Gen Digital exceeds expectations with record revenue of $1.2 billion, raising fiscal year guidance amid strong AI integration and customer growth momentum.

OPERATOR - (00:01:19)

Good afternoon everyone. Thank you for standing by. My name is Lauren and I will be your conference operator today. Today's call is being recorded and all lines have been placed on mute to prevent any background noise after the speaker's remarks. There will be a question and answer session at this time for opening remarks. I would like to pass the call over to Jason Starr, Head of Investor Relations. Please go ahead.

Jason Starr - Head of Investor Relations - (00:01:45)

Thank you Lauren and good afternoon everyone. Welcome to Jen's second quarter fiscal year 2026 earnings call. Joining me today are Vincent Paulette, CEO and Natalie Dursey, CFO. As a reminder, there will be a replay of this call posted on the Investor Relations website along with our slides and press release. I'd like to remind everyone that during this call all references to the financial metrics are non-GAAP and all growth rates are year over year unless otherwise stated. A reconciliation of non-GAAP to GAAP measures, is included in our press release and earnings presentation, both of which are available on our IR website at investor.gendigital.com we encourage investors to monitor this website as we routinely post investor oriented information such as news and events and financial filings. Today's calls contain statements regarding our business financial performance and operations, including the impact of our business on our business and industry that may be considered forward looking statements and such statements involve risks and uncertainties that may cause actual results to differ materially from our current expectations. Those statements are based on current beliefs, assumptions and expectations as of today's date, November 6, 2025. We undertake no obligation to update these statements as a result of new information or future events. For more information, please refer to the cautionary statement in our press release and the risk factors in our filings with the SEC and in particular our most recent reports on Form 10K and Form 10Q. And now I'll turn the call over to Vincent.

Vincent Paulette - CEO - (00:03:14)

