Gen Digital Inc. Price & Performance (GEN)

Thank you, Jayla, and good afternoon, everyone. Welcome to Jen's Q3 fiscal year 2025 earnings call. Joining me today are Vincent Pullet, CEO and Natalie Dursey, CFO. As a reminder, there will be a replay of this call posted on the Investor Relations website along with our slides and press release.

I'd like to remind everyone that during this call, all references to the financial metrics are non GAAP. And all growth rates are year over year unless otherwise stated. A reconciliation of non GAAP to GAAP measures is included in our press release and earnings presentation, both of which are available on our IR website at investor. Gandigital.com. We encourage investors to monitor this website as we routinely post investor oriented information such as news and events and financial filings. Today's call contains statements regarding our business, financial performance and operations, including the impact of our business and industry, that may be considered forward looking statements and such statements involve risks and uncertainties that may cause actual results to differ materially from our current expectations. Those statements are based on current beliefs, assumptions and expectations as of today's date, January 30, 2025. We undertake no obligations to update these statements as a result of new information or future For more information, please refer to the cautionary statement in our press release the risk factors in our filings with the SEC and in particular our most recent reports on Form 10 ks and Form 10 Q. And now, I will turn the call over to Vincent.

Thanks, Jason, and welcome, everyone, to our earnings call. Q3 was another quarter of solid execution, innovation innovating on the most comprehensive cyber safety portfolio for consumers while delivering profitable growth. We grew cyber safety bookings and revenue mid single digit and delivered our 5th consecutive quarter of double digit growth for EPS, up 15% Gen. Our direct customer base is at a record 40,000,000 nearly 400,000 sequentially and up over €1,000,000 compared to last year. These solid results are a testament to the consistent and disciplined execution by our team to serve the needs for comprehensive cyber safety. You've heard me tell you every quarter now about the dynamic nature of the threat landscape and that continues to be the case. In calendar year 2024 alone, we blocked nearly 15,000,000,000 attacks globally. Not only are people all over the world being exposed to a greater number of threats, scams and other risks to their digital lives, but these threats are getting harder to detect as bad actors deployed increasingly sophisticated techniques and more believable lurks to compromise and exploit their victims. Our researchers estimate that today 90% of all cyber threats began with a scam up from just 30% Gen 20.

As technology rapidly evolves, and consumers' digital footprint expands, the proliferations of breach just keeps adding fuel to the fire. In addition to the large scale breaches like the National Public Data breach last quarter, recent ones are putting not only individuals at risk, but entire families, as we saw with the PowerSchool Bridge. This means that threat actors have no shortage of information available to use to convince you to help them attack you and your asset. We have seen this trend accelerate this quarter with the dramatic rise in scam use attacks through deceptive and routine based means. We saw this coming and we launched Northern Gen just over a year ago to give consumers an easy to use tool to help detect scamps coming to you via email, text, video files or website. Our proprietary AI engine continuously trains on the extensive datasets and real life scans submitted by our users catching the newest threats with almost 100% efficacy. With 2,000,000 downloads of the product, Gen AI Engine cannot only understand the meaning and intent of text, but also scans a wide range of additional attachment files, URLs, images and even audio and video files. And we aren't stopping there.

We'll soon be expanding the power of Gen into our Nolan 360 product family. This enhanced version of Genie will be available in all memberships seamlessly providing proactive and comprehensive scan protection and acting as your AI powered scam assistant. The pro version provides advanced features including call blocking, text filtering and scam reimbursement and will be included in the higher membership tiers or available as an add on for the remaining customer base. Beyond our own AI investments to address this growing threat, we recently teamed up with Qualcomm at CES to showcase an early preview of how AI powered scam detection can be integrated into neural processing units or NPUs embedded into smartphones.

By leveraging the NPU speed and efficiency, we're able to detect deepfakes and other sophisticated threats on the device in mere seconds. We keeping user data private. A lot of exciting developments with more to come. In this dynamic digital world, we continue to invest in and innovate around how we keep customers' devices, personal information, reputations and financial assets. [indiscernible] Our security foundation stays at the forefront with advanced protection, recently earning top accolades from AV Test AV Comparatives and AV Labs. And our products provide solutions for evolving consumer needs not only securing customer against cyber threats, but also protecting their identity and finances empowering them to manage and grow their finances and safeguarding their personal data. Earlier this month, we brought to the protection of Avast Security Identity to 15 new countries, which helps consumers keep their identity safe from escalating scam and identity theft risks. [indiscernible] continuously scours across private forms and the dark web identifying and notifying you if we detect your personal information. It also gives consumers additional features like restoration support stolen wallet assistance, and in selected markets, identity theft insurance. We've also embedded financial monitoring features to help alert consumers to suspicious bank account transactions that may indicate fraud.

