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"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%. 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 15.0 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 June 28, 2013, was $3.812 billion compared with $3.745 billion as of June 29, 2012, up 2% year-over-year and up 3% 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% 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%.
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% of total revenue and declined 1% year-over-year (increased 1% after adjusting for currency) to $732 million.
· The Information Security segment grew 7% year-over-year (9 percent after adjusting for currency) to $336 million. This segment represented 20% of total revenue and includes Symantec's security capabilities such as our mail & web security, authentication services, data center security, Managed Security Services (MSS), hosted security services, and Data Loss Prevention (DLP) businesses.
· The Information Management segment represented 37% of total revenue and grew 4% 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% of total revenue and increased 2% (4 percent after adjusting for currency).
· The Europe, Middle East and Africa region represented 27% of total revenue and increased 8% year-over-year (6 percent after adjusting for currency).
· The Asia Pacific/Japan revenue represented 18% of total revenue and decreased 5% year-over-year (increased 1% after adjusting for currency).
· The Americas, including the United States, Latin America and Canada, represented 55% of total revenue and increased 3% 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% 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 authorized stock repurchase plan.
Symantec's Board of Directors has declared a quarterly cash dividend of $0.15 per common share to be paid on September 18, 2013 to all shareholders of record as of the close of business on August 26, 2013. The ex-dividend date will be August 22, 2013.
Fiscal Year 2014 Guidance
For fiscal 2014, we are reconfirming our revenue guidance of 0-2% 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% 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 organization 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% 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 has scheduled a conference call for 5 p.m. ET/2 p.m. PT today to discuss the results of its fiscal first quarter 2014, ended June 28, 2013 and to review guidance. Interested parties may access the conference call on the Internet at http://www.symantec.com/invest. To listen to the live call, please go to the website at least 15 minutes early to register, download and install any necessary audio software. A replay and script of our officers' remarks will be available on the investor relations' home page shortly after the call is completed.
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 center, 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.