symc4 0 investor 01 23 13 final (white and black) · symantec's strategic direction and 3q...

Symantec's Strategic Direction and 3Q 2013 Earnings Presentation

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Symantec’s Strategic Direction and 3Q 2013 Earnings Presentation

January 23, 2013

Welcome

Helyn CorcosVice President Investor Relations

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3Q FY13 Earnings Highlight

Strategic Direction and Operational Plan

Questions & Answers

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Forward Looking Statements

This presentation contains statements regarding our intention to execute a new strategy, implement operational and organizational changes and our projected financial and business results, as well as our intention to return cash to shareholdersthrough dividends and continued share buyback activity, which may be considered forward‐looking within the meaning of the U.S. federal securities laws. 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 presentation. Such risk factors include those related to: maintaining customer and partner relationships; the anticipated growth of certain market segments, particularly with regard to security and storage; the competitive environment in the softwareindustry; changes to operating systems and product strategy by vendors of operating systems; fluctuations in currency exchange rates; the timing and market acceptance of new product releases and upgrades; the successful development of new products and integration of acquired businesses; and the degree to which these products and businesses gain market acceptance. Actual results may differ materially from those contained in the forward‐looking statements in this presentation. Additional information concerning these and other risk factors is contained in the Risk Factors section of our Form 10‐K for the year ended March 30, 2012 and in our Form 8‐K filed on June 11, 2012.

Any information regarding pre‐release Symantec offerings, future updates or other planned modifications is subject to ongoing evaluation by Symantec and therefore subject to change. This information is provided without warranty of any kind, express orimplied. Customers who purchase Symantec offerings should make their purchase decision based upon features that are currently available.

We assume no obligation to update any forward‐looking information contained in this presentation.

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Use of GAAP and Non‐GAAP Financial Information

Our results of operations have undergone significant changes 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 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 the financial review presentation, and which can also be found, along with other financial information, on the investor relations page of our website at www.symantec.com/invest.

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3Q13 Earnings Highlights

James BeerChief Financial Officer

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Better than Expected Results for 3Q13

• Revenue Drivers– Constant currency adjusted revenue grew 5% Y/Y

– Organic, constant currency revenue grew 4% Y/Y

– Strength in EMEA, Information Management and Trust Services

– License, constant currency revenue grew 8% Y/Y driven by strength in Information Management solutions

– Subscription, constant currency revenue grew 5% and maintenance revenue grew 5% Y/Y… Enterprise, constant currency subscription revenue grew 12%

• Profitability Drivers– Operating margin and EPS driven by higher revenue and lower spending

3Q’13 3Q’12As Reported Growth Y/Y

Revenue $1,791m $1,715m 4%

Non‐GAAP Operating Margin 25.6% 26.2% ‐60 bp

Non‐GAAP EPS $0.45 $0.42 7%

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Solid Revenue Results by Segment

3Q’13 3Q’12FX AdjustedGrowth Y/Y

Consumer $530m $525m 2%

Security and Compliance $527m $510m 4%

Storage and Server Management $666m $618m 9%

Services $68m $62m 9%

• Consumer… up‐selling to premium suites and growing emerging backup, NortonLive services and mobile

• Security and Compliance… strength in Trust Services, MSS and Encryption

• Storage and Server Management

– Information Management revenue grew 12% Y/Y driven by double digit growth in NetBackup

– Storage Management revenue grew 1% Y/Y as customers continue to deploy more mission critical applications on Linux and virtualized infrastructures

• Services… driven by Business Critical Services88


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Strong Cash Generation

3Q’13 3Q’12As Reported Growth Y/Y

Cash From Operating Activities $463m $403m 15%

Cash, Cash Equivalents and Short Term Investments Balance

$4,252m $2,380m 79%

• 43% of cash on shore… ~ 26% excluding $1 billion allocated to maturity of June 2013 convertible notes

• $200m to repurchase 11m shares at average price $17.94… $283m remaining in the current board authorized share repurchase plan

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• ~73% or $1.26b of March quarter revenue coming from balance sheet

• Guidance assumes

– FX rate of $1.32 per Euro

– 24.6% effective tax rate and 702m CSE… R&D tax credit drives down our tax rate in 4Q13

