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Symantec: Fiscal 1Q15 Financial Results

Backup appliances growing 35% Y/Y, weakness in Backup Exec

(in $ million) 1Q14 1Q15
Revenue 1,709 1,735
Growth   2%
Net income (loss) 157 236

Symantec Corp. reported the results of its first quarter of fiscal year 2015, ended July 4, 2014.

Michael A. Brown, Symantec interim president and CEO, said: “We are making steady progress against the five priorities outlined last quarter including: optimizing certain businesses for margin, improving efficiencies, attracting top talent, returning significant cash to shareholders and focusing our investments for growth in our enterprise business. These investments are focused in backup appliances, mobile, advanced threat protection, managed security services and data loss prevention.”

Separation of the sales force into new business and renewals teams has led to improved performance, especially in North America. In particular, our federal and renewals teams both delivered one of their best quarters ever,” Brown continued. “Our backup appliances, Trust Services and data loss prevention businesses also generated robust revenue growth. In the last two quarters, we’ve introduced nearly two dozen new or improved products and we’re on track to release almost two dozen more by fiscal year end.”

Thomas Seifert, EVP and CFO, said: “We’re pleased with the solid results in the quarter, which were driven by productivity improvements in both our new business and renewals teams. We have eight revenue and efficiency initiatives in place that we expect will help us continue to build momentum into next year. We’ve identified three efficiency initiatives that we believe will ramp during the second half of the fiscal year: optimizing our Norton business, streamlining product support, and reducing our global footprint.”

Guidance assumes an exchange rate of $1.36 per Euro for the second quarter of fiscal year 2015 versus the actual weighted average rate of $1.33 and an end of period rate of $1.35 per Euro for the second quarter of fiscal year 2014 and $1.38 per Euro for fiscal year 2015. Guidance assumes an effective tax rate of 27.5% for the second quarter of fiscal year 2015 and 27.8% for the remaining quarters in fiscal year 2015, and a common stock equivalents total for the quarter and fiscal year of 696 million shares.

Symantec’s board of directors has declared a quarterly cash dividend of $0.15 per common share to be paid on September 17, 2014 to all shareholders of record as of the close of business on August 27, 2014. The ex-dividend date will be August 25, 2014.

Comments

Abstracts of the earnings call transcript:

Mike Brown, interim CEO and president:
"Our backup business performed very well during the quarter, with Backup Appliances growing 35% year-over-year. We nearly doubled the capacity of our enterprise backup appliance from 76 terabytes to 148 terabytes, allowing us to target the upper mid-market of the enterprise segment and effectively double our addressable market.
"In Information Management, we have the largest backup and recovery business, with 30% market share of this multibillion dollar market. We've enabled customers to purchase NetBackup as an integrated appliance, which is a high growth market. In fact, our integrated backup appliances market share group from 0% to 38%, to the #2 spot in just under 4 years. Going forward, we're moving our products to the cloud to complement the strength we already have in our cloud-based archiving business."

Thomas J. Seifert, CFO:
"The Information Management segment was flat year-over-year at $650 million. Continued growth in NetBackup and Backup Appliances was offset by weakness in Backup Exec.
"For the September quarter, we expect revenue between $1.6 billion to $1.64 billion which is flat sequentially after normalizing for the extra week and in line with our typical seasonal trend."

Revenue for Information Management

(in $ million) 1Q14 1Q15
Revenue 641 650
Y/Y growth
 4% 1%
Operating income
148 89

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