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What changed in Gen Digital Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Gen Digital Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+278 added−310 removedSource: 10-K (2024-05-16) vs 10-K (2023-05-25)

Top changes in Gen Digital Inc.'s 2024 10-K

278 paragraphs added · 310 removed · 219 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

66 edited+12 added−32 removed39 unchanged
Biggest changeOur objectives include: • Data Privacy and Protection: We safeguard our customer, partner and employee data and offer products that help consumers protect their personal data wherever it is found. 9 Table of Contents • Education and Training for Cyber Safety: We leverage our leading expertise and technology in Cyber Safety to protect communities.
Biggest changeThese include: • Data Privacy and Protection: We safeguard our customer, partner and employee data and offer products that help consumers protect their personal data wherever it is found. • Education and Training for cyber safety: We leverage our leading expertise and technology to help educate, train and protect children, families and vulnerable communities online. • Diversity, Equity and Inclusion in Technology: We invest in high-impact non-profits to bring more women and under-represented groups into cybersecurity and technology. • Environment: We focus our environmental strategy on climate and energy, sustainable products, our supply chain, and engagement with employees and nonprofit partners with an emphasis on transparency about our progress and commitments. • Employee Engagement: We provide employees globally with meaningful ways to put their time, skills and monetary donations to work for their favorite causes.
We plan to also continue investing in enhancing both desktop and mobile customer experiences throughout a customer’s journey with Gen, from purchase, to onboarding and beyond. • Increase value to existing customers: We believe strong customer satisfaction will provide us with the opportunity to engage customers in new services offerings.
We also plan to continue investing in enhancing both desktop and mobile customer experiences throughout a customer’s journey with Gen, from purchase, to onboarding and beyond. • Increase value to existing customers: We believe strong customer satisfaction will provide us with the opportunity to engage customers in new services offerings.
We are our customers’ trusted ally they can depend on to help secure and control their digital lives so they can be free to enjoy the promise of the digital world. We are committed more than ever to protecting and empowering people’s digital lives with human-centered safety.
We are our customers’ trusted ally they can depend on to help secure and control their digital lives so they can be free to enjoy the promise of the digital world. We are committed more than ever to protecting and empowering people’s digital lives with personalized, human-centered safety.
We developed and implemented a global partner sales organization that targets new, as well as existing, partners to enhance our partner distribution channels. These channels include retailers, telecom service providers, hardware OEMs, employee benefit providers, strategic partners, and small office, home offices and very small businesses.
We developed and implemented a global partner sales organization that targets new, as well as existing, partners to enhance our partner distribution channels. These channels include retailers, telecom service providers, hardware OEMs, employee benefit providers, strategic partners, and small offices, home offices and very small businesses.
The key elements of our strategy include the following: • Extend our leadership position through new products and continued enhancement of our solutions and services: Cyber Safety is large and expanding, which we believe provides a significant growth opportunity.
The key elements of our strategy include the following: • Extend our leadership position through new products and continued enhancement of our solutions and services: Cyber safety is a large and expanding market, which we believe provides a significant growth opportunity.
We work to reduce greenhouse gas emissions from our operations through operational efficiencies, reduce the environmental footprint of our products across their lifecycle through innovative approaches to product development and packaging, promote high standards for environmental stewardship in our supply chain and engage with employees and environmental partners to amplify our work. • Social: We are proud to support the communities where our team members live and work.
We work to reduce greenhouse gas emissions from our operations through operational efficiencies, reduce the environmental footprint of our products across their lifecycle through innovative approaches to product development and packaging, promote high standards in our supply chain and engage with employees and environmental partners to amplify our work. • Social: We are proud to support the communities where our team members live and work.
From time to time, we enter into cross-license agreements with other technology companies covering broad groups of patents; we have an additional portfolio of over 2,100 U.S. and international patents cross-licensed to us as part of our arrangement with Broadcom as a result of the asset sale of our former Enterprise Security business.
From time to time, we enter into cross-license agreements with other technology companies covering broad groups of patents; we have an additional portfolio of over 2,000 U.S. and international patents cross-licensed to us as part of our arrangement with Broadcom as a result of the asset sale of our former Enterprise Security business.
We believe the Cyber Safety market will continue to expand beyond these core markets and grow significantly, driven by the growing number of people globally connected to the internet and their expanding digital lives. The cyber threat landscape is larger and more complicated than ever before, exposing consumers to an increased risk to their digital lives.
We believe the cyber safety market will continue to expand beyond these core markets and grow significantly, driven by the increasing number of people globally connected to the internet and their expanding digital lives. The cyber threat landscape is larger and more complicated than ever before, exposing consumers to an increased risk to their digital lives.
