This document provides financial targets and projections for Symantec Corporation from FY2012 to FY2015. Some key points include:
- Revenue from consumer security products is projected to grow in the mid-single digits annually while security and compliance revenue is targeted for mid-to-high single digit growth.
- Non-GAAP EPS is forecasted to increase 9-11% annually through FY2015, driven by net income growth and continued share repurchases.
- Emerging businesses like managed security services and consumer services showed the strongest revenue growth above 10% in FY2012 and are viewed as key drivers of future growth.
- Tight expense control and productivity improvements are expected to increase operating margins gradually
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This presentation contains forward-looking statements, including our expectations for churn improvement in the fourth quarter of 2015, our expectations for revenue, adjusted EBITDA and capital expenditures in 2015 and our ability to accelerate profitable growth from our new performance-based product offerings and greatly improved execution.
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This presentation contains forward-looking statements, including our belief in the benefits to be achieved from the business unit realignment, expectations for annualized cost savings achieved from our cost optimization program and resulting restructuring charges, expectations for revenue, adjusted EBITDA and capital expenditures in 2016 and our ability to further improve margin profile and generate positive levered free cash flow for the full-year 2016. Because such statements are not guarantees of future performance and involve risks and uncertainties, there are important factors that could cause Internap's actual results to differ materially from those in the forward-looking statements.
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2. Revenue Growth Targets
• We expect weakness in PC shipments in developed markets to be offset by
continued upsell/cross sell of our customer base and the expansion of our
emerging consumer products and services
• The FY12 Security & Compliance results reflect, in part, the impact of
recent acquisitions
• Information Management continues to meet our expectations driven by
appliance and backup growth
2
FY14 Targets
as of 5/2011
FY12
Results1
FY15 Targets
as of 5/2012
Consumer Growth Mid Single 5% Mid Single
Security & Compliance Growth Mid to High Single 17% Mid to High Single
Information Management Growth Mid to High Single 7% Mid to High Single
Storage Management Growth Flat to Down Low Single -6% Flat to Down Low Single
1. Growth rates in constant currency
Prior Projections Current Projections
3. 3-Year Revenue and EPS Targets
• We expect 1-2 points of revenue growth to come from
future M&A
• We are forecasting EPS growth driven by:
– Net income growth
– Continued share repurchases
3
FY14 Targets
as of 5/2011
FY12
Results1
FY15 Targets
as of 5/2012
Revenue 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 EPS
Prior Projections
Current
Projections
4. 2,752 2,744 2,923
934 908 869
429 585
835
0
1,000
2,000
3,000
4,000
5,000
FY10 FY11 FY12
($M)
Subscriptions
License
Maintenance
-2%
Changing Enterprise Revenue Mix
4
• In FY12, subscription revenue became a larger share of total revenue as
we made more SaaS, MSS and authentication sales
– The transition towards subscription has shifted more sales to
the balance sheet
• Licenses declined due to continued headwinds in our storage
management business
37%
-7%
40%
4%
Values are GAAP in USD as reported, growth rates in constant currency
1%
5. -5.3%
1.2% 1.4%
-6%
-4%
-2%
0%
2%
FY10 FY11 FY12
Organic 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
– SMB
51. Excludes acquisition revenue for 4 full quarters following close. Adjusts for deferred revenue haircut impact.
6. 6
FY12 Organic Constant Currency Non-GAAP Revenue
Breakdown by Growth Rate1
• Three quarters of our business is growing organically
• We are growing our backup, consumer security and enterprise security core businesses at
single digit rates
• Our businesses that have been declining are being run for cash generation, profitability
and in support of key customer relationships
• See appendix for product level details by growth rate
661. 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 is
Declining
$4.3B of Revenue is
Growing 0 - 9%
$700M of Revenue is
Growing 10+%
7. Businesses with Revenue Growth Greater than 10%
• We are driving double digit organic growth in our
emerging businesses
7
0% 15% 30% 45% 60%
FY12 Non-GAAP Growth Rates1 FY12 GAAP
Revenue ($M)
