Symantec (SYMC)

Q2 2012 Earnings Call

October 26, 2011 5:00 pm ET


Enrique T. Salem - Chief Executive Officer, President and Director

James Beer - Chief Financial Officer and Executive Vice President

Helyn Corcos - Vice President of Investors Relations


Dennis Simson - Crédit Suisse AG, Research Division

Brent Thill - UBS Investment Bank, Research Division

Adam H. Holt - Morgan Stanley, Research Division

Brian Freed - Wunderlich Securities Inc., Research Division

Danyaal Farooqui

Steven M. Ashley - Robert W. Baird & Co. Incorporated, Research Division

Kash G. Rangan - BofA Merrill Lynch, Research Division

Edward Maguire - Credit Agricole Securities (USA) Inc., Research Division

John S. DiFucci - JP Morgan Chase & Co, Research Division

Rob D. Owens - Pacific Crest Securities, Inc., Research Division

Brad A. Zelnick - Macquarie Research

Unknown Analyst -

James Wesman



Good day, and welcome to Symantec's Second Quarter 2012 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the conference over to Ms. Helyn Corcos, Vice President of Investor Relations. Please go ahead.

Helyn Corcos

Thank you. Good afternoon, and thank you for joining our call to discuss fiscal second quarter 2012 financial result. With me today are Enrique Salem, Symantec's President and CEO; and James Beer, Symantec's Executive Vice President and CFO. In a moment, I will turn the call over to Enrique. He will discuss Symantec's execution during the quarter, then James will highlight our financial results as well as discuss our guidance assumptions as outlined in the press release. This will be followed by a question-and-answer session.

Today's call is being recorded and will be available for replay on Symantec's Investor Relations website. A copy of today's press release and supplemental financial information are posted on our website. And a copy of today's prepared remarks will be available on the website shortly after the call is completed.

Before we begin, I'd like to remind you that we will review our financial results focusing on year-over-year constant currency growth rates, unless otherwise stated. Net income, EPS and sequential growth rates are based on as-reported results.

For the September 2011 quarter, the actual weighted average exchange rate was $1.41 per euro, and the end-of-period rate was $1.34 per euro compared to our guided rate of $1.43 per euro. For the September 2010 quarter, the actual weighted average rate was $1.30 per euro, and the end-of-period rate was $1.38 per euro. We've included a summary of the year-over-year constant currency and actual growth rates in our press release tables and in our supplemental information, which can be accessed on the Investor Relations website.

Some of the information discussed on this call, including our projections regarding revenue, operating results, deferred revenue, cash flow from operations, amortization of acquisition-related intangibles and stock-based compensation for the coming quarter contain forward-looking statements. These statements involve risks and uncertainties and may cause actual results to differ materially from those set forth in the statement. Additional information concerning these risks and uncertainties can be found in the company's most recent periodic reports filed with the U.S. Securities and Exchange Commission. Symantec assumes no obligation to update any forward-looking statement. In addition to reporting financial results in accordance with generally accepted accounting principles or GAAP, Symantec reports non-GAAP financial results. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to the most directly comparable GAAP results, which can be found in the press release and on our website.

And now, I'd like to introduce our CEO, Mr. Enrique Salem.

Enrique T. Salem

Thank you, Helen, and good afternoon, everyone. For the fifth quarter in a row, the team executed very well, delivering solid September quarter results. We generated record September revenue and deferred revenue. Performance was balanced across our business segments and geographies. Results were largely driven by strength in enterprise security, backup and Consumer. The VeriSign authentication business generated strong growth for the fifth consecutive quarter. In addition, the Clearwell acquisition completed its first full quarter, posting its largest bookings quarter ever and exceeding expectations.

Now let's take a closer look at some of the highlights from the quarter. Focused sales execution, coupled with industry-leading products, drove solid results in each region. Both the Americas and APJ regions grew double digits, and the growth in EMEA met expectations. Our public sector business generated record bookings this quarter as we closed several competitive wins. We are successfully cross-selling the product portfolio with 43% of our September quarter deals over $1 million, including sales from both enterprise product segments. Sales of Data Loss Prevention and backup solutions drove license revenue growth for the third consecutive quarter.

Our enterprise security business generated another quarter of growth, reflecting improvement in the Endpoint Security business and strong performance for our Managed Security Services, authentication and Data Loss Prevention businesses. Since the July launch of Symantec Endpoint Protection 12, the product has been successfully deployed on more than 1.3 million end points. I'm pleased with both the level of quality and effectiveness the solution provides for both virtual and physical environments. Early customer and partner feedback for both the enterprise and small business editions has been very positive. Recently, at our annual partner conference, several partners commented that the product is easy to deploy, and their customers have had 0 infections since installing the product due to SEP 12's new, innovative, reputation-based security technology. Partners serving the SMB segment in the U.S. and Canada are also excited about the ability to sell for end customers' choice in deploying our security solutions.

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