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Investor Presentation
February 2015
Investor Presentation
February 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.
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Investor Presentation
February 2015
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, 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.
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Investor Presentation
February 2015
Protecting the world’s information requires great people.
• 20,000 Employees in 50 Countries
• 4th Largest Software Company in The WORLD
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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.
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Investor Presentation
February 2015
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. 7
3Q15 Results
3Q15
3Q14
• Drove operating margin above 30%, one quarter ahead of plan
Revenue ($ millions)
$1,638
$1,705
Deferred Revenue ($ millions)
$3,494
$3,654
• Delivered operating margin and EPS that exceeded guidance Non‐GAAP Operating Margin1
30.4%
29.9%
53¢
52¢
• License revenue grew 20% Y/Y and 35% Q/Q in CC
1 Non‐GAAP
$500
27.2%
28.7%
30.4%
35%
30%
24.6%
25%
$450
20%
$400
15%
10%
$350
5%
$300
Non‐GAAP Operating Margin
• The number of $300,000+ deals were up 21% Y/Y
$550
Non‐GAAP Operating Income ($ in millions)
• Implied billings growth of 3% Y/Y in CC, marking our 3rd consecutive quarter of growth
Non‐GAAP EPS1
0%
4Q14
1Q15
Non‐GAAP Operating Income
2Q15
3Q15
Non‐GAAP Operating Margin
financial measure. See www.symantec.com/invest for a reconciliation to the applicable GAAP financial measure
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Investor Presentation
February 2015
• We are the only company that offers a combination of MSS, incident response, cybersecurity simulations, and adversary threat intelligence services 1 Non‐GAAP
50%
53%
53%
51%
54%
52%
$500
50%
$480
48%
$460
46%
$440
44%
$420
42%
$400
40%
4Q14
1
1Q15
Revenue
2Q15
3Q15
Operating Margin
Enterprise Security
$560
$540
$520
$500
$480
13%
17%
17%
18%
17%
16%
15%
14%
15%
$460
$440
$420
$400
13%
12%
11%
10%
4Q14 1
1Q15
Revenue
2Q15
Operating Margin
• Net impact of Norton’s lower operating expenses more than offset lower Norton revenue, delivering 15% Y/Y CC growth in operating income
Revenue ($ in millions)
• Optimizing Norton business resulted in operating margins increasing by 1,055 bps Y/Y in CC to 53%
$520
Revenue ($ in millions)
• Enterprise Endpoint Protection and DLP grew 5% and 2% Y/Y in CC, respectively
Consumer Security
$540
Operating Margin
Security Quarterly Highlights
3Q15
Operating Margin
financial measure. See www.symantec.com/invest for a reconciliation to the applicable GAAP financial measure
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Security: How We Are Going to Win
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
Our Competitive Advantage
We see more, analyze more, and therefore know more about security threats than any other company in the world
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Investor Presentation
February 2015
Information Management Quarterly Highlights
Information Management
25%
14%
$650
24%
20%
18%
22%
$600
20%
18%
$550
16%
$500
14%
$450
12%
10%
$400
4Q14 1
1Q15
Revenue
1 Non‐GAAP
26%
Operating Margin
$700
Revenue ($ in millions)
• 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
2Q15
3Q15
Operating Margin
financial measure. See www.symantec.com/invest for a reconciliation to the applicable GAAP financial measure
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Information Management: How We Are Going to Win
Expand our best‐in‐class, foundational
portfolio across backup and recovery, storage management, clustering, disaster recovery, archiving and eDiscovery.
Deliver next‐generation availability
solutions that dramatically reduce the TCO of managing data and provide business continuity and application recovery. Enable next‐generation insight
solutions that provide visibility, management, and control across an organization’s entire information landscape.
Deliver capabilities however customers want to buy (on premise software, integrated appliances or cloud).
Help customers orchestrate the movement of mission critical information in a hybrid cloud world.
Deliver through an intelligent information fabric layer that integrates our portfolio and third‐party ecosystems.
Our Competitive Advantage
We enable organizations to harness the power of their information by extending current products, leveraging IP and building differentiated architectures.
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Investor Presentation
February 2015
Product Delivery for FY15
1H15 Security
• 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 2H15
Information Management
• 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
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
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Two Independent Companies with Strong Financial Profiles
SECURITY
Revenue1: $6.7 billion
• Revenue1: $4.2 billion
• Operating Margin1,2: 30%
IM
38%
CS
31%
ES
31%
CS = Consumer Security
ES = Enterprise Security
IM = Information Management
• 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
INFORMATION MANAGEMENT
• Revenue1: $2.5 billion
• Operating Margin1,2: 23%
• 75% of Fortune 500
• Global leader in backup
• NetBackup appliance:
35% market share3
1 FY2014 GAAP
metrics
reconciling items
IDC, 2013; Symantec
2 Excluding
3 Source:
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Investor Presentation
February 2015
Strategic Rationale for Separation
Focus
Reduce operational complexity
Enhance strategic flexibility
• Streamlining processes
• Realign efforts toward distinct opportunities for growth and margin expansion focus
• Unique growth opportunities in each
• Tailor R&D investments and go‐to‐market capabilities to unique market dynamics
• Simplifying each organization
• Making it easier for customers to do business with us
• Set capital allocation policy as well as M&A and partnership strategies that align to specific needs
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Separation Operating Principles
• 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
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Investor Presentation
February 2015
Progress on the Separation
• 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 17
Separation Timeline
2014
FY15 Q3
2015
FY15 Q4
FY16 Q1
Dedicated Work Streams for Org Structure, Capital Structure, and Carve‐out Financials
Announcement
2016
FY16 Q2
FY16 Q3
Credit Rating
Discussions
Form 10 Operational Filing Separation
Public
Separation
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Investor Presentation
February 2015
Capital Allocation Strategy
• 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
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Making Progress and Building Momentum
• 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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Investor Presentation
February 2015
At Symantec, we protect your information wherever it’s stored or accessed.
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Contact Investor Relations
Helyn Corcos
Vice President
(650) 527‐5523
[email protected]
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