1. finance
2. accounting and auditing

Unlocking Our Growth Opportunity
Thomas Seifert
EVP and Chief Financial Officer
Forward Looking Statements This presentation contains statements regarding 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 financial guidance and targets (as a
combined company and by business segment); our proposed separation into two publicly traded companies; the projected market
growth rates and margin expansion opportunities for the security business and the information management business; statements
regarding our competitive advantages in security and information management; statements with respect to the proposed timing of
the separation; and statements with respect to proposed capital allocation strategies for both Symantec and Veritas. 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 presentation. 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 industries in which
we operate; 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 January 2, 2015.
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.
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FINANCIAL OVERVIEW
1
Use of GAAP and Non‐GAAP Financial Information
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. 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.
Reconciliations for our financial results and guidance can be found on Symantec’s investor relations website.
3
Agenda 1
Path to Growth and Improving Profitability
2
FY15 Highlights
3
FY15‐17: Guidance and Targets
4
Cash Flow and Capital Allocation
5
Separation and Restructuring
4
FINANCIAL OVERVIEW
2
Path to Accelerating Growth and Improving Profitability
FY15 FOCUS
FY16 ACCELERATE
FY17 UNLOCK VALUE
Security
Returning to growth
Build on FY15 growth momentum
Accelerated growth
Right‐sized cost structure
Continue to expand margin
Further improved margin
Achieved profitability targets
Deliver on product roadmap
Two streamlined businesses
Returned cash to shareholders
Execute on separation
Significant cash flow generation
5
FY15 Highlights
Achieved our Profitability Targets
Returning to Growth
Implied Billings and Deferred Revenue Growth1
Implied Billings Growth
Deferred Revenue Growth
Operating Margin2
27%
3% 2%
‐6%
‐8%
FY14
Growth and efficiency initiatives delivered 28%
25%
FY15E
FY13
FY14
Executed on Operational Initiatives
Hit
$150M+
30%
in incremental operating profit, and we are tracking at a run‐rate of target in 3Q15
~$225M FY15E
into FY16
1. Adjusted for FX and extra week in the June 2014 quarter; Growth assumptions for 4Q15 based on management discretion. 2. Non‐GAAP financial measure. See www.symantec.com/invest for a reconciliation to the applicable GAAP financial measure.
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FINANCIAL OVERVIEW
3
Building Momentum while Executing Veritas Separation
Security
World’s largest civilian cyberintelligence
threat network
#1 in Backup and Recovery
Focus and strategic flexibility to address market dynamics driven by different trends and customer needs
Enable each business to unlock its full growth potential and win in its respective market
Reduce operational complexity
7
Veritas: Accelerating Growth and Significant Margin Expansion
FY15 FOCUS
FY16 ACCELERATE
FY17 UNLOCK VALUE
Targets
Rev. Growth:
Op. Margin:
Guidance
Rev. Growth:
Op. Margin:
Rev. Growth:
Op. Margin:
~2% ~20% • Growth accelerated to 5% in 3Q15 vs. (4%) decline in FY14
• Fastest appliance growth in industry
• Right‐sized cost structure
• 12 percentage point op margin improvement over last 3 quarters
• Enterprise backup software and appliances to drive growth • GTM effectiveness
• Operating leverage
• Billings momentum
1. FY15 and FY16 revenue growth adjusted for FX and extra week in the June 2014 quarter; FY16 growth compared to midpoint of FY15 guidance.
2. Op. margin expansion at constant currency.
3. 4Q15 revenue and op margin allocated to segments based on management’s discretion.
FINANCIAL OVERVIEW
4% – 7% 27% – 29% 5% – 8% 29% – 30% • New offerings accelerate FY17 revenue growth
• Margin improvement driven by increasing sales productivity
4. Op. margin is a non‐GAAP financial measure. See www.symantec.com/invest for a reconciliation to the applicable GAAP financial measure.