Although we only launched it a few weeks ago, we've already seen strong interest and engagement from our AVAS customer base, affirming our belief in the need for these types of solutions and the growth opportunity ahead with identity and financial wellness, across our entire family of trusted brands. In Japan, one of our largest international markets, we also rolled out a pilot digital vault with IDAdvisor Plus, With ID Vault, we automatically detect and sensitive identity information on users' phone and move it to a secure cloud vault for added protection. And we don't stop there. With IDAdvisor Plus, we also include access to scan verification specialists and a privacy advisor to on demand services that are available to consumers in their time of need. As we drive engagement and early feedback through this offering, we plan to expand our digital vault technology across our portfolio in the coming quarters to give our customers more control over when and where to share their data.

I'm also proud to share that all of these new launches have been built on the new Gen Stack, which our team has been hard at work on since the Avas acquisition closed.

We set on the foundational technical initiative to build a new best in class fiber safety infrastructure. With the brightest minds from both teams, we've created our next Gen tech tech stack that enable us to provide strong protection a more modern user interface and a more personalized experience for our customers. The Gen Stack enabled us to deliver a unified data set that makes our AI enhanced solution more relevant for our customers, given our extensive threat telemetry and behavioral data. With the scale of our cyber safety networks, which protects hundreds of millions of users, we have exceptional visibility into the threat landscape. The massive amount of data that comes from all of these enable us to further train our machine learnings models and harness the power of AI driving additional improvement in the efficacy rates of our award winning rates of [indiscernible] making current and future customers inherently safer The technical benefits are unquestionable but it does something equally, if not more important, for our customers. The next gen stack allows us to begin delivering on Gen reimagined user centric experience. With a more intuitive, simpler and fully integrated experience, our customer can use more of the tools we have available to protect their digital lives.

It also allows us to more smartly advise and offer products and services that match their actual needs to enhance and unintrusive in product contextual messaging. Our extensive machine learning models helps us bring the right cross sell and up sell campaigns to the right people at the right time, which helps us better protect them and as a result, improve customer loyalty. We have already started expanding this advanced machine learning models and data driven communications to personalize our engagement, with customers. All of these new products and capabilities are enabling us to deliver on our plan to expand our cyber safety platform which already protects 100 of millions of users and over 65,000,000 paid customers. These customers all benefit from the most comprehensive features and best technology in the market backed by 1 of the world's largest consumer cyber safety networks, which protecting people around the globe against advanced online threats. Further building on our foundation in cyber safety, in December, we announced the acquisition of [indiscernible] in order to strengthen and accelerate our financial wellness offerings. This transaction enables us to offer a complete set of personal financial management tools, enhances [indiscernible] diversify our customer base with consumer in earlier stage more than double addressable market to over 50,000,000,000 and finally reinforces our long term financial model.

We've started to address our customers' demand for more credit and financial insight but this acquisition will open up and accelerate new opportunities for Gen and our customer base. While we can't provide additional commentary about this transaction until it closes, in the first half of fiscal year twenty twenty six, we will continue our effort to build out our Financial Wellness offering through organic and inorganic investments that can enhance the capabilities Gen and MoneyLion have today. In summary, we see a long runway of opportunities fueled by the very real and expanding consumer needs to protect their data We have the best fiber safety foundation in place that inspires customer trust, confidence and loyalty. Our Q3 results demonstrate that we are executing to our plan to accelerate revenue and drive double digit EPS growth. With our pending acquisition of MoneyLion, are excited for the next phase of our strategy to deliver and empower our customers with digital trust services such as Financial Wellness to further accelerate our growth while operating with the same consistent and disciplined execution you've come to expect from our team. And I think we're just getting started. So with that, let me pass it to Nathalie to review our Q3 performance in detail.

Thank you, Vincent, and hello, everyone.

