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Symantec to-acquire-blue-coat-investor-presentation

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Symantec to-acquire-blue-coat-investor-presentation

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Symantec to-acquire-blue-coat-investor-presentation

  1. 1. to Acquire Investor Summary June 13, 2016
  2. 2. FORWARD LOOKING STATEMENTS This presentation contains statements which may be considered forward-looking within the meaning of the U.S. federal securities laws, including statements regarding the acquisition of Blue Coat, Inc. and the time frame in which this will occur, the expected benefits to Symantec, its customers, stockholders and investors from completing the acquisition, including expected growth, earnings accretion and cost savings, statements regarding the investment by Bain Capital and Silver Lake, statements regarding Symantec’s planned capital return program, and statements regarding leadership changes in connection with the acquisition and investments and the potential benefits to be derived therefrom. These statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from results expressed or implied in this press release. Such risk factors include those related to: required regulatory approvals and the satisfaction of other closing conditions, the potential impact on the businesses of Blue Coat and Symantec due to uncertainties regarding the acquisition; the retention of employees of Blue Coat and the ability of Symantec to successfully integrate Blue Coat and to achieve expected benefits; general economic conditions; fluctuations and volatility in Symantec’s stock price; the ability of Symantec to successfully execute strategic plans; maintaining customer and partner relationships; fluctuations in tax rates and currency exchange rates; the timing and market acceptance of new product releases and upgrades; and the successful development of new products, 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. Symantec assumes 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 Symantec’s Form 10-K for the year ended April 1, 2016. Any information regarding pre-release of Symantec offerings, future updates or other planned modifications is subject to ongoing evaluation by Symantec and therefore subject to change. This information is provided without warranty of any kind, express or implied. Customers who purchase Symantec offerings should make their purchase decision based upon features that are currently available. We assume no obligation to update any forward‐looking information contained in this presentation.
  3. 3. Strategically and Financially Compelling Combination 3 The Next Generation of Cybersecurity Best-of-breed for protection, detection and remediation across endpoint, email, web and servers Cloud Generation Security One Symantec platform solution for end-to-end cloud needs Significant Synergy Opportunities $150 million annual cost synergies by the end of fiscal 2018 Significant cross-sell opportunity Attractive Financial Model Return to growth with significantly improved profitability
  4. 4. Best-In-Breed Protection, Detection and Remediation Across Endpoint, Email, Web, Network and Servers 4 EndpointUsers Network Data Center Email Highly complementary product offering Cloud AppsCloud Servers
  5. 5. Combination Enhances Entire Enterprise Security Offering 5 Shared telemetry & protection engines DLP CASB Web Cross control point detection & remediation Data Loss Prevention everywhere ATP Analytics Endpoint Email Server Web Endpoint 175M endpoints protected Email 2Bn emails scanned/day Web 1.2Bn new web requests secured/day Physical & Virtual Workloads 64,000 Datacenters protected Cloud Security 12,000 cloud applications secured Unique customer proposition and significant competitive advantage
  6. 6. Capability One Symantec Solution Cloud & App-based Web Traffic Cleansing Cloud Gateway Inspect User Communication for Advanced Malware Cloud-Based Sandbox Visibility into Cloud Application Usage by Users Application Discovery User-Centric DLP Data Loss Prevention User-Based Cloud Application Authorization Cloud Broker Audit Acceptable-Use with Real-Time Analytics Cloud Analytics Cloud-Generation Security Requires 8-10 point vendors today Enables Enterprises to Securely Embrace The Cloud 6 For the cloud, from the cloud and to the cloud
  7. 7. Massive Threat Intelligence and Significant Investments Will Drive Next Wave of Innovation Unmatched Resources to Drive Innovation 7 • More than 3,000 R&D engineers and researchers • Telemetry gathered from 175M endpoints protected • >2bn emails scanned/day • 1.2bn web requests monitored per day across 55 languages • 12,000 cloud applications monitored and controlled Integrated protection, detection and remediation across endpoints, network, web, email, data-centers and apps Control critical information on-premises and in the cloud Comprehensive cloud security for users, data and applications
