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Gen Digital (GEN)
NASDAQ:GEN
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Gen Digital
(NASDAQ:GEN)
73Outperform
Positive Factors
Acquisition Impact
Gen Digital's acquisition of MoneyLion rounds out its financial wellness portfolio, thereby accelerating topline growth and EPS accretion.
Financial Performance
Gen delivered strong 2Q25 results, highlighted by 5% bookings growth, which was the highest since the Avast acquisition in 2022.
Negative Factors
Market Concerns
Customer retention downticked 50bps QoQ to ~77.5%, which likely raises questions about the quality of these newer subscribers.
Gen Digital (GEN) vs. S&P 500 (SPY)
Market Cap
$16.67B
Dividend Yield1.8%
Average Volume (3M)3.82M
Price to Earnings (P/E)27.3
Beta (1Y)1.16
Revenue Growth2.64%
EPS Growth-53.16%
CountryUS
Employees3,400
SectorTechnology
Sector Strength45
IndustrySoftware
Share Statistics
EPS (TTM)1.01
Shares Outstanding616,301,400
10 Day Avg. Volume4,393,446
30 Day Avg. Volume3,823,553
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)4.38
Price to Cash Flow (P/CF)13.10
P/FCF Ratio9.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$31.00Price Target Upside16.10% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
Gen Digital Business Overview & Revenue Model
Company DescriptionGen Digital is a leading cybersecurity software and service company. It offers products and services in cybersecurity, online privacy, and identity protection through its popular Cyber Safety brands, including Norton, Avast, AVG, LifeLock, Avira, CCleaner, and ReputationDefender.
How the Company Makes MoneyGen Digital makes money primarily through a subscription-based revenue model. It generates income by offering its cybersecurity and digital privacy solutions to consumers and enterprises on a subscription basis. Key revenue streams include sales of antivirus software, identity protection services, and VPN subscriptions. The company also earns from its partnerships with other technology firms and through licensing agreements for its security technologies. Additionally, Gen Digital may engage in strategic alliances and collaborations that enhance its product offerings and expand its customer base, further contributing to its earnings.
Gen Digital Financial Statement Overview
Summary
Gen Digital's financial statements reflect strong revenue growth and operational efficiency, with robust cash flow positions supporting continued investment and debt management. However, high leverage poses a risk, necessitating careful debt management.Income Statement
Gen Digital has shown strong revenue growth with a consistent increase in total revenue over the years. The Gross Profit Margin is robust, reflecting effective cost management, and the Net Profit Margin remains healthy. EBIT and EBITDA margins indicate solid operational efficiency. However, the net income has fluctuated, impacting the overall profitability trajectory.85
Very Positive
Balance Sheet
The balance sheet shows a high debt-to-equity ratio, indicating significant leverage, which could pose a risk if not managed properly. The equity ratio has improved, reflecting stronger equity relative to assets. Return on Equity has been volatile, suggesting variability in shareholder returns.70
Positive
Cash Flow
Operating Cash Flow is strong and exceeds net income, indicating good cash generation from operations. Free Cash Flow has grown significantly, showing effective capital expenditure management. The company has demonstrated a positive Free Cash Flow to Net Income ratio, reinforcing its ability to generate cash profitably.80
Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 3.89B | 3.81B | 3.34B | 2.80B | 2.55B | 2.49B | Gross Profit |
| 2.99B | 3.08B | 2.75B | 2.39B | 2.19B | 2.10B | EBIT |
| 1.61B | 1.12B | 1.23B | 1.00B | 896.00M | 1.28B | EBITDA |
| 1.99B | 1.63B | 1.56B | 1.33B | 1.19B | 1.29B | Net Income Common Stockholders |
| 635.00M | 616.00M | 1.35B | 836.00M | 554.00M | 578.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 883.00M | 846.00M | 750.00M | 1.89B | 951.00M | 2.26B | Total Assets |
| 15.36B | 15.77B | 15.95B | 6.94B | 6.36B | 7.74B | Total Debt |
| 8.53B | 8.65B | 9.82B | 3.83B | 3.69B | 4.32B | Net Debt |
| 7.65B | 7.81B | 9.07B | 1.94B | 2.76B | 2.15B | Total Liabilities |
| 13.21B | 13.57B | 13.75B | 7.04B | 6.86B | 7.72B | Stockholders Equity |
| 2.15B | 2.20B | 2.20B | -93.00M | -500.00M | 10.00M |
| Cash Flow | Free Cash Flow | ||||
| 2.13B | 2.04B | 751.00M | 968.00M | 700.00M | -950.00M | Operating Cash Flow |
| 2.15B | 2.06B | 757.00M | 974.00M | 706.00M | -861.00M | Investing Cash Flow |
| -19.00M | 2.00M | -6.55B | 326.00M | -69.00M | 11.38B | Financing Cash Flow |
| -1.71B | -1.96B | 4.68B | -333.00M | -1.90B | -10.12B |
Gen Digital Technical Analysis
Negative
26.70
Price Trends
27.35
Negative
28.14
Negative
26.71
Negative
Market Momentum
-0.07
Positive
41.36
Neutral
20.06
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GEN, the sentiment is Negative. The current price of 26.7 is below the 20-day moving average (MA) of 27.44, below the 50-day MA of 27.35, and below the 200-day MA of 26.71, indicating a bearish trend. The MACD of -0.07 indicates Positive momentum. The RSI at 41.36 is Neutral, neither overbought nor oversold. The STOCH value of 20.06 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GEN.
