sections of Symantec’s most recent reports on Form 10-K and Form 10-Q.

USE OF NON-GAAP FINANCIAL INFORMATION: We use non-GAAP measures of adjusted revenues, operating margin, net income and earnings per share, which are adjusted from results based on GAAP to include certain purchase accounting adjustments and exclude certain expenses, gains and losses. Additionally, we provide the non-GAAP metric of reported billings (previously referred to as implied billings). These non-GAAP financial measures are provided to enhance the user’s understanding of our past financial performance and our prospects for the future. Our management team uses these non-GAAP financial measures in assessing Symantec’s performance, as well as in planning and forecasting future periods. These non-GAAP financial measures are not computed according to GAAP and the methods we use to compute them may differ from the methods used by other companies. Non-GAAP financial measures are supplemental, should not be considered a substitute for financial information presented in accordance with GAAP and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Readers are encouraged to review the reconciliation of our non-GAAP financial measures to the comparable GAAP results, which is attached to our quarterly earnings release and which can be found, along with other financial information including Supplemental Information, on the investor relations page of our website at: http://www.symantec.com/invest.

 
SYMANTEC CORPORATION

Condensed Consolidated Balance Sheets (1)

(In millions, unaudited)
 
  March 29, 2019   March 30, 2018 (2)
ASSETS
Current assets:
Cash and cash equivalents $ 1,791 $ 1,774
Short-term investments 252 388
Accounts receivable, net 708 809
Other current assets 435   522
Total current assets 3,186 3,493
Property and equipment, net 790 778
Intangible assets, net 2,250 2,643
Goodwill 8,450 8,319
Other long-term assets 1,262   526
Total assets $ 15,938   $ 15,759
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 165 $ 168
Accrued compensation and benefits 257 262
Current portion of long-term debt 491
Contract liabilities (3) 2,320 2,368
Other current liabilities 533   372
Total current liabilities 3,766 3,170
Long-term debt 3,961 5,026
Long-term contract liabilities (3) 736 735
Deferred income tax liabilities 577 592
Long-term income taxes payable 1,076 1,126
Other long-term liabilities 84   87
Total liabilities 10,200 10,736
Total stockholders’ equity 5,738   5,023
Total liabilities and stockholders’ equity $ 15,938   $ 15,759

____________________

(1)   We adopted the new revenue recognition accounting standard (ASC 606) on a modified retrospective basis during Q1 FY19. The results as of March 29, 2019 are presented under the new revenue recognition accounting standard, while prior period amounts are not adjusted and continue to be reported under the prior revenue recognition accounting standard (ASC 605).
(2) Derived from audited consolidated financial statements.
(3) As a result of the new revenue recognition accounting standard (ASC 606), amounts we have previously referred to as deferred revenue are now referred to as contract liabilities, which consist of the total of what is now identified as deferred revenue and customer deposit liabilities in all schedules throughout this document.
 
 
SYMANTEC CORPORATION

Condensed Consolidated Statements of Operations (1)

(In millions, except per share data, unaudited)
 
  Three Months Ended   Year Ended
March 29, 2019   March 30, 2018 March 29, 2019   March 30, 2018 (2)
Net revenues $ 1,189 $ 1,210 $ 4,731 $ 4,834
Cost of revenues 279   264   1,050   1,032  
Gross profit 910 946 3,681 3,802
Operating expenses:
Sales and marketing 378 354 1,493 1,593
Research and development 236 257 913 956
General and administrative 102 143 447 574
Amortization of intangible assets 51 54 207 220
Restructuring, transition and other costs 36   132   241   410  
Total operating expenses 803   940   3,301   3,753  
Operating income 107 6 380 49
Interest expense (51 ) (57 ) (208 ) (256 )
Gain (loss) on divestiture (5 ) 653
Other expense, net (4 ) (9 ) (64 ) (9 )
Income (loss) from continuing operations before income taxes 52 (65 ) 108 437
Income tax expense (benefit) 22   (7 ) 92   (690 )
Income (loss) from continuing operations 30 (58 ) 16 1,127
Income (loss) from discontinued operations, net of income taxes 4   (1 ) 15   11  
Net income (loss) $ 34   $ (59 ) $ 31   $ 1,138  
 
Income (loss) per share – basic:
Continuing operations $ 0.05 $ (0.09 ) $ 0.03 $ 1.83
Discontinued operations $ 0.01 $ (0.00 ) $ 0.02 $ 0.02
Net income (loss) per share – basic (3) $ 0.05 $ (0.10 ) $ 0.05 $ 1.85
 