  8. 8. The Blue Coat Evolution Strategic, Operational, Financial Product Lines: › Web Gateway › Performance Financial Performance: › Revenue: $487mm › Non-GAAP Operating Margin: ~20% (circa FY’11) Ticker: NASDAQ: BCSI (Today) Go To Market: Refocused partner ecosystem and direct sales force (+50% since FY’12 to ~600 headcount) Notable Tuck-In Acquisitions: Solera, Norman Shark, Netronome, Perspecsys, Elastica Financial Performance: • FY16 Adjusted Net Revenue: $755mm Security Platform Comprised of: • Web Gateway • Cloud Delivered Gateway • Content Analysis System • Performance • Incident Response & Analytics • Web Application Firewall • Encrypted Traffic Management • Advanced Threat Prevention • CASB • Cloud Data ProtectionProduct Lines: • Web Gateway • Performance Financial Performance: • Revenue: $487mm Note: Financials presented are Non-GAAP 8
  9. 9. Protecting the World’s Largest Enterprises Across Any Device, Across Any Network, At Enterprise Scale Revenue Scale / Growth $755M FY16 Adjusted Net Revenue Strong Profitability 24% FY16 Adjusted EBITDA (% Adj. Net Revenue) SECURITY PLATFORM ~20% Total Net Revenue from New Products1 New Product Momentum Network + Security + Cloud 9 Industry Leader #1 Market Share $11B+ TAM 9Note: Financials presented are Non-GAAP; Financial metrics reflect FY16 (FYE April 30) 1 Includes products released after FY12
  10. 10. Track Record of Achievement (April 30 FYE, $mm) 10 $275 $320 $368 $436 $643 $755 FY15 FY16 Product Service & Subscription Adjusted Operating Income Adjusted Net Revenue Adjusted EBITDA Cash Flows3 Note: Financials presented are Non-GAAP unless noted otherwise below 1 Includes litigation costs, retention costs, debt fees and debt extinguishment & refinancing costs 2 Includes litigation costs, retention costs and debt fees 3 Represents GAAP cash flow from operations 4 Represents GAAP interest expense 17% growth $170 $163 $178 $202 FY15 FY16 $187 $179 $196 $223 FY15 FY16 $8 $103Interest expense4 $95 $135 FY15 FY16 Adjustments1 Adjustments2 $39 $44$9 $66
  11. 11. Blue Coat Security Platform 11 15K+ Customers 70%+ of Fortune Global 500 ~43% Secure Web Gateway Market Share 1 +700 Net New Customers Jan’15 – Jan’16 2 95%+ Customer Retention Rate 3 Note: Financials presented are Non-GAAP; 1 IDC; 2014 Web Security Gateway report; 2 Cumulative net new customers January, 2015 – January, 2016; 3 Top1k customers by Revenue, since FY12
  12. 12. Traditional Perimeter Security Model Characterized by Centralized Control 12 • Most applications in the data center • Regional offices and users VPN into the company • Security stack existed on-premise to protect users against the outside Internet Headquarters Data Center Regional Office Security Stack
  13. 13. Expansion of the Enterprise Network Users, encryption, bandwidth transforming modern IT 13 Headquarters Data Center Regional Office Security Stack Roaming Users SSL Encryption SSL Encryption SSL Encryption
  14. 14. Blue Coat: The Enabler of the Expanded Network Security for the Cloud Generation Headquarters Data Center Regional Office Security Stack Roaming Users Next Generation Endpoints (IoT/Mobile) Web Protection Service CLOUD APPLICATION POLICY CONTROL VIA API INTEGRATION (SECURELETS) CLOUD DATA PROTECTION (ENCRYPTION & TOKENIZATION) 14
  15. 15. Combined Comprehensive Cloud Protection 15 Headquarters Data Center Regional Office Roaming Users Next Generation Endpoints (IoT/Mobile) Web Protection Encrypted Traffic Tokenized Data storage Advance Malware Analysis Next-Generation SOC Data Loss Prevention Managed Security Service Next Gen Endpoint Mail Protection Security Stack
  16. 16. Significant Cross-Sell Opportunity 16 Symantec + Blue Coat Fortune 500 Fortune 2000 Beyond Fortune 2000  Scale Cloud Delivery across Symantec customer base  Increase wallet share among the top 1000 customers  Cross-sell Blue Coat web security beyond Fortune 1000  Highly complimentary Fortune 500 customer relationships 370,000+ customers 15,000+ customers
  17. 17. Transaction Overview 17 Transaction Consideration • $4.65* billion in cash • Key management of Blue Coat to invest in Symantec Approval Process & Expected Closing • Subject to customary closing conditions and regulatory approvals • Expect to close in Q2 FY2017 Financial Impact • Significantly accretive to FY 2018 Non-GAAP EPS • Expect FY 2018 Non-GAAP EPS $1.70 to $1.80 Sources of Financing • Combination of cash on balance sheet and $2.8 billion of new debt • Silver Lake to invest an additional $500 million and Bain Capital to invest $750 million *Based on expected cash and debt balance at closing and excludes transaction expenses