Thanks Jason. Hello everyone and thank you for joining us today to discuss GEN's results for the second quarter of fiscal year 2026. This was another quarter of outstanding execution exceeding our expectations and as we capitalize on our global user base and compounding data advantage, we delivered record revenue and earnings, continue to drive strong customer and bookings growth and are making clear progress with our portfolio transformation. This performance demonstrates the strength and resilience of our business underpinned by a high margin subscription model now expanding into faster growing adjacencies in Secure Financial Wellness. It also reflects our strategic position as the most trusted partner in protecting digital lives, bringing confidence in a complex and increasingly AI driven world. Before diving into the numbers it is important to recognize the environment in which we operate. Consumers today face a rapidly evolving threat landscape. They face a new generation of cyber threats like AI powered phishing, deepfakes, inner circle impersonation and identity thefts. Driven by large scale data breaches, these threats are increasingly personalized, sophisticated and harder to detect. The financial impact is real and rising. Cybercrimes against consumers are projected to exceed $15 billion annually in the US alone, growing at double digit rates. Meanwhile, financial wellness is a very real and prevailing consumers need. Two thirds of Americans live paycheck to paycheck, often stitching together their financial lives across multiple digital platforms beyond traditional banks. In this environment, risk and financial wellness are deeply interconnected. When people live with little financial buffer, an incident of identity theft, a fraudulent charge or even a scam can quickly upend their finances. The stakes go beyond security and protection. They are also about trust and well being. People aren't just searching for another financial product, they're seeking for a trusted and reliable partner, one that can secure their identity, protect their data, safeguard their privacy and empower their financial well being through trusted decisioning along their journey. And that is exactly the role Gen is built to play and we are uniquely positioned to be the global consumer, cyber safety and fintech leader now and in the future agentic world that is emerging around us. Let me review some of the highlights of the current quarter. We generated just over 1.2 billion in revenue up 25% year over year. Our consumer fintech business Moneylion delivered another exceptional quarter, growing 50% and when including Moneylion's results in the prior year, Gen grew revenue 10% matching our strong Q1 performance. We continue to operate with financial discipline, maintaining a non GAAP operating margin above 50% and driving a non GAAP EPS result of 62 cents up 15% year over year. Even as we continue to make disciplined growth investments throughout our technology stack in AI data and platform architecture, these disciplined investments will continue to fortify our global leadership and over time further compound allowing us to offer even more offers, services and value to our customers customers to help them lead secure and safe financial and digital lives. Similar to Q1, our performance was broad based. We generated growth across our Norton, Avast, Lifelock and Moneyline brands. Our bookings for the cybersafety segment grew 5% year over year coupled with a robust operating margin of 61% and healthy and stable customer retention. During the quarter we expanded our SCAM and deepfake protection powered by Norton Genie Pro and Avast Scam Guardian to help users combat the rapid rise in AI based scams early adoption is strong and accelerating with Support in over 40 languages and more countries coming on later this year. We are driving rapid development with our Cyber Safety Assistant delivering actionable Insights to Norden 360 users. As more innovation is integrated into our cyber safety suites, we are seeing higher engagement which we believe is helping drive strong Norton 360 and Avast1 membership growth. Our refreshed privacy portfolio is also gaining momentum following the Norton VPN improvements which we released earlier this year and several positive reviews in leading tech publications that have boosted market awareness, illicit privacy have accelerated to double digit growth. We also enrich our own small business solution combining security and financial protection features for entrepreneurs and teams. These efforts align with Jen's strategic direction to penetrate new customer cohorts combining technology leadership and improved user experience. Independent testing continues to validate our leadership as Norton and Avast remain the top two brands in consumer protection and we will continue to drive additional innovation in the portfolio through new features such as our AI driven customer renewal model. Overall, cyber safety provides an important needed value proposition to consumers as we continue to operate this business with discipline driving stable and profitable growth. Our trust based solutions segment delivered another standout quarter with revenue up over 25% on a pro forma basis while operating margin came in at our 30% target. Our trusted brand LifeLock remains the leader in identity protection allowing consumers to support their financial journey with their best credit reputation consuming financial products at those moments of truth when identity, reputation and financial well being intersect. MoneyLion's exceptional results across our first party personal finance products and our engine marketplace demonstrate our disciplined execution, unrivaled portfolio and the strong singular demand for our Secure Financial Wellness services. The integration of moneylion has been one of our smoothest yet with cost synergies delivered ahead of plan, we are now unlocking revenue synergies by unifying best in class data systems and solutions across our cyber safety and trust based solutions. We have embraced moneylion's experimentation and innovation DNA and are focused on building new features in a category that is still transforming. Incorporating best practices from all of our businesses will ensure cutting edge product performance but also multiple opportunities to to cross promote our features to consumers across channels such as the planned launch of EWA feature in our employee benefit channel. We have begun rolling out early access financial wellness features across selected gen brands including LifeLock and Norton, marking a key step in expanding our ecosystem. This includes the early launch of Norton Money, a unified platform that combines credit monitoring, identity protection, financial insight and a curated marketplace. We have also embedded a robust credit card marketplace for Lifelock customers, a natural expansion of the credit monitoring features. They are increasingly engaging with continued excellence in embedding AI powered financial recommendations and Insight is a natural use of our data advantage to help consumers make even better financial decisions. The Lifelock and Northern consumers will no longer need to leave the ecosystem for customized precise recommendations that can improve their financial lives. These initiatives reflect our broad ambition to build the leading decisioning platform for consumers Secure Financial Empowerment Gen now serves hundreds of millions of active and freemium customers across our ecosystem, creating a substantial base for future financial product and subscription cross sell monetization. This strategy drives lifetime value expansion and sets up a strong growth trajectory. This is exactly what we outlined in our Strategic Vision for Secure Financial Wellness to enrich Gen's ecosystem by leveraging our trusted data platform where every decision and transaction feels secure, permitted and contextual and embedding financial wellness like Digital Banking Insights, Precision Marketplace Payments into our cybersafety and identity protection entry door. AI is now the connective tissue of everything we do across innovation, products, marketing and customer experience. In cybersafety, AI powers behavioral based threat detection and real time scam identification, protecting users from phishing, deepfakes and other emerging forms of attacks in financial wellness. The moneylion engine leverages AI through Spark, our proprietary underwriting platform that matches customers with the best and most relevant financial products, personalizing and accelerating their decision making. Our AI native Norton Neo browser fire need personalized browsing by introducing safe and private memory support, transforming each browser instance into a unique personal assistant that user can trust. Within our customer success organization, we improved retention through tailored offers and enhanced user satisfaction and drove sustainable long term revenue growth. As we unify our customer data securely, we are developing personalized and permissioned AI powered outcomes, redefining the trusted value we bring to consumers. Operationally, AI AI is already delivering tangible productivity gains. Our customer support, automation and agentic framework continues to mature, now handling 55% of text based chat and 40% of voice based interactions, driving over 20% cost efficiencies in this function to reallocate towards our platform investment in R and D, we have applied agentic AI across the entire product development life cycle enabling us to shift over time resources for maintenance towards innovation and ultimately boost product velocity. And finally in marketing we have built an AI enabled ecosystem that accelerates creative production and enhanced productivity across every team from upper to lower funnel. This shift is creating a more agile data informed marketing organization that is operating at the pace of our ambitious innovation. We're very excited about the scale and growth we can deliver through this strategy through our global data advantage and the consumer trust. With a strong first half results and increased visibility in the second half of the year, we are raising our annual guidance at $95 million at the midpoint of our prior revenue range, representing over 25% growth on a reported basis. This underscores the momentum we see in our business as we transform into a customer centric platform, leveraging our scaled customer base and using our data mode to drive personalization and trust at the core of our business. In summary, we delivered another very strong quarter and are raising our annual guidance again, demonstrating our strategy is working. We are ahead of plan with moneylion and setting our sight on capturing further growth synergies and leading with innovation grounded in trust. We are building the first AI powered platform with a trust layer that unites security, privacy, identity and financial wellness solutions into a market advantage that no one else holds at scale. Our ecosystem brings together a portfolio of competitive first party products in cybersafety and trust based solutions and an expanding partner network that underpins our engine marketplace to also provide leading third party products and solutions for our customers and all of it is supported by a customer driven platform that deliver personalization and contextualization at key moments of truth to our investor and partners. I want to thank you for your confidence to our employees. I want to thank you for your relentless commitments to our customers and to fulfilling our mission of powering digital freedom. Jen is executing with momentum, discipline and purpose and our opportunity has never been greater and now I will turn it over to Natalie to discuss our financial results and financial guidance in more details.