Income (loss) per share – diluted:
Continuing operations $ 0.05 $ (0.09 ) $ 0.02 $ 1.69
Discontinued operations $ 0.01 $ (0.00 ) $ 0.02 $ 0.02
Net income (loss) per share – diluted (3) $ 0.05 $ (0.10 ) $ 0.05 $ 1.70
 
Weighted-average shares outstanding:
Basic 637 621 632 616
Diluted 662 621 661 668

____________________

(1)   We adopted the new revenue recognition accounting standard (ASC 606) on a modified retrospective basis during Q1 FY19. The results for Q4 FY19 and FY19 are presented under the new revenue recognition accounting standard, while prior period amounts are not adjusted and continue to be reported under the prior revenue recognition accounting standard (ASC 605).
(2) Derived from audited consolidated financial statements.
(3) Net income (loss) per share may not add due to rounding.
 
 
SYMANTEC CORPORATION
Condensed Consolidated Statements of Cash Flows
(In millions, unaudited)
 
  Three Months Ended   Year Ended
March 29, 2019   March 30, 2018 March 29, 2019   March 30, 2018 (1)
OPERATING ACTIVITIES:
Net income (loss) $ 34 $ (59 ) $ 31 $ 1,138
(Income) loss from discontinued operations, net of income taxes (4 ) 1 (15 ) (11 )
Adjustments:
Amortization and depreciation 158 155 615 640
Impairments of long-lived assets 2 34 10 81
Stock-based compensation expense 87 162 352 610
Loss from equity interest 17 26 101 26
Deferred income taxes (52 ) (27 ) (70 ) (1,848 )
(Gain) loss on divestiture 5 (653 )
Other 18 8 (14 ) 45
Changes in operating assets and liabilities, net of acquisitions and divestiture:
Accounts receivable, net 16 (132 ) 113 (170 )
Accounts payable (29 ) (9 ) 6 (4 )
Accrued compensation and benefits 28 20 2 (33 )
Contract liabilities 145 354 215 541
Income taxes payable 84 (74 ) 67 880
Other assets (33 ) (187 ) (32 ) (199 )
Other liabilities 76   (1 ) 114   (86 )
Net cash provided by continuing operating activities 547 276 1,495 957
Net cash used in discontinued operating activities   (10 )   (7 )
Net cash provided by operating activities 547 266 1,495 950
INVESTING ACTIVITIES:
Purchases of property and equipment (54 ) (37 ) (207 ) (142 )
Payments for acquisitions, net of cash acquired (139 ) 1 (180 ) (401 )
Proceeds from divestiture, net of cash contributed and transaction costs (13 ) 933
Purchases of short-term investments (28 ) (436 )
Proceeds from maturities and sales of short-term investments 20 24 139 49
Proceeds from sale of property 26
Other (7 ) (4 ) (19 ) (24 )
Net cash used in investing activities (180 ) (57 ) (241 ) (21 )
FINANCING ACTIVITIES:
Repayments of debt (600 ) (570 ) (600 ) (3,210 )
Net proceeds from sales of common stock under employee stock incentive plans 11 38 19 121
Tax payments related to restricted stock units (5 ) (10 ) (173 ) (107 )
Dividends and dividend equivalents paid (48 ) (48 ) (217 ) (211 )
Repurchases of common stock (234 ) (234 )
Payment for dissenting LifeLock shareholder settlement (68 )
Other (4 )   (4 )  
Net cash used in financing activities (880 ) (590 ) (1,209 ) (3,475 )
Effect of exchange rate fluctuations on cash and cash equivalents (5 ) 13   (28 ) 73  
Change in cash and cash equivalents (518 ) (368 ) 17 (2,473 )
Beginning cash and cash equivalents 2,309   2,142   1,774   4,247  
Ending cash and cash equivalents $ 1,791   $ 1,774   $ 1,791   $ 1,774  

____________________

(1)   Derived from audited consolidated financial statements.
 
