- Organic FX adjusted revenue grew 3 percent
- Non-GAAP operating margin expanded to 25.3 percent
- Non-GAAP EPS of $0.44 grew 7 percent
SYDNEY – 31 July 2013 – Symantec Corp. (Nasdaq: SYMC) today reported the results of its first quarter of fiscal year 2014, ended 28 June 2013. GAAP revenue for the fiscal first quarter was US$1.71 billion, up 2 percent year-over-year and up 3 percent after adjusting for currency.
"I'm proud of the team's performance despite the ongoing work to right-size and transform the company. I'm also pleased that we delivered better than expected results," said Steve Bennett, president and chief executive officer, Symantec. "While the hard work is just beginning, I'm confident we have the right team in place to execute our multi-year roadmaps, implement our critical go-to-market changes and continue to make progress on our successful transformation."
"We achieved better than expected results driven by strength in our backup, information security and endpoint security businesses," said James Beer, executive vice president and chief financial officer, Symantec. "During a period of planning and significant resource reallocation, we executed well and grew organic revenue by 3 percent. The magnitude of change we are undertaking is substantial and so as we move increasingly into the implementation phase of our transformation, we remain cautious on our outlook for the coming quarter."
GAAP Results for the First Quarter of Fiscal Year 2014
- GAAP operating margin was 13.1 percent compared with 15 percent for the same quarter last year.
- GAAP net income was $157 million compared with net income of $160 million for the year-ago period.
- GAAP diluted earnings per share were $0.22, flat compared to a year ago.
- GAAP deferred revenue as of 28 June 2013, was $3.812 billion compared with $3.745 billion as of 29 June 2012, up 2 percent year-over-year and up 3 percent after adjusting for currency.
- Cash flow from operating activities was $312 million compared with $340 million for the year ago period.
Non-GAAP Results for the First Quarter of Fiscal Year 2014
- Non-GAAP operating margin was 25.3 percent compared with 24.9 percent for the same quarter last year, up 40 basis points year-over-year and up 36 basis points after adjusting for currency.
- Non-GAAP net income was $308 million, compared to $297 million for the year-ago period, up 4 percent year-over-year.
- Non-GAAP diluted earnings per share were $0.44, compared with $0.41 for the year-ago period, an increase of 7 percent.
Business Segment and Geographic Highlights for the Quarter
In alignment with our 4.0 strategy, we created three new business segments. Below is a breakdown of our results by segments and geographies.
- The User Productivity & Protection segment, which is comprised of endpoint security and management, encryption, and our mobile offerings, represented 43 percent of total revenue and declined 1 percent year-over-year (increased 1 percent after adjusting for currency) to $732 million.
- The Information Security segment grew 7 percent year-over-year (9 percent after adjusting for currency) to $336 million. This segment represented 20 percent of total revenue and includes Symantec's security capabilities such as our mail and web security, authentication services, data centre security, Managed Security Services (MSS), hosted security services, and Data Loss Prevention (DLP) businesses.
- The Information Management segment represented 37 percent of total revenue and grew 4 percent year-over-year on an actual and currency adjusted basis to $641 million. This segment is comprised of offerings related to backup and recovery, information intelligence, which includes archiving and e-discovery, and information availability, which we previously referred to as storage management.
- International revenue represented 51 percent of total revenue and increased 2 percent (4 percent after adjusting for currency).
- The Europe, Middle East and Africa region represented 27 percent of total revenue and increased 8 percent year-over-year (6 percent after adjusting for currency).
- The Asia Pacific/Japan revenue represented 18 percent of total revenue and decreased 5 percent year-over-year (increased 1 percent after adjusting for currency).
- The Americas, including the United States, Latin America and Canada, represented 55 percent of total revenue and increased 3 percent year-over-year on an actual and currency-adjusted basis.
Symantec ended the quarter with cash, cash equivalents and short-term investments of $3.8 billion compared to $4.1 billion, a decrease of 8 percent year-over-year as we paid off our $1 billion of convertible notes that matured in June 2013. On June 27th, Symantec paid our first dividend of 15¢ per share for a total of $105 million. Also, during the quarter, Symantec repurchased 5.2 million shares for $125 million at an average price of $23.96. At the end of the first quarter, Symantec had $1 billion remaining for future repurchases in the current board authorised stock repurchase plan.
