NortonLifeLock : Q1 FY22 Earnings Press Release (opens in new window)

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NortonLifeLock Delivers Strong Q1 Results in Fiscal 2022

TEMPE, Ariz. - July 27, 2021 - NortonLifeLock Inc. (NASDAQ: NLOK), a global leader in consumer Cyber Safety, today released results for its fiscal year 2022 first quarter which ended July 2, 2021.

Q1 GAAP Financial Results YoY

Q1 GAAP revenue was $686 million, up 12% in USD. Q1 GAAP diluted EPS from continuing operations was $0.31, up 29%. Q1 GAAP operating margin was 41.8%, up 22.3 points. Q1 operating cash flow was $258 million.

Q1 Non-GAAP Financial Highlights and Commentary YoY

• Revenue of $691 million, up 13% in USD
• Diluted EPS of $0.42, up 35%
• Operating margin was 51.2%, up 410 bps
• Bookings increased 12% in USD to $660 million
• Direct customer count of 23.1 million, up 2.6 million

"Our Cyber Safety platform is designed to evolve to meet the needs of a consumer's digital life," said Vincent Pilette, CEO of NortonLifeLock. "This quarter reflects our strong execution and accelerating pace of innovation as we strengthen our foundation for long-term sustainable growth and bring our Cyber Safety offering to even more people."

"Our team continues to identify and unlock additional opportunities to accelerate our long- term growth, and we will continue to invest in product innovation, execute our international go-to-market strategy and improve our customer experience," said Natalie Derse, CFO of NortonLifeLock. "Once again we delivered on our commitments. In Q1 we accelerated revenue growth and profit, and we drove another consecutive quarter of increased customer count."

Fiscal 2022 Q2 Guidance

• Non-GAAPRevenue is expected to be in the range of $690 million to $700 million, translating to 10% to 12% growth YoY
• Non-GAAPEPS is expected to be in the range of $0.41 to $0.43

Reiterating Full Year Fiscal 2022 Guidance

• Non-GAAPRevenue growth in the range of 8% to 10%+ YoY
• Non-GAAPEPS is expected to be in the range of $1.65 to $1.75

Quarterly Cash Dividend

NortonLifeLock's Board of Directors has declared a quarterly cash dividend of $0.125 per common share to be paid on September 15, 2021, to all shareholders of record as of the close of business on August 23, 2021.

Q1 Conference Call

Fiscal 2022 Q1 Earnings Call July 27, 2021

2 p.m. PDT / 5 p.m. EDT

Webcast:Investor.NortonLifeLock.com(replay will be posted after the conference call).

Phone Dial-In:Investor.NortonLifeLock.comto register in advance for call details.

For additional details regarding NortonLifeLock's results and outlook, please see the Earnings Presentation and the Supplemental Information on the investor relations page of our website at Investor.NortonLifeLock.com.

About NortonLifeLock Inc.

NortonLifeLock Inc. (NASDAQ: NLOK) is a global leader in consumer Cyber Safety, protecting and empowering people to live their digital lives safely. We are the consumer's trusted ally in an increasingly complex and connected world. Learn more about how we're transforming Cyber Safety at www.NortonLifeLock.com.

Forward-Looking Statements

This press release contains statements which may be considered forward-looking within the meaning of the U.S. federal securities laws. In some cases, you can identify these forward- looking statements by the use of terms such as "expect," "will," "continue," or similar expressions, and variations or negatives of these words, but the absence of these words does not mean that a statement is not forward-looking. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, but not limited to: the statements under "Fiscal 2022 Q2 Guidance," including expectations relating to second quarter non-GAAP revenue, non-GAAP revenue growth and non-GAAP EPS; the statements contained in the quotations; and any statements of assumptions underlying any of the foregoing. 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, but are not limited to, those related to: the current and future impact of the COVID-19 pandemic on the Company's business and industry; retention of executive leadership team members; difficulties in improving sales and product

development during leadership transitions; difficulties in executing the operating model for the consumer cyber safety business; lower than anticipated returns from the Company's investments in direct customer acquisition; the impact of acquisitions and our ability to achieve expected synergies or attendant cost savings; difficulties and delays in reducing run rate expenses and monetizing underutilized assets; general business and economic conditions; matters arising out of our completed Audit Committee investigation and the ongoing U.S. Securities and Exchange Commission investigation; fluctuations and volatility in NortonLifeLock's stock price; the ability of NortonLifeLock to successfully execute strategic plans; the ability to maintain customer and partner relationships; the ability of NortonLifeLock to achieve its cost and operating efficiency goals; the anticipated growth of certain market segments; NortonLifeLock's sales and business strategy; fluctuations in tax rates and foreign currency exchange rates; the potential for corporate tax increases under the Biden Administration; the timing and market acceptance of new product releases and upgrades; and the successful development of new products and the degree to which these products gain market acceptance. Additional information concerning these and other risk factors is contained in the Risk Factors sections of NortonLifeLock's most recent reports on Form 10-K and Form 10-Q. NortonLifeLock assumes no obligation, and does not intend, to update these forward-looking statements as a result of future events or developments.

