NortonLifeLock (NLOK) Q3 earnings in line, revenue up year-over-year

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NortonLifeLock Inc. NLOK reported third-quarter fiscal 2022 non-GAAP earnings of 44 cents per share, matching Zacks’ consensus estimate. Net income improved 16% from year-ago quarter earnings of 38 cents per share.

The company’s non-GAAP quarterly revenue rose 10% year over year to $704 million. Revenue was just below the upper end of management’s forecast of $695 million to $705 million. Constant currency adjusted revenue on a non-GAAP basis was $715 million, 12% higher than the figure reported a year ago.

Improved customer experience, diversified product offerings and expanded international business contributed to double-digit growth in revenue and bookings in the quarter under review.

Direct customer revenue increased to $622 million from $569 million in the prior year quarter. Partner revenue increased 17.1% year-over-year to $82 million.

NortonLifeLock said its expected closing of the UK-based Avast merger deal has accelerated. The company now expects the August 2021 deal to close on February 24, 2022, much earlier than the initial estimate of mid-2022.

NortonLifeLock Inc. Price, Consensus and EPS Surprise

NortonLifeLock Inc. price-consensus-eps-surprise-chart | NortonLifeLock Inc. Quote

Quarterly details

Average monthly direct revenue per user (ARPU) decreased 2.5% year over year to $8.87. The further stabilization of the number of direct customers was positive. Quarterly bookings increased 10% year over year to $752 million.

NortonLifeLock’s number of direct customers increased by 2.4 million year-over-year to 23.4 million, from 23.3 million in the prior quarter. The customer retention rate was just over 85% as new initiatives were launched to improve retention overall and within specific products and customer cohorts.

Non-GAAP gross profit climbed 9.3% year-over-year to $610 million from $558 million. However, gross margin contracted by 70 basis points (bps) to 86.6%.

Non-GAAP operating profit for the third quarter of fiscal 2022 totaled $372 million, up 14.1% year-over-year. Non-GAAP operating margin increased by 180 basis points to 52.8%.

Non-GAAP EBITDA increased 5.4% year-over-year to $330 million, while non-GAAP EBITDA jumped 13.9% to $376 million dollars.

Balance sheet and other details

NortonLifeLock ended the third quarter with cash and cash equivalents of $1.77 billion, compared to $1.53 billion in the prior quarter. Long-term debt was $2.76 billion, down from $2.78 billion in the prior quarter.

The company generated $330 million in cash from operations in the third quarter of fiscal 2022 and $648 million in the first nine months of fiscal 2022. The flow free cash was $328 million in the third quarter and $644 million in the first nine months of fiscal 2022.

NortonLifeLock has authorized a quarterly cash dividend of $0.125 per share payable March 16, 2022 to shareholders of record as of February 22.

Tips update

For the full fiscal year 2022, NortonLifeLock expects revenue of between $2,795 million and $2,805 million. He now expects revenue growth of around 10% from the previous range of 9-10% and the initial estimate of 8-10%.

The company raised the lower estimate of the non-GAAP earnings per share estimate to $1.73-$1.75 from the previous estimate of $1.70-$1.75 and the initial estimate of $1.65 to $1.75.

Zacks ranking and key picks

NortonLifeLock currently carries a Zacks Rank #3 (Hold).

Some top-ranked stocks in the broader IT and technology sector include the iPhone maker Apple AAPL, sporting a Zacks Rank #1 (Strong Buy), Analog devices ADI and Axcelis Technologies ACLS, both carrying Zacks Rank #2 (Buy). You can see the full list of today’s Zacks #1 Rank stocks here.

Zacks’ consensus estimate for Apple’s second-quarter fiscal 2022 earnings has been revised up 3.6% to $1.43 per share in the past seven days. For fiscal 2022, earnings estimates rose 5.9% to $6.15 per share in the past seven days.

Apple’s earnings have exceeded the Zacks consensus estimate in each of the previous four quarters, with the average surprise being 20.3%. AAPL stock has appreciated 25.9% over the past year.

Zacks’ consensus estimate for Analog Devices’ fiscal 2022 first-quarter earnings has been revised up a penny to $1.79 per share in the past 30 days. For fiscal 2022, earnings estimates have moved north 7 cents to $7.53 per share in the past 30 days.

Earnings for Analog Devices have exceeded the Zacks consensus estimate in each of the previous four quarters, with the average surprise being 6.1%. ADI shares have gained 7.6% over the past year.

Zacks’ consensus estimate for Axcelis Technologies’ fourth-quarter 2021 earnings was revised up 16 cents to 84 cents per share over the past 90 days. For 2021, earnings estimates have moved north 8.5% to $2.67 per share in the past 90 days.

Axcelis’ earnings have exceeded the Zacks consensus estimate in each of the previous four quarters, with the average surprise being 24.1%. ACLS shares are up 63.8% over the past year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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