GEN Financial Analysis

Analysis Date: 1/31/2025

Business Model

Gen Digital generates revenue primarily through direct-to-consumer cybersecurity and digital protection subscriptions, with additional revenue from partner channels

Revenue Sources

• Direct consumer subscriptions (88% of Q3 2025 revenue)
• Partner channel revenue (11% of Q3 2025 revenue)
• Legacy revenue (1% of Q3 2025 revenue)

Revenue Distribution by Channel

• Direct consumer: $869M (88% of total revenue)
• Partner revenue: $105M (11% of total revenue)

Income Statement Analysis

• Revenue growth of 4% driven by strong cyber safety bookings
• Operating margin stable at 58.5% reflecting disciplined cost management
• EPS growth of 15% marks fifth consecutive quarter of double-digit growth

Balance Sheet Analysis

• Strong liquidity position with $2.4B available including undrawn revolver
• Debt/EBITDA leverage ratio of 3.3x with target of <3x by FY27

Cash Flow Analysis

• Strong free cash flow generation of $318M in Q3
• Operating cash flow growth of 3.5% year-over-year

Capital Allocation

Company maintains balanced capital allocation approach with focus on debt reduction, dividends, and strategic M&A. Q3 activities included $59M in debt paydown and $77M in dividends. Capital allocation temporarily limited pending closure of MoneyLion acquisition.

Management Commentary

Q3 marked 22nd consecutive quarter of growth with cyber safety bookings up 4%

Direct customer base reached record 40.1M, up 1.2M year-over-year

Operating margins stable at 58.5% while investing in innovation

MoneyLion acquisition will accelerate financial wellness strategy

Overall Sentiment: Management conveyed confidence in execution and growth strategy while emphasizing disciplined investment approach

Recommendation

Rating: Buy

Reason for Rating: Strong execution, expanding margins, and strategic expansion into financial wellness support positive outlook

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/31/2025, 1:31:37 PM