4Q FY13 Guidance

4Q’13 Expected Y/Y GrowthFX AdjustedGrowth Y/Y

Revenue $1.70 to $1.74b 1 – 4% 1 – 3%

GAAP EPS 18¢ to 19¢ ‐ (75 – 76)% na

Non‐GAAP EPS 37¢ to 38¢ ‐ 2.6 – 0% na

Deferred Revenue $4.01 to $4.07b 1 – 2% 1 – 3%

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Symantec 4.0 ‐ Strategy

Steve BennettPresident and Chief Executive Officer

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Symantec 4.0 Financial Theme

Organic growth focused company

Complemented by accretive acquisitions… that add value to customers

Growing operating margins and cash flow

Disciplined approach to capital allocation

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Strategy and Operating Plan Agenda

Learning Journey

Customers and Market Overview

Offering Strategy

Go‐to‐Market Strategy

Organization

Resource Allocation

Financial View1313

Culver CityCulver City

SpringfieldSpringfield

HeathrowHeathrow

DublinDublin

PunePuneChennaiChennai

ChengduChengdu

BeijingBeijing

TokyoTokyo

SydneySydney

Over 8000 employees in town hall and small team

meetings

RosevilleRoseville

LondonLondonParisParisReadingReading

BarcelonaBarcelona

SingaporeSingapore

Washington DCWashington DCNew YorkNew York

BaltimoreBaltimore

BostonBoston

More than 1300 customers, including presenting at

VISION Barcelona

36 Analyst meetings across all regions, speaking to Gartner, IDC, Forrester and others

78 financial analysts including attending Citi Investor Conference

251 partners at the Baltimore Partner Exchange

Meetings with various House and Senate members, including General Alexander and presenting to over 900attendees at the Symantec Government Symposium

Mountain ViewMountain View

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Key Learnings… Strengths

Strong AssetsDeep Expertise and Capability

Portfolio of Leading Products

Strong Brands Reach and

Installed Base

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Key Learnings… Opportunities

Products and Services

GTM and Global

Strategy

People and Organization

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Evolution

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A Revolution

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Market Trends, CompetitiveLandscape and Product Offerings

Stephen GillettCOO

Francis deSouzaPresident of Products & Services

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Voice of the Customer

• Global economic uncertainty and enterprise security

• Full Emergence of Digital and Social Media

• Explosive data and intelligence growth

• Enterprise IT will need to adapt and evolve

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Enterprise Security

• Redefined boundaries between consumer and business

• Enterprise attack sophistication is increasing

• Technology realm transfer

• Dispersion of authority

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Countries and Government

• Governments are responsible for protecting their nation's critical infrastructure

• Attacks on citizens and institutions increasing in complexity

• Cyber has become the fifth domain for warfare — after land, sea, air, and space

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Changing Landscape and Market Trends

Internet of “Things” Mobility

Computing EcosystemsDigital & Social Life

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Changing Market Requires a New Model For Protection

Corporate Network

Data CenterPCs

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SpecialistIntegrated

Stack ProvidersStartups

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How We Win

Best of Need

Scale

Integration

Cross Platform

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We Will Strengthen Our Offerings: More R&D

Leverage Innovation

Zero‐based mindset

More Innovation

• Whole company scope

• Resource best growth opportunities

• Eliminate redundancy

• Increase R&D spend

• Redeploy and hire

• Advanced research

File System

DLP

Security Intelligence

Centers of Excellence

Better and Easier

Customer Experience

Right‐for‐Me Offerings

New Offerings

Better meet customer

needs…faster organic growth

Encryption

EndpointProtection

More R&D

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We Will Strengthen Our Offerings: Better and Easier Customer Experience

• Focus product teams on end‐to‐end customer use experience

• Simplified licensing

• Self‐healing technology

To Use, Upgrade and Maintain

To Get Help and Support

• Simplified support options

• Expanded support channels ex. Web, chat, community support

• Knowledge management

More R&DBetter and Easier

Customer Experience


New Offerings



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We Will Strengthen Our Offerings: Right‐For‐Me Offerings

Tailored Offerings

Choice of Deployment

Option

• Consumers

• Small Businesses

• Large Enterprise

• Governments

• Software

• Appliance

• Cloud

• Hybrids

• Geographies

• Specific Industries…verticals


Customer Experience


New Offerings



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New Offerings Will Address Broader Customer Needs

