symantec investor presentation february 2015

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Investor Presentation February 2015

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Investor PresentationFebruary 2015

Forward Looking Statements This presentation contains statements regarding our strategic direction and our projected financial and business results, which may be

considered forward-looking within the meaning of the U.S. federal securities laws, including statements regarding our intention to separate the

company into two, independent publicly traded companies and the expected benefits to be realized as a result of the separation; the projected

market growth rates and margin expansion opportunities for the security business and the information management business; statements

regarding our competitive advantage in security and information management; and statements with respect to the proposed timing of the

separation. 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: risks related to the separation of the company into the security business and the information management business, general

economic conditions; maintaining customer and partner relationships; the anticipated growth of certain market segments, particularly with

regard to security and information management; the competitive environment in the software industry; changes to operating systems and

product strategy by vendors of operating systems; fluctuations in currency exchange rates; the timing and market acceptance of new product

releases and upgrades; the successful development of new products; and the degree to which these products and businesses gain market

acceptance. Actual results may differ materially from those contained in the forward-looking statements in this presentation. We assume no

obligation, and do not intend, to update these forward-looking statements as a result of future events or developments. Additional information

concerning these and other risks factors is contained in the Risk Factors sections of our Form 10-K for the year ended March 28, 2014 and our

Form 10-Q for the quarter ended October 3, 2014.

Any information regarding pre-release of Symantec offerings, future updates or other planned modifications is subject to ongoing evaluation by

Symantec and therefore subject to change. This information is provided without warranty of any kind, express or implied. Customers who

purchase Symantec offerings should make their purchase decision based upon features that are currently available.

We assume no obligation to update any forward‐looking information contained in this presentation.2

Use of GAAP and Non-GAAP Financial Information

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Our results of operations have undergone significant change due to a series of acquisitions, the impact of stock-based compensation,

impairment charges and other corporate events, including the impact on revenue of the ongoing investigation into Symantec’s compliance with

certain provisions of its 2007 GSA contract. To help our 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 method we use to produce non-GAAP results is not computed according to GAAP and may differ from the methods used by other

companies. Our non-GAAP results are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be

read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.

Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business

and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting

future periods. Investors are encouraged to review the reconciliation of our non-GAAP financial measures to the comparable GAAP results,

which can be found, along with other financial information, on the investor relations’ page of our website at www.symantec.com/invest.

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At Symantec, we protect your information wherever it’s stored or accessed.

• 20,000 Employees in 50 Countries

• 4th Largest Software Company in The WORLD

Protecting the world’s information requires great people.

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We do security and a whole lot more.• We have the best visibility into what attackers are doing because we operate the

largest civilian cyberintelligence threat network in the world.

• We are pioneering new solutions in growing markets like mobile, cloud, appliances, backup, data loss prevention, managed security services and authentication.

Investment Thesis

• Operates in growing markets – backup appliances, mobile, cloud, advanced threat protection, information protection, and cyber security services – where IT spend continues to grow

• Leverages the world’s largest civilian cyberintelligence threat network to provide faster and better protection

– Broadest set of market-leading brands across security and backup in the industry

– Global base of customers from consumers to large enterprises and governments

• Opportunity to grow and increase profitability to create shareholder value

• Strong cash flow generation and balance sheet to allocate towards growth initiatives

• Continue to return significant cash to shareholders with approximately 50% of free cash flow returned through dividends and buybacks.

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27.2%24.6%

28.7% 30.4%

0%

5%

10%

15%

20%

25%

30%

35%

$300

$350

$400

$450

$500

$550

4Q14 1Q15 2Q15 3Q15

No

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argi

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No

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($ in

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ion

s)

Non-GAAP Operating Income Non-GAAP Operating Margin

3Q15 Results

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3Q15 3Q14

Revenue ($ millions) $1,638 $1,705

Deferred Revenue ($ millions) $3,494 $3,654

Non-GAAP Operating Margin1 30.4% 29.9%

Non-GAAP EPS1 53¢ 52¢

• Drove operating margin above 30%, one quarter ahead of plan

• Delivered operating margin and EPS that exceeded guidance

• Implied billings growth of 3% Y/Y in CC, marking our 3rd consecutive quarter of growth

