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Financial Analyst Day 2012
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  • Update FY12 Actual
  • Update FY12 Actual
  • Update FY12 and March12 numbers
  • Picture size 3.54 x 9.26Picture position is 0.37 and 1.31Updated in the “Segment Revenue” Tab
  • Lower op margins primarily driven by M&ALower FY11 op mgn primarily driven by expenses from our acqsHigher sales commissions were associated with significantly higher bookings that will be reflected in our revenue during the coming quartersProductivity improvements in our core businessesEmerging businesses include appliances, SaaS, managed security services, consumer services, and business critical services
  • Board of Directors approved a $1 billion share repurchase program in January 2011Seller expectations and our available integration capacity will drive the actual outcomeWe have kept the dollar volume of CapEx approximately constant during the last three yearsWe expect CapEx to increase by approximately $50 million in FY12 as we upgrade our internal systems infrastructure with a particular focus on better serving SMB customers
  • Picture size 3.54 x 9.26Picture position is 0.37 and 1.31Updated in the “Segment Revenue” Tab

Financial Analyst Day 2012 Presentation Transcript

  • 1. 1Financial ObjectivesJames BeerEVP & Chief Financial Officer
  • 2. Revenue Growth Targets• We expect weakness in PC shipments in developed markets to be offset bycontinued upsell/cross sell of our customer base and the expansion of ouremerging consumer products and services• The FY12 Security & Compliance results reflect, in part, the impact ofrecent acquisitions• Information Management continues to meet our expectations driven byappliance and backup growth2FY14 Targetsas of 5/2011FY12Results1FY15 Targetsas of 5/2012Consumer Growth Mid Single 5% Mid SingleSecurity & Compliance Growth Mid to High Single 17% Mid to High SingleInformation Management Growth Mid to High Single 7% Mid to High SingleStorage Management Growth Flat to Down Low Single -6% Flat to Down Low Single1. Growth rates in constant currencyPrior Projections Current Projections
  • 3. 3-Year Revenue and EPS Targets• We expect 1-2 points of revenue growth to come fromfuture M&A• We are forecasting EPS growth driven by:– Net income growth– Continued share repurchases3FY14 Targetsas of 5/2011FY12Results1FY15 Targetsas of 5/2012Revenue Growth 7 – 8% 6% 7 – 8%Non-GAAP EPS Growth 9 – 11% 13% 9 – 11%1. Growth rates in constant currency for revenue and as reported for Non-GAAP EPSPrior ProjectionsCurrentProjections
  • 4. 2,752 2,744 2,923934 908 869429 58583501,0002,0003,0004,0005,000FY10 FY11 FY12($M)SubscriptionsLicenseMaintenance-2%Changing Enterprise Revenue Mix4• In FY12, subscription revenue became a larger share of total revenue aswe made more SaaS, MSS and authentication sales– The transition towards subscription has shifted more sales tothe balance sheet• Licenses declined due to continued headwinds in our storagemanagement business37%-7%40%4%Values are GAAP in USD as reported, growth rates in constant currency1%
  • 5. -5.3%1.2% 1.4%-6%-4%-2%0%2%FY10 FY11 FY12Organic Constant Currency Non-GAAP Revenue Growth1• Organic revenue growth continues to be the primary focus for the management team• Our organic growth drivers include:– Appliances– Integrated backup/archiving/eDiscovery– DLP/encryption/compliance/user authentication– Emerging consumer solutions– SaaS– SMB51. Excludes acquisition revenue for 4 full quarters following close. Adjusts for deferred revenue haircut impact.