For today's call, I will walk through our fiscal Q3 2025 results. Followed by our outlook for Q4 and full fiscal year 2025. I will focus on non GAAP financials and year over year growth rates unless otherwise stated. Q3 was another quarter of solid execution with revenue above the midpoint of our guidance and EPS at the high end and reflects our 20 [indiscernible] consecutive quarter of growth. Cyber Safety bookings, which exclude our legacy business lines, were 4% in constant currency. Reported bookings exceeded $1,000,000,000 an increase 3% in USD and constant currency. Q3 revenue was $986,000,000 up 4% in USD and We drove broad based growth across our product portfolio and geos bolstered with 5% growth in the United States In security, our Norton cross sell program continues to gain momentum reflecting our strong incremental monetization after initial purchase. With Identity, adoption of our Norton 360 with LifeLock membership is increasing. As consumer awareness grows alongside breaches and fraud activity and consumers recognize the need for comprehensive cyber safety protection. Our privacy offerings, namely anti track and privacy monitoring assistance, are bolstered by broader market shifts towards greater privacy needs gaining traction across both the security and identity customer base.

Direct revenue was $869,000,000 up 4% supported by improvements across our key performance metrics at the cohort level. Let me share some specifics. A key ingredient to our growth strategy is driving net new customers. And in Q3, we expanded our direct customer base for the 6th quarter consecutive quarter increasing to 40,100,000 up $371,000 sequentially and up $1,200,000 year over year. Our customer base is more diverse as we continue to expand Gen and we prioritize our marketing allocations to where we see the highest demand in ROI. This quarter, customer growth in international markets and in mobile remained strong. While the unit economics are different in international markets, our strategy is to reach these customers early in their cyber safety journey and leverage our brands a comprehensive product set and customer service to drive long term loyalty.

With mobile, we remain top of mind during a potential customer's purchasing decision we have intentionally shifted more marketing dollars to reach these customers in the app stores lower customer acquisition costs, and increased opportunities for cross sell and upsell, We are encouraged by the early indicators as an increased percentage of our new Norton Mobile customers are purchasing our Norton 360 membership, which has a higher ARPU than the standalone mobile security product. We are confident that as we extend our improved in product messaging and lifecycle marketing playbook, towards this growing base, we will increase customer lifetime value contributing towards our mid single digit growth target.

And as we shared in our Investor Day, we continue to fund customer acquisition, across regions, products and customer value segments as we expand. On monetization, our monthly direct ARPU was $7.27 in USD up a $0.01 from the prior quarter and up $0.09 compared to last year's result.

Note that this metric was negatively impacted by about [indiscernible] Keep in mind, this is a blended number across geos, [indiscernible] products and customer tenure, When we review at the cohort level, the story is even stronger. Across our online and mobile cohorts, ARPU is up mid single digits year over year as our cross sell and upsell activities scale with new products introduced into the base. We will continue to feed this flywheel as we execute our product roadmap and add new features into our membership such as scan protection powered by Genie. Expanded value in services provided to our customers are also reflected on our strong retention rates. In Q3, our direct retention rate was Similar to ARPU, we continue to see gains at the cohort level from mobile customers to our highest retaining lifelop base to 1st year and tenured customers. Driving long lasting customer relationships with a strong engagement focus on each stage of their customer journey remains a key tenant of our growth framework. Turning to our partner business, Partner revenue was $105,000,000 in Q3, up 6% in USD and constant currency, as we execute on the strategy shared a year ago. Mobilizing to where the customers are expanding through our identity and privacy offerings.

Employee Benefits continues to grow double digits as more companies recognize the importance of cyber safety as a necessity for their employees. Our pipeline and pipeline conversion are strong and we have added new reputation and privacy services to the channel to scale further. Internationally, we are leveraging key strategic partnerships to scale identity by adding more features such as stolen funds insurance Our mobile attach products have become even more compelling with the digital vault offering that Vincent shared driving double digit bookings growth in Japan. We continue to strengthen our value proposition to existing [indiscernible] Progressing towards our goal of generating $500,000,000 in annual partner revenue over the next few years. Rounding out our revenue, our legacy business lines contributed $12,000,000 this quarter down from $15,000,000 the prior quarter.