  18. 18. $550 Million in Annual Operating Efficiencies 18 Transaction Cost Synergies Standalone Symantec Cost Saves + Products Sales and Marketing Overlay IT G&A and Facilities $150 million$400 million Industry Leading Margins
  19. 19. Significantly Enhanced Financial Model 19 Return to Growth: Business Mix: Profitability: Substantial improvement in Enterprise Security profitability 62% Enterprise Security with $2.7 billion revenue 38% Consumer Security with $1.7 billion revenue Platform for sustainable growth Expect Fiscal 2018 EPS of $1.70 to $1.80 Note: Financials presented are Non-GAAP
  20. 20. Capital Structure and Financing 20 Cash $6.1 $5.6 Existing debt 2.8 2.8 New debt - 2.8 Convertible debt 0.5 1.7 Net debt ($2.8)1 $1.7 Net debt / EBITDA (1.9x)2 0.9x3 $billion Current Pro Forma Note: Financials presented are Non-GAAP 1 Net debt, cash and existing debt have been adjusted for the $1.0B Term Loan closed in May 2016 and Veritas-related tax 2 FY16 EBITDA adjusted for SBC, restructuring separation charge and normalized for $400 million of in cost save initiatives 3 FY16 Pro forma EBITDA adjusted for SBC, restructuring separation charges, $150 million of expected transaction cost synergies and normalized for $400 million of in cost save initiatives
  21. 21. Financial Policy 21 3 Expect to pay down debt rapidly to maintain strong balance sheet 4 Maintain $0.30 annual dividend 1 Complete $5.5 billion capital return program by March 2017 including $1.3 billion in remaining share repurchases 2 $400 million standalone net cost reduction initiatives timeline remains unchanged
  22. 22. 22 3 4 1 Increases the exposure to higher growth end markets 2 Combined competitive product differentiation to capture share Key Financial Summary Significant cost synergies and commitment to industry leading margins Highly accretive to our earnings
  23. 23. Use of Non-GAAP Financial Information Our results of operations have undergone significant change due to the impact of litigation accruals, discontinued operations including the gain on the sale of Veritas, stock-based compensation, restructuring, transition and separation matters, charges related to the amortization of intangible assets, and certain other income and expense items that management considers unrelated to the Company’s core operations. The results of operations of Blue Coat have undergone significant change due to the impact of purchase accounting on revenue from prior acquisitions, stock-based compensation, restructuring, transition and integration matters, charges related to the amortization of intangible assets, and certain other income and expense items that management considers unrelated to the Company’s core operations. 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. Non-GAAP financial measures are supplemental, should not be considered a substitute for financial information presented in accordance with GAAP and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management team uses these non-GAAP financial measures in assessing Symantec’s operating results, as well as when planning, forecasting and analyzing 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 press release and which can be found, along with other financial information, on the investor relations page of our website at: http://www.symantec.com/invest. 23
  24. 24. 24 GAAP RESULTS RECONCILED TO NON-GAAP RESULTS (1) (Dollars in thousands, unaudited) Year Ended Year Ended April 30, 2016 April 30, 2015 Non-GAAP EBITDA GAAP net loss (289,081) (15,430) Plus: Impact of purchase accounting on net revenue 157,037 11,601 Amortization of intangible assets and purchased technology 165,326 77,006 Acquisition write-up of acquired inventory sold 29,210 - Depreciation expense 20,438 18,440 Stock-based compensation expense 22,565 2,696 Restructuring and other charges 2,857 1,130 Acquisition fair value adjustments to earn-outs (970) - Acquisition transaction costs 30,417 1,223 Acquisition integration, transition and other 3,537 5,008 Financial sponsor fees 5,839 3,545 Interest expense, net 103,228 66,396 Income tax provision (benefit) (71,139) 15,104 Adjusted EBITDA $ 179,264 $ 186,719 Adjusted EBITDA % of non-GAAP revenue 24% 29% (1) For more information about the non-GAAP metrics in this presentation, please see the Appendix to the Press Release that can be found on the investor relations page of our website at: http://www.symantec.com/invest.

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