  • 6. 6FY12 Organic Constant Currency Non-GAAP RevenueBreakdown by Growth Rate1• Three quarters of our business is growing organically• We are growing our backup, consumer security and enterprise security core businesses atsingle digit rates• Our businesses that have been declining are being run for cash generation, profitabilityand in support of key customer relationships• See appendix for product level details by growth rate661. Excludes acquisition revenue for 4 full quarters following close. Adjusts for deferred revenue haircut impact.-10%5%23%-15%0%15%30%$1.8B of Revenue isDeclining$4.3B of Revenue isGrowing 0 - 9%$700M of Revenue isGrowing 10+%
  • 7. Businesses with Revenue Growth Greater than 10%• We are driving double digit organic growth in ouremerging businesses70% 15% 30% 45% 60%FY12 Non-GAAP Growth Rates1 FY12 GAAPRevenue ($M)385891211061. Excludes acquisition revenue for 4 full quarters following close. Adjusts for deferred revenue haircut impact.702Total:Consumer Services(Norton Data, NortonLive & Mobile)Business Critical ServicesManaged Security ServicesDLP, Encryption, Compliance& User Authentication
  • 8. FY12 Non-GAAP Operating Margin8• We continue to improve the cost efficiency of our core businesses while investingin our emerging growth areas• These emerging growth businesses will drive positive NPV, but may generate lowermargin profiles than our traditional on-premise software businesses• We will grow operating margins over time as our emerging businesses scale and wecontinue to drive productivity in the core24.8%(10bps)(120bps)10bps60bps100bps25.2%23.0%23.5%24.0%24.5%25.0%25.5%FY11 as reported M&A Dilution Growth Investments Commissions FX Core Cost Savings FY12 as reportedSee appendix for non-GAAP reconciliation
  • 9. FY12 Cost Structure• We increased R&D spending as we executed on our vision• We will continue to tightly manage our costs across the company– S&M: ongoing sales force efficiencies – reduced management; consolidated specialist groups– R&D: offshoring; consolidating onshore centers; support center consolidation;support infrastructure upgrades– G&A: ongoing real estate consolidation, process automation, IT cost reduction, procurementefficiencies, ongoing M&A integration opportunities• OEM fees may increase YoY if PC shipments rebound in emerging markets939% 41% 41%13% 13% 14%5% 6% 6%0%13%26%39%52%65%FY10 FY11 FY12Non-GAAP OpEx by Categoryas a % of RevenueS&M R&D G&A Non-GAAP Op Margin276 280262$225$245$265$285FY10 FY11 FY12 FY13 EConsumer OEM Placement Fees ($M)235-285See appendix for non-GAAP reconciliation
  • 10. 1,2141,5772,3511,830 1,3818433,044 2,9583,194FY10 FY11 FY12Year End Cash Balanceby Location ($M)Series3 OnshoreCash Flow and Cash Balance• We continue to generate strongcash flow primarily driven by highrenewal rates in our corebusinesses• We expect our cash flow tocontinue to grow10• With the sale of our stake in theChina joint venture our offshorecash balance rose to represent72% of our total balanceCash Flow Generation Cash Balance0%2%4%6%8%1,5001,6001,7001,8001,9002,000FY10 FY11 FY12Cash Flow from OperationsCFFO ($M) YoY Growth as Reported
  • 11. Capital Allocation Strategy• We remain committed to returning value to shareholders through our sharerepurchase program– $1 billion share repurchase program approved in January 2012• We are expecting to spend approximately $500 to 750 million on acquisitionsin FY13– We continue to focus on acquiring companies at prices that will allow us to generate astrong positive NPV• We plan to refinance $1 billion in convertible debt outstanding ahead of theJune 2013 maturity1110.0015.0020.0025.0002004006008001,000FY10 FY11 FY12Share BuybacksShare Repurchase Amount ($M) Average Price per Share ($)$42$1,538$51605001,0001,5002,000FY10 FY11 FY12Annual M&A Spending ($M)
  • 12. Summary• Drive organic top line growth in our core businesses andcapitalize on the key emerging growth areas• Tightly manage expenses and simplify our operating procedures• Expand operating profit by driving scale in our emerging growthproducts and services, and by improving productivity in our corebusinesses• Acquire and integrate new businesses and technologies to drivegrowth and accelerate the execution of our strategy• Return value to shareholders through share buybacks12
  • 13. Q & Awith James Beer13
  • 14. Appendix14
  • 15. Business Segment Growth Detail15Revenue is growing 10+%FY12 GAAPRev ($M)FY11 GAAPRev ($M)YoY ConstantCurrencyGrowthYoY OrganicConstant CurrencyNon- GAAP Growth1% ofTotalServices (Norton Data, NortonLive & Mobile) 106 69 52% 52% 5%DLP, Encryption, Compliance & User Auth 385 298 27% 15% 20%Managed Security Services 89 72 22% 22% 5%Business Critical Services 121 92 30% 30% 48%Total 702 23.3%Revenue is Growing 0-9%NIS 840 755 8% 8% 40%N360 822 751 7% 7% 39%Endpoint Security 750 731 0% 0% 38%Trust Services 288 91 211% 4% 15%SaaS 186 169 7% 5% 9%NetBackup 905 851 4% 4% 38%Backup Exec 463 429 5% 5% 19%Total 4,254 4.8%Revenue is DecliningNAV 230 245 (8%) (8%) 11%Other Consumer 106 133 (22%) (22%) 5%Endpoint Management 263 275 (6%) (6%) 13%Archiving and eDiscovery 262 216 19% (6%) 11%Storage Foundation 577 601 (6%) (6%) 24%Cluster Server 203 207 (4%) (4%) 8%Consulting 88 159 (46%) (46%) 35%Education 42 41 (1%) (1%) 17%Total 1,771 (10.4%)1. Excludes acquisition revenue for 4 full quarters following close. Adjusts for deferred revenue haircut impact.