But as a reminder, we expect our legacy revenue to continue declining double digits year over year and represent only approximately 1% of our total revenue. Turning to profitability. Q3 operating income was $577,000,000 up 4% year over year in line with revenue growth and translating to an operating margin of 58.5 percent. Our efficient business model creates the capacity to make investments in our portfolio and sales expansion efforts coupled with our operational discipline, Consistent with our plan, we are [indiscernible] which is crucial to our growth strategy. We are also investing in marketing as we launch new products and reach new audiences with our existing portfolio. With incremental spend always evaluated within a disciplined ROI to We will continue to invest in our business with the same disciplined approach as we focus on driving sustainable mid single digit growth in our core cyber safety business. Q3 net income was $350,000,000 up Gen% Diluted EPS was $0.56 Gen at the high end of our guidance and up 15% year over year representing our 5th consecutive quarter of double digit EPS growth. Interest expense related to our debt was $134,000,000 Our non GAAP tax rate remained steady at Gen. And our ending share count was 623,000,000 dollars down $22,000,000 year over year reflecting the impact of share repurchases.

Turning to our balance sheet and cash flow.

Q3 ending cash balance was $883,000,000 We are supported by $2,400,000,000 of total liquidity consisting of our ending Q3 cash balance $1,500,000,000 revolver. Q3 operating cash flow was $326,000,000 and free cash flow was $318,000,000 which included approximately $180,000,000 of cash interest payments this quarter. Our debt to EBITDA net leverage was 3.3 times. As we look at near term maturities, we plan to refinance our 2025 senior unsecured note of $1,100,000,000 in Q4 fiscal year 2025.

Moving to capital allocation. In the quarter, we paid $59,000,000 of mandatory debt payment across our Term Loan A and Term Loan B. In December, we announced the acquisition of MoneyLion for approximately $1,000,000,000 in cash, plus an additional $23 per share in Gen stock assuming certain trading conditions are met. We're excited about what this combination enables for our customers and also our financial model which we will share more details about after closing. As a result of the pending transaction, there was no additional debt paydown or stock repurchases in Q3. In the quarter, we paid $77,000,000 to shareholders in the form of our regular quarterly dividend of $0.125 per common share. For Q4 fiscal 2025, the Board of Directors approved a regular quarterly cash dividend of $0.125 per common share to be paid on March 12, 2025 for all shareholders of record as of the close of business on February 17, 2025. Since the start of fiscal year 2023, we have paid down over $2,000,000,000 worth of debt and have deployed a total of $1,600,000,000 share repurchases over that time period. Following the closure of the deal, we will returning 100% of excess free cash flow to shareholders maintaining our dividend and balancing our capital allocation between debt paydown and share buyback.

While remaining opportunistic and disciplined with M and A opportunities to further accelerate growth and expand our portfolio. With our strong cash flow generation, we will continue to deploy capital to achieve the long term objectives laid out in our Analyst Day. Now turning to our Q4 fiscal 'twenty five outlook. Given our strong operating results year to date, we are again strengthening our prior guidance and expect full year revenue in the range of $3,915,000,000 to $3,930,000,000 translating to 4% cyber safety growth at the midpoint, supported by expected cyber safety bookings growth of approximately Gen, both expressed in constant currency. We have also raised the lower end of our EPS guidance. And now expect non GAAP EPS to be in the range of $2.20 Gen to $2.22 per share. Representing 14% to 15% growth in constant currency and in line with the EPS growth objectives we shared at our Investor Day. This translates to Q4 non GAAP revenue the range of 9.90 [indiscernible] $1,000,000 and Q4 non GAAP EPS in the range of $57,000,000 to dollars In summary, we are pleased with the execution and financial results. We're on target for our 2025 plan and we remain well positioned to achieve our long term goals with our key performance indicators trending in the right direction.

We look forward to closing out the fiscal year strong As always, thank you for your time today. And I will now turn the call back to the operator to take your questions. Operator?

First question comes from Roger Boyd with the company UBS. Gen, your line is now open.

Great. Thank you for taking the question. I wanted to touch on retention rates. The directional trends you saw there. I know you mentioned on the cohort level all all retention rates came up but were impacted by the higher mix of mobile year 1 customers. How do you reconcile that with the still improving ARPU numbers? And then given the continued strength of the mobile and international channels, what are you expecting to see a run of our retention as we move forward from here?

