Release Date: May 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Gen Digital Inc (GEN, Financial) reported a record total bookings of $4 billion for fiscal year 2025, up 4% year-over-year.
• The company achieved a record non-GAAP operating margin of 58.4%, reflecting strong cost controls and operational efficiencies.
• Gen Digital Inc (GEN) launched Genie Scam Protection, significantly enhancing scam detection efficacy by tenfold.
• The acquisition of MoneyLion expands Gen Digital Inc (GEN)'s total addressable market and accelerates entry into the financial wellness market.
• The company grew its direct customer count by 1.3 million, reaching over 40 million direct paid customers.

Negative Points

• Despite growth, the legacy business lines contributed only $12 million this quarter, down from $15 million in the prior year.
• The integration of MoneyLion introduces potential volatility due to its transactional revenue model.
• There is a concern about macroeconomic sensitivity, particularly with the MoneyLion segment.
• The company faces challenges from increasingly sophisticated AI-powered threats in the cybersecurity landscape.
• Gen Digital Inc (GEN) has a net leverage of 3.2 times EBITDA, which, while reduced, still represents a significant debt position.

Q & A Highlights

Q: How does the guidance for fiscal '26 reflect MoneyLion's growth, and what visibility do you have in that segment compared to your Cyber Safety platform? A: Vincent Pilette, CEO: The guidance is based on our Cyber Safety platform's mid-single-digit growth potential, with MoneyLion having grown around 24-25% last year. We closed the MoneyLion acquisition at the end of April, so it won't contribute a full year. We're focusing on cross-selling into our installed base and transitioning MoneyLion from a transactional to a subscription business, which informs our 6% to 8% pro forma growth guidance.

Q: How are you approaching capital allocation, particularly regarding share repurchases, dividends, and reducing net leverage? A: Natalie Derse, CFO: We paused share repurchases due to acquisition activity but plan to resume a balanced capital allocation strategy, including debt paydown and opportunistic share buybacks. We generate high cash flow and will continue a disciplined approach to capital allocation.

Q: How does MoneyLion's network of potential customers change the type of subscribers you can target? A: Vincent Pilette, CEO: MoneyLion allows us to offer financial wellness features to our existing 65 million customers, enhancing our Cyber Safety platform. It also enables us to improve MoneyLion's offerings and eventually provide a full lifecycle of Cyber Safety and financial wellness solutions, following customers through different stages of their financial journey.

Q: How does MoneyLion impact customer acquisition costs and overall customer economics? A: Natalie Derse, CFO: MoneyLion's assets, like their AI recommendation engine, combined with our growing customer base and ARPU, provide opportunities for efficiencies in customer acquisition. We expect to leverage the volume from both businesses to drive margin improvements and invest in growth.

Q: What signs of demand are you seeing that give you confidence in the business's resilience despite macroeconomic uncertainty? A: Vincent Pilette, CEO: Our business model, with high subscription and auto-renewal rates, is resilient. The threat landscape remains active, and demand for Cyber Safety products is strong. While MoneyLion may introduce some volatility, it fits well with the need for better financial decision-making in a challenging environment.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.