• The number of $300,000+ deals were up 21% Y/Y

• License revenue grew 20% Y/Y and 35% Q/Q in CC

1 Non-GAAP financial measure. See www.symantec.com/invest for a reconciliation to the applicable GAAP financial measure

51%

50% 53% 53%

40%

42%

44%

46%

48%

50%

52%

54%

$400

$420

$440

$460

$480

$500

$520

$540

4Q14 1Q15 2Q15 3Q15

Op

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($

in m

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Consumer Security

Revenue Operating Margin

15%

13% 17% 17%

10%

11%

12%

13%

14%

15%

16%

17%

18%

$400

$420

$440

$460

$480

$500

$520

$540

$560

4Q14 1Q15 2Q15 3Q15

Op

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($

in m

illio

ns)

Enterprise Security

Revenue Operating Margin

Security Quarterly Highlights

• Enterprise Endpoint Protection and DLP grew 5% and 2% Y/Y in CC, respectively

• Optimizing Norton business resulted in operating margins increasing by 1,055 bps Y/Y in CC to 53%

• Net impact of Norton’s lower operating expenses more than offset lower Norton revenue, delivering 15% Y/Y CC growth in operating income

• We are the only company that offers a combination of MSS, incident response, cybersecurity simulations, and adversary threat intelligence services

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1

1

1 Non-GAAP financial measure. See www.symantec.com/invest for a reconciliation to the applicable GAAP financial measure

Security: How We Are Going to Win

Our Competitive Advantage

We see more, analyze more, and therefore know more about security threats than any other company in the world

Provide a unified security global

analytics platform that

leverages the intelligence of our

enterprise and consumer

offerings, augmented by 3rd

party data

Cybersecurity service

capabilities to span managed

security, incident response,

threat adversary intelligence

and simulation-based training

Simplify our security portfolio

and deliver a newly developed,

integrated Advanced Threat

Protection and Information

Protection solution

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18%

14%

20%

25%

10%

12%

14%

16%

18%

20%

22%

24%

26%

$400

$450

$500

$550

$600

$650

$700

4Q14 1Q15 2Q15 3Q15

Op

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g M

argi

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ue

($

in m

illio

ns)

Information Management

Revenue Operating Margin

Information Management Quarterly Highlights

• Revenue accelerated from 3% to 5% Y/Y in CC, increasing to $668 million

• Operating margin increased 564 bps Q/Q in CC to 25%

• NetBackup software and appliances grew 15% and 22% Y/Y in CC driven by the October launch of our NetBackup 5330 appliance

• Continue to gain share in the backup market

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1 Non-GAAP financial measure. See www.symantec.com/invest for a reconciliation to the applicable GAAP financial measure

1

Information Management: How We Are Going to Win

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Our Competitive Advantage

We enable organizations to harness the power of their information by extending current products, leveraging IP and building differentiated architectures.

Expand our best-in-class, foundational

portfolio across backup and recovery, storage

management, clustering, disaster recovery,

archiving and eDiscovery.

Deliver capabilities however customers want

to buy (on premise software, integrated

appliances or cloud).

Deliver next-generation availability

solutions that dramatically reduce the TCO of

managing data and provide business

continuity and application recovery.

Help customers orchestrate the movement of

mission critical information in a hybrid cloud

world.

Enable next-generation insight

solutions that provide visibility, management,

and control across an organization’s entire

information landscape.

Deliver through an intelligent information

fabric layer that integrates our portfolio and

third-party ecosystems.

Product Delivery for FY15

Information Management Security

2H

15

1H

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• Released appliances which doubled the capacity of prior models• Backup Exec 2014 is 100% faster than previous versions and

provides Windows Server 2012/R2 support• Enterprise Vault 11.0 delivers a new end user search interface

and mobile device access• Disaster Recovery Orchestrator automates and manages DR of

Windows based applications residing on either physical or virtual machines to Microsoft Azure cloud

• Released Norton Security, streamlining our Consumer portfolio• Launched MSS ATP service• DLP & mobile security integration in Mobile App Center• Launched Incident Response service providing customers with

immediate access to critical capabilities, knowledge and skill sets during incident response scenarios

• Extended DLP to multiple tiers, reducing its footprint and making it more cost effective

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• Released Managed Adversary Threat Intelligence which provides access to in-depth analysis of adversaries

• Extended DLP to Office 365 • Released Mobility: Suite 5.0 broadens our platform support and

increases our protection capabilities• Offering our Cyber Security Simulation Platform which will give

customers the ability to run simulations • Identity Access Manager is our next generation access control platform

that integrated Single Sign-On with strong authentication

• Released NetBackup 5330 which delivers twice the performance and capacity of prior models