Gen Digital Risk Analysis
Gen Digital disclosed 32 risk factors in its most recent earnings report. Gen Digital reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Gen Digital Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $2.83T | 30.62 | 34.29% | 0.83% | 15.04% | 12.38% | |
79 Outperform | $24.46B | 29.82 | 30.15% | ― | 6.22% | 6.15% | |
79 Outperform | $73.85B | 42.50 | 338.74% | ― | 12.27% | 54.69% | |
74 Outperform | $241.36B | 27.19 | 20.02% | 2.58% | -5.34% | -30.57% | |
73 Outperform | $16.67B | 27.33 | 27.80% | 1.80% | 2.64% | -53.16% | |
71 Outperform | $115.09B | 98.20 | 23.38% | ― | 13.86% | -46.44% | |
58 Neutral | $21.35B | 10.05 | -19.26% | 2.35% | 5.02% | -22.63% |
* Technology Sector Average
Performance Comparison
GEN
Gen Digital
27.05
5.35
24.65%
CHKP
Check Point
217.99
53.19
32.28%
CSCO
Cisco Systems
60.46
11.88
24.45%
FTNT
Fortinet
97.93
27.75
39.54%
MSFT
Microsoft
383.27
-28.68
-6.96%
PANW
Palo Alto Networks
179.48
34.42
23.73%
Gen Digital Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: -3.82% | Next Earnings Date: May 8, 2025
Earnings Call Sentiment Positive
The earnings call was predominantly positive, with strong revenue growth, customer base expansion, and significant progress in product innovation and AI integration. While there were some areas of concern, such as a slight deceleration in bookings growth and decline in legacy business, these were outweighed by the company's achievements and strategic acquisition of MoneyLion.Highlights
Cyber Safety Bookings and Revenue Growth
Cyber Safety bookings grew 4% in constant currency, and revenue was $986 million, up 4% in USD and constant currency, with strong growth in the United States.
EPS Growth and Financial Performance
The company delivered its fifth consecutive quarter of double-digit EPS growth, with EPS up 15% year-over-year. Operating income was $577 million, up 4%, with an operating margin of 58.5%.
Direct Customer Base Expansion
The direct customer base reached a record 40.1 million, up 371,000 sequentially and 1.2 million year-over-year.
Product Innovation and AI Integration
Norton Genie was downloaded 2 million times, and its AI engine shows nearly 100% efficacy in detecting scams. The company is also integrating AI-powered scam detection into smartphones through a partnership with Qualcomm.
International and Mobile Market Growth
Customer growth in international markets and mobile remained strong, with increased adoption of Norton 360 memberships among new mobile customers.
Acquisition of MoneyLion
Gen announced the acquisition of MoneyLion to strengthen and accelerate its financial wellness offerings, more than doubling its addressable market to over $50 billion.
Lowlights
Slight Deceleration in Cyber Safety Bookings Growth
Cyber Safety bookings growth was 4% this quarter, slightly down from 5% in the previous quarter, partially attributed to a one-time bump from the National Public Data Breach.
Legacy Business Decline
Revenue from legacy business lines declined to $12 million this quarter, down from $15 million the prior quarter, with expectations of continued double-digit year-over-year declines.
Interest Expense Impact
Interest expense related to debt was significant at $134 million, impacting net income.
Company Guidance
During Gen's third quarter fiscal year 2025 earnings call, the company reported solid performance with mid-single-digit growth in Cyber Safety bookings and revenue, while achieving a 15% year-over-year increase in earnings per share (EPS). The direct customer base grew to a record 40 million, marking an increase of nearly 400,000 customers sequentially and over 1 million compared to the previous year. Gen blocked nearly 15 billion attacks globally in calendar year 2024, reflecting the dynamic threat landscape. The company's Norton Genie, an AI-powered scam detection tool, reached 2 million downloads, providing almost 100% efficacy against new threats. Gen announced the acquisition of MoneyLion to enhance its financial wellness offerings, aiming to double its addressable market to over $50 billion. The company forecasts fiscal year 2025 revenue between $3.915 billion and $3.93 billion, with an EPS range of $2.20 to $2.22, representing 14% to 15% growth.Gen Digital Corporate Events
Private Placements and FinancingRegulatory Filings and Compliance
Gen Digital Prepares Investor Presentation for Credit Facility
Neutral
Feb 10, 2025
Gen Digital Inc. has prepared an investor presentation for meetings with investors starting February 10, 2025. The presentation, available as part of a Current Report on Form 8-K, includes publicly available information and does not contain material non-public details about the company or its securities. This presentation serves to inform potential lenders about a proposed credit facility, with a focus on maintaining confidentiality and adherence to regulatory requirements.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.