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NortonLifeLock (NLOK) Q3 Earnings Beat Estimates, Rise Y/Y

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Zacks Equity Research
·3 min read
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NortonLifeLock’s NLOK third-quarter fiscal 2021 non-GAAP earnings increased 52% from the year-ago quarter to 38 cents per share. Also, the bottom line beat the Zacks Consensus Estimate by 2.7%.

Revenues of $639 million also surpassed the consensus mark of $630 million and jumped 3% year over year. This outperformance was mainly driven by double-digit revenue growth by the company’s partner business. Strong demand, especially in Japan, for identity theft protection solutions such as dark web monitoring and ID advisor, was a positive.

NortonLifeLock Inc. Price, Consensus and EPS Surprise

NortonLifeLock Inc. Price, Consensus and EPS Surprise
NortonLifeLock Inc. Price, Consensus and EPS Surprise

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

Quarter Details

Direct average revenue per user (ARPU) increased 1.2% year over year to $9.10 per month. Continued stabilization of direct customer count was a positive. The company’s direct customer count increased 900,000 year over year during the fiscal third quarter, bringing the total count to 21 million.

In the reported quarter, gross profit climbed 7.2% year over year to $552 million. Moreover, gross margin expanded 310 basis points (bps) to 86.4%.

Operating income on a non-GAAP basis jumped 45.5% year over year to $326 million. Operating margin was 51%, up significantly from 36.2%.

Balance Sheet

As of Jan 1, 2021, NortonLifeLock had $1.05 billion in cash and cash equivalents, flat sequentially. Long-term debt was $3.54 billion, down slightly from the $3.56 billion witnessed in the previous quarter.

The company used cash of $293 million for operational activities.

Guidance

For the fourth quarter of fiscal 2021, NortonLifeLock projects revenues between $655 million and $665 million.

Moreover, non-GAAP earnings from continuing operations are expected between 37 cents and 39 cents per share.

Outlook for the fourth quarter includes the partial impact of Avira acquisition.

Zacks Rank and Stocks to Consider

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

Better-ranked stocks in the broader technology sector include Apple Inc. AAPL, Zoom Video Communications ZM and Shopify SHOP, all sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Apple, Zoom Video Communications and Shopify is currently pegged at 11.5%, 25%, and 32.5%, respectively.

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