Symantec Reports 29 Percent Revenue Growth in Fiscal Third Quarter
Record International Performance Fueled the Growth
CUPERTINO, Calif. - Jan. 15, 2003 - Symantec Corp. (Nasdaq: SYMC), the world leader in Internet security, today reported results for the fiscal third quarter 2003, ended Dec. 31, 2002. Symantec posted revenue for the quarter of $376 million, a 29 percent increase compared to $290 million for the same quarter last year. Performance was driven by double-digit growth in all regions around the world and continued strength in the company's consumer and enterprise security offerings.
Pro Forma Results: Pro forma net income before the amortization of acquisition-related intangible assets and one-time charges for the fiscal third quarter was $77 million, compared to $59 million from the same quarter last year. Symantec reported pro forma earnings per share of $0.47, representing 21 percent growth compared to pro forma earnings per share of $0.39 for the year-ago quarter.
GAAP Results: Net income for the third quarter was $72 million, compared to net income of $100 thousand from the same quarter last year. Symantec reported earnings per share of $0.44, compared to break-even earnings per share ($0.00) for the year-ago quarter. GAAP results, as outlined in the attached consolidated statements, includes expenses from the amortization of goodwill, the amortization of other intangibles from acquisitions, and restructuring and site closures as well as related income tax benefits.
"We continue to see traction across the breadth of our enterprise security solutions with double-digit growth in antivirus, firewall/VPN and vulnerability management sales and more than 200 percent growth in our services business," said John W. Thompson, Symantec chairman and CEO. "In addition, our consumer business continues to overachieve, and for the first time in the history of the company, international revenues surpassed domestic revenue."
International revenues grew 39 percent over the same quarter last year and represented 50.4 percent of total revenue in the third quarter. Latin America led regional sales performance with a revenue growth of 51 percent year-over-year followed by 46 percent growth in Europe, Middle East and Africa, 31 percent growth in Japan, 28 percent growth in Asia Pacific, 21 percent growth in the United States and 16 percent growth in Canada.
For the quarter, Symantec's worldwide enterprise security segment grew 26 percent compared to the same quarter last year and represented 42 percent of total revenue. Performance in the enterprise security business was supported by 49 percent growth in firewall/VPN sales, 25 percent growth in antivirus sales and 20 percent growth in vulnerability management sales compared to the same quarter last year. Symantec's security services segment revenue grew 205 percent compared to the same quarter last year. Symantec's enterprise administration segment grew 7 percent and represented 14 percent of total revenue. Symantec's consumer business grew 40 percent and represented 42 percent of total revenue.
- Symantec generated a record 215 contracts worldwide each worth more than $100,000, including 59 worth more than $300,000 and 8 worth more than $1 million, during the quarter. Symantec signed new or extended agreements with customers including The Procter & Gamble Company; Lockheed Martin; Colgate/Palmolive; Pepco Holdings Inc., a diversified energy holding company headquartered in Washington, D.C.; Ingersoll-Rand; Charter Communications, the nation's third-largest broadband communications company; Halliburton, one of the world's largest providers of products and services to the petroleum and energy industries; Bollore, one of Europe's top diversified holdings companies; Michelin Tire Company; and Boehringer-Ingelheim, a German pharmaceuticals company.
- In the public sector, Symantec is working as a sub-contractor with Unisys to enhance the Internet security infrastructure of the Transportation Security Administration, and extended its relationship with Raytheon and the Navy/Marine Corps Intranet.
- In addition, Symantec initiated several key partnerships with companies including Siemens Business Services in Europe, Pacific Internet, Asia's largest independent ISP and SingNet, Singapore's largest ISP. Symantec also has been selected as the security partner for BT Home Computing, a new service from British Telecom offering consumers a stress-free way of buying and using a PC. Symantec Norton Internet Security will be pre-installed on every BT Home Computing PC.
- The company's success is punctuated by the continued growth of its worldwide enterprise customer base, featuring new contracts with 48 Global 500 and 18 Fortune 100 companies including 12 of the world's largest banks, three of the world's largest auto manufacturers, two of the world's largest beverage distributors, one of the world's largest health care providers, three of the world's largest petroleum companies, three of the world's largest pharmaceutical companies and four of the world's largest telecommunications companies.
