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GEN's Q3 Earnings Beat, Revenues Match: Will the Stock Move Upward?
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Gen Digital Inc. (GEN - Free Report) reported third-quarter fiscal 2025 results, wherein revenues matched the Zacks Consensus Estimate and earnings beat the same.
Gen Digital reported non-GAAP earnings of 56 cents per share, which improved 15% year over year and on a constant currency basis. In the third quarter, the bottom line came at the high end of management's guidance of 54-56 cents, exceeding the Zacks Consensus Estimate by 1.8%. This resulted from strong operational leverage and balanced capital allocation.
In the trailing four quarters, GEN’s earnings surpassed the Zacks Consensus Estimate twice, while matching twice on the same occasion, with an average surprise of 0.94%.
Gen Digital’s third-quarter non-GAAP revenues increased 4% year over year and on a constant currency basis to $986 million, matching the Zacks Consensus Estimate. Stronger growth in the higher-value U.S. market and the broad-based expansion across the product portfolio, fueled by the ongoing demand for comprehensive consumer cyber safety solutions, were the main drivers of the top line.
Gen Digital’s strong quarterly performance, along with upbeat guidance for the fourth quarter and fiscal 2025, is likely to give a fresh boost to its share price. GEN shares have risen 16.6% over the past year compared with the Zacks Technology Services industry’s growth of 71.3%.
Gen Digital Inc. Price, Consensus and EPS Surprise
Robust growth in Gen Digital’s top line can be attributed to the increase in the Cyber Safety revenues, which comprises the Direct customer revenues and the Partner revenues.
Gen’s Cyber Safety revenues amounted to $974 million in the third quarter, out of which Direct Customer revenues increased 4% year over year to $869 million and Partner revenues improved 6% to $105 million. Our revenue estimates for Direct Customer and Partner were pegged at $868.6 million and $104.3 million, respectively.
The direct monthly average revenue per user (ARPU) increased to $7.27 compared with the year-ago quarter’s ARPU of $7.18 and the previous quarter’s $7.26. Our estimate for the direct monthly average revenue per user was pegged at $7.28. The quarterly bookings advanced 3% on a year-over-year basis to $1.036 billion.
Gen Digital’s average direct customer count increased to 40.1 million from 38.9 million in the year-ago quarter and 39.7 million in the previous quarter. Our estimate for the average direct customer count was pegged at 39.8 million.
GEN’s customer retention rate grew 0.5% year over year to 77.5%. The company’s customer retention rate was 78% in the previous quarter and 77% in the year-ago quarter.
GEN’s Operating Details
The non-GAAP gross profit grew 3% year over year to $850 million. However, the gross margin contracted by 70 basis points (bps) to 86.2%.
Non-GAAP operating expenses increased to $273 million from $269 million. Moreover, as a percentage of revenues, non-GAAP operating expenses deteriorated 70 bps to 27.7%.
The non-GAAP operating income in the third quarter of fiscal 2025 totaled $577 million, up 4% year over year. The non-GAAP operating margin was flat year over year at 58.5%, reflecting ongoing efforts in disciplined spending.
Non-GAAP EBITDA decreased 3.1% year over year to $447 million. Meanwhile, the non-GAAP reported EBITDA increased 4% year over year to $582 million.
Gen Digital’s Balance Sheet & Cash Flow
Gen Digital exited the third quarter with cash and cash equivalents of $883 million compared with the previous quarter’s $737 million. The long-term debt was $7.08 billion, down from $7.13 billion in the previous quarter.
In the third quarter of fiscal 2025, the company generated operating and free cash flows of $326 million and $318 million, respectively. In the first nine months of fiscal 2025, the company generated operating cash flow and free cash flow of $748 million and $736 million, respectively.
Gen Digital paid out $77 million in dividends during the third quarter. In the first nine months of fiscal 2025, it paid $236 million in dividends, repurchased stocks worth $272 million and repaid debt worth $147 million.
Gen Digital Updates Guidance for 2025
For the fourth quarter of fiscal 2025, Gen Digital anticipates revenues between $990 million and $1.005 billion. The company projects non-GAAP earnings between 57 cents and 59 cents in the fiscal fourth quarter. The Zacks Consensus Estimate for fourth-quarter revenues and non-GAAP earnings is currently pegged at $1 billion and 57 cents per share, respectively.
For fiscal 2025, Gen Digital projects revenues to be in the range of $3.915-$3.930 billion compared to the prior guidance of $3.905-$3.930 billion. It now anticipates earnings per share to be in the range of $2.20-$2.22 compared to the prior guidance of $2.18-$2.23. The consensus mark for fiscal 2025 revenues and non-GAAP earnings currently stands at $3.93 billion and $2.19 per share, respectively.
GTLB shares have dropped 0.7% for the past year. The Zacks Consensus Estimate for GTLB’s full-year 2025 earnings is pegged at 63 cents per share, up 37% over the past 60 days, suggesting an increase of 215% from the year-ago quarter’s reported figure.
PL shares have surged 153.3% in the past year. The Zacks Consensus Estimate for PL’s full-year fiscal 2025 loss has contracted to 15 cents from the year-ago quarter’s loss of 50 cents.
FTNT shares have gained 52.2% for the past year. The Zacks Consensus Estimate for FTNT’s full-year 2025 earnings is pegged at $2.39 per share, up by a couple of pennies over the past 60 days, suggesting an increase of 6.5% from the year-ago quarter’s reported figure.
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GEN's Q3 Earnings Beat, Revenues Match: Will the Stock Move Upward?
