Symantec Reports Fiscal First Quarter 2019 Results
MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Aug 2, 2018--Symantec Corp. (NASDAQ: SYMC) today reported results for its first quarter fiscal year 2019 ended June 29, 2018.
“We are pleased with our revenue, earnings and cash flow from operations in the first quarter,” said Greg Clark, Symantec CEO. “We believe that Symantec is well positioned to execute against the opportunity in the cyber defense market. Following a successful fiscal year 2018 in our Enterprise Security segment, first quarter fiscal year 2019 enterprise implied billings were below expectations due to longer than expected sales cycles for large, multi-product platform sales. This pipeline management issue was isolated to North America. In our Consumer Digital Safety segment, we were pleased to have strong revenue growth in the first quarter. We have adjusted our guidance for the remainder of fiscal year 2019 to reflect our outlook on our business. We believe demand remains strong across our products and services and are confident in our long-term strategy to drive organic growth and leverage our scale, innovation and capital to create industry-leading platform solutions.”
Starting with the first quarter of fiscal 2019, Symantec reports its results under Accounting Standard Codification (“ASC”) 606. We did not recast certain historical financial information as we elected to use the modified retrospective transition method.
To help readers understand our past financial performance and our future results, we supplement the financial results that we provide in accordance with generally accepted accounting principles, or GAAP, with non-GAAP financial measures. The methods we use to produce non-GAAP results are not in accordance with GAAP and may differ from the methods used by other companies. Additional information regarding our non-GAAP measures are provided below.
First Quarter Fiscal 2019 Financial Highlights (ASC 606)GAAP revenue was $1.156 billion, non-GAAP revenue was $1.165 billion GAAP operating margin of 0.1%, non-GAAP operating margin of 28.1% GAAP Diluted EPS was $(0.10), non-GAAP Diluted EPS was $0.34 Cash flow from operations of $334 million
We are providing the following results of operations under the previous revenue recognition standard, ASC 605, in order to provide investors with a direct comparison to guidance and prior results.
First Quarter Fiscal 2019 Financial Highlights (ASC 605)GAAP revenue was $1.151 billion, non-GAAP revenue was $1.160 billion GAAP operating margin of (1.1)%, non-GAAP operating margin of 27.0% GAAP Diluted EPS was $(0.13), non-GAAP Diluted EPS was $0.33
Symantec’s Board of Directors has declared a quarterly cash dividend of $0.075 per common share to be paid on September 12, 2018, to all shareholders of record as of the close of business on August 20, 2018.
Update of Previously Released Financial Results for Q4 and Fiscal Year 2018
Subsequent to the release of our financial results for the fourth quarter fiscal year 2018, consistent with SEC guidance on provisional reporting for accounting impacts of the Tax Cuts and Jobs Act (the “Act”), we have continued to update our analysis and refine our calculations of the effects of the enactment of the Act, including the impact of the one-time transition tax liability on the earnings of our foreign subsidiaries. Due to the ongoing Audit Committee investigation, we have not yet filed our annual report on Form 10-K for fiscal year 2018, and our fourth quarter of fiscal year 2018 and subsequent periods remain open periods from an accounting perspective, subject to adjustment for material updates. In connection with our most recent quarterly reporting cycle, we have updated our fourth quarter and fiscal year 2018 provisional transition tax expense, resulting in a $15 million increase to our tax provision and a corresponding increase of long-term income taxes payable and income taxes receivable. Our financial results for the fourth quarter and fiscal year 2018 in our earnings materials posted to our investor relations website have been revised to reflect this adjustment. The computation of the one-time tax on the earnings of our foreign subsidiaries, as well as our net deferred tax liability and other aspects of the Act is based on our current understanding and assumptions regarding the impact of the Act, and may continue to change as additional clarification and implementation guidance is issued and as the interpretation of the Act evolves over time. This adjustment is solely related to the provisional impacts of the Act and is unrelated to the ongoing Audit Committee investigation.
Ongoing Audit Committee Investigation
As previously disclosed, Symantec’s Audit Committee is conducting an internal investigation in connection with concerns raised by a former employee regarding the Company’s public disclosures including commentary on historical financial results, its reporting of certain non-GAAP measures including those that could impact executive compensation programs, certain forward-looking statements, stock trading plans and retaliation. The investigation is ongoing. The Company’s financial results and guidance may be subject to change based on the outcome of the Audit Committee investigation. At this time, the Company does not anticipate a material adverse impact on its historical financial statements for the third quarter of fiscal year 2018 and prior. As noted above, our fourth quarter of fiscal year 2018 and subsequent periods remain open periods from an accounting perspective, subject to adjustment for material updates.