5. FY16 and FY17 revenue and op margin assume FX rate of €/$ 1.13.
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4
Consumer Security: Improving Revenue Outlook with Outstanding Margin
FY15 FOCUS
FY16 ACCELERATE
FY17 UNLOCK VALUE
Targets
Rev. Growth:
Op. Margin:
Guidance
Rev. Growth:
Op. Margin:
Rev. Growth:
Op. Margin:
~(7%) ~53% • Exited unprofitable OEMs and retail markets
• Massive business simplification and cost reduction
• Formed business unit in April ‘14
• Shift to subscription
(8%) – (5%) 52% – 54% • Subscription and pricing optimization
• Shift toward online acquisition
• Merchandising
• Optimize marketing spend
1. FY15 and FY16 revenue growth adjusted for FX and extra week in the June 2014 quarter; FY16 growth compared to midpoint of FY15 guidance.
2. Op. margin expansion at constant currency.
3. 4Q15 revenue and op margin allocated to segments based on management’s discretion.
(6%) – (3%) 51% – 55% • Leverage consumer mobile
• Customer experience improvements
• Premium support services
4. Op. margin is a non‐GAAP financial measure. See www.symantec.com/invest for a reconciliation to the applicable GAAP financial measure.
5. FY16 and FY17 revenue and op margin assume FX rate of €/$ 1.13.
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Enterprise Security: Accelerating Growth and Margin Expansion
FY15 FOCUS
FY16 ACCELERATE
FY17 UNLOCK VALUE
Targets
Rev. Growth:
Op. Margin:
Guidance
Rev. Growth:
Op. Margin:
Rev. Growth:
Op. Margin:
~(2%) ~14% • Positioning and investing for growth
• Operational performance improvement
•
•
•
•
•
3 new ATP products
2 new Cybersecurity services
2 unified security offerings
GTM effectiveness
Subscriber growth for services and content
1. FY15 and FY16 revenue growth adjusted for FX and extra week in the June 2014 quarter; FY16 growth compared to midpoint of FY15 guidance.
2. Op. margin expansion at constant currency.
3. 4Q15 revenue and op margin allocated to segments based on management’s discretion.
FINANCIAL OVERVIEW
1% – 6% 10% – 12% 6% – 10% 14.5% – 16.5% • Unified security analytics platform monetization
• Growth from cloud and mobile offerings
4. Op. margin is a non‐GAAP financial measure. See www.symantec.com/invest for a reconciliation to the applicable GAAP financial measure.
5. FY16 and FY17 revenue and op margin assume FX rate of €/$ 1.13.
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5
Scale & Scope of Enterprise Security Franchises Underpin Growth
Endpoint Security
Data Protection
Email and Web Security
#1 share; AAA rating
nine quarters in a row
#1 DLP share
100% of Fortune 100
#1 email share; 100%
Authentication & Authorization
SSL
Certificates
Managed
Security Services
13B validations every day
100% uptime last 5 years
#1 share
6B certificate lookups/day
5 global SOCs
30B logs analyzed/day availability with <0.0003% FPs
Source: IDC, Gartner, Symantec.
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Enterprise Security Growth Levers Unlock Significant Value
NEW BUSINESS
>$350M
100bps of new TAM over next 3yrs
Focused and dedicated sales force
RETENTION
>$800M
Annual
Renewal opportunity
Industry‐leading likelihood to renew1
>$100M
100bps
improvement in price realization… +200‐
300bps …leads to larger impact on Op Margin
likelihood of selling more to existing customers than new customers
>$1Bn
Each customer buys +1 product…
PRICING
UPSELL/
CROSS‐SELL
>5X
1. Highest ‘Likelihood to renew’ for Enterprise Security customers (Oct ’14 Brand Survey, 9 Countries, 6,300 Customers)
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FINANCIAL OVERVIEW
6
FY15‐17: Path to Accelerating Growth and Improving Profitability
FY15 FOCUS
FY16 ACCELERATE
FY17 UNLOCK VALUE
Targets
Rev. Growth:
Op. Margin:
Guidance
Rev. Growth:
Op. Margin:
EPS Growth:
Rev. Growth:
Op. Margin:
EPS Growth:
