Symantec Reports Third Quarter Fiscal Year 2010 Results
- Non-GAAP Revenue of $1.551 billion
- Non-GAAP Operating Margin of 28.3 percent
- Non-GAAP Earnings Per Share of $0.40
- Non-GAAP Deferred Revenue of $3.07 billion
- Cash Flow from Operations of $393 million
MOUNTAIN VIEW, Calif. – Jan. 27, 2010 – Symantec Corp. (Nasdaq:SYMC) today reported the results of its third quarter of fiscal year 2010, ended Jan. 1, 2010. GAAP revenue for the fiscal third quarter was $1.548 billion. Non-GAAP revenue was $1.551 billion, up 1 percent over the comparable period a year ago (down 3 percent after adjusting for currency).
“Our consumer business, with its market-leading solutions and diverse go-to-market channels, continued to show strong momentum,” said Enrique Salem, president and chief executive officer, Symantec. “Our Security and Compliance business contributed to the better than expected results, driven by our ability to sell multiple security products to our customers. In addition, our hosted services, data loss prevention and compliance solutions performed well.”
“We are encouraged by the improving trends in our license revenue and by the sequential stabilization of our maintenance revenues. This led to better than expected sequential and year-over-year growth in both revenue and deferred revenue,” said James Beer, executive vice president and chief financial officer. “Our business continues to deliver strong cash flow from operations, generating approximately $1 billion over the last three quarters.”
GAAP Results: GAAP operating margin for the third quarter of fiscal year 2010 was 17.9 percent. GAAP net income for the fiscal third quarter was $300 million compared with a $6.82 billion loss for the same quarter last year. GAAP diluted earnings per share were $0.37 compared with a loss per share of $8.25 for the same quarter last year.
Symantec realized a one-time benefit of $78.5 million to GAAP net income, or a $0.10 benefit to GAAP earnings per share in the December 2009 quarter as a result of the favorable ruling by the U.S. Tax Court regarding the Veritas Software tax assessment for 2000 and 2001. The company realized this one-time benefit because the previous accrual exceeded Symantec’s revised estimated incremental tax liability. The GAAP net loss for the year-ago quarter includes a non-cash goodwill impairment charge of approximately $7 billion.
GAAP deferred revenue as of Jan. 1, 2010, was $3.05 billion compared with $2.92 billion as of Jan. 2, 2009, up 4 percent. After adjusting for currency, GAAP deferred revenue increased 3 percent year-over-year.
Cash flow from operating activities for the third quarter of fiscal year 2010 was $393 million. Symantec ended the quarter with cash, cash equivalents and short-term investments of $2.61 billion.
Non-GAAP Results: Non-GAAP operating margin for the third quarter of fiscal year 2010 was 28.3 percent. Non-GAAP net income for the fiscal third quarter was $326 million compared with $352 million for the year-ago period. Non-GAAP diluted earnings per share were $0.40 compared with earnings per share of $0.42 for the year-ago quarter.
Symantec realized a one-time benefit of $16.5 million to non-GAAP net income, or a $0.02 benefit to non-GAAP earnings per share in the December 2009 quarter as a result of the previously mentioned favorable ruling by the U.S. Tax Court. The company realized this one-time benefit after releasing the accrual related to interest on the original tax assessment recorded since the Veritas acquisition.
Non-GAAP deferred revenue as of Jan. 1, 2010, was $3.07 billion compared with $2.96 billion as of Jan. 2, 2009, up 3 percent. After adjusting for currency, non-GAAP deferred revenue increased 2 percent year-over-year.
During the third quarter of fiscal year 2010, Symantec repurchased 6.8 million shares for $121 million at an average price of $17.76 per share.
Business Segment and Geographic Highlights
For the quarter, Symantec’s Consumer segment represented 31 percent of total non-GAAP revenue and increased 7 percent year-over-year (increased 3 percent after adjusting for currency). The Security and Compliance segment represented 24 percent of total non-GAAP revenue and increased 3 percent year-over-year (declined 2 percent adjusting for currency).
The Storage and Server Management segment represented 38 percent of total non-GAAP revenue and declined 4 percent year-over-year (declined 8 percent after adjusting for currency). Services represented 7 percent of total non-GAAP revenue, flat year-over-year (declined 5 percent after adjusting for currency).
International revenue represented 51 percent of total non-GAAP revenue in the third quarter of fiscal year 2010 and increased 3 percent year-over-year (declined 5 percent after adjusting for currency). The Europe, Middle East and Africa region represented 32 percent of total non-GAAP revenue for the quarter and increased 1 percent year-over-year (declined 9 percent after adjusting for currency). The Asia Pacific/Japan revenue for the quarter represented 15 percent of total non-GAAP revenue and increased 11 percent year-over-year (increased 5 percent after adjusting for currency). The Americas, including the United States, Latin America and Canada, represented 53 percent of total non-GAAP revenue and declined 2 percent both before and after adjusting for currency.
Fourth Quarter Fiscal Year 2010 Guidance
Guidance assumes an exchange rate of $1.40 per Euro for the March 2010 quarter versus the actual weighted average rate of $1.30 per Euro for the March 2009 quarter, equivalent to an approximately 8 percent currency benefit. The end of period rate for the March 2009 quarter was $1.34, representing an approximately 4 percent currency benefit versus the $1.40 per Euro assumption for the March 2010 quarter.
For the fourth quarter of fiscal year 2010, ending April 2, 2010, GAAP revenue is estimated between $1.507 billion and $1.522 billion. GAAP diluted earnings per share are estimated between $0.16 and $0.17. GAAP deferred revenue is expected to be in the range of $3.162 billion and $3.192 billion.
Non-GAAP revenue for the fourth quarter of fiscal year 2010 is estimated between $1.510 billion and $1.525 billion. Non-GAAP diluted earnings per share are estimated between $0.36 and $0.37. Non-GAAP deferred revenue is expected to be in the range of $3.175 billion and $3.205 billion.
Symantec is a global leader in providing security, storage and systems management solutions to help consumers and organizations secure and manage their information-driven world. Our software and services protect against more risks at more points, more completely and efficiently, enabling confidence wherever information is used or stored. More information is available at www.symantec.com
USE OF NON-GAAP FINANCIAL INFORMATION: Our results of operations have undergone significant change due to a series of acquisitions, the impact of SFAS 123(R), 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 is attached to our quarterly earnings release and which can be found, along with other financial information, on the investor relations’ page of our Web site at www.symantec.com/invest