Natalie Dursey - Chief Financial Officer - (00:16:45)

Thank you Vincent and hello everyone. For today's call I will walk through our Q2 results and also provide some additional color on our performance metrics. I'll then conclude by providing our outlook for Q3 and fiscal year 2020. I will focus on non-GAAP financials and year over year growth rates unless otherwise stated. I will also include commentary on our pro forma growth which include Moneyline's results from the prior year for comparative purposes. Now on to our results. Q2 was another strong quarter for gen with better than expected results. On a reported basis, Q2 bookings and revenue were over $1.2 billion, up 27% and 25% year over year respectively. On a pro forma basis, Q2 revenue grew 10% consistent with last quarter and excluding moneylion, Q2 revenue grew 5% which is consistent quarter over quarter performance and in line with our commitments in our cybersafety segment bookings was up 5% and revenue was up over 3% with broad based growth across channels. With our expanded scam protection features and cyber safety AI assistant helping consumers outpace emerging threats, this has translated into strong sales of our leading Norton 360 comprehensive membership offerings and reflected in our accelerated bookings growth this quarter, more partners are also adopting our highest tier all in one cyber safety memberships and promoting our bundled solutions through their channels. As just one example, our employee benefits partners already see the expanded value we provide through Norton360 and this channel continues to grow double digits with a robust pipeline ahead of the annual enrollment period. More and more consumers understand the need to have full suite with identity protection and we see it in our results. Additionally, across our go to market channels we are leveraging our data and AI capabilities to drive more effective targeted campaigns through our in product messaging platform, upselling more customers to higher tier memberships with additional identity and privacy protection or cross selling them additional add on products that fit their immediate needs based on select moments of exposure. These post sale levers continue to drive more growth, higher engagement and in turn higher retention. Our cyber safety platform remains our foundational bedrock and the growth playbook we deploy continues to provide an accelerating flywheel rooted in innovation and serving customer needs. In our trust based solutions segment on a pro forma basis, bookings and revenue grew 26% and 27% respectively and more than doubled on a reported basis. In our Lifelock business, growth remains stable with highly retaining customers and strong customer nps. Additionally, moneylion's personal financial management solutions are scaling significantly with strong gains in new active users and increasing product consumption and our Engine Financial Marketplace delivered another strong quarter, the fourth consecutive quarter of growth over 50%. The accelerating adoption of third party financial products available on Engine reinforces our Marketplace strategy and our mission to help consumers make better financial decisions through the embedded experiences across financial and non financial platforms and apps. This momentous business is powerful in and of itself and as we innovate across our trust based solutions segment, we believe it provides us with such a unique opportunity to cross pollinate. Although we're just getting started, we are very excited about the green shoots in our early test results, driving offers and in turn demand with our Lifelock cohorts and we expect this momentum to continue as we expand the Marketplace catalog to include new third party product categories such as prime credit cards that are personalized for our diverse customer base. Overall, our direct channels continue to demonstrate strong fundamentals, growing revenue 17% as reported, and 6% pro forma and partner is scaling considerably, growing revenue 88% as reported, and 24% pro forma demonstrating healthy diversification underpinned by strong innovation across our product portfolio. Turning to customers we continue to expand our customer base now reaching over 77 million customers up approximately 1 million sequentially with expansion across our segments and net adds across our key channels. As we navigate forward with a more integrated business model, we will take a customer centric approach and that requires us to refine how we target personalized offerings to best serve their needs. We will continue to focus on subscribers which are customers who pay for our products on a recurring monthly or annual basis such as our vast Norton360 membership customers or Moneyline subscriptions which are refining. In addition to subscribers, we will also focus on product users generating revenue which are customers whom we monetize through transactions and complementary engagement models such as our Moneyline, Personal Financial, Wellness and Marketplace customers. And while we are at the early stages of development, we wanted to introduce our expanded approach designed to capture the growing demand in a more focused manner as we continue to innovate and scale. We are no longer just a direct to consumer business and there is no one size fits all approach with such a diverse customer base. More to come on this as we drive further expansion across these vectors. Now Turning to profitability, Q2 operating income was $623 million translating to 51% operating margin in line with our expectations. Operating margin for Cyber safety platform was 61% to and trust based solutions was 30% each in line with our plan. Our margins remain robust as we continue to drive growth with a disciplined approach to resource allocation, scaling efficiency with AI and measured investment in our long term strategic initiatives. Q2 net income was $387 million and diluted EPS was $0.62 up 15% year over year as reported,. This represents our eighth consecutive quarter of achieving or exceeding our 12 to 15% EPS growth,. Target interest expense was $139 million in Q2. Our non-GAAP tax rate remained steady at 22% and our ending share count was 624 million up 2 million year over year. Turning to our balance sheet and cash flow, Q2 ending cash balance was 7,101 million dollars representing over $2.2 billion of liquidity when including our $1.5 billion revolver. Year to date, operating cash flow was $525 million and free cash flow was $512 million demonstrating the capital efficiency of our business model as we shared, Q2 is seasonally high. Our highest use of cash given the concentration of tax payments that are due within the quarter, including $139 million transition tax payment, our last payment related to the 2017 tax cuts and Jobs Act. Also worth noting due to how specific calendar dates fall in this fiscal year. We have both of our semiannual interest payments in our first half of fiscal 2026, whereas typically we have the first payment in the first half and the second payment in the second half of the fiscal year. Given this higher use of cash in Q2, we did not have any additional capacity for share buyback. During the open period, we paid down $160 million of debt and ended the quarter with our net leverage at 3.2 times EBITDA. We paid $77 million to shareholders in the form of a regular quarterly dividend of 12 and a half cents per common share. For Q3 fiscal 2026, the Board of Directors approved a regular quarterly cash dividend of 12.5 cents per common share to be paid on December 10, 2025 for all shareholders of record as of the close of business on November 17, 2025, our free cash flow generation remains very strong and we stay committed to a balanced capital allocation as we enter into the second half of our fiscal year. Now let me share our Q3 and fiscal 2026 outlook. We are raising our revenue and EPS guidance again for fiscal 2026 based on our strong results and the momentum we're seeing. Our business remains resilient, bolstered by a highly recurring revenue base further supported by solid customer retention and substantial free cash flow generation for fiscal year 2026,. We now expect full year revenue in the range of 4.92 to $4.97 billion, up from our prior expectation of 4.8 to $4.9 billion and reflects reported revenue growth of 25 to 26% year over year. We expect non-GAAP EPS to be in the range of $2.51 to $2.56, representing our continued commitment to achieving our 12 to 15% annual EPS growth. For Q3, we expect non-GAAP revenue in the range of 1.22 billion to $1.24 billion. We expect Q3 non-GAAP EPS to be in the range of 62 to $0.64 or 12 to 15% growth year over year. Our Q3 and full year guidance assumes high single digit pro forma growth combined with disciplined cost management while funding targeted long term growth, investments in the GEN platform and additional AI capabilities. This guidance range also assumes current FX rates to Q2 although significant fluctuations remain possible given the volatility in currency markets that has taken place over the past few years. In summary, we are well positioned after a strong first half. We're accelerating growth while maintaining the same operating discipline that has long defined our strategy. We are driving healthy growth in both of our segments and we've made tremendous progress with the integration of moneylion. Operating margins remain strong and we're continuing to invest in scalable innovation without compromising returns. Our free cash flow generation is robust, creating capacity for ongoing opportunistic share repurchases and further delivering to drive strong returns for our shareholders. We continue to hit the mile markers we've laid out as we navigate towards our long term growth objectives. I want to thank the entire team for staying focused and delivering great value to our customers and shareholders. We look forward to sharing more progress in the coming quarters. As always, thank you for your time today and I will now turn the call back to the operator to take your questions. Operator.