Of these total users, we have approximately 65 million paid Cyber Safety customers including over 38 million direct customers with whom we have a direct billing relationship. • Direct-to-consumer channel: We use advertising to elevate our family of brands, attract new customers and generate significant demand for our services.
Of these total users, we have approximately 65 million paid cyber safety customers including over 39 million direct customers with whom we have a direct billing relationship. • Direct-to-consumer channel: We use advertising to elevate our family of brands, attract new customers and generate significant demand for our services.
We are well positioned across three key Cyber Safety categories: • Security and Performance (Norton, Avast, Avira, AVG, and CCleaner offerings): Our offerings provide real-time protection for PCs, Macs and mobile devices against malware, viruses, adware, ransomware and other online threats.
We are well positioned across three key cyber safety categories: • Security and Performance (Norton, Avast, Avira, AVG, and CCleaner offerings): Our offerings provide real-time threat protection for PCs, Macs and mobile devices against malware, viruses, adware, ransomware and other online emerging threats.
We are well positioned for driving the awareness of Cyber Safety for individuals, families, and small businesses, fueled by an increasingly connected world. We maintain a global, omni-channel sales approach, including direct acquisition and a family of brands marketing program.
We are well positioned for driving the awareness of cyber safety for individuals, families, and small businesses, fueled by an increasingly connected world. We maintain a global, omni-channel sales approach, including direct, indirect and freemium acquisition and a family of brands marketing program.
Setting strategic, achievable, and business-aligned corporate responsibility objectives helps to guide our work and improves our company performance. We align our objectives with the company’s financial goals and focus on the unique positive social and environmental impacts that our business model can have on the world.
Setting strategic, achievable, and business-aligned corporate responsibility objectives helps to guide our work and improves our company performance. We align our ESG programs with the company’s financial goals and focus on the unique positive social and environmental impacts that our business model can have on the world.
With dual headquarters in Tempe, Arizona, and in Prague, Czech Republic, we have over 1,100 active employees located in the U.S. and nearly 900 active employees in the Czech Republic. None of our U.S. employees are represented by a labor union or covered by a collective bargaining agreement.
With dual headquarters in Tempe, Arizona, and in Prague, Czech Republic, we have over 1,000 active employees located in the U.S. and nearly 900 active employees in the Czech Republic. None of our U.S. employees are represented by a labor union or covered by a collective bargaining agreement.
Our community impact programs include employee volunteering and giving, product donations, signature programs that leverage our unique expertise in increasing digital safety literacy, and corporate philanthropic giving focused on digital safety education; environmental action; and disaster response.
Our community impact programs include employee volunteering and giving, product donations, signature programs that leverage our unique expertise in increasing digital safety literacy, and corporate philanthropic giving. Our giving focuses on digital safety education; environmental action; and disaster response.
In addition, for individual solutions or features, smaller, well-funded competitors may be able to innovate and adapt more nimbly to the dynamic nature of the market and shift consumer needs.
In addition, for individual solutions or features, smaller, well-funded competitors may be able to innovate and adapt more nimbly to the dynamic nature of the market and shifting consumer needs.
To this end, we offer both free and paid subscription-based Cyber Safety solutions primarily direct-to-consumer through our family of brands and indirectly through partner relationships. Most of our subscriptions are offered on annual terms, but we also provide monthly subscriptions. As of March 31, 2023, we have approximately 500 million total users, which come from direct, indirect and freemium channels.
To this end, we offer both free and paid subscription-based cyber safety solutions primarily direct-to-consumer through our family of brands and indirectly through partner relationships. Most of our subscriptions are offered on annual terms, but we also provide monthly subscriptions. As of March 29, 2024, we have approximately 500 million total users, which come from direct, indirect and freemium channels.
Our mission is to increase our global representation of underrepresented groups at all levels (diversity), where everyone has an opportunity for development and advancement (equity) and can bring their whole selves to work and feel valued every day (inclusion).
Our mission is to increase our global representation of underrepresented groups at all levels (diversity), where everyone has an opportunity for 9 Table of Contents development and advancement (equity) and can bring their whole selves to work and feel valued every day (inclusion).
We also have a global threat 7 Table of Contents response and security technology organization that is comprised of our dedicated team of threat and security researchers, supported by advanced systems to innovate security technology and threat intelligence. We have one of the world’s largest consumer Cyber Safety networks.
We also have a global threat response and security technology organization that is comprised of our dedicated team of threat and security researchers, supported by advanced systems to innovate security technology and threat intelligence. We have one of the world’s largest consumer cyber safety networks.
In addition, as of March 31, 2023, women represented 40% of our Board of Directors and half of our independent board membership. • Diversity, Equity and Inclusion (DEI): We strive to be a diverse, vibrant community with strong values and a shared commitment to our customers, to each other, the work we do and the world we all share.