- Symantec's Managed Security Services business continues to expand, with 95 new or extended deals during the quarter in the United States alone. Companies in the banking, insurance, government and healthcare sectors have selected Symantec to manage their security environment.
- During the quarter, Symantec announced Symantec DeepSight Alert Services 4.0, an advanced alerting system that proactively alerts IT staff of Internet security threats and provides recommendations on how to protect their specific environment. Symantec DeepSight Alert Services provides comprehensive monitoring covering a broad range of products while saving companies significant time and resources. The solution aggregates and analyzes information from more than 1,600 vendors and 3,400 products with nearly 13,000 distinct versions.
- The company launched Symantec AntiVirus for NetApp Filers and Symantec AntiVirus for Network Appliance NetCache. Based on the award winning technology in Symantec AntiVirus Scan Engine 4.0, the solutions provide IT Administrators with the fast, scalable, and reliable virus protection required to confidently safeguard network resources and information stored on Network Appliance storage and content delivery appliances.
- Symantec also launched Norton Internet Security 2003 Professional Edition, the tightly integrated online security and privacy suite for small businesses, professionals and advanced users. The new version addresses the security needs of small business users with powerful protection against hackers, viruses, threats to information assets, and Internet productivity distractions in one solution. It includes spam filtering, automatic virus removal and a simplified user interface in addition to Symantec's updated, best-of-breed firewall, privacy control, antivirus, and content filtering technologies in a single, easy-to-use suite.
- In October, Gartner Dataquest released its "2001 Security Software Market Share" report (C. Graham, Oct. 29, 2002) that reflected Symantec's continued position as the world's leading security software provider based on new license revenue and market share in 2001. The report showed that Symantec's market share of the worldwide security industry increased from 14.7 percent in 2000 to 21 percent in 2001, leading the list of the world's top security software vendors. The growth of Symantec's market share was underscored by the seven-point lead over second-place IBM.
- Purdue University began taking applications for the Symantec Fellowship at the University's Center for Education and Research in Information Assurance and Security (CERIAS), the world's foremost university center for multidisciplinary research and education in areas of information security. The Symantec Fellowship will provide up to $50,000 to cover the full tuition costs for two years and a stipend for a degree-seeking student enrolled at Purdue and working with CERIAS.
- The company continued to earn industry recognition during the quarter. Information Security Magazine named Symantec to its "Influence List" as a company that will have great impact on IT security over the next five years. Network World named Symantec as one of the 10 most powerful companies in networking. Symantec Enterprise Firewall with VPN 7.0 was named CRN Product of the Year. Norton Internet Security received PC Magazine's Editor's Choice award and was named to PC Magazine's celebrated annual Best of the year list, for the second consecutive year.
Symantec has scheduled a conference call for 4:30 p.m. EDT today to discuss fiscal third quarter results and guidance for the fiscal fourth quarter and fiscal year 2003 as well as a preview of fiscal year 2004. Interested parties may access the conference call on the Internet at http://www.symantec.com/invest/index.html. To listen to the live call, please go to the Web site at least 15 minutes early to register, download and install any necessary audio software. A replay of the call will be available on the Internet at http://www.symantec.com/invest/index.html until Feb. 14, 2003.
Symantec is the world leader in providing solutions to help individuals and enterprises assure the security, availability, and integrity of their information. Headquartered in Cupertino, Calif., Symantec has operations in more than 40 countries. More information is available at www.symantec.com.
Consolidated Financial Statement
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FORWARD LOOKING STATEMENT:
This press release contains forward-looking statements, including forecasts of future revenue and earnings per share, expected industry patterns, and other financial and business results that involve 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 by this press release. Such risk factors include, among others: the sustainability of recent growth rates, particularly in consumer products; whether certain market segments, particularly enterprise security, grow as anticipated; the positioning of Symantec's products in those segments; the competitive environment in the software industry; ability to integrate acquired companies and technology; ability to retain key employees; ability to successfully combine product offerings and customer acceptance of combined products; general market conditions, fluctuations in currency exchange rates, changes to operating systems and product strategy by vendors of operating systems; and whether Symantec can successfully develop new products and the degree to which these gain market acceptance. Actual results may differ materially from those contained in the forward-looking statements in this press release. Additional information concerning these and other risk factors is contained in the Risk Factors sections of Symantecís previously filed Form 10-K and Form 10-Q.
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