OPERATOR - (00:28:23)

Thank you. We will now begin the Q and A session. If you would like to ask a question then please press STAR followed by one on your telephone keypad. To withdraw your question, please press Star followed by two. Please also ensure that your phone is unmuted locally as a reminder. That is STAR followed by one to ask a question. Our first question today comes from Rob Correct Evercore isi, please go ahead.

Rob - (00:28:52)

Great. Thank you very much and congratulations on the strong results. Just wondering first of all if you could maybe give us your view of the macro environment and the health of the consumer right now and if we were to see a more significant downturn, how you'd expect that to play across the two segments of the business. And then also I asked on the transition. Sure,, please go ahead. Sorry.

Vincent Paulette - CEO - (00:29:16)

Okay, you asked a question after jump, but this is Vincent, thanks for the congratulations. We definitely had an outstanding quarter and I would add another one. So let's talk about the macro environment. We have two segments, right? Security and privacy and then trust based solution really anchored around the secure financial wellness. I start with the security and privacy. Obviously you've seen in our Q2 threat report that we just published last week. Continued increasing complexity of the threat landscape, targeting consumers in various form, increased use of AI just last quarter blocked 140,000 website all designed by AI bot with a very high level of credibility and precision. So all of that if you want to, will continue. We believe the consumers for a very small membership fee I would say can protect against thousands of dollars lost through cyber criminals. When you look Back at historical during downturns or upturns we have not seen too much correlation to our subscription or security revenue streams. On the secure financial wellness. We now have millions of our customers connecting their bank account for monitoring alerts. We do offer as you know, first party financial products from liquidity offering to credit building to high yield savings accounts. We've seen a very strong growth again this quarter under personal financial management offerings here, slightly under 50% but, but, but very strong. We have not seen a change in patterns in consumption over the last few months and we do not see it here as, as we speak so far. Generally speaking when interest rates continue to trend down normally there's actually a renewed activities and refinancing and other activities that that supports that that demand. On the second aspect of our secure financial wellness, it's our marketplace here we've really seen the benefit of coming together with gen millions of consumer brought onto the marketplace. We're just at Money20 20 conference and a lot of very strong interest from financial partners to join the Engine Marketplace by gen and I think we'll continue to have that opportunity to offer for consumer whether the economy goes up or down. I think the need for the best financial decisions will remain and be strong.

Rob - (00:32:05)

Great. And thank you for all the detail on the Lifelock integration. Some of the experiences you're bringing to bear between Lifelock and Secure Financial Wellness. Just if you could maybe talk a little bit as you go down this cross sell journey. Maybe about the frequency of member interaction with the Lifelock products particularly around as they do identity unlock as they're shopping for financial products. Maybe if you could just talk a. Little bit about the mechanics of the. Cross sell and some of the unique opportunities there. Thank you.

