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Gen Digital (GEN) Up 5.9% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Gen Digital (GEN - Free Report) . Shares have added about 5.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Gen Digital due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Gen Digital Q2 Earnings Meet Estimates, Revenues Beat
Gen Digital posted second-quarter fiscal 2025 results, wherein earnings matched the Zacks Consensus Estimate and revenues beat the same.
Gen Digital reported non-GAAP earnings of 54 cents per share, which improved 16% year over year and came in line with the Zacks Consensus Estimate. The bottom line increased 16% on a constant currency basis too. Increased revenues, disciplined spending and cost synergies from the NortonLifeLock and Avast merger drove the bottom-line growth.
Gen Digital’s second-quarter non-GAAP revenues increased 3% year over year to $974 million and beat the Zacks Consensus Estimate of $968.5 million. The top line also increased by 3% on a constant-currency basis.
GEN’s revenues benefited from decent demand in the cyber safety space. The traction in the cyber safety market acted as a tailwind for the company’s privacy and identity offerings and increased direct customer sales and cross-selling for its portfolio.
Key Metrics
Gen Digital’s Direct Customer revenues increased 3% year over year to $860 million. Partner revenues improved 7% to $102 million. Our revenue estimates for Direct Customer and Partner were pegged at $857.5 million and $102 million, respectively.
The direct monthly average revenue per user (ARPU) marginally increased to $7.26 compared to the year-ago quarter’s ARPU of $7.25 and the previous quarter’s $7.23. Our estimate for the direct monthly average revenue per user was pegged at $7.27. The quarterly bookings advanced 4% on a year-over-year basis to $964 million.
Gen Digital’s average direct customer count increased to 39.7 million from 38.5 million in the year-ago quarter and 39.3 million in the previous quarter. Our estimate for the average direct customer count was pegged at 39.3 million.
GEN’s customer retention rate grew 1% year over year to 78%. The company’s customer retention rate was 78% in the previous quarter and 77% in the year-ago quarter.
Operating Details
The non-GAAP gross profit grew 1.8% year over year to $839 million. However, the gross margin contracted by 110 basis points (bps) to 86.1%.
Non-GAAP operating expenses decreased to $272 million from $278 million. Moreover, as a percentage of revenues, non-GAAP operating expenses deteriorated 150 bps to 27.9%.
The non-GAAP operating income in the second quarter of fiscal 2025 totaled $567 million, up 3.8% year over year. The non-GAAP operating margin expanded by 40 bps to 58.2%, due to disciplined spending.
Non-GAAP EBITDA grew 242.6% year over year to $507 million. Meanwhile, the non-GAAP reported EBITDA increased 3.4% year over year to $571 million.
Balance Sheet & Other Details
Gen Digital exited the second quarter with cash and cash equivalents of $737 million compared with the previous quarter’s $644 million. The long-term debt was $7.13 billion, down from $7.2 billion in the previous quarter.
The company generated operating and free cash flows of $158 million and $156 million, respectively, in the second quarter of fiscal 2025. In the first half of fiscal 2025, the company generated operating cash flow and free cash flow of $422 million and $418 million, respectively.
Gen Digital paid out $77 million in dividends during the second quarter. In the first half of fiscal 2025, it paid $159 million in dividends, repurchased stocks worth $272 million and repaid debt worth $88 million.
Third-Quarter and Fiscal 2025 Guidance
For the third quarter of fiscal 2025, Gen Digital anticipates revenues in the band of $980-$990 million. The company projects non-GAAP earnings between 54 and 56 cents in the third quarter.