Yes. Thanks for the question. So retention rate is definitely definitely one of our top KPIs. And the Q3 results that we saw were relatively in line with Q2, albeit there's some rounding in there. What I would call out is the strength of the retention rate being industry leading in total. And then yes, as we said, all the cohorts, whether you're talking about by brand, by device and the tenures are all stable to up, which is the strength that we we point to and what leads us to the to the confidence in our revenue guide I'd love to call out these are output metrics, they're performance metrics that we really look at as the ingredients for our growth And it's about the mix of these KPIs coming together all to drive top line and revenue acceleration. And exactly what we saw across all the KPIs when they all come together, our revenue growth this quarter being 4%, last quarter being Gen, And so all the with the positive net positive customer count quarter over quarter, the strength of the retention rate and the expanding ARPU we feel confident in that revenue acceleration. And then as it pertains to the mix of those metrics, whether it's retention rate, customer count, ARPU, etcetera, We're down the lanes of what we laid out for Analyst Day.

We're going after All of the demand globally across geos, across products, across experiences, whether it's desktop or mobile, We want to be where the customers are. We want to capture as much demand as we possibly can. In an ROI positive fashion. And that's what exactly what I see as I evaluate the ingredients of our revenue performance, that is what I see And so how those mix on a go forward basis and how they come together in the metrics obviously have our eyes on it. And we operate in a disciplined fashion So far, the KPIs are performing to our expectation and we're delivering on that revenue acceleration from 3 to 4 percent quarter over quarter.

Got it. Thanks, Natalie.

Thank you.

Our next question comes from Andrew Nowinski with the company Wells Fargo. Andrew, your line is now open.

Great.

Thank you. And thank you for taking the [indiscernible] Maybe just Quick clarification. So the cyber safety bookings growth certainly still strong. At 4% this quarter. I think that maybe was down from last quarter at 5 Gen. But given what you just said about our proving retention up, new customer adds up, I guess was that deceleration just entirely due to that one time bump from the national public data breach last quarter Yes. If you recall, in our conversations and on the call last quarter, we did say, there's no [indiscernible] Absolutely, you can see that on any chart of demand and traffic You can see that in our sales, you can see that in our conversion. We put approximately a point of impact our Q2 bookings result last quarter. We pinned about point of that acceleration on that NPD breach. And now it's not yes, the breach in and of itself is one time in nature, [indiscernible] we obviously evaluate how long that lift has sustained. It has come down from the peak, but of course, any awareness, any education, any thing that we can do to expand the awareness and therefore the demand for cyber safety protection with potential customers we see that in our business.

And keep in mind, we're talking about the bookings growth rate that will continue to fuel our revenue throughout as we amortize that bookings growth, as we service those contracts, and then we continue to foster the strength in the retention rate keep those customers in our cohorts and into in our properties.

Thank you.

Natalie. That makes sense. If I could just squeeze a follow-up in on the MoneyLion acquisition. I know it's not closed yet and there's not much color you can provide, but on the financial side, but I'm just wondering at a high level, it seems like maybe their customer base is a very different demographic relative to the customers that are buying the Norton the Norton membership. So I'm just wondering If you could just help us understand where you see the synergies between the 2 businesses? Thank you.

Hey, Andrew, this is Vincent. I'll take that one. As you know, we've moved from a core addressing a core security need with our customers to addressing what we call total cyber safety, which was moving towards identity protection. Within identity, we'll be tracking the entire web around your personal data many of them being financial data. And the consumer needs that we address and number 1 is protect me against my financial potential loss or protect my financial assets from what's out there. So as we migrate our customers along their cyber safety journey, those who were the most advanced kept asking about more insight into their financial lives, if you want, or financial wellness. How do you give some credit insights? How do you build your credit how do you leverage your credit and some of those aspects. So we started to feed that organically and building kind of a product layer of features inside our own cyber safety for that. What MoneyLion will do as a first level of revenue synergies is provide the back end architecture around all of a complete PFM feature, personal financial management set of features that we can then offer to our customers to better manage the insight that we protect them for.

And then the second one is the embedded marketplace where they can also make best choices to make best financial decisions. So the cross selling in into our installed base with the UI that is in our brand, whether it's Lock or Norton or Avast, [indiscernible] Then if you push a little bit out there, the entire financial or credit journey, if you want, We have a layer of it, which is protection. And moving up that layer around building it and then leveraging it is super important. Later on, we'll be able to offer to the MoneyLion customers the entire set, including the protection of some of the assets that they want to manage and grow. So those are the kind of the 2 views. Obviously, it has other benefits. It will give us a much more robust set of data, which will enrich our AI and personal personalization capabilities. And then you'll see us continue to expand both globally and through features making the the cyber safety platform, including Financial Wellness, richer for our customer base.