Symantec's Board of Directors has declared a quarterly cash dividend of $0.15 per common share to be paid on 18 September 2013 to all shareholders of record as of the close of business on August 26, 2013. The ex-dividend date will be 22 August 2013.
Fiscal Year 2014 Guidance
For fiscal 2014, we are reconfirming our revenue guidance of 0-2 percent growth year-over-year and non-GAAP operating margin expansion of 200 basis points – both on a constant currency basis. We expect non-GAAP EPS to grow between 5-7 percent year-over-year. We expect currency to be a headwind year over year driven primarily by weakness in the Yen. We also expect cash flow from operations to be down approximately $200 million year-over-year driven by severance cash payments.
Second Quarter Fiscal Year 2014 Guidance
Our September quarter guidance takes into consideration the significant changes our sales organisation will be undergoing as well as the associated risk. We are confident that these changes will improve execution in the long-term, but may impact results in the short-term.
For the second quarter of fiscal 2014, Symantec expects:
- GAAP revenue of $1.65 billion to $1.69 billion, compared to $1.70 billion in the year ago period.
- GAAP operating margin of 13.6 percent to 14.2 percent compared to 17.5 percent in the year ago period.
- Non-GAAP operating margin of 25.8 percent to 26.4 percent compared to 27 percent in the year ago period.
- GAAP diluted earnings per share between $0.22 and $0.24 as compared to $0.27 in the year ago period.
- Non-GAAP diluted earnings per share between $0.42 and $0.44 as compared to $0.45 in the year ago period.
Guidance assumes an exchange rate of $1.31 per Euro for the September 2013 quarter versus the actual weighted average rate of $1.25 and an end of period rate of $1.29 per Euro for the September 2012 quarter. Our guidance assumes an effective tax rate of 27.5 percent and a common stock equivalents total for the quarter of approximately 705 million shares.
Symantec protects the world's information, and is the global leader in security, backup and availability solutions. Our innovative products and services protect people and information in any environment – from the smallest mobile device, to the enterprise data centre, to cloud-based systems. Our industry-leading expertise in protecting data, identities and interactions gives our customers confidence in a connected world. More information is available at www.symantec.com or by connecting with Symantec at: go.symantec.com/socialmedia.
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Forward-looking Statements: This press release contains statements regarding our financial and business results, which may be considered forward-looking within the meaning of the U.S. federal securities laws, including projections of future revenue, operating margin and earnings per share, as well as projections of amortisation of acquisition-related intangibles and stock-based compensation and restructuring charges. These statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from results expressed or implied in this press release. Such risk factors include those related to: general economic conditions; maintaining customer and partner relationships; the anticipated growth of certain market segments, particularly with regard to security and storage; the competitive environment in the software industry; changes to operating systems and product strategy by vendors of operating systems; fluctuations in currency exchange rates; the timing and market acceptance of new product releases and upgrades; the successful development of new products and integration of acquired businesses, and the degree to which these products and businesses gain market acceptance. Actual results may differ materially from those contained in the forward-looking statements in this press release. We assume no obligation, and do not intend, to update these forward-looking statements as a result of future events or developments. Additional information concerning these and other risks factors is contained in the Risk Factors section of our Form 10-K for the year ended March 29, 2013.
USE OF NON-GAAP FINANCIAL INFORMATION: Our results of operations have undergone significant change due to a series of acquisitions, the impact of stock-based compensation, impairment charges and other corporate events. To help our readers understand our past financial performance and our future results, we supplement the financial results that we provide in accordance with generally accepted accounting principles, or GAAP, with non-GAAP financial measures. The method we use to produce non-GAAP results is not computed according to GAAP and may differ from the methods used by other companies. Our non-GAAP results are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Investors are encouraged to review the reconciliation of our non-GAAP financial measures to the comparable GAAP results, which is attached to our quarterly earnings release and which can be found, along with other financial information, on the investor relations' page of our website at www.symantec.com/invest.