Vincent Paulette - CEO - (00:32:37)

Absolutely. So obviously revenue synergies is a long process. Moneyline fully integrated from a back end, integrated from an R and D perspective. We're finalizing the integration of the data to offer even enriched experience. And now we're really unlocking the revenue synergies. There are two immediate components we're focusing on. One is Norton Money with EWA features going into employee benefits but also Norton Money as a PFM tool for our northern install base. That's one. And the second one is the embedded, I would call it created marketplaces focusing at the needs of the consumer. Lifelock is the first immediate case since we brought Moneyline on. We've really enriched the marketplace with credit cards, catalogs or offerings if you want for prime customers. And we're embedding that into Lifelock and As you know LifeLock, it's not only monitoring your credit, it's really monitoring and managing your financial lives at moments of truth. You check your credits, you check your financials when you're going to go for a purchase and or if you want to improve your credit level in order to do a purchase that you intend to do today. And so at that point in time, if you wanted an embedded experience, we now have that marketplace place and made it into the LifeLock applications. It's actually very positive results, although it's still on a small base and we have a long transformation to drive, as we've already discussed in prior quarters. And making progress on it is really moving an application that was essentially passively giving you peace of mind to a more engaged application in which you come and validate and try to improve your journey. And we see good progress overall in that trend as we bring new tools such as the builder tool or now this created marketplace.

Rob - (00:34:37)

Great, thank you again. Yep, thanks a lot.

OPERATOR - (00:34:43)

Our next question comes from Roger Boyd from ubs. Please go ahead.

Roger Boyd - Equity Analyst - (00:34:49)

Great. Thanks for taking the question and congrats also on the strong results. I want to touch on partner revenue, which was again very strong and I think maybe accelerated organically. But you did note 50% growth in moneyline Engine and double digit growth in employee benefits. Just any thoughts on how we should think about the trajectory of partner revenue over the back half of the year? Anything to be mindful of from a seasonality perspective, particularly with Moneyline Engine and then the employee benefits channel into open enrollment and have a follow up?

Vincent Paulette - CEO - (00:35:20)

Yeah, I'll take that one because I think it's less financial and more structural. So two years ago when we did NSD, we said, hey, we have a big opportunity in our portfolio partner organizations. At the time it was 90% direct, 10% partner. As we were expanding the portfolio, we said in the long run we think it will be more of an 8020 and you're going to see partner growing faster than direct. And it makes sense because many of our services are embedded into partner views. And then we had the view of this long term view of bringing this marketplace, adding more value to our consumer. And what you see now, two years later, eight quarters later, since we laid out that strategy, it's finally taking roots. Quarter in, quarter out, you may have a little bit bigger gap or smaller gap, but I think you'll continue to see the partner revenue outgrow the direct revenue as we continue to contemplate bringing to our consumers adjacent values that we may not even manufacture ourselves because we Neither a bank or we may not be a legal firm but that all fits together around supporting that financial wellness overall. And no, I would not predict specific seasonality calling in quarter out that you see every year. Now obviously you can always the growth rate change quarter in quarter out but similar trends will continue moving forward.

Roger Boyd - Equity Analyst - (00:36:44)

Awesome. That's helpful Vincent. And then Natalie, just on free cash flow, it looked like it was actually pretty robust after backing out the tax payment. I know you don't guide to it but any color you can give just on how you think about free cash flow trajectory and as that continues to improve. I know you touched upon it in your remarks but any update on how you think about capital allocations between debt pay down and share repurchase? Thanks.

Natalie Dursey - Chief Financial Officer - (00:37:08)

Yeah, thanks Roger. Our free cash flow generation will continue to stay strong. It's seasonally high in Q2 and then of course we had that timing element that hurt a little bit more in Q2 than normal, as well. Yeah. As you know we accelerate rates of growth as we integrate and we continue to scale. We're going to continue to operate in a disciplined fashion. We've laid out our margin expectations up front for each of the segments over the long term and we'll continue to deploy our capital in a disciplined and balanced way across accelerated debt paydown but also share repurchases. And then you know, we just haven't with the timing of the Moneyline deal over the last I would say three to four quarters and when we were able to get out in the open period we just were, we just didn't have the opportunity to do much share repurchase. But as we look to the back half we'll get back to being much, much more balanced across accelerated debt pay down and share repurchase.

Roger Boyd - Equity Analyst - (00:38:12)

Really helpful, thanks again. Thanks.

OPERATOR - (00:38:18)

Our next question comes from Dan Bergstrom from rbc. Please go ahead.

Dan Bergstrom - Equity Analyst - (00:38:24)

Hey, it's Dan Bergstrom for Matt Hedberg. Thanks for taking our questions. So you highlighted higher engagement on Norton360 in their prepared remarks. You also talked with some scams as providing some tailwind there. Beyond that maybe you know what are some keys to the momentum in upselling customers into Those higher tier Norton360 memberships.