 
SYMANTEC CORPORATION

Reconciliation of Selected GAAP Measures to Non-GAAP Measures (1) (2)

(In millions, except per share data, unaudited)
 
  Three Months Ended   Year Ended
March 29, 2019   March 30, 2018 March 29, 2019   March 30, 2018
Net revenues $ 1,189 $ 1,210 $ 4,731 $ 4,834
Contract liabilities fair value adjustment 6   12   31   126  
Net revenues (Non-GAAP) $ 1,195   $ 1,222   $ 4,762   $ 4,960  
 
Operating income $ 107 $ 6 $ 380 $ 49
Contract liabilities fair value adjustment 6 12 31 126
Stock-based compensation 87 162 352 610
Amortization of intangible assets 111 112 443 453
Restructuring, transition and other costs 36 132 241 410
Acquisition-related costs 9 3 60
Litigation settlement   2   (5 ) 2  
Operating income (Non-GAAP) $ 347   $ 435   $ 1,445   $ 1,710  
 
Operating margin 9 % 0 % 8 % 1 %
Operating margin (Non-GAAP) 29 % 36 % 30 % 34 %
 
Net income (loss) $ 34 $ (59 ) $ 31 $ 1,138
Adjustments to income (loss) from continuing operations:
Contract liabilities fair value adjustment 6 12 31 126
Stock-based compensation 87 162 352 610
Amortization of intangible assets 111 112 443 453
Restructuring, transition and other costs 36 132 241 410
Acquisition-related costs 9 3 60
Litigation settlement 2 (5 ) 2
Non-cash interest expense 7 9 26 50
(Gain) loss on divestiture and gain on sale of assets 2 (656 )
Loss from equity interest 17 26 101 26
Income tax reform 151 (659 )
Other income tax effects and adjustments (38 ) (261 ) (158 ) (434 )
Total adjustment from continuing operations 226 356 1,034 (12 )
Total adjustment from discontinued operations (4 ) 1   (15 ) (11 )
Net income (Non-GAAP) $ 256   $ 298   $ 1,050   $ 1,115  
 
Diluted net income (loss) per share $ 0.05 $ (0.10 ) $ 0.05 $ 1.70
Adjustments to diluted net income per share:
Contract liabilities fair value adjustment 0.01 0.02 0.05 0.19
Stock-based compensation 0.13 0.26 0.53 0.91
Amortization of intangible assets 0.17 0.18 0.67 0.68
Restructuring, transition and other costs 0.05 0.21 0.36 0.61
Acquisition-related costs 0.01 0.00 0.09
Litigation settlement 0.00 (0.01 ) 0.00
Non-cash interest expense 0.01 0.01 0.04 0.07
(Gain) loss on divestiture and gain on sale of assets 0.00 (0.98 )
Loss from equity interest 0.03 0.04 0.15 0.04
Income tax reform 0.24 (0.99 )
Other income tax effects and adjustments (0.06 ) (0.42 ) (0.24 ) (0.65 )
Total adjustment from continuing operations 0.34 0.57 1.56 (0.02 )
Total adjustment from discontinued operations (0.01 ) 0.00 (0.02 ) (0.02 )
Incremental dilution effect   (0.04 )    
Diluted net income per share (Non-GAAP) (3) $ 0.39   $ 0.44   $ 1.59   $ 1.67  
 
Diluted weighted-average shares outstanding 662 621 661 668
Incremental dilution 54
Diluted weighted-average shares outstanding (Non-GAAP) (4) 662 675 661 668

____________________

(1)   This presentation includes non-GAAP measures. Non-GAAP financial measures are supplemental and should not be considered a substitute for financial information presented in accordance with GAAP. For a detailed explanation of these non-GAAP measures, please see Appendix A.
(2) We adopted the new revenue recognition accounting standard (ASC 606) on a modified retrospective basis during Q1 FY19. The results for Q4 FY19 and FY19 are presented under the new revenue recognition accounting standard, while prior period amounts are not adjusted and continue to be reported under the prior revenue recognition accounting standard (ASC 605).
(3) Net income per share amounts may not add due to rounding.
(4) Diluted GAAP and non-GAAP weighted-average shares outstanding are the same, except in periods in which there is a GAAP loss from continuing operations. In accordance with GAAP, we do not present dilution for GAAP in periods in which there is a loss from continuing operations. However, if there is non-GAAP net income, we present dilution for non-GAAP weighted-average shares outstanding in an amount equal to the dilution that would have been presented had there been GAAP income from continuing operations for the period.
 