(1%) – 0% 27.5% – 27.7%
~1% •
•
•
•
• Achieved profitability targets
• Right‐sized cost structure
• Returned cash to shareholders
0 – 2% 29% – 30% 8 – 14% Build on FY15 growth momentum
Continue to improve margin
Execute on separation
Deliver on product roadmap
1. FY15 revenue and EPS growth adjusted for FX. Includes extra week in the June 2014 quarter.
2. 4Q15 revenue and op margin allocated to segments based on management’s discretion.
3. Op. margin and EPS are non‐GAAP financial measures. See www.symantec.com/invest for a reconciliation to the applicable GAAP financial measure.
2% – 6% 30% – 32% Security
Rev. Growth:
Op. Margin:
1% – 4% 30% – 33% Rev. Growth:
Op. Margin:
5% – 8% 29% – 30% 4. Op. margin expansion at constant currency.
5. FY16 revenue and EPS growth adjusted for FX and extra week in the June 2014 quarter; Growth compared to midpoint of FY15 guidance.
6. FY16 and FY17 revenue and op. margin, and FY16 EPS assume FX rate of €/$ 1.13.
7. FY16 and FY17 revenue and op. margin pro forma for combined Symantec Security and Veritas.
13
Improving Cash Flow from Operations
Cash Flow from Operations ($ in billions)
1
~$1.8
Continued margin momentum and accelerating growth drive significant cash flow
~$1.5
~$1.3
~26%
~12%
Security
FY15E
FY16E Guidance
FY17E Target
1. FY15 CFFO based on 1Q15‐3Q15 actuals + 4Q15 estimate based on management discretion.
2. FY16 and FY17 CFFO based on midpoint of FY16 guidance and FY17 targets; growth rates not adjusted for currency. FINANCIAL OVERVIEW
Disciplined
capital allocation
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7
Capital Allocation Strategy
Pre‐Separation
Post‐Separation
Continue to return the same level of cash dividends and buybacks as in FY15 until legal separation Security
Attractive dividend yield and share repurchase program
More details on capital structure and allocation to come post filing the Form 10
15
On Track to Separate Veritas as an Attractive Standalone Business
FY2016
FY16 Q1
FY16 Q2
FY16 Q3
FY16 Q4
Sales force separated
Form 10 Filing
Credit Rating Discussions
Operational Separation
(October 3, 2015)
Legal Separation
(January 2, 2016)
Expect separation costs of $170‐$190M
Expect restructuring costs of $165‐$195M
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FINANCIAL OVERVIEW
8
Summary: Unlocking Our Growth Opportunity
FOCUS drove implied billings and deferred revenue growth at target profitability
Building on momentum to ACCELERATE growth & margin expansion through new offerings
On track to separate Veritas as an attractive standalone business
Growth on more efficient cost base drives significant cash flow & EPS improvement
Committed to UNLOCK VALUE and continue to return cash to shareholders
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Q&A
Michael Brown and Thomas Seifert
President and Chief Executive Officer, and EVP and Chief Financial Officer
FINANCIAL OVERVIEW
9
Appendix
FY15 Guidance and Reconciliation of GAAP to Non‐GAAP Operating Margin and Earnings Per Share (1) (2)
Range
$6,515 ‐ $6,575 Year Ended April 3, 2015
Year‐Over‐Year Growth Rate (3) (4)
Actual
Constant Currency (5)
(2.8%) ‐ (1.9%) (0.8%) ‐ 0.2% Range
18.8% ‐ 19.0% Year Ended April 3, 2015
Year‐Over‐Year Increase (3)
Actual
Constant Currency (5)
110 bps ‐ 130 bps
198 bps ‐ 221 bps $ in millions, except per share data, unaudited
Revenue Guidance
Revenue range Operating Margin Guidance and Reconciliation
GAAP operating margin
Add back:
Stock‐based compensation
Other non‐GAAP adjustments
Non‐GAAP operating margin
Earnings Per Share Guidance and Reconciliation
GAAP diluted earnings per share range
Add back:
Stock‐based compensation, net of taxes
Other non‐GAAP adjustments, net of taxes
Non‐GAAP diluted earnings per share range
1.