In addition, as of March 29, 2024, women represented 40% of our Board of Directors and half of our independent board membership. • Diversity, Equity and Inclusion (DEI): We strive to be a diverse, vibrant community with strong values and a shared commitment to our customers, to each other, the work we do and the world we all share.
Plans are offered through Norton 360 and Avast One subscriptions, both brands provide multiple levels of membership tiers that range from basic, mid-level, or premium tiers where identity theft and online privacy features are included. • Point solutions: Providing individual, stand-alone products and services in security, identity and privacy, which offers flexibility for consumers to choose between free or paid solutions.
Plans are offered through Norton 360 and Avast One subscriptions, with both brands providing multiple levels of membership tiers that range from basic, mid-level, or premium tiers where identity theft and online privacy features are included. • Point solutions: Providing individual, stand-alone products and services in security, identity and privacy, offering flexibility for consumers to choose between free or paid solutions.
The ability to maintain and protect our intellectual property rights is important to our success, but we believe our business is not materially dependent on any individual patent, copyright, trademark, trade secret, license, or other intellectual property right. However, circumstances outside our control could pose a threat to our intellectual property rights.
The ability to maintain and protect 10 Table of Contents our intellectual property rights is important to our success, but we believe our business is not materially dependent on any individual patent, copyright, trademark, trade secret, license, or other intellectual property right. However, circumstances outside our control could pose a threat to our intellectual property rights.
Our principal competitors are set forth below: 8 Table of Contents • Security: Our principal competitors in this segment include Apple, Bitdefender, Google, Kaspersky, McAfee, Microsoft, Trend Micro, Webroot, Malwarebytes and F-Secure. • Identity Protection: Our principal competitors in this segment include credit bureaus such as Equifax, Experian and TransUnion, as well as certain credit monitoring and identity theft protection solutions from others such as Allstate, Generali (Iris), Aura and Intuit (Credit Karma). • Online Privacy: Our principal competitors in this segment include Apple, Aura, Kape, Nord Security, IPVanish, Mozilla, Brave, and DuckDuckGo. • Other Competitors: In addition to competition from independent software vendors such as Bitdefender, Kaspersky, McAfee and Trend Micro, and from OS providers such as Apple, Google and Microsoft, we also face competition from other companies that currently focus on one or a few Cyber Safety or adjacent segments but are developing additional competing products and expanding their portfolios into new segments, such as ‘pure play’ companies such as Life360, Bark, Dashlane, LastPass, internet service providers, big tech platform providers, insurance companies and financial service organizations.
Our principal competitors are set forth below: • Security: Our principal competitors in this segment include Apple, Bitdefender, ESET, F-Secure, Google, Kaspersky, Malwarebytes, McAfee, Microsoft, Trend Micro, and Webroot. • Identity Protection: Our principal competitors in this segment include credit bureaus such as Equifax, Experian and TransUnion, as well as certain credit monitoring and identity theft protection solutions from others such as Allstate, Aura, Generali (Iris), Intuit (Credit Karma) and Microsoft. • Online Privacy: Our principal competitors in this segment include Apple, Aura, Brave, DuckDuckGo, IPVanish, Kape, Mozilla and Nord Security. • Other Competitors: In addition to competition from independent software vendors such as Bitdefender, Kaspersky, McAfee and Trend Micro, and from OS providers such as Apple, Google and Microsoft, we also face competition from other companies that currently focus on one or a few cyber safety or adjacent segments but are developing additional competing products and expanding their portfolios into new segments, such as ‘pure play’ companies including but not limited to, 1Password, Bark, Dashlane, LastPass, Life360, Proton, and Truecaller, internet service providers, big tech platform providers, insurance companies and financial service organizations.
We measure belonging as a key metric in our quarterly Engage employee surveys and are proud to support our eight employee resource groups our Gen communities for people to come together as allies, to learn, support, mentor, and celebrate with one another and to provide an environment where everyone feels seen, heard, respected and valued. • Employee Development and Training: Our people programs are designed to provide our team members with support, resources, and opportunities they need to grow, learn and thrive in their careers.
Inclusion is something we strive for and we measure belonging as a key metric in our Engage employee surveys and are proud to support our nine employee resource groups, our Gen communities for people to come together as allies, to learn, support, mentor, and celebrate with one another and to provide an environment where everyone feels seen, heard, respected and valued. • Employee Development and Training: Our people programs are designed to provide our team members with support, resources, and opportunities they need to grow, learn and thrive in their careers.
This committee has oversight of ESG issues and receives quarterly updates on topics such as diversity, ethics, environmental stewardship and community investment. Our global culture of responsibility, and the positive contributions we make to the customers, employees, communities, and other stakeholders that we serve drives value for our business.