 
SYMANTEC CORPORATION

Reconciliation of GAAP Revenue to Non-GAAP Reported Billings (1)(2)(3)

(In millions, unaudited)
 
  Three Months Ended
March 29, 2019   March 30, 2018
Total Company Reported Billings (Non-GAAP)
Total revenue $ 1,189 $ 1,210
Add: Contract liabilities (end of period) 3,056 3,103
Less: Contract liabilities (beginning of period) (2,915 ) (2,730 )
Other contract liabilities adjustments (4) 2   15  
Reported billings (Non-GAAP) $ 1,332   $ 1,598  
 
Enterprise Security Reported Billings (Non-GAAP)
Total revenue $ 584 $ 597
Add: Contract liabilities (end of period) 2,002 2,010
Less: Contract liabilities (beginning of period) (1,876 ) (1,685 )
Other contract liabilities adjustments (4) 2   15  
Reported billings (Non-GAAP) $ 712   $ 937  
 
Consumer Cyber Safety Reported Billings (Non-GAAP) (5)
Total revenue $ 605 $ 613
Add: Contract liabilities (end of period) 1,054 1,093
Less: Contract liabilities (beginning of period) (1,039 ) (1,045 )
Reported billings (Non-GAAP) $ 620   $ 661  

____________________

(1)   This presentation includes non-GAAP measures. Non-GAAP financial measures are supplemental and should not be considered a substitute for financial information presented in accordance with GAAP. For a detailed explanation of these non-GAAP measures, please see Appendix A.
(2) We adopted the new revenue recognition accounting standard (ASC 606) on a modified retrospective basis during Q1 FY19. The results for Q4 FY19 and FY19 are presented under the new revenue recognition accounting standard, while prior period amounts are not adjusted and continue to be reported under the prior revenue recognition accounting standard (ASC 605).
(3) Reported billings was previously referred to as implied billings. The calculation did not change.
(4) Other contract liabilities adjustments include the change in contract liabilities related to Veritas discontinued operations.
(5) Consumer Cyber Safety was previously named Consumer Digital Safety.
 
 
SYMANTEC CORPORATION

Guidance and Reconciliation of GAAP to Non-GAAP Revenue, Operating Income and EPS (1) (2)

(In millions, except per share data, unaudited)
 
First Quarter Fiscal Year 2020      
 
Revenue Guidance
GAAP revenue range $1,171 $1,201
Adjustment:
Contract liabilities fair value adjustment $4
Non-GAAP revenue range $1,175 $1,205
 
Operating Margin Guidance and Reconciliation
GAAP operating margin 5 % 7 %
Adjustments:
Contract liabilities fair value adjustment 0 %
Stock-based compensation 8 %
Amortization of intangible assets 10 %
Restructuring, transition and other costs 2 %
Non-GAAP operating margin 25 % 27 %
 
Earnings Per Share Guidance and Reconciliation
GAAP diluted income per share range (3) $0.01 $0.05
Adjustments:
Contract liabilities fair value adjustment $0.01
Stock-based compensation $0.14
Amortization of intangible assets $0.17
Restructuring, transition and other costs $0.03
Other $0.01
Income tax effects and adjustments ($0.07 )
Non-GAAP diluted earnings per share range (3) $0.30

$0.34
 
Fiscal Year 2020
 
Revenue Guidance
GAAP revenue range $4,750

 

$4,890
Adjustment:
Contract liabilities fair value adjustment $10
Non-GAAP revenue range $4,760 $4,900
 
Operating Margin Guidance and Reconciliation
GAAP operating margin 13 % 15 %
Adjustments:
Contract liabilities fair value adjustment 0 %
Stock-based compensation 7 %
Amortization of intangible assets 10 %
Restructuring, transition and other costs 1 %
Non-GAAP operating margin 31 % 33 %
 
Earnings Per Share Guidance and Reconciliation
GAAP diluted income per share range (3) $0.57 $0.73
Adjustments:
Contract liabilities fair value adjustment $0.02
Stock-based compensation $0.53
Amortization of intangible assets $0.70
Restructuring, transition and other costs $0.08
Other $0.03
Income tax effects and adjustments ($0.29 )
Non-GAAP diluted earnings per share range (3) $1.65 $1.80

Contacts

MEDIA CONTACT:
Lauren Armstrong
Symantec Corp.
(650) 448-7352
[email protected]

INVESTOR CONTACT:
Cynthia Hiponia
Symantec Corp.
(650) 527-8020
[email protected]

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Jessica Yaniv
Jessica Yaniv

Jessica is the founder and editor-in-chief of TrustedNerd.com. Covering major tech shows such as CES, Jessica is always there for the latest tech news. Want your gadget to be reviewed or have a release you'd like to be considered for publishing? Send Jessica an email, jessica [at] trustednerd.com

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