Symantec: Fiscal 2Q13 Financial Results

Symantec Corp. reported the results of its second quarter of fiscal year 2013, ended Sept. 28, 2012.

GAAP revenue for the fiscal second quarter was $1.7 billion, up 1% year-over-year and up 5% after adjusting for currency.
 
"I am pleased with the team’s results and progress made this quarter. We delivered solid results during the first quarter of a significant transition for the company," said Steve Bennett, chairman, president and CEO, Symantec. "After travelling the world speaking to employees, customers and shareholders, there is a strong sense of excitement about our future success. While focused on running the company, the team is also hard at work building a strategy and operational plan to deliver greater than 5% organic growth and 30% operating margins on a sustainable basis within the next two-to-three years."
 
"We delivered better than expected results with record September revenue and deferred revenue, in addition to strong net income and EPS as we continue to make improvements to the performance of our businesses," said James Beer, EVP and CFO, Symantec. "We saw strength in enterprise security and backup as well as growth in consumer security."
 
GAAP Results for second quarter of fiscal year 2013

• GAAP operating margin was 18.0% compared with 17.0% for the same quarter last year, up 6% year-over-year.
• GAAP net income was $193 million compared with net income of $182 million for the year-ago period, up 6% year-over-year.
• GAAP diluted earnings per share were $0.27 compared with $0.24 for the year ago quarter, up 13% year-over-year. 
• GAAP deferred revenue was $3.619 billion compared with $3.452 billion for the year ago quarter, up 5% year-over-year on an actual and currency-adjusted basis.
• Cash flow from operating activities was $178 million compared with $308 million for the year ago period due to higher tax, restructuring and transition payments, foreign currency movements as well as lower September quarter cash collections.

Symantec ended the quarter with cash, cash equivalents and short-term investments of $4.0 billion. During the quarter, it repurchased 12 million shares for $200 million at an average price of $16.48. It has $483 million remaining in the current board authorized stock repurchase plan.

Non-GAAP Results for second quarter of fiscal year 2013

• Non-GAAP operating margin was 27.5% compared with 25.5% for the same quarter last year, up 200 basis points year-over-year (up 250 basis points after adjusting for currency) driven by stronger revenue and lower costs.
• Non-GAAP net income was $322 million, compared to $295 million for the same quarter last year, up 9% year-over-year.
• Non-GAAP diluted earnings per share were $0.45 compared with earnings per share of $0.39 for the year-ago quarter, up 15% year-over-year.

Business Segment Highlights for the Quarter

• The Consumer segment represented 31% of total revenue and decreased 1% year-over-year (increased 3% after adjusting for currency).
• The Security and Compliance segment represented 30% of total revenue and increased 6% year-over-year (increased 9% after adjusting for currency).
• The Storage and Server Management segment represented 35% of total revenue and decreased 2% year-over-year (increased 2% after adjusting for currency).
• Services represented 4% of total revenue and increased 2% year-over-year (increased 7% after adjusting for currency).

Geographic Highlights for the Quarter

• International revenue represented 51% of total revenue and increased 1% year-over-year (increased 7% after adjusting for currency).
• The EMEA region represented 26% of total revenue and decreased 4% year-over-year (increased 7% after adjusting for currency).
• AsiaPac/Japan revenue represented 20% of total revenue and increased 6% year-over-year (increased 8% after adjusting for currency).
• The Americas, including the United States, Latin America and Canada, represented 54% of total revenue and increased 2% year-over-year on an actual and currency-adjusted basis.

Third Quarter Fiscal Year 2013 Guidance
Guidance assumes an exchange rate of $1.30 per Euro for the December 2012 quarter versus the actual weighted average rate of $1.35 and an end of period rate of $1.30 per Euro for the December 2011 quarter. The guidance assumes an effective tax rate of 28.5% and a common stock equivalents total for the quarter of approximately 700 million shares.

For the third quarter of fiscal 2013, Symantec expects:
GAAP revenue of $1.72 billion to $1.75 billion, up 0 to 2% as reported and up 1% to 3% in constant currency.
GAAP diluted earnings per share between $0.17 and $0.19 as compared to $0.32 in the year ago period.
Non-GAAP diluted earnings per share between $0.36 and $0.38 as compared to $0.42 in the year ago period, due to investments to better serve customers.
GAAP deferred revenue is estimated to be between $3.765 billion and $3.825 billion, up 3% to 4% on an actual and currency-adjusted basis.