• Released eDiscovery 8.0 with a redesigned user experience and accelerating how fast customers can search and identify relevant information

• Extended AWS support for Disaster Recovery Orchestrator• Released our SmartIO platform expansion with flexible storage

sharing for Storage Foundation

Two Independent Companies with Strong Financial Profiles

Revenue1: $6.7 billion

CS31%

ES31%

IM38%

• Revenue1: $4.2 billion

• Operating Margin1,2: 30%

• 1 billion+ systems

• 42 million attack sensors in 157 countries

• 4 trillion+ threat indicators, updated at the rate of 200,000 new threats per second

SECURITY

• Revenue1: $2.5 billion

• Operating Margin1,2: 23%

• 75% of Fortune 500

• Global leader in backup

• NetBackup appliance:35% market share3

INFORMATION MANAGEMENT

1 FY2014 GAAP metrics2 Excluding reconciling items3 Source: IDC, 2013; Symantec 14

CS = Consumer SecurityES = Enterprise Security

IM = Information Management

Enhance strategic flexibility

• Realign efforts toward distinct opportunities for

growth and margin expansion

• Set capital allocation policy as well as M&A and

partnership strategies that align to specific needs

Reduce operational complexity

• Streamlining processes

• Simplifying each organization

• Making it easier for customers to do business with us

Strategic Rationale for Separation

Focus

• Unique growth opportunities in each

• Tailor R&D investments and go-to-market

capabilities to unique market dynamics

focus

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Separation Operating Principles

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• Our philosophy is to manage each business separately, to minimize disruption to our businesses, partners, customers, and employees, and to execute a well-managed separation

• We’ve established four operating principles:

– Deploying dedicated work streams to manage the separation

– Leaving our go-to-market capability largely intact for the remainder of this fiscal year

– Creating a process to separate contracts that pertain to both our information management and security products

We believe separating the contracts will not be problematic and intend to enter into intercompany agreements to address the ELAs

– To minimize costs, we are delaying the creation of a duplicative organizational structure until later in the separation process

Progress on the Separation

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• Finalized the planning phase and advancing to the execution phase

• We are on track to complete the operational separation in October and legal separation by calendar year end

• Key Milestones:

– Selected “Veritas Technologies Corporation” as the name for the IM company and plan to relaunch the Veritas brand in a phased approach over the coming months

– Named key leaders, sales, and product personnel to both companies

– Veritas and Symantec sales organizations are on track to be operating independently in April

– Building an ERP solution for Veritas and well underway toward separating IT infrastructure

– Finalized major real estate decisions

– Progress in setting up the appropriate legal entities and corporate infrastructure to separate the companies

2014 2015 2016

FY15 Q3 FY15 Q4 FY16 Q1 FY16 Q2 FY16 Q3

Announcement Operational Separation

PublicSeparation

Form 10Filing

Separation Timeline

Credit RatingDiscussions

Dedicated Work Streams for Org Structure, Capital Structure, and Carve-out Financials

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Capital Allocation Strategy

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• Our long-term objective is to return approximately 50% of free cash flow to shareholders through dividends and share repurchases

– Substantial cash flow generation

– About 34% of cash is held onshore

• Remain committed to returning cash to shareholders in the form of dividends and buybacks through the date of the separation

• Strong balance sheet and financial flexibility

– $2.1 billion in investment grade debt

• Allocate resources to growth areas such as advanced threat protection, backup appliances, mobile, cloud, information protection, and cyber security services

Making Progress and Building Momentum

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• Separating our security and information management businesses has already begun to improve both our strategic focus and operational discipline

• We continue to execute on our five key priorities, especially managing our businesses as a portfolio

• Our Unified Security Strategy is based on three pillars: (1) provide a unified security global analytics platform that leverages our telemetry (2) simplify our security portfolio and deliver a newly developed, integrated ATP and Information Protection solution; (3) grow our cybersecurity service capabilities

• We are using Veritas’s leading capabilities to create a foundation for new information availability and insight technologies to help customers unlock the value of their data

• Shifting R&D investment to the fastest growth areas for our future which include ATP, Cyber Security Services, information protection, backup appliances, and mobile

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At Symantec, we protect your information wherever it’s stored or accessed.

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Contact Investor Relations

Helyn CorcosVice President(650) [email protected]