Thank you. That was very helpful. Appreciate it.

Our next question comes from Saket Kalia with the company Barclays. Saket, your line is now open.

Okay, great.

Hey guys, thanks for taking my questions here. Natalie, maybe for you just a little bit of a housekeeping question. Great to see the full year revenue guide go up a little bit. You just talk about any incremental FX movement how that's impacting the full year guide, if at all? I know that it's a little impactful to ARPU in the quarter. Can you just level set kind of any impact the full year revenue guide if at all?

That's relatively immaterial.

Got it. Got it. That's helpful. Vincent, if I can maybe squeeze in follow-up maybe there was so much innovation that you talked about in your prepared remarks, right, just around whether it's Genie or other things in terms of finding scams, And it really adds to some of those higher end kind of bundles like Norton 360. Can you just sort of give us a state of the state in terms of what percentage of the base is kind of using Norton 360 now and how you think that can trend going forward?

Yes, absolutely. And if I can use your questions, Saket, Gen also elaborate a bit discussions. I've had a few questions from saying, okay, I understand you have your antivirus business that growing low single digit, you're diversifying with Moneyline. We actually believe there is a lot of opportunities within cybersecurity. I mentioned it's a dynamic threat landscape from the old virus or antivirus, which is absolutely still necessary to protect your device. The needs have moved towards a real anti scam set of tools. And that is a very different threat landscape. And so with that, the evolution of our portfolio, if you want follow that threat evolution, you see a lot of our new features is about making sure you don't get scammed, whether it's protecting your email, whether it's protecting Gen even a scam yourself antivirus or making sure that your data is not out there in the dark web and then can be patched and totally fool you into doing something you don't want to do. So the introduction of that Ginnie into our platform is the view more and more fact that then adopting that membership structure for a full view of the portfolio. On desktop, we are at around 50% now across.

I don't know if you remember, but before we acquire AVAN, we reached all the way to, I think, 2 thirds, 65%, I don't remember the exact percentage in the membership. Havas didn't have yet that membership structure. They had AVAS 1, the single digit percent adoption. And now our entire population has about 50% Gen. When you include mobile, which is still a little bit point product, we dropped a little bit more. We had 45%, 46% Gen. But I think we continue to make good progress towards that that view that in the future, we'll have the majority of our customers all on the membership structure.

Super helpful.

Our next question comes from Gen Bergstrom with the company RBC. Dan, your line is now open.

Hey, it's Dan Bergstrom with Matt Hedberg. Thanks for taking our questions. Sounds like you're having good success with the mobile customers. Purchasing Norton 360. You called that out in the prepared remarks.

Maybe a little bit more of what you're doing there, some of the areas that you could lead into to help drive that that mobile adoption of [indiscernible] Yes. I can take that. So definitely, I think it's what about 2 years ago that we launched NONE 360 on mobile Gen then a year after, the majority of sales on mobile were on that platform. With Avast, we had back to a few single product, but then now we launched More of our new product into the new Gen architecture. We launched our UltraVPN Gen product a few months ago and that is essentially a membership structure that enables you to move to different tiers as you enable new features to be fully cyber safe and protected. With that launch and that new Gen Stack, we also launched the IPM in product message tool, if you want, that enable us also to give real time feedback on the consumer behavior and needs as they use their product on mobile. That engagement, if you want, on mobile has enabled us to improve all of our ratios Natalie was mentioning whether it's ARPU, whether it's retention, whether of course it's customer count, But on mobile, all of our metrics are trending in the right direction.

What that is because of moving more to the membership and having that full engaged tech platform.

That's great. And then Vincent, could you talk a little bit about the customization and personalization of the offerings? I know that something that remains underway. Maybe what are some of those personalization efforts that have been impactful to you? And then maybe where are we in that journey?

Yes, definitely. So the first step here is to deploy everybody on the new Gen Stack. And we are very disciplined and cautious as we deploy it. As you know, we want to make sure that it very smooth for the customers. We're well on the way. We'll finish through the year that migration that will enable us to use that AI enabled IPM platform in product messaging. We now have a team working on developing the various models. And looking at all of the datasets and how to further refine and cut the different cohorts in smaller size based on behaviors, and then be able to have the product if you want, react based on those LLMs tailored to specific activities. And I think the whole team is super mobilized around enabling that hyper personalization, if you want. Once we are on the full on the common stack, then everybody has the unified set of data and all of models can be deployed across either brands or product sets.