Vincent Paulette - CEO - (00:38:46)

Very good Dan. Thanks for joining. So to remind people, Norton 360 is our all in one suite set of plans if you want from the Norton branch. We have the same on Avast 1 from the Avast view and our goal has been to move more and more people to membership. You pay a fee and with that you'll get our new features and get peace of mind in this environment where cyber threat is pretty dynamic and then depending on the plan all the way to all in one including the LifeLock identity protection, then you're fully protected. We still have the majority of our customers on the norm360 lower and mid level tier, not including the identity. We have at the beginning of the year moved Norton Genie, our anti scam into that Norton 360 platform and have evolved Norton Genie from a pure AI driven anti scam cam to becoming really the AI cyber safety assistant. And we've now just launched into 40 new countries in 40 languages. That, that feature, that feature is at the core of getting our application so our platform more engaging where you can ask your questions and can automatically also become ultimately become your agent connecting different privacy and security features. At the moment it's needed. We have seen some traction on the upper level of the plan Northern 360 with Norton Genie Pro which is an upgraded feature that provides not only the security side, the AI assistant but also the insurance, the voice block, the text block and so a much more enriched experience, full private and full protection. And we've seen traction with that. And then we now just launching Norton Money which will be the alternative to go and move to a higher plan with credit monitoring, financial insights and a credit marketplace as an alternative path to the upper plan. So as I mentioned in my remarks continue to see very good progress towards A the membership and B the engagement with the platform.

Dan Bergstrom - Equity Analyst - (00:41:05)

That's great. And then I know paid customers is the new metric but the old KPO KPI around direct cyber safety customers was in the slides up 400000 quarter over quarter. You know understanding there's some rounding there but that's, that's impressive and at the upper end of you know what we'd expect historically and again no it's seasonally strong quarter here but maybe what was some of, what was behind some of the strengths on the customer edition number?

Vincent Paulette - CEO - (00:41:29)

Yeah, I would say now it has been many, many, many calls. I don't remember how many, maybe seven or eight that we've been in the range of. I would call it like 250 to 400. So you write it in the upper of the range but we basically see it on the high side of the range in line to our expectations as we've been driving increased engagement, more channel to acquire customers and improvement on the retention. And I think it's, it's more progress across all of the dimensions that reviewed. Now as you know our customer base is evolving. We see it in two categories. One is a subscriber generated revenue, as Natalie mentioned, and the other one is a product usage generated revenue. We see a very strong increase across all dimensions and our goal will be to continue to increase the subscription. We did provide the all metric just for people to understand and assess the health of our core gen. The way we looked at it before we split into two segments, which I think will be useful for investors.

Dan Bergstrom - Equity Analyst - (00:42:32)

Thank you.

OPERATOR - (00:42:37)

Thank you. Our next question comes from Saket Kalia from Barclays. Please go ahead.

Saket Kalia - Equity Analyst - (00:42:44)

Okay, great. Hey, Vincent. Hey Natalie. Thanks for taking my questions here and congrats on another raised guide. Yeah, thank you, Vincent. Maybe for you. Absolutely, Vincent, Maybe for you. Just kind of picking up off that thread, you know you've talked about sort of the potential for new business models in the Money lion base. I mean it seems to be doing very well, right? Just as it is. But you know, I think that there's such a subscription DNA at Gen. You've. Kind of talked about that as a. Possibility without pronouncing anything. How do you sort of envision something like that looking.

Vincent Paulette - CEO - (00:43:22)

If that makes sense. So just to put in context, maybe some investors don't have the full history that we've had since you know us very well, cover us for a long time. When we acquired moneylion, most of the revenue, if not all of the revenue was driven by what we call product usage revenue or product usage derived revenue, which is essentially transaction based. And many customers like that. They use the product for free and when they transact, a very small portion of the transaction gets booked as a fee. And that's how they make the money. You know what they say, Saket don't break what's working. So we're trying to make sure we manage very carefully because it's really working for the Moneyline install base and it's working for the Moneyline customer. And the team knows how to bring innovation into that environment. You will maintain that in addition and that's why it's complementary. We said that when you come to a little bit more premium customers, they like to have a subscription, they pay and then they have access to many different features, avocado or as much as they want. And we building those subscription views which may include not only the ability to use the PFM tool or to consume some liquidity production or to do credit builder for their kids or having access to actually the investment features on the platform. And we know that's more prone to our type of customer base. And so the features are there and it's a question of balance on how we're going to drive from a marketing perspective and where we're going to drive membership versus transaction based revenue and over time you're going to see that progression. As you know, just to complete my, my, my answer, we always said that a shift, a full shift from transaction to subscription will lead to a shorter gap in the gap in the short term and a longer value over time. And we hopeful to be able to manage that transition towards more subscription without too much impact on our overall knowing that it's all about driving long term customer value. We here for, for maximizing that. LV Yep, absolutely.

Saket Kalia - Equity Analyst - (00:45:34)

Natalie, maybe my follow up for you. I'd love to maybe just touch on the profitability of the, of the Moneyline business. I think, I think in the, in the presentation it showed about a 20% operating margin. That of course is fantastic if it's supporting 50% top line growth. But maybe the question is how do you think about the margin journey that we could see in Moneylion and maybe remind us how that sort of 3060 dynamic that we talked about at our session a couple months ago sort of plays into that journey.