For additional details regarding Symantec’s results and outlook, please see the Supplemental Information on the investor relations page of our website at: http://www.symantec.com/invest.
Symantec has scheduled a conference call for 5:00 p.m. ET / 2:00 p.m. PT today to discuss its results for its first quarter fiscal year 2019 ended June 29, 2018 and to review guidance. Interested parties may access the conference call through Symantec’s Investor Relations website at http://investor.symantec.com/investor-relations/events-calendar/. For telephone access to the conference, call (877) 475-6198 within the United States or (970) 297-2372 from outside the United States. Please call 15 minutes early and give the operator conference ID number 7188405.
A replay and our prepared remarks will be available on the investor relations home page shortly after the call is completed.
Symantec Corporation (NASDAQ: SYMC), the world’s leading cyber security company, helps organizations, governments and people secure their most important data wherever it lives. Organizations across the world look to Symantec for strategic, integrated solutions to defend against sophisticated attacks across endpoints, cloud and infrastructure. Likewise, a global community of more than 50 million people and families rely on Symantec’s Norton and LifeLock product suites to protect their digital lives at home and across their devices. Symantec operates one of the world’s largest civilian cyber intelligence networks, allowing it to see and protect against the most advanced threats. For additional information, please visit www.symantec.com or connect with us on Facebook, Twitter, and LinkedIn.
NOTE TO EDITORS: If you would like additional information on Symantec Corporation and its products, please visit the Symantec News Room at http://www.symantec.com/news. All prices noted are in U.S. dollars and are valid only in the United States.
Symantec, the Symantec logo and the Checkmark logo are trademarks or registered trademarks of Symantec Corporation or its affiliates in the U.S. and other countries. Other names may be trademarks of their respective owners.
Forward-Looking Statements: This press release contains statements which may be considered forward-looking within the meaning of the U.S. federal securities laws, including the statements regarding the expected impact of the ongoing Audit Committee investigation, the information contained under the caption “Fiscal Year 2019 Guidance (ASC 606)” and the statements regarding Symantec’s other projected financial and business results, including demand for its products and services, Symantec’s enhanced capabilities, and Symantec’s continued cost and operating efficiencies. These statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from results expressed or implied in this press release. Such risk factors include those related to: our ability to continue to integrate and fully achieve the expected benefits from acquired businesses; general economic conditions; fluctuations and volatility in Symantec’s stock price; the ability of Symantec to successfully execute strategic plans; the ability to maintain customer and partner relationships; the ability of Symantec to achieve its cost and operating efficiency goals; the anticipated growth of certain market segments; Symantec’s sales pipeline and business strategy; fluctuations in tax rates and foreign currency exchange rates and the impact of the recently enacted tax reform legislation; the impact related to Symantec’s future adoption of the new revenue and other accounting standards; the timing and market acceptance of new product releases and upgrades; and the successful development of new products and the degree to which these products gain market acceptance. Other risks include, but are not limited to, risks relating to the ongoing internal investigation by the Audit Committee, including: (i) the risk that the internal investigation may take longer to complete than expected (ii) the risk that the internal investigation identifies errors, which may be material, in the Company’s financial results, or impacts the timing of Company filings; and (iii) the risk of legal proceedings or government investigations relating to the subject of the internal investigation or related matters. Actual results may differ materially from those contained in the forward-looking statements in this press release. Symantec assumes no obligation, and does not intend, to update these forward-looking statements as a result of future events or developments. Additional information concerning these and other risk factors is contained in the Risk Factors sections of Symantec’s most recent reports on Form 10-K and Form 10-Q.
USE OF NON-GAAP FINANCIAL INFORMATION: We use non-GAAP measures of adjusted revenues, operating margin, net income and earnings per share, which are adjusted from results based on GAAP to include certain purchase accounting adjustments and exclude certain expenses, gains and losses. Additionally, we provide the non-GAAP metric of implied billings. These non-GAAP financial measures are provided to enhance the user’s understanding of our past financial performance and our prospects for the future. Our management team uses these non-GAAP financial measures in assessing Symantec’s performance, as well as in planning and forecasting future periods. These non-GAAP financial measures are not computed according to GAAP and the methods we use to compute them may differ from the methods used by other companies. Non-GAAP financial measures are supplemental, should not be considered a substitute for financial information presented in accordance with GAAP and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Readers are encouraged to review the reconciliation of our non-GAAP financial measures to the comparable GAAP results, which is attached to our quarterly earnings release and which can be found, along with other financial information including Supplemental Information, on the investor relations page of our website at: http://www.symantec.com/invest.
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