385
89
121
106
1. Excludes acquisition revenue for 4 full quarters following close. Adjusts for deferred revenue haircut impact.
702Total:
Consumer Services
(Norton Data, NortonLive & Mobile)
Business Critical Services
Managed Security Services
DLP, Encryption, Compliance
& User Authentication
8. FY12 Non-GAAP Operating Margin
8
• We continue to improve the cost efficiency of our core businesses while investing
in our emerging growth areas
• These emerging growth businesses will drive positive NPV, but may generate lower
margin profiles than our traditional on-premise software businesses
• We will grow operating margins over time as our emerging businesses scale and we
continue to drive productivity in the core
24.8%
(10bps)
(120bps)
10bps
60bps
100bps
25.2%
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 reported
See 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, procurement
efficiencies, ongoing M&A integration opportunities
• OEM fees may increase YoY if PC shipments rebound in emerging markets
9
39% 41% 41%
13% 13% 14%
5% 6% 6%
0%
13%
26%
39%
52%
65%
FY10 FY11 FY12
Non-GAAP OpEx by Category
as a % of Revenue
S&M R&D G&A Non-GAAP Op Margin
276 280
262
$225
$245
$265
$285
FY10 FY11 FY12 FY13 E
Consumer OEM Placement Fees ($M)
235-285
See appendix for non-GAAP reconciliation
10. 1,214
1,577
2,351
1,830 1,381
843
3,044 2,958
3,194
FY10 FY11 FY12
Year End Cash Balance
by Location ($M)
Series3 Onshore
Cash Flow and Cash Balance
• We continue to generate strong
cash flow primarily driven by high
renewal rates in our core
businesses
• We expect our cash flow to
continue to grow
10
• With the sale of our stake in the
China joint venture our offshore
cash balance rose to represent
72% of our total balance
Cash Flow Generation Cash Balance
0%
2%
4%
6%
8%
1,500
1,600
1,700
1,800
1,900
2,000
FY10 FY11 FY12
Cash Flow from Operations
CFFO ($M) YoY Growth as Reported
11. Capital Allocation Strategy
• We remain committed to returning value to shareholders through our share
repurchase program
– $1 billion share repurchase program approved in January 2012
• We are expecting to spend approximately $500 to 750 million on acquisitions
in FY13
– We continue to focus on acquiring companies at prices that will allow us to generate a
strong positive NPV
• We plan to refinance $1 billion in convertible debt outstanding ahead of the
June 2013 maturity
11
10.00
15.00
20.00
25.00
0
200
400
600
800
1,000
FY10 FY11 FY12
Share Buybacks
Share Repurchase Amount ($M) Average Price per Share ($)
$42
$1,538
$516
0
500
1,000
1,500
2,000
FY10 FY11 FY12
Annual M&A Spending ($M)
12. Summary
• Drive organic top line growth in our core businesses and
capitalize on the key emerging growth areas
• Tightly manage expenses and simplify our operating procedures
• Expand operating profit by driving scale in our emerging growth
products and services, and by improving productivity in our core
businesses
• Acquire and integrate new businesses and technologies to drive
growth and accelerate the execution of our strategy
• Return value to shareholders through share buybacks
12
17. Historical First Quarter Seasonal Trends
17
GAAP Revenue Non-GAAP EPS
3 Year Average
Quarter
Sequential
Growth
% of Total
Fiscal Year
June (3.3%)
48%
September 2.6%
December 5.1%
52%
March 0.4%
3 Year Average
Quarter
Sequential
Growth
% of Total
Fiscal Year
June (6.8%)
48%
September 0.9%
December 7.2%
52%
March (0.3%)
• Season fluctuations have historically caused sequential revenue and
non-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 half
of the fiscal year
Sequential growth rates as reported
18. (In millions, except per share data) FY12 FY11 FY10
NET REVENUE:
GAAP net revenue 6,730 6,190 5,985
OPERATING EXPENSES:
GAAP operating expenses 4,569 4,265 3,947
Operating expense adjustment (511) (518) (510)
Non-GAAP operating expenses 4,058 3,747 3,437
OPERATING INCOME (LOSS):
GAAP operating income (loss) 1,079 880 933
Gross profit adjustment 107 137 249
Operating expense adjustment 511 518 510
Non-GAAP operating income 1,697 1,535 1,692
NET INCOME (LOSS) PER SHARE - DILUTED:
GAAP net income (loss) per share attributable to Symantec Corporation stockholders 1.57 0.76 0.87
Stock-based compensation adjustment per share, net of tax 0.16 0.14 0.14
Other non-GAAP adjustments per share, net of tax (0.12) 0.52 0.48
Non-GAAP net income per share attributable to Symantec Corporation stockholders 1.61 1.42 1.49
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED:
GAAP weighted-average shares outstanding attributable to
Symantec Corporation stockholders 748 786 819
Non-GAAP weighted-average shares outstanding attributable to
Symantec Corporation stockholders 748 786 819
Reconciliation of GAAP Statement of Operations to Non-GAAP
18Please refer to the Earnings Supplemental Information on our investor relations website: http://www.symantec.com/invest
19. Reconciliation of GAAP Operating Expenses to Non-GAAP
19
FY12 FY11 FY10
OPERATING EXPENSES:
Sales and marketing 2,814 2,622 2,367
Research and development 969 862 857
General and administrative 437 390 352
Amortization of other purchased 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
Total GAAP operating expenses 4,569 4,265 3,947
Stock-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 2,308
Research and development 920 832 804
General and administrative 394 350 325
Total Non-GAAP operating expenses 4,058 3,747 3,437
Please refer to the Earnings Supplemental Information on our investor relations website: http://www.symantec.com/invest
Editor's Notes
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