  • 16. 16Segment Review1616FY12 GAAPRev ($M)FY11 GAAPRev ($M)YoY ConstantCurrencyGrowthYoY Organic ConstantCurrencyNon- GAAP Growth1% ofTotalConsumer 2,104 1,953 5% 5% 31%NIS 840 755 8% 8% 40%N360 822 751 7% 7% 39%NAV 230 245 (8%) (8%) 11%Services (Norton Data, NortonLive & Mobile) 106 69 52% 52% 5%Other Consumer 106 133 (22%) (22%) 5%Security & Compliance 1,961 1,637 17% 3% 29%Endpoint Security 750 731 0% 0% 38%Trust Services 288 91 211% 4% 15%DLP, Encryption, Compliance & User Auth 385 298 27% 15% 20%Endpoint Management 263 275 (6%) (6%) 13%SaaS 186 169 7% 5% 9%Managed Security Services 89 72 22% 22% 5%Storage & Server Mgmt 2,400 2,305 2% 0% 36%Backup, Archiving and eDiscovery 1,630 1,497 7% 3% 68%NetBackup 905 851 4% 4% 38%Backup Exec 463 429 5% 5% 19%Archiving and eDiscovery 262 216 19% (6%) 11%Storage Management 780 808 (6%) (6%) 33%Storage Foundation 577 601 (6%) (6%) 24%Cluster Server 203 207 (4%) (4%) 8%Services 252 292 (16%) (16%) 4%Business Critical Services 121 92 30% 30% 48%Consulting 88 159 (46%) (46%) 35%Education 42 41 (1%) (1%) 17%1. Excludes acquisition revenue for 4 full quarters following close. Adjusts for deferred revenue haircut impact.
  • 17. Historical First Quarter Seasonal Trends17GAAP Revenue Non-GAAP EPS3 Year AverageQuarterSequentialGrowth% of TotalFiscal YearJune (3.3%)48%September 2.6%December 5.1%52%March 0.4%3 Year AverageQuarterSequentialGrowth% of TotalFiscal YearJune (6.8%)48%September 0.9%December 7.2%52%March (0.3%)• Season fluctuations have historically caused sequential revenue andnon-GAAP EPS growth to be negative in the June quarters• Sequential non-GAAP EPS typically declines in the March quarters• Revenue and non-GAAP EPS are typically greater in the second halfof the fiscal yearSequential growth rates as reported
  • 18. (In millions, except per share data) FY12 FY11 FY10NET REVENUE:GAAP net revenue 6,730 6,190 5,985OPERATING EXPENSES:GAAP operating expenses 4,569 4,265 3,947Operating expense adjustment (511) (518) (510)Non-GAAP operating expenses 4,058 3,747 3,437OPERATING INCOME (LOSS):GAAP operating income (loss) 1,079 880 933Gross profit adjustment 107 137 249Operating expense adjustment 511 518 510Non-GAAP operating income 1,697 1,535 1,692NET INCOME (LOSS) PER SHARE - DILUTED:GAAP net income (loss) per share attributable to Symantec Corporation stockholders 1.57 0.76 0.87Stock-based compensation adjustment per share, net of tax 0.16 0.14 0.14Other non-GAAP adjustments per share, net of tax (0.12) 0.52 0.48Non-GAAP net income per share attributable to Symantec Corporation stockholders 1.61 1.42 1.49WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED:GAAP weighted-average shares outstanding attributable toSymantec Corporation stockholders 748 786 819Non-GAAP weighted-average shares outstanding attributable toSymantec Corporation stockholders 748 786 819Reconciliation of GAAP Statement of Operations to Non-GAAP18Please refer to the Earnings Supplemental Information on our investor relations website: http://www.symantec.com/invest
  • 19. Reconciliation of GAAP Operating Expenses to Non-GAAP19FY12 FY11 FY10OPERATING EXPENSES:Sales and marketing 2,814 2,622 2,367Research and development 969 862 857General and administrative 437 390 352Amortization of other purchased intangible assets 289 270 247Restructuring and transition 56 92 94Impairment of intangible assets and goodwill 4 27 -Loss and impairment of assets held for sale - 2 30Total GAAP operating expenses 4,569 4,265 3,947Stock-based compensation (148) (123) (139)Amortization of other intangible assets (289) (270) (247)Restructuring and transition (56) (92) (94)Impairment of intangible assets and goodwill (4) (27) -Loss and impairment of assets held for sale - (2) (30)Acquisition-related expenses (6) (14) -Internally developed software costs - 10 -Patent settlement (8) - -Operating expense adjustment (511) (518) (510)Sales and marketing 2,744 2,565 2,308Research and development 920 832 804General and administrative 394 350 325Total Non-GAAP operating expenses 4,058 3,747 3,437Please refer to the Earnings Supplemental Information on our investor relations website: http://www.symantec.com/invest