Use of Non-GAAP Financial Information

We use non-GAAP measures of operating margin, net income and earnings per share, which are adjusted from results based on GAAP and exclude certain expenses, gains and losses. We also provide the non-GAAP metrics of revenues, constant currency revenues, and free cash flow, which is defined as cash flows from operating activities less purchases of property and equipment. These non-GAAP financial measures are provided to enhance the user's understanding of our past financial performance and our prospects for the future. Our management team uses these non-GAAP financial measures in assessing NortonLifeLock's performance, as well as in planning and forecasting future periods. These non-GAAP financial measures are not computed according to GAAP and the methods we use to compute them may differ from the methods used by other companies. Non-GAAP financial measures are supplemental, should not be considered a substitute for financial information presented in accordance with GAAP and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Readers 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 including the Earnings Presentation, on the investor relations page of our website at Investor.NortonLifeLock.com. No reconciliation of the forecasted range for non-GAAP EPS guidance is included in this release because most non-GAAP adjustments pertain to events that have not yet occurred. It would be unreasonably burdensome to forecast, therefore we are unable to provide an accurate estimate.

UK Takeover Code: Profit Forecast

UK Takeover Code

On July 14, 2021, NortonLifeLock announced that it is in advanced discussions with the board of Avast plc ("Avast") regarding a possible combination of NortonLifeLock and Avast (the "Possible Combination"). The Possible Combination would be governed by the UK's City Code on Takeovers and Mergers (the "UK Takeover Code"). In accordance with the rules of the UK Takeover Code, NortonLifeLock is required to publish certain confirmations in connection with the information set out in this press release. These confirmations are set out below.

NortonLifeLock Profit Forecast

Each of the following statements regarding NortonLifeLock's earnings per share ("EPS") in this press release (together, the "NortonLifeLock Profit Forecast") constitutes an ordinary course profit forecast for the purposes of Rule 28.1(a) and Note 2(b) on Rule 28.1 of the UK Takeover Code:

• "Fiscal 2022 Q2 Guidance … Non-GAAP EPS is expected to be in the range of $0.41 to $0.43"; and
• Reiterating Full Year Fiscal 2022 Guidance … Non-GAAP EPS is expected to be in the range of $1.65 to $1.75".

References to "GAAP" in the NortonLifeLock Profit Forecast are to U.S. GAAP, being the accounting policies applied in the preparation of NortonLifeLock's annual results for the year ended April 2, 2021.

Basis of preparation

The NortonLifeLock Profit Forecast has been prepared on a basis consistent with NortonLifeLock's accounting policies, as summarized in the paragraph entitled "Use of Non- GAAP Financial Information" above.

Assumptions

The NortonLifeLock Profit Forecast is based on the assumptions listed below.

Factors outside the influence or control of the NortonLifeLock Directors:

• There will be no material changes to existing prevailing macroeconomic or political conditions in the markets and regions in which NortonLifeLock operates.
• There will be no material changes to the conditions of the markets and regions in which NortonLifeLock operates or in relation to customer demand or the behavior of competitors in those markets and regions.

• The interest, inflation and tax rates in the markets and regions in which NortonLifeLock operates will remain materially unchanged from the prevailing rates.
• There will be no material adverse events that will have a significant impact on
  NortonLifeLock's financial performance.
• There will be no material adverse events that will have a significant impact on the timing and market acceptance of new product releases and upgrades by NortonLifeLock.
• There will be no business disruptions that materially affect NortonLifeLock or its key customers, including natural disasters, acts of terrorism, cyber-attack and/or technological issues or supply chain disruptions.
• There will be no material changes to foreign exchange rates that will have a significant impact on NortonLifeLock's revenue or cost base.
• There will be no material changes in legislation or regulatory requirements impacting on NortonLifeLock's operations or its accounting policies.
• There will be no material litigation in relation to any of NortonLifeLock's operations.
• The Possible Combination, if it were to occur, would not result in any material changes to NortonLifeLock's obligations to customers.
• The Possible Combination, if it were to occur, would not have any material impact on
  NortonLifeLock's ability to negotiate new business.

Factors within the influence and control of the NortonLifeLock Directors:

• There will be no material change to the present executive management of NortonLifeLock.
• There will be no material change in the operational strategy of NortonLifeLock.
• There will be no material adverse change in NortonLifeLock's ability to maintain customer and partner relationships.
• There will be no material acquisitions or disposals.
• There will be no material strategic investments over and above those currently planned.
• There will be no material change in the dividend or capital policies of NortonLifeLock.
• There will be no unexpected technical or network issues with products or processes.

NortonLifeLock Directors' confirmation

With the consent of Avast, the Panel on Takeovers and Mergers has granted a dispensation from the UK Takeover Code requirement for NortonLifeLock's reporting accountants and financial advisers to prepare reports in respect of the NortonLifeLock Profit Forecast.

The NortonLifeLock Directors have considered the NortonLifeLock Profit Forecast and confirm that it has been properly compiled on the basis of the assumptions set out in this press release and that the basis of the accounting used is consistent with NortonLifeLock's accounting policies.