Gen Digital Inc. (GEN - Free Report) reported third-quarter fiscal 2025 results, wherein revenues matched the Zacks Consensus Estimate and earnings beat the same.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Gen Digital reported non-GAAP earnings of 56 cents per share, which improved 15% year over year and on a constant currency basis. In the third quarter, the bottom line came at the high end of management's guidance of 54-56 cents, exceeding the Zacks Consensus Estimate by 1.8%. This resulted from strong operational leverage and balanced capital allocation.
In the trailing four quarters, GEN’s earnings surpassed the Zacks Consensus Estimate twice, while matching twice on the same occasion, with an average surprise of 0.94%.
Gen Digital’s third-quarter non-GAAP revenues increased 4% year over year and on a constant currency basis to $986 million, matching the Zacks Consensus Estimate. Stronger growth in the higher-value U.S. market and the broad-based expansion across the product portfolio, fueled by the ongoing demand for comprehensive consumer cyber safety solutions, were the main drivers of the top line.
Gen Digital’s strong quarterly performance, along with upbeat guidance for the fourth quarter and fiscal 2025, is likely to give a fresh boost to its share price. GEN shares have risen 16.6% over the past year compared with the Zacks Technology Services industry’s growth of 71.3%.
Gen Digital Inc. Price, Consensus and EPS Surprise
Gen Digital Inc. price-consensus-eps-surprise-chart | Gen Digital Inc. Quote
GEN’s Q3 Top-Line Details
Robust growth in Gen Digital’s top line can be attributed to the increase in the Cyber Safety revenues, which comprises the Direct customer revenues and the Partner revenues.
Gen’s Cyber Safety revenues amounted to $974 million in the third quarter, out of which Direct Customer revenues increased 4% year over year to $869 million and Partner revenues improved 6% to $105 million. Our revenue estimates for Direct Customer and Partner were pegged at $868.6 million and $104.3 million, respectively.
The direct monthly average revenue per user (ARPU) increased to $7.27 compared with the year-ago quarter’s ARPU of $7.18 and the previous quarter’s $7.26. Our estimate for the direct monthly average revenue per user was pegged at $7.28. The quarterly bookings advanced 3% on a year-over-year basis to $1.036 billion.
Gen Digital’s average direct customer count increased to 40.1 million from 38.9 million in the year-ago quarter and 39.7 million in the previous quarter. Our estimate for the average direct customer count was pegged at 39.8 million.
GEN’s customer retention rate grew 0.5% year over year to 77.5%. The company’s customer retention rate was 78% in the previous quarter and 77% in the year-ago quarter.
GEN’s Operating Details
The non-GAAP gross profit grew 3% year over year to $850 million. However, the gross margin contracted by 70 basis points (bps) to 86.2%.
Non-GAAP operating expenses increased to $273 million from $269 million. Moreover, as a percentage of revenues, non-GAAP operating expenses deteriorated 70 bps to 27.7%.
The non-GAAP operating income in the third quarter of fiscal 2025 totaled $577 million, up 4% year over year. The non-GAAP operating margin was flat year over year at 58.5%, reflecting ongoing efforts in disciplined spending.
Non-GAAP EBITDA decreased 3.1% year over year to $447 million. Meanwhile, the non-GAAP reported EBITDA increased 4% year over year to $582 million.
Gen Digital’s Balance Sheet & Cash Flow
Gen Digital exited the third quarter with cash and cash equivalents of $883 million compared with the previous quarter’s $737 million. The long-term debt was $7.08 billion, down from $7.13 billion in the previous quarter.
In the third quarter of fiscal 2025, the company generated operating and free cash flows of $326 million and $318 million, respectively. In the first nine months of fiscal 2025, the company generated operating cash flow and free cash flow of $748 million and $736 million, respectively.
Gen Digital paid out $77 million in dividends during the third quarter. In the first nine months of fiscal 2025, it paid $236 million in dividends, repurchased stocks worth $272 million and repaid debt worth $147 million.
Gen Digital Updates Guidance for 2025
For the fourth quarter of fiscal 2025, Gen Digital anticipates revenues between $990 million and $1.005 billion. The company projects non-GAAP earnings between 57 cents and 59 cents in the fiscal fourth quarter. The Zacks Consensus Estimate for fourth-quarter revenues and non-GAAP earnings is currently pegged at $1 billion and 57 cents per share, respectively.
For fiscal 2025, Gen Digital projects revenues to be in the range of $3.915-$3.930 billion compared to the prior guidance of $3.905-$3.930 billion. It now anticipates earnings per share to be in the range of $2.20-$2.22 compared to the prior guidance of $2.18-$2.23. The consensus mark for fiscal 2025 revenues and non-GAAP earnings currently stands at $3.93 billion and $2.19 per share, respectively.
Zacks Rank & Stocks to Consider
Currently, GEN carries a Zacks Rank #3 (Hold).
Gitlab (GTLB - Free Report) , Planet Labs PBC (PL - Free Report) and Fortinet (FTNT - Free Report) are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. PL, FTNT and GTLB carries a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
GTLB shares have dropped 0.7% for the past year. The Zacks Consensus Estimate for GTLB’s full-year 2025 earnings is pegged at 63 cents per share, up 37% over the past 60 days, suggesting an increase of 215% from the year-ago quarter’s reported figure.
PL shares have surged 153.3% in the past year. The Zacks Consensus Estimate for PL’s full-year fiscal 2025 loss has contracted to 15 cents from the year-ago quarter’s loss of 50 cents.
FTNT shares have gained 52.2% for the past year. The Zacks Consensus Estimate for FTNT’s full-year 2025 earnings is pegged at $2.39 per share, up by a couple of pennies over the past 60 days, suggesting an increase of 6.5% from the year-ago quarter’s reported figure.