This committee has oversight of ESG program and receives quarterly updates on topics such as diversity, ethics, community investment and the environment. Our global culture of responsibility, and the positive contributions we make to the customers, employees, communities, and other stakeholders that we serve drives value for our business.
The digitization of the world and the overlap between the physical and digital world is growing at a fast pace. New technologies, smart devices, digital identities and an increasingly more connected world means consumers will encounter a range of new Cyber Safety challenges.
The digitization of the world and the overlap between the physical and digital world are growing at a fast pace. New technologies, smart devices, digital identities and an increasingly more connected world mean consumers will encounter a range of new cyber safety challenges.
We continued to focus on learning and development in fiscal 2023, investing further in digital learning via our Rise Learning (formally Nvest Learning) programs for all employees. Leveraging an extensive breadth of content and learning opportunities. This umbrella of offerings includes Rise Mentorship, Rise eLearning and University of Rise.
We continued to focus on learning and development in fiscal 2024, investing further in digital learning via our Rise Learning programs for all employees. Leveraging an extensive breadth of content and learning opportunities, this umbrella of offerings includes Rise Mentorship, Rise eLearning and University of Rise (U Rise).
Physical retail and OEM partners represent a small portion of our distribution, which minimizes the impact of supply chain disruptions. 5 Table of Contents • Freemium channels: With the acquisition of Avast and Avira, we have expanded our go-to-market with multiple freemium channels.
Physical retail and OEM partners represent a small portion of our distribution, which minimizes the impact of supply chain disruptions. • Freemium channels: With the acquisitions of Avast and Avira, we have expanded our go-to-market with multiple freemium channels.
To fuel our growth, our consumer-centric strategy is to provide comprehensive and easy-to-use integrated platforms, which we have built in-house or acquired. By combining and leveraging our family of trusted consumer brands, including offerings from Norton, Avast, LifeLock, Avira, AVG, Reputation Defender and CCleaner, we deliver an industry-leading set of Cyber Safety solutions.
To fuel our growth, our consumer-centric strategy is to provide comprehensive and easy-to-use integrated platforms, which we have built in-house or acquired. By combining and leveraging our family of trusted consumer brands, including offerings from Norton, Avast, LifeLock, Avira, AVG, ReputationDefender and CCleaner, we deliver an industry-leading set of cyber safety solutions. We are positioned for long-term growth and expansion.
Our technology platforms bring together software and service capabilities within these three categories into comprehensive and easy-to-use products and solutions across our brands. We have also evolved beyond traditional Cyber Safety to offer adjacent trust-based solutions, including digital identity and access management, digital reputation, and restoration support services.
Leveraging our technology platforms, we integrate software and service capabilities within these three categories into comprehensive and easy-to-use products and solutions across our brands. 6 Table of Contents We have also evolved beyond traditional cyber safety to offer adjacent trust-based solutions, including digital identity and access management, digital reputation, and restoration support services.
Seasonal behavior in orders primarily reflects consumer spending patterns where our fiscal third and fourth quarters are higher due to the holidays in our third quarter, as well as follow-on holiday purchases and the U.S. tax filing season which typically is in our fourth quarter.
However, we believe the net impact on our business is limited. Seasonal behavior in orders primarily reflects consumer spending patterns where our fiscal third and fourth quarters are generally higher due to the holidays in our third quarter, as well as follow-on holiday purchases and the U.S. tax filing season which typically is in our fourth quarter.
We make available our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after we electronically file such material with the Securities and Exchange Commission (SEC) on our investor relations website located at Investor.GenDigital.com .
Available Information Our internet home page is located at GenDigital.com . We make available our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after we electronically file such material with the SEC on our investor relations website located at Investor.GenDigital.com .
For more information on the risks associated with our competitors, please see “Risk Factors” – Risks Related to Our Business Strategy and Industry – “We operate in a highly competitive and dynamic environment, and if we are unable to compete effectively, we could experience a loss in market share and a reduction in revenue” and “We may need to change our pricing models to compete successfully,” in Item 1A included in this Annual Report on Form 10-K.
For more information on the risks associated with our competitors, please see “Risk Factors” – Risks Related to Our Business Strategy and Industry – “We operate in a highly competitive and dynamic environment, and if we are unable to compete effectively, we could experience a loss in market share and a reduction in revenue” and “We may need to change our pricing models to compete successfully,” in Item 1A included in this Annual Report on Form 10-K. 8 Table of Contents Environmental, Social and Governance (ESG) Our commitment to ESG supports our company Purpose and Mission.
We are positioned for long-term growth and expansion. Our three primary growth levers are: 1. Extending Reach: Leveraging omni-channel strategy and building partnerships to broaden privacy and identity protection internationally. 2. Increasing Value: Cross-selling and up-selling, and expanding identity and privacy solutