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It has been about a month since the last earnings report for Gen Digital (GEN). Shares have added about 5.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Gen Digital due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Gen Digital Q2 Earnings Meet Estimates, Revenues Beat
Gen Digital posted second-quarter fiscal 2025 results, wherein earnings matched the Zacks Consensus Estimate and revenues beat the same.
Gen Digital reported non-GAAP earnings of 54 cents per share, which improved 16% year over year and came in line with the Zacks Consensus Estimate. The bottom line increased 16% on a constant currency basis too. Increased revenues, disciplined spending and cost synergies from the NortonLifeLock and Avast merger drove the bottom-line growth.
Gen Digital’s second-quarter non-GAAP revenues increased 3% year over year to $974 million and beat the Zacks Consensus Estimate of $968.5 million. The top line also increased by 3% on a constant-currency basis.
GEN’s revenues benefited from decent demand in the cyber safety space. The traction in the cyber safety market acted as a tailwind for the company’s privacy and identity offerings and increased direct customer sales and cross-selling for its portfolio.
Key Metrics
Gen Digital’s Direct Customer revenues increased 3% year over year to $860 million. Partner revenues improved 7% to $102 million. Our revenue estimates for Direct Customer and Partner were pegged at $857.5 million and $102 million, respectively.
The direct monthly average revenue per user (ARPU) marginally increased to $7.26 compared to the year-ago quarter’s ARPU of $7.25 and the previous quarter’s $7.23. Our estimate for the direct monthly average revenue per user was pegged at $7.27. The quarterly bookings advanced 4% on a year-over-year basis to $964 million.
Gen Digital’s average direct customer count increased to 39.7 million from 38.5 million in the year-ago quarter and 39.3 million in the previous quarter. Our estimate for the average direct customer count was pegged at 39.3 million.
GEN’s customer retention rate grew 1% year over year to 78%. The company’s customer retention rate was 78% in the previous quarter and 77% in the year-ago quarter.
Operating Details
The non-GAAP gross profit grew 1.8% year over year to $839 million. However, the gross margin contracted by 110 basis points (bps) to 86.1%.