Natalie Dursey - Chief Financial Officer - (00:46:08)

Yeah. Thanks Socket. Good to hear from you. Yeah. Moneyline margin, that's where we started. Approximately 20%. Keep in mind as we blend Moneyline with trust based solutions and even just integrated with Gen overall we have achieved the cost synergies that we, that we have laid out for ourselves as we integrate that them as an acquisition. Just, just high level, especially the back office and some of the other the fixed costs that we could strip out of the business. So that's done. We also have revenue synergies that we're going after. You heard them peppered through the messaging today in our slide where in our, in our, our day that we did around Moneyline back in September, there's so many revenue synergies to go after. It requires investment to drive that growth and so we'll continue to stay committed to that. So that points to you know, the current margin rate today driving that 50% growth rate and then as we look forward, of course, yes the mix is, is definitely there and is an opportunity for us to balance. But keep in mind we want all parts of the 30-60-90 day. They provide us different layers and levels and types of of value and access to different customers. So if you think about the 30% margin on the marketplace that's going to fuel customer acquisition and really give us just a ton of access to different sites, lots of data that we can do deep data analysis and customization, personalization and then the first party products at 60% and then all the way up to the retargeting of the 90%. It's a very, very healthy model. It's a flywheel effect. But the quarter in, quarter out, what percentage of the business is going to come from different segments is going to be mixed. And as we move forward we're going to find that right balance for the business. All with the appetite of healthy, sustainable, accelerating rates of growth as we integrate across trust based solutions with all of the different services that we're innovating on.

Saket Kalia - Equity Analyst - (00:48:09)

Super helpful. Thanks guys. Thanks.

OPERATOR - (00:48:15)

Our next question comes from Thomas Silberman from Bank of America. Please go ahead.

Thomas Silberman - Equity Analyst - (00:48:23)

Hey guys. Yeah, maybe going along the same tracks. Of the Money lion, right? You had two solid quarters of money lion growth, you know, 45 to 50%. You previously guided it to grow 30%. I think your guidance now calls for an exit rate of 30%. And just wanted to get more color why we wouldn't see these elevated growth levels sustained into the back half. And apologies if I missed in your prepared remarks, but can you pair that with commentary around the business model transition you're expecting in the second half? And I have a follow up after.

Vincent Paulette - CEO - (00:48:56)

Absolutely, yeah. So I'll take that one first. So moneylion, when we acquired and closed the deal April of this year, it's not too long ago, it feels like a long time because only six, six months ago they were growing at 25 to 30% at about 15% operating margin since the beginning of this year. And as we integrated and started to work on various different aspects including marketing and leveraging our current customer base, etc. We've seen an elevated performance level as you mentioned, 45% in acquired before and 50% this quarter. While we improved the operating margin over 5 points now over 20% we are not forecasting moving forward 50%. We do believe there may be a little bit of a boost of coming together and we feel it's more prudent to base maybe linking back to Saket's question at around a 30% growth rate, 20% margin. If I redefine another new rule and call you the rule of 50, that's what it would be. And managing the business along those lines as we see room and acceleration will definitely come capture it in the marketplace. So be sure of that. And there are different ways of capturing it, including moving more transactional customer, maybe customer we can identify as not having a strong recurring pattern and moving them to a membership or Having a chance to offer different values in a bundle membership structure which is really most of what we are planning to do over time while we maintain that rule of 50 growing at 30 to 20% margin and then along the line every quarter we learn more, we'll understand better the trends and that's where we'll be what it is not implied into Our current exit 30% growth rate is any significant macro level effect because as I mentioned in a prior answer, we do not see a change today of patterns or behaviors from the millions of customers that are plugging into our platform.

Thomas Silberman - Equity Analyst - (00:50:56)

Got it. And maybe as a follow up if. I move towards the core core cybersafety business, I know someone addressed earlier that you grew your customers 400 case sequentially but if we look at the growth trends, they diverged a little bit from last quarter. Last quarter if I have it right, revenue and bookings grew 4% this quarter. Revenue was 3%, bookings was 5%. What drove that slight delta? And do you think that the 400k adds this quarter in the the better bookings growth can translate into better revenue growth over the next few quarters?

Natalie Dursey - Chief Financial Officer - (00:51:32)

Yeah, Kilmer. Hey, it's Natalie. So keep in mind revenue is going to reflect the trailing 12 month bookings. So if you go back and look at the bookings as reported, that's where you would see the 3%. Also keep in mind we're only rounded at the whole numbers. When you get into the decimals it's sub two points. So it's really not that different between bookings, rate of growth and revenue. Like you see two points on the surface. And yes as we look forward it's not just the customer count acquisition, it's the balance across the segments, it's the innovation, it's the scale, it's AI coming through, it's more personalization, it's more customization through ipm Cross sell upsell are still alive and well Partner mixing in. There's just so many factors even when you, you know when you look at both on a pro forma basis but even excluding money lion, the core business has so much opportunity and we are just driving all of the growth levers that we possibly can with all of the innovation that that's coming to market. So I would say as you look forward we're, we're focused and just look at the full year guide pointing to on a pro forma basis as high single digit rate of growth. And that's what I would, that's what I would point you back to.

Thomas Silberman - Equity Analyst - (00:52:47)

Great, thank you. Thanks.

OPERATOR - (00:52:54)

Our next question comes from Meta Marshall from Morgan Stanley. Please go ahead.

Meta Marshall - Equity Analyst - (00:52:59)

Great, thanks so much. Maybe as a first question you noted the AI impact kind of bringing 20% efficiency on the customer support. Just wanted to get a sense of, you know, other ways in which you guys are utilizing AI in which you're finding traction within the business and then just as a follow up question, just any obba impact on tax rate that we should be expecting. Thanks.