• Integrated, modular, solving bigger jobs

•Customer can buy existing products OR new integrated offerings

• Turn on new capability as needed


Customer Experience


New Offerings



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Symantec Addresses Unmet, Underserved Needs In Three Areas

Make it simple for me to be productive & protected at home and work

Keep my business safe and compliant

Keep my business information and applications up and running

User Productivity & Protection

Information Security

Information Management: Availability & Scalability

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How Current Offerings Map to Customer Jobs

Current Offering Examples

Norton 360Norton Mobile SecurityNorton Data ServicesEndpoint ProtectionEnterprise MobilityEndpoint EncryptionUser Authentication

Managed Security ServicesData Loss PreventionMail and Web SecurityO3Control Compliance SuiteCritical System ProtectionTrust Services

Storage Foundation HANetBackupEnterprise Vault/eDiscoveryBackup ExecBE.cloudFileStore




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We Will Deliver New Integrated, Modular Offerings Over the Next 6‐24 Months




New Higher‐Value Offerings

Mobile Workforce Productivity

Norton Protection

Norton Cloud

Information Security Service

Identity/Content‐awareSecurity Gateway

Data Center Security

Business Continuity

Integrated Backup

Cloud‐based Info Management

Object Storage Platform33

Enables authorized users to access corporate resources from any corporate or personal mobile device, PC or Mac while protecting data, applications,

devices and identities

New Higher‐Value Offering: Mobile Workforce Productivity

Employee Owned/BYOD

Corporate Owned

Enterprise Applications

Cloud Services

• Endpoint protection• Corporate

• Personal

• Mobile device management

• Mobile container

• Mobile application Management

• Enterprise app store

• Endpoint encryption

• Endpoint DLP

• User authentication

Integrated

Solves an important customer problem and builds competitive advantage34


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Provides visibility into, and comprehensive protection from, advanced threats leveraging Symantec and 3rd‐party products

New Higher‐Value Offering: Information Security Service

Enterprise Apps

Symantec Security Offerings

3rd‐Party Products and Tools

Symantec Global Security Intelligence Network

• Analysis

• Correlation

• Visibility

• Dashboard

• Threat Detection

• Prioritization and Workflow

• Incident Management

• Risk Management

Integrated

Solves an important customer problem and builds competitive advantage35

New Higher‐Value Offering: Business Continuity

Applications

Platforms

Storage

• Windows Backup

• Unix/Linux Backup

• Virtual Backup

• Clustering

• Virtual HA

• Replication

• Disaster Recovery

• Service Orchestration

Integrated

Solves an important customer problem and builds competitive advantage

Delivers high availability, performance, and scalability for business applications in virtual, private cloud environments

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Examples of New or Expanded Centers of Excellence

Cloud Platform & Capabilities

HardwareSupply Chain

Information FabricGlobal Security Intelligence Network

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Solve Bigger Problems

Better and Easier


How This Benefits Customers

How They Want to Buy

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• Evaluated entire portfolio

• Two key criteria– Stand‐alone offering or part of a

larger, modular future offering

– Asset to solve new, important customer problems?

Symantec 4.0 Portfolio Strategy

• Portfolio review continues over time

• Will deal with anything that doesn’t fit

Nothing to announce today

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Applied “Right for GEO” manner

Customer Segment

Commercial

Global

Consumer andSmall Business

Enterprise

• Global & Enterprise… Symantec direct + Customer led channel involvement

• New Verticals business… Telco/ISPs, SIs, XaaS, National Public Sector

• Channel‐led… dedicated Symantec team supports

• Combination of direct through e‐business and channel‐led

Simplified Go‐to‐Market (GTM) Strategy

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• Expanded high quality/ lower cost models