For fiscal 2025, Gen Digital projects revenues between $3.905 billion and $3.930 billion compared with the previous guidance range of $3.89-$3.93 billion. It now anticipates earnings per share in the range of $2.18-$2.23, compared with the earlier range of $2.17-$2.23.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, Gen Digital has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision has been net zero. Notably, Gen Digital has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Gen Digital (GEN) Up 5.9% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Gen Digital (GEN - Free Report) . Shares have added about 5.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Gen Digital due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Gen Digital Q2 Earnings Meet Estimates, Revenues Beat
Gen Digital posted second-quarter fiscal 2025 results, wherein earnings matched the Zacks Consensus Estimate and revenues beat the same.
Gen Digital reported non-GAAP earnings of 54 cents per share, which improved 16% year over year and came in line with the Zacks Consensus Estimate. The bottom line increased 16% on a constant currency basis too. Increased revenues, disciplined spending and cost synergies from the NortonLifeLock and Avast merger drove the bottom-line growth.
Gen Digital’s second-quarter non-GAAP revenues increased 3% year over year to $974 million and beat the Zacks Consensus Estimate of $968.5 million. The top line also increased by 3% on a constant-currency basis.
GEN’s revenues benefited from decent demand in the cyber safety space. The traction in the cyber safety market acted as a tailwind for the company’s privacy and identity offerings and increased direct customer sales and cross-selling for its portfolio.
Key Metrics
Gen Digital’s Direct Customer revenues increased 3% year over year to $860 million. Partner revenues improved 7% to $102 million. Our revenue estimates for Direct Customer and Partner were pegged at $857.5 million and $102 million, respectively.
The direct monthly average revenue per user (ARPU) marginally increased to $7.26 compared to the year-ago quarter’s ARPU of $7.25 and the previous quarter’s $7.23. Our estimate for the direct monthly average revenue per user was pegged at $7.27. The quarterly bookings advanced 4% on a year-over-year basis to $964 million.
Gen Digital’s average direct customer count increased to 39.7 million from 38.5 million in the year-ago quarter and 39.3 million in the previous quarter. Our estimate for the average direct customer count was pegged at 39.3 million.
GEN’s customer retention rate grew 1% year over year to 78%. The company’s customer retention rate was 78% in the previous quarter and 77% in the year-ago quarter.
Operating Details
The non-GAAP gross profit grew 1.8% year over year to $839 million. However, the gross margin contracted by 110 basis points (bps) to 86.1%.
Non-GAAP operating expenses decreased to $272 million from $278 million. Moreover, as a percentage of revenues, non-GAAP operating expenses deteriorated 150 bps to 27.9%.
The non-GAAP operating income in the second quarter of fiscal 2025 totaled $567 million, up 3.8% year over year. The non-GAAP operating margin expanded by 40 bps to 58.2%, due to disciplined spending.
Non-GAAP EBITDA grew 242.6% year over year to $507 million. Meanwhile, the non-GAAP reported EBITDA increased 3.4% year over year to $571 million.
Balance Sheet & Other Details
Gen Digital exited the second quarter with cash and cash equivalents of $737 million compared with the previous quarter’s $644 million. The long-term debt was $7.13 billion, down from $7.2 billion in the previous quarter.
The company generated operating and free cash flows of $158 million and $156 million, respectively, in the second quarter of fiscal 2025. In the first half of fiscal 2025, the company generated operating cash flow and free cash flow of $422 million and $418 million, respectively.
Gen Digital paid out $77 million in dividends during the second quarter. In the first half of fiscal 2025, it paid $159 million in dividends, repurchased stocks worth $272 million and repaid debt worth $88 million.
Third-Quarter and Fiscal 2025 Guidance
For the third quarter of fiscal 2025, Gen Digital anticipates revenues in the band of $980-$990 million. The company projects non-GAAP earnings between 54 and 56 cents in the third quarter.
For fiscal 2025, Gen Digital projects revenues between $3.905 billion and $3.930 billion compared with the previous guidance range of $3.89-$3.93 billion. It now anticipates earnings per share in the range of $2.18-$2.23, compared with the earlier range of $2.17-$2.23.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, Gen Digital has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision has been net zero. Notably, Gen Digital has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.