2.
3.
4.
5.
3.0%
5.7%
27.5% ‐ 27.7% Range
$1.23 ‐ $1.26
$0.21 $0.43 $1.87 ‐ $1.90
10 bps ‐ 30 bps
85 bps ‐ 109 bps Year Ended April 3, 2015
Year‐Over‐Year Growth Rate (3)
Actual
(3.9%) ‐ (1.6%)
(4.1%) ‐ (2.6%)
This presentation includes non‐GAAP measures. Non‐GAAP financial measures are supplemental and should not be considered a substitute for financial information presented in accordance with GAAP. For a detailed explanation of these non‐GAAP measures, please see Appendix A.
Non‐GAAP measures for fiscal 2015 have been revised to reflect a change in methodology that reduces the number of adjustments to GAAP measures. For a detailed explanation of this change in methodology, please see “Change in non‐GAAP methodology” in Appendix A.
We have a 52/53‐week fiscal accounting year. The fiscal year ended April 3, 2015 consists of 53 weeks, whereas the fiscal year ended March 28, 2014 consisted of 52 weeks. Growth rates are calculated using fiscal year 2014 non‐GAAP revenue.
Management refers to growth rates adjusting for currency fluctuations in foreign currency exchange rates so that the business results can be viewed without the impact of these fluctuations. We compare the percent change of the results from one period to another period in order to provide a consistent framework for assessing how our underlying businesses performed. To exclude the effects of foreign currency rate fluctuations, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the actual exchange rates in effect during the respective prior periods.
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FINANCIAL OVERVIEW
10
FY16 Guidance and Reconciliation of GAAP to Non‐GAAP Operating Margin and Earnings Per Share (1) (2)
Range
$6,210 – $6,350
Year Ended April 1, 2016
Year‐Over‐Year Growth Rate (2)
Actual
Constant Currency (3)
(5.1%) – (3.0%) (1.5%) – 0.7% Range
14.5% ‐ 15.5% Year Ended April 1, 2016
Year‐Over‐Year Increase (2)
Actual
Constant Currency (3)
(440 bps) ‐ (340 bps)
(304 bps) – (204 bps) $ in millions, except per share data, unaudited
Revenue Guidance
Revenue range Operating Margin Guidance and Reconciliation
GAAP operating margin
Add back:
Stock‐based compensation
Other non‐GAAP adjustments
Non‐GAAP operating margin
Earnings Per Share Guidance and Reconciliation
GAAP diluted earnings per share range
Add back:
Stock‐based compensation, net of taxes
Other non‐GAAP adjustments, net of taxes
Non‐GAAP diluted earnings per share range
4.6% 9.9%
29.0% ‐ 30.0%
Range
$0.86 ‐ $0.96 $0.30 $0.64
$1.80 ‐ $1.90
140 bps – 240 bps 246 bps – 346 bps
Year Ended April 1, 2016
Year‐Over‐Year Growth Rate (2)
Actual
(30.9%) – (22.9%) (4.5%) – 0.8% 1. This presentation includes non‐GAAP measures. Non‐GAAP financial measures are supplemental and should not be considered a substitute for financial information presented in accordance with GAAP. For a detailed explanation of these non‐GAAP measures, please see Appendix A.
