Key takeaways from Symantec's 2Q15 earnings (Part 10 of 14)
Operating segment’s performance
Now let’s take a look at Symantec’s financials. As we saw in the earlier parts of this series, Symantec’s (SYMC) revenues for 2Q15 declined 1% to $1.617 billion. The primary reason for this decline is product line restructuring announced in the Consumer Security software business, though the margins saw expansion. In 2Q15, Consumer Security software segment revenues and Enterprise Security software revenues declined 6% and 1%, to$485 million and $511 million, respectively. The Information Management software segment registered a marginal 3% expansion to $621 million.
As the above chart shows, Symantec generates the majority of its revenues from subscriptions, giving a recurring nature to its business.
Operating and R&D expenditures
As a part of its Symantec 4.0 strategy, Symantec has increased its research and development (or R&D) expenditure from 14% of its revenue in 2013 to 16% by 2017 on account of new product launches. For the six months ended in 2015, it stood at 17.4%. Among leading technology players such as Microsoft (MSFT), Oracle (ORCL), IBM (IBM), SAP (SAP), and Symantec, Symantec spent the maximum on sales and marketing at 40% of its revenues in 2014. However, that percentage fell to 36% for the six months ended fiscal year 2015. IBM spent the lowest at 1%.
Cash, debt, and cash flow position
Symantec reported that it has $3.79 billion worth of cash, cash equivalents, and short-term investments. As of October 3, 2014, it carried $2.1 billion total debt on its books. The majority of its debt is long-term. Symantec enjoys a negative cash conversion cycle due to its subscription-based business.
In 2Q15, net income, operating cash flows, and earnings per share (or EPS) were recorded at $244 million, $466 million, and $0.35, respectively.
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