‐ Telesales

‐ e‐Business

‐ In product

• New business growth

‐ Field paid only on new over time

‐ Separate renewals org

• New global sales and partner enablement organization

New Marketing and Sales Capabilities

• New, enhanced partner program

‐ More selective based on capabilities

‐ Better enablement & Symantec support

‐ New performance‐based incentives

• Expanded Marketing

‐ Total customer experience

‐ New centers of excellence

‐ Strategic Pricing & Licensing

Offerings Customers

Beyond Current Point

Products to Integrated Offerings

Beyond Short-Term Bookings to

Lasting Customer

Value

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Organizational Strategy

July 25th to Present

• Common company level objectives

• Financial results + customers + partners + employees

• New staff performance objectives

• Changed staff meeting cycle

• Trained 95% of directors and VPs on SYMC 4.0 leadership

Today

• Symantec 4.0 strategy and plan

• New org structure and leadership team

• New organization simplification initiative

• Splitting Chairman and CEO roles

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New Organization Design: Objectives

Improve Teamwork Increase Customer Focus Functionalize Upgrade Growth Capability

• Office of the CEO

• Senior leadership decision on talent + collaboration skills

• Consumer & business world merging

• Customer jobs vs. segments

• Break up BU structure that created silos

• Global in thinking and actions… GEO leaders

• Upgrade process capability

• Consolidation for leverage

– Centers of excellence

– Eliminate redundancies

• Right talent… Fewer, bigger roles for our best and brightest

• Marketing

• Sales process management

• IT

• Cloud Ops

• HR

Strengthen leadership… Improve Organic Growth Capabilities… Minimize Execution Risk

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Creation of the Office of the CEO New Roles or Major Changes

Office of the CEO• COO• President Products & Services• CFO

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New Structure 11 Direct Reports to the CEO New Roles or Major Changes

Product & Services

COO Verticals Business

Strategic Sales

NA Enterprise Sales

EMEA

APJ

CFO HR LegalStrategy & Corp

Dev

CEO

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President of Products and Services Organization

CEO

New Roles or Major Changes

Products

MobileInformationSecurity

InformationManagement

CTOBusiness Critical

Services

Enterprise & Norton Endpoint PD

Education

Enterprise & Norton Endpoint PM

Global/Vertical Offering Integration

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COO Organization

CEO

COO

Consumer Sales

Renewals

e‐Business

CIO

Cloud Ops

CMO

Sales Process & Enablement

Customer Care

Communications

New Roles or Major Changes

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Operational Plan

James BeerChief Financial Officer

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Opportunities to Drive Efficiency & Redeploy Resources

Company‐wide Opportunities

DroveDuplication and Complexity

Partially integrated acquisitions

Siloed organization; redundancy

Too much management

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Product Development

2 Significant duplication today… 24 cloud service platforms and 54 data center locations

1 Consolidated $1.8 billion spending pool

3 Align point product spending with market opportunity

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Sales & Marketing

1 Simplify pricing & licensing … 31 price lists and 41 license meters

5 Field sales real estate consolidation

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4 Streamline route to market structure … 23 distinct sales channels

6 Fewer individualized compensation plans

2 Build high performance and cost effective renewals team

Consolidate worldwide marketing spend

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Cross‐company

Management ranks have expanded steadily

• High cost

• Slow decision making, removed from front line reality

Organization Simplification Initiative

• Move from 10 layers of management to 6‐7

• Move from average of 4 spans to ~8

1

2

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Existing offerings

New integrated offerings

Product delivery capabilities• Cloud infrastructure platform• Hardware Supply Chain• Information Fabric• Global security intelligence

network

IT a strategic enabler• Insource some activity• Applications and infrastructure

HR… building talent and organizational capability

Process capability

Marketing• Pricing resources• Customer analytics• Brand building

Sales• Process improvements• Renewals team• e‐Business expansion

Investments to Build Organic Growth Engine

Product DevelopmentGeneral &

AdministrativeSales & Marketing

People InfrastructureProducts

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FY12A FY17E Median High

R&D 14% 16% 13% 17%

S&M 41% 27% 28% 50%

G&A 6% 5% 8% 13%

Expense to Revenue Ratios

Benchmark1

Invest to drive faster organic growth

Symantec

1Benchmark includes 3 year averages for BMC, CA, CVLT, CRM, ORCL, MSFT, SAP, INTU, CTXS, ADBE 54


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Commitment to 5%+ organic revenue growth and 30%+ operating margins• Organic revenue… 5%+ CAGR FY15‐17• Operating margins… 30% goal in FY15

Financial Plan

FY14 ‐ A Transition Year… Expect• 0‐2% revenue growth

• Operating margins grow 200 bps

• Free cash flow impacted by

• ~$275 million severance payments

• Incremental CapEx $100‐$150 million

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Capital Allocation

• CapEx and acquisitions that support strategy + meet IRR hurdles• Return excess cash to shareholders