Vincent Paulette - CEO - (00:53:28)

Okay, let me take the one on on the user AI. So all of our AI initiatives are split into two buckets. One is to use our data platform to build AI native features of products from Northern Genie to Spark to others browser that you see there. I leave that on the side because that's not the question but it's our main effort in trying to bring a truly AI native portfolio even all the way thinking in our lap of not only how we protect against AI generated scams or threats, but how will security look like in the world of agent to agent interaction where you as a consumer may ask your automated agent to do financial wellness transaction on your behalf and then interact in the world of agent how does privacy and security work in that environment? So super, super important topic. And then we have the second bucket which we call transforming gen into an AI first company which is really changing our workflows. Not immediately jumping into AI platform or tools but changing our workflows to then being able to automate and where it's needed using AI to generate things. Obviously in support and services we're further along the tools and the processes in the market are more mature. We today have roughly half, a little bit less than half of all of our content contacts fully contained into an AI environment, whether it's one or multiple bots. And that has generated significant savings which we have reused to really build our data approach or data platform to our business. I mentioned marketing. Marketing is probably the second to R& D. I'll talk about R in a minute function that we transforming marketing really we combine everything from upper funnel or branding all the way down to performance marketing under one leader combined organizations and we've realigned around value creations around their brands and they are using the tools AI first to really develop the framework to our vision later on will be to enable our product leaders to do everything from ideations to to first level performance materials assisted by AI bots without human intervention. That's not the case today. But within the marketing function they started to get really good traction on developing materials and even creatives all through AI. And that has enabled Also to redirect the savings towards more performance marketing to then accelerate the growth. And then the last piece is around R and D. We've been at it for a little bit longer which is starting with more automations. We're running some palette I'll give you the name we call it inside Gen the Genicorn and to see if we have from ideation to product development everything managed by one person assisted by bots. We have some level of success but we are running a lot of those experiences and bringing them back into our development environment to improve the way we we develop products there the savings are really redirected since we had a large portfolio with years of experience but also skew to maintain. We try to lower our maintenance cost to redirect into more innovation and most importantly higher velocity in a different product type and testing. I would say I see really great potential. They're slower to materialize and capture but we are on a great path. That's how we we are becoming an AI first company.

Natalie Dursey - Chief Financial Officer - (00:57:15)

And then I think you had a follow up question on the one beautiful tax bill. Yeah, just any impacted tax rate that we should be thinking of. So our tax rate is long term focused and so the 22% that you see in our non GAAP results and our is is assumed in the guide as well. So the beautiful bill just helps with cash flows in terms of cash taxes in the short term. In the long term it's there's no material change so we don't really influence that or that we don't include that change in the long term tax rate expectations.

Meta Marshall - Equity Analyst - (00:57:56)

Got it. Great. Thank you.

OPERATOR - (00:57:59)

Sure. Our final question today comes from Joseph Gallo from Jefferies. Please go ahead.

Joseph Gallo - Equity Analyst - (00:58:09)

Hey guys, thanks for the question. As you think through the cross sell opportunities between the moneylion and the gen digital bases and vice versa which one seems to be getting the most traction early on and then are there any more go to market efforts left to implement to accelerate?

Vincent Paulette - CEO - (00:58:24)

Yeah, very good. So we are the early stage. So I definitely would say yes we have a lot of room to accelerate. The current results you see here is on the merits of the core business on their own, each one of them and then maybe a core platform of data and operations but we haven't really delivered yet. The value of bringing everything together. The most natural one and more immediate one is really the embedding if you want of financial insights and financial options into the Lifelock app. That's where originally maybe we had discussed that in September where the initial ask for financial wellness insights and advice were coming from. That's how we started that project organically and then led to the acquisition of moneylion. We know embedding that and I think is going to take traction. We're very careful, we're very creative if I can say we're not doing blasting marketing. We know that our customer in lifelong will benefit from that insight and those new options. But we're following the demand. We're not trying to do a forceful marketing campaign or inside app that that could be very annoying. So preserving their peace of mind is key and and we will drive at that space. The second one obviously is bringing Norton Money, sorry Money into Norton as an alternative to identity into Norton or in full combine of course. And the most immediate one is Moneyline features into our employee benefit channel that represent probably the best channel on selling the entire portfolio and having traction on all dimensions. We are about to launch that of course in employee Benefit channel you're going to have to have the time to onboard the new employers then go for the onboarding view and then only you see the results. So the result will be delayed but the traction and the early discussions are are extremely positive. So it's only the beginning of the journey I would say on the revenue synergy side.

Joseph Gallo - Equity Analyst - (01:00:33)

Great to hear. There's more to come and then just I know you called out a consistent macro but Americas has been pretty consistently strong. Is there anything to call out on the other Geos?

Vincent Paulette - CEO - (01:00:44)

Actually you. Right. We haven't talked too much about the other Geo. I was just discussing that with Natalie and my head of corporate SP and yesterday reviewing the results jobs in Europe, they've been very strong. Positively surprised by how broad based our growth rates have been. Us first then you know for a while we had Latin America leading the way. Right now for the last two quarter we've seen a lot of strength coming out of Europe and we haven't reintroduced financial wellness yet in Europe. So that's talk about more to come over the next few quarters and years. We really feel excited about all of the levers we have at our disposal if I can say to drive that long term value for our customers. Thank you.

OPERATOR - (01:01:32)

Thank you. That is the end of the Q and A session and this concludes today's call. Thank you for joining everyone. You may now disconnect your lines.