2. We have a 52/53‐week fiscal accounting year. The fiscal year ended April 1, 2016 consists of 52 weeks, whereas the fiscal year ended April 3, 2015 consisted of 53 weeks. 3. Management refers to growth rates adjusting for currency fluctuations in foreign currency exchange rates so that the business results can be viewed without the impact of these fluctuations. We compare the percent change of the results from one period to another period in order to provide a consistent framework for assessing how our underlying businesses performed. To exclude the effects of foreign currency rate fluctuations, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the actual exchange rates in effect during the respective prior periods.
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Fiscal 2016 Guidance
$ in millions, except EPS
FY16 Guidance1
% Adj. Growth2
Veritas
$2,570 +/‐ $30
4% – 7%
Consumer Security
$1,690 +/‐ $30
(8%) – (5%)
Enterprise Security
$2,020 +/‐ $50
1% – 6%
$6,280 +/‐ $70
0% – 2% Total Revenue
Veritas
27% – 29%
Consumer Security
52% – 54%
Enterprise Security
10% – 12%
Non‐GAAP Operating Margin
Non‐GAAP EPS
Cash Flow from Operations
29% ‐ 30%
2.9pts – 3.9pts $1.80 ‐ $1.90
8% – 14%
$1,450 +/‐ $50
1. Guidance at FX rate of €/$ 1.13; Segment ranges are wider than total revenue range.
2. Adjusted for FX and extra week in the June 2014 quarter; growth compared to midpoint of FY15 guidance and allocated to segments based on management’s discretion.
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FINANCIAL OVERVIEW
11
Fiscal 2017 Targets
$ in millions
FY17 Targets1
% Adj. Growth2
Veritas
$2,740 +/‐ $40
5% – 8%
Consumer Security
$1,615 +/‐ $25
(6%) – (3%)
Enterprise Security
$2,180 +/‐ $40
6% – 10%
Revenue
Non‐GAAP Operating Margin
Veritas
29% – 30%
1 pts – 2 pts
Consumer Security
51% – 55%
(2) pts – 2 pts Enterprise Security
14.5% – 16.5%
3.5 pts – 5.5 pts
Cash Flow from Operations
Veritas
$785 +/‐ $35
Symantec Security
$1,040 +/‐ $40
1. Guidance at FX rate of €/$ 1.13.
2. Growth and margin expansion compared to midpoint of FY16 guidance.
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Financial Target Summary
$ in millions
Adj. Revenue Growth
FY15E1
FY16E2,3
FY17E3
(1%) – 0%
0% – 2%
2% – 6%
Veritas
4% – 7%
5% – 8%
(4%) – 1%
1% – 4%
29% – 30%
30% – 32%
Veritas
27% – 29%
29% – 30%
Symantec Security
30% – 31%
30% – 33%
$1.80 ‐ $1.90
–
Symantec Security
Non‐GAAP Operating Margin
Non‐GAAP EPS4
27.5% – 27.7%
$1.87 ‐ $1.90
Note: Guidance for FY15 at FX rate of $1.28; FY16 & FY17 at FX rate of €/$ 1.13.
1. FY15 growth includes extra week.
2. FY16 growth excludes extra week in FY15.
3. Pro forma metrics assuming both Symantec Security and Veritas are together for all 4 quarters of FY16 and FY17. 4. Non‐GAAP EPS at actual rates and not adjusted for extra week in the FY15 June 2014 quarter.
FINANCIAL OVERVIEW
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12
As Reported Growth Rates
$ in millions, except EPS
FY16 Guidance1,2
Veritas
FY17 Targets1,2
(1%) – 2%
5% – 8%
Consumer Security
(13%) – (10%)
(6%) – (3%)
Enterprise Security
(5%) – 0%
6% – 10%
Total Revenue
(5%) – (3%)
2% – 6%
Non‐GAAP EPS
(4.5%) – 0.8%
–
1. Guidance at FX rate of €/$ 1.13; FY16 growth rates based on midpoint of FY15 guidance which includes the extra week in the June 2014 quarter.
2. Total revenue pro forma for combined Symantec Security and Veritas.
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FINANCIAL OVERVIEW
13