• 15%+ IRR hurdle• Target returning 50% of free cash flow longer‐term• Over time, ~50/50 balance between dividends and repurchases

Strategy

Strategy Elements

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Capital Allocation

• Initiating dividend with targeted yield of 2.5% in 1Q14• New $1B share repurchase authorization• Continue opportunistic buybacks

• Expect to return $800m• Will invest $375‐425m for severance and CapEx investments

Announcing Today

FY14

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Symantec 4.0 Operating Theme… Better and Easier

How we play… As a Team… Making High Quality, Timely Decisions

• Symantec‐wide objectives and performance metrics• One Symantec strategy with cascading organizational strategies and operational priorities• Individual accountability… to their role and the team

What we do… People and Partnerships… Internal and external… creating customer value

How we think… Innovation + Execution…. Global and Local… Big and Small

• Innovation everywhere with special focus on customer driven and technology innovation• Excellence in execution through people, process and technology• Act big where there is value… act small everywhere else• Eliminate complexity not valued by customers or partners• Create and leverage global centers of excellence

How we organize… Simplified and Streamlined

• Inverted triangle organizational philosophy• Lean and effective management structure• Culture of learning and sharing to make us better

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Symantec 4.0 Company Theme

Enabling people, businesses and countries… to protect and manage their digital information… so they can focus their time and energy

achieving their aspirations

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Appendix

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4Q FY13 Guidance

Revenue Guidance

Three Month Ending March 29, 2013Year‐Over‐Year Growth Rate

Range Actual Constant CurrencyGAAP revenue range $1.70 ‐ $1.74B 1% ‐ 4% 1% ‐ 3%


Earnings Per Share Guidance and Reconciliation Range ActualGAAP diluted earnings per share range $0.18 ‐ $0.19 (76)% ‐ (75)%Add back:Stock‐based compensation, net of tax $0.04Amortization of intangible assets, non‐cash interest expenseand transition & transformation expenses, net of tax $0.15

Non‐GAAP diluted earnings per share range $0.37 ‐ $0.38 (3)% ‐ 0%


Deferred Revenue Guidance Range Actual Constant CurrencyGAAP deferred revenue range $4.01 ‐ $4.07B 1% ‐ 2% 1% ‐ 3%

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GAAP to Non‐GAAP Reconciliation($ In millions, except per share data) Three Months Ended

Year-Over-YearNon-GAAP Growth Rate

December 28, 2012 December 30, 2011 ConstantGAAP Adj Non-GAAP GAAP Adj Non-GAAP Actual Currency

Net revenue: $1,791 N/A $1,791 $1,715 N/A $1,715 4% 5%

Gross profit: $1,492 $20 $1,512 $1,444 $26 $1,470 3% 4%Stock-based compensation 4 4 Amortization of intangible assets 16 22

Gross margin % 83.3% 84.4% 84.2% 85.7% -130 bps -110 bpsOperating expenses: $1,194 $140 $1,054 $1,144 $123 $1,021 3% 4%Stock-based compensation 38 42 Amortization of intangible assets 71 73 Restructuring and transition 27 5 Acquisition/divestiture-related expenses 4 3

Operating expenses as a % of revenue 66.7% 58.8% 66.7% 59.5% -70 bps -40 bpsOperating income $298 $160 $458 $300 $149 $449 2% 2%Operating margin % 16.6% 25.6% 17.5% 26.2% -60 bps -80 bpsNet income: $212 $101 $313 $240 $74 $314 0% N/AGross profit adjustment 20 26 Operating expense adjustment 140 123 Non-cash interest expense 15 12 China VAT tax refund (24) -Income tax effect on above items (44) (45)Tax related adjustments:Release of pre-acquisition tax contingencies (6) (42)

Diluted net income per share attributable to

Symantec Corporation stockholders $0.30 $0.15 $0.45 $0.32 $0.10 $0.42 7% N/ADiluted weighted-average shares outstandingattributable to Symantec Corporation stockholders 702 702 740 740 -5% N/A

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symc4 0 investor 01 23 13 final (white and black) · symantec's strategic direction and 3q...

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