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Gen Digital (GEN) to Report Q3 Earnings: What's in the Cards?
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Gen Digital (GEN - Free Report) is slated to report third-quarter fiscal 2024 results on Feb 1. Gen Digital was formerly known as NortonLifeLock Inc. and was trading under the NLOK ticker symbol.
NortonLifeLock changed its name and ticker symbol, effective from Nov 8, 2022, following the completed merger of NortonLifeLock and Avast Plc. The newly named company unites trusted consumer safety brands, including Norton, Avast, LifeLock, AVG, Avira, CCleaner and ReputationDefender.
The company projects quarterly revenues between $950 million and $960 million. The Zacks Consensus Estimate for third-quarter revenues is pegged at $955.8 million, indicating a 2.1% improvement from the year-ago quarter’s figure of $936 million.
For the third quarter of fiscal 2024, Gen Digital expects non-GAAP earnings in the range of 49 cents-51 cents per share. The Zacks Consensus Estimate is pegged at 50 cents per share, indicating an 11.1% higher than the year-ago reported figure of 45 cents.
The company’s earnings surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while matching on one occasion, the average surprise being 4.1%.
Let’s see how things have shaped up before this announcement.
GEN’s third-quarter performance is likely to have benefited from the increased demand for cybersecurity and ID analytics solutions in the hybrid work environment. Over the past couple of years, as more people are shifting online, the need for online privacy has been rising. Global workforces working remotely are logging into employers' networks, escalating the need for digital security. This trend is likely to have spurred the demand for Gen Digital’s security products in the fiscal third quarter.
Our third-quarter estimate for Gen Digital’s Consumer Security segment’s revenues is pegged at $611.7 million, indicating a year-over-year increase of 3.7%. Our estimate of $330 million for the Identity and Information Protection division implies growth of 2.2% from the year-ago quarter.
Gen Digital’s third-quarter top line is also likely to have been primarily driven by the inclusion of the Avast business, which significantly increased the combined company’s Average Direct Customer count. Our third-quarter estimate for this key metric is pegged at 38.4 million.
Moreover, the expansion of product offerings following the merger of NortonLifeLock and Avast is likely to have facilitated the newly formed company to cross-sell products to each other’s customers, thereby aiding Average Revenue Per User (“ARPU”) growth. Gen Digital’s ARPU increased by 30 cents to $7.28 in the second quarter of fiscal 2024 from $6.98 in the year-ago quarter.
We anticipate the trend is likely to have continued in the to-be-reported quarter. Our third-quarter fiscal 2024 estimate for ARPU is pegged at $7.32, which is 23 cents higher than the third-quarter fiscal 2023 level.
An expansion in the EMEA, Asia Pacific and Latin American regions is also likely to have been an upside for GEN this season. Further, the growing number of client bookings, supported by their retention and renewal rates, is anticipated to have contributed to the company’s fiscal third-quarter top line. At the end of the second quarter of fiscal 2024, Gen Digital’s client retention rate was 77%, while bookings grew 28% on a year-over-year basis.
The Norton and Avast antivirus maker’s sustained focus on growing partner channels and employee benefit programs is likely to have driven its performance in the quarter to be reported. Our estimate for the company’s Partner revenues is pegged at $98.4 million, which calls for a 3.5% increase from the year-ago quarter. Additionally, Direct Customer revenues are expected to increase 3.1% year over year to $843.4 million, per our estimate.
However, GEN’s overall third-quarter performance is likely to have been negatively impacted by unfavorable foreign exchange rates. Additionally, increased interest expenses due to enhanced debt related to Avast acquisition financing are likely to have weighed on the bottom line. Moreover, the company’s earnings per share are expected to have been negatively impacted by the equity dilution impact of the Avast acquisition. To finance the acquisition of Avast, Gen Digital issued 94 million new shares.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for Gen Digital this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.
Though GEN currently carries a Zacks Rank of 3, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
Per our model, Fabrinet (FN - Free Report) , Apple (AAPL - Free Report) and Meta Platforms (META - Free Report) have the right combination of elements to post an earnings beat in their upcoming releases.
Fabrinet carries a Zacks Rank #1 and has an Earnings ESP of +2.13%. The company is scheduled to report second-quarter fiscal 2024 results on Feb 5. Its earnings beat the Zacks Consensus Estimate in the preceding four quarters, with the average surprise being 3.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Fabrinet’s second-quarter earnings stands at $2.04 per share, indicating a year-over-year improvement of 7.4%. It is estimated to report revenues of $699.8 million, which suggests an increase of approximately 4.7% from the year-ago quarter.
Apple is slated to report first-quarter fiscal 2024 results on Feb 1. The company has a Zacks Rank #3 and an Earnings ESP of +1.96% at present. Apple’s earnings beat the Zacks Consensus Estimate thrice in the trailing four quarters while missing on one occasion, the average surprise being 3.5%.
The Zacks Consensus Estimate for first-quarter earnings is pegged at $2.09 per share, suggesting an increase of 11.2% from the year-ago quarter’s earnings of $1.88. Apple’s quarterly revenues are estimated to improve marginally to $117.62 billion from $117.15 billion in the year-ago quarter.
Meta carries a Zacks Rank #2 and has an Earnings ESP of +0.79%. The company is scheduled to report fourth-quarter 2023 results on Feb 1. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 27.5%.
The Zacks Consensus Estimate for Meta’s fourth-quarter earnings is pegged at $4.83 per share, indicating a year-over-year increase of 61%. The consensus mark for revenues stands at $38.93 billion, calling for a year-over-year rise of 21%.
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Gen Digital (GEN) to Report Q3 Earnings: What's in the Cards?