That's exciting. Thanks.

Our next question comes from Dan Zonfotowala with the company Morgan Stanley. Hamzah, your line is now open.

All right. Thank you for taking my question. Natalie, just a quick one for you. I was wondering if you could give us a sense of how you're thinking about balancing capital allocation [indiscernible] debt paydown buyback given the pending acquisition of MoneyLion. I know there's a bit Pause there. Right now, but once you do start to digest that, how should we think about modeling that a longer term basis. [indiscernible] We will get back to it as soon as we can. We're in a we're locked out just because of where we're at on the deal once we Once we move past that, you'll see us get right back into the market on both would just point you to consistently, I think we balanced we do strike the right balance, especially if you zoom out and you look at the annual numbers we provided earlier today in the script, or in the prepared remarks. And we'll continue to do that. I think there is value in both We've demonstrated our value proposition in terms of really understanding at the right time when we go for accelerated debt paydown and opportunistic share buyback, And keep in mind too, we'll be in the refi market refinancing that unsecured note pretty soon as we expressed we'll be in that market in Q4.

So you'll start seeing some more activity from us as soon as we've got we're past the close of the deal and we'll be focused on really delivering additional value through that balanced approach. All to say really nothing has changed in our in our capital allocation tenants. We've been relatively consistent actually, since I got here, but definitely in line with our AID Absolutely. Our final question comes from Tomer Zimmerman with the company Bank of America Tomer. Your line is now open.

Hey, guys. I actually wanted to go back and touch on ARPU So you talked about a $0.01 sequential improvement Currency had a $0.01 negative impact, so call it maybe $0.02 normalized sequential improvement Are you seeing that kind of more broad based across your cross sell and up momentum or is there any specific that you can call out that happened this quarter that helped improve the numbers? I know you talked about an increasing number of mobile customers adopting Noren 360, but anything additional you have would be helpful.

Yes. Thank you for the question. So of course, I'm keeping my eye on the quarterly metrics because like we've indicated, they are key performance indicators to the health and Gen the growth ingredients of our business. But when you really evaluate, I would encourage us to kind of zoom out and look at the year over year. That's when you're really going to see the full suite the full set of cohorted customers really perform. And so when you look at that, we're up a point of retention rate in the overall cyber safety retention rate. And we're up $0.09 in ARPU. So whether you're looking at it from an annualized perspective or specific The economics and the components of growth I would say, are very consistent So cross sell and upsell is working in the Norton base across all the regions and is really driving success in terms of not only driving ARPU, but we have studied and shown impacts to increased retention And so we continue to diversify that through new products being introduced, Vincent has talked a couple of times in terms of what we're doing to optimize the membership offerings, so that drives the upsell lever.

And we see that coming customer acquisition as our offerings become even more and more relevant and in demand. It comes through ARPU as we see the ARPU continuously expand as we sell more and more of the additional service and we see the retention rate gains from those levers because retention rate is just frankly higher. And then as it pertains to, our mobile acquisition, they're just different starting points, but the behaviors are very consistent. And that's why we point to just such incredible opportunity We have very healthy ROI customer acquisition internationally in mobile And then it just allows us cohorts of customers to go after and really as they're getting more familiar we have the opportunity to further educate the needs and then therefore the services that we can provide to these customers So it's really, really a flywheel effect as to where the customers were diversing diversifying at the very top of the funnel to customer acquisition and we're sending them with a unique experience, a very focused experience in terms of leveraging cross sell, up sell in all of our CSM attention efforts And in my opinion, when I look at the customer performance indicators and unpack them at cohort level they're trending in the right direction.

Hope that helps.

Yes, that's great color. Thank you very much. Thank you.

At this time, I'd like to pass the conference back over to Vincent Pellet, the CEO, for closing remarks. You may proceed.

Thank you, and thank you everyone for joining our call today. As the leader in consumer cyber safety, we have a bold vision to provide digital freedom for everyone. Our many investments in new products and technology are paying off as we shared today. With the progress we're making with Gen, the new Genstact and AI technologies, The pending MoneyLion acquisition will accelerate the next phase of our strategy empower our customers' financial wellness. Thanks for joining our call today, and I look forward to speaking with you in the coming days weeks.

That will conclude today's conference call. Thank you for your participation and enjoy the rest of your day.