Symantec: Fiscal 4Q12 Financial Results

For the Storage and Server Management Group only
(without services)

Symantec Corp. reported the results of its fourth quarter and the fiscal year 2012, ended March 30, 2012.

GAAP revenue for the fiscal fourth quarter was $1.68 billion, flat year-over-year and up 1% after adjusting for currency. For the fiscal year, GAAP revenue was $6.73 billion, up 9% year-over-year and up 6% after adjusting for currency.

"We posted 9% growth for fiscal year 2012, driven by strength in our backup, Software-as-a-Service, data loss prevention, and managed security services offerings. In addition, we generated strong deferred revenue and cash flow, despite a weaker than expected fourth quarter," said Enrique Salem, president and CEO, Symantec. "We are encouraged as customers move towards cloud delivered services, and are excited about the roadmap we’ve developed for fiscal year 2013. We have many of the foundational elements in place to continue growing our business."

"Year over year declines in license sales and a larger proportion of ratable subscription sales caused revenue and EPS to come in below our expectations for the fourth quarter. However, a greater amount of our billings went to the balance sheet, driving record deferred revenue," said James Beer, EVP and CEO, Symantec. "In fiscal year 2012, our business generated $1.9 billion of cash flow from operations, up 6% from fiscal year 2011, driven by record results for each of our key financial metrics and across all of our geographies."

GAAP Results
GAAP operating margin for the fourth quarter of fiscal year 2012 was 11.4% compared with 14.3% for the same quarter last year. GAAP net income for the fiscal fourth quarter was $559 million compared with $168 million for the year-ago period. GAAP diluted earnings per share were $0.76, including the one-time impact from the sale of Symantec’s share of the Huawei-Symantec joint venture, compared with $0.22 for the year-ago quarter.

For the fiscal year 2012, GAAP operating margin was 16.0% compared with 14.2% for the same period last year. GAAP net income for the fiscal year 2012 was $1.17 billion. GAAP diluted earnings per share for the year were $1.57.

GAAP deferred revenue as of March 30, 2012, was $3.97 billion compared with $3.82 billion as of April 1, 2011, up 4% year-over-year and up 5% after adjusting for currency.

Cash flow from operating activities for the fourth quarter of fiscal year 2012 was $687 million compared with $689 million for the same quarter last year. Symantec ended the quarter and fiscal year with cash, cash equivalents and short-term investments of $3.21 billion. Cash flow from operating activities for fiscal year 2012 was $1.90 billion compared with $1.79 billion for fiscal year 2011, an increase of 6%.

Non-GAAP Results
Non-GAAP operating margin for the fourth quarter of fiscal year 2012 was 22.2% compared with 24.1% for the year-ago period. Non-GAAP net income for the fourth quarter was $283 million compared with $297 million for the year-ago quarter. Non-GAAP diluted earnings per share were $0.38 compared with earnings per share of $0.38 for the year ago quarter.

For the fiscal year 2012, non-GAAP operating margin was 25.2% compared with 24.8% for the same period last year. Non-GAAP net income for the year was $1.2 billion, compared to $1.1 billion for the prior year, an increase of 7%. Non-GAAP diluted earnings per share were $1.61, compared to $1.42, up 13% year over year.

During the fourth quarter of fiscal year 2012, Symantec repurchased approximately 12 million shares for $200 million at an average price of $17.88. During the fiscal year 2012, the company repurchased 51 million shares at an average price of $17.62, equivalent to $893 million. Symantec has $984 million remaining in the current board authorized stock repurchase program.

Business Segment and Geographic Highlights
For the quarter, Symantec’s Consumer segment represented 31% of total revenue and increased 2% year-over-year on an actual and currency-adjusted basis. The Security and Compliance segment represented 30% of total revenue and increased 8% year-over-year (9% after adjusting for currency). The Storage and Server Management segment represented 35% of total revenue and declined 6% year-over-year (down 5% after adjusting for currency). The Services segment represented 4% of total revenue and declined 6% year-over-year (down 5% after adjusting for currency).

International revenue represented 52% of total revenue in the fourth quarter of fiscal year 2012 and increased 4% year-over-year (5% after adjusting for currency). The Europe, Middle East and Africa region represented 27% of total revenue for the quarter and declined 5% year-over-year (down 1% after adjusting for currency). The Asia Pacific/Japan revenue for the quarter represented 19% of total revenue and increased 15% year-over-year (13% after adjusting for currency). The Americas, including the United States, Latin America and Canada, represented 54% of total revenue and declined 1% year-over-year on an actual and currency-adjusted basis.

Acquisition Highlights
For the quarter, Clearwell and LiveOffice combined to generate revenue of $17 million. The combined earnings per share dilution from these acquisitions was approximately $0.01.

For the fiscal year 2012, total revenue from the Clearwell and LiveOffice acquisitions was $54 million. The combined earnings per share dilution from these acquisitions was $0.01.

First Quarter Fiscal Year 2013 Guidance
Guidance assumes an exchange rate of $1.32 per Euro for the June 2012 quarter versus the actual weighted average of $1.44 and end of period rate of $1.45 per Euro.

For the first quarter of fiscal year 2013, ending June 29, 2012, revenue is estimated between $1.645 billion and $1.660 billion, compared to $1.653 billion in the year ago period, down 0.5% to up 0.5% as reported and up between 2.4% and 3.3% after adjusting for currency.

GAAP diluted earnings per share are estimated between $0.18 and $0.19 compared to $0.25, down between 24% and 27% as reported and down 16% to 20% after adjusting for currency. Non-GAAP diluted earnings per share are estimated between $0.37 and $0.38, compared to $0.40, down between 5% to 7.5% as reported, and down 1.5% to up 1.0% after adjusting for currency.

Deferred revenue is expected to be in the range of $3.715 billion and $3.735 billion, compared to $3.689 billion, up 0.7% to 1.3% as reported, and up between 2.8% and 3.4% after adjusting for currency.

To read the earnings call transcript