Gen Digital (GEN - Free Report) is slated to report third-quarter fiscal 2024 results on Feb 1. Gen Digital was formerly known as NortonLifeLock Inc. and was trading under the NLOK ticker symbol.
NortonLifeLock changed its name and ticker symbol, effective from Nov 8, 2022, following the completed merger of NortonLifeLock and Avast Plc. The newly named company unites trusted consumer safety brands, including Norton, Avast, LifeLock, AVG, Avira, CCleaner and ReputationDefender.
The company projects quarterly revenues between $950 million and $960 million. The Zacks Consensus Estimate for third-quarter revenues is pegged at $955.8 million, indicating a 2.1% improvement from the year-ago quarter’s figure of $936 million.
For the third quarter of fiscal 2024, Gen Digital expects non-GAAP earnings in the range of 49 cents-51 cents per share. The Zacks Consensus Estimate is pegged at 50 cents per share, indicating an 11.1% higher than the year-ago reported figure of 45 cents.
The company’s earnings surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while matching on one occasion, the average surprise being 4.1%.
Let’s see how things have shaped up before this announcement.
Gen Digital Inc. Price and EPS Surprise
Gen Digital Inc. price-eps-surprise | Gen Digital Inc. Quote
Factors to Note
GEN’s third-quarter performance is likely to have benefited from the increased demand for cybersecurity and ID analytics solutions in the hybrid work environment. Over the past couple of years, as more people are shifting online, the need for online privacy has been rising. Global workforces working remotely are logging into employers' networks, escalating the need for digital security. This trend is likely to have spurred the demand for Gen Digital’s security products in the fiscal third quarter.
Our third-quarter estimate for Gen Digital’s Consumer Security segment’s revenues is pegged at $611.7 million, indicating a year-over-year increase of 3.7%. Our estimate of $330 million for the Identity and Information Protection division implies growth of 2.2% from the year-ago quarter.
Gen Digital’s third-quarter top line is also likely to have been primarily driven by the inclusion of the Avast business, which significantly increased the combined company’s Average Direct Customer count. Our third-quarter estimate for this key metric is pegged at 38.4 million.
Moreover, the expansion of product offerings following the merger of NortonLifeLock and Avast is likely to have facilitated the newly formed company to cross-sell products to each other’s customers, thereby aiding Average Revenue Per User (“ARPU”) growth. Gen Digital’s ARPU increased by 30 cents to $7.28 in the second quarter of fiscal 2024 from $6.98 in the year-ago quarter.
We anticipate the trend is likely to have continued in the to-be-reported quarter. Our third-quarter fiscal 2024 estimate for ARPU is pegged at $7.32, which is 23 cents higher than the third-quarter fiscal 2023 level.
An expansion in the EMEA, Asia Pacific and Latin American regions is also likely to have been an upside for GEN this season. Further, the growing number of client bookings, supported by their retention and renewal rates, is anticipated to have contributed to the company’s fiscal third-quarter top line. At the end of the second quarter of fiscal 2024, Gen Digital’s client retention rate was 77%, while bookings grew 28% on a year-over-year basis.
The Norton and Avast antivirus maker’s sustained focus on growing partner channels and employee benefit programs is likely to have driven its performance in the quarter to be reported. Our estimate for the company’s Partner revenues is pegged at $98.4 million, which calls for a 3.5% increase from the year-ago quarter. Additionally, Direct Customer revenues are expected to increase 3.1% year over year to $843.4 million, per our estimate.
However, GEN’s overall third-quarter performance is likely to have been negatively impacted by unfavorable foreign exchange rates. Additionally, increased interest expenses due to enhanced debt related to Avast acquisition financing are likely to have weighed on the bottom line. Moreover, the company’s earnings per share are expected to have been negatively impacted by the equity dilution impact of the Avast acquisition. To finance the acquisition of Avast, Gen Digital issued 94 million new shares.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for Gen Digital this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.
Though GEN currently carries a Zacks Rank of 3, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
Per our model, Fabrinet (FN - Free Report) , Apple (AAPL - Free Report) and Meta Platforms (META - Free Report) have the right combination of elements to post an earnings beat in their upcoming releases.
Fabrinet carries a Zacks Rank #1 and has an Earnings ESP of +2.13%. The company is scheduled to report second-quarter fiscal 2024 results on Feb 5. Its earnings beat the Zacks Consensus Estimate in the preceding four quarters, with the average surprise being 3.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Fabrinet’s second-quarter earnings stands at $2.04 per share, indicating a year-over-year improvement of 7.4%. It is estimated to report revenues of $699.8 million, which suggests an increase of approximately 4.7% from the year-ago quarter.
Apple is slated to report first-quarter fiscal 2024 results on Feb 1. The company has a Zacks Rank #3 and an Earnings ESP of +1.96% at present. Apple’s earnings beat the Zacks Consensus Estimate thrice in the trailing four quarters while missing on one occasion, the average surprise being 3.5%.
The Zacks Consensus Estimate for first-quarter earnings is pegged at $2.09 per share, suggesting an increase of 11.2% from the year-ago quarter’s earnings of $1.88. Apple’s quarterly revenues are estimated to improve marginally to $117.62 billion from $117.15 billion in the year-ago quarter.
Meta carries a Zacks Rank #2 and has an Earnings ESP of +0.79%. The company is scheduled to report fourth-quarter 2023 results on Feb 1. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 27.5%.
The Zacks Consensus Estimate for Meta’s fourth-quarter earnings is pegged at $4.83 per share, indicating a year-over-year increase of 61%. The consensus mark for revenues stands at $38.93 billion, calling for a year-over-year rise of 21%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.