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NortonLifeLock's (NLOK) Q2 Earnings Double, Beat Estimates

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NortonLifeLock’s reported second-quarter fiscal 2021 non-GAAP earnings doubled to 36 cents per share from the year-ago quarter’s 18 cents. The earnings figure beat the Zacks Consensus Estimate of 33 cents as well.

Revenues of $626 million also surpassed the consensus mark of $621.1 million and marked a year-over-year improvement of 5%. This outperformance was mainly driven by strong execution, favorable foreign currency exchange rates and the removal of the company’s final stranded costs.

Quarter Details

Direct average revenue per user (ARPU) increased 2% year over year to $9.10 per month. Continued stabilization of direct customer count was a positive. The company added 117,000 customers during the fiscal second quarter, bringing the total count to 20.7 million.

In the reported quarter, gross profit climbed 5.9% year over year to $536 million. Moreover, gross margin expanded 160 basis points (bps) on a year-over-year basis to 85.6%.

NortonLifeLock Inc. Price, Consensus and EPS Surprise

NortonLifeLock Inc. Price, Consensus and EPS Surprise

NortonLifeLock Inc. price-consensus-eps-surprise-chart | NortonLifeLock Inc. Quote

Operating income on a non-GAAP basis jumped 71.6% year over year to $314 million. Operating margin was 50.2%, up significantly from the year-ago quarter’s 30.1%.

Balance Sheet

As of Oct 2, 2020, NortonLifeLock had $1.05 billion in cash and cash equivalents compared with the prior quarter’s $1.1 billion. Long-term debt was $3.56 billion, down from the $2.84 billion witnessed in the previous quarter.

The company uses cash of $113 million for operational activities. During the first six months of fiscal 2021, the company generated an operating cash flow of $57 million.

Guidance

For the third quarter of fiscal 2021, NortonLifeLock projects revenues between $625 million and $635 million, suggesting 4-5% growth adjusting for ID Analytics revenues ($15 million).

Moreover, non-GAAP earnings from continuing operations are expected between 36 cents and 38 cents per share.

Zacks Rank & Stocks to Consider

NortonLifeLock currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector include NVIDIA Corporation (NVDA - Free Report) , Paylocity Holding Corporation (PCTY - Free Report) and Covetrus, Inc. , all carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term earnings growth rate for NVIDIA, Paylocity and Covetrus is currently pegged at 20.1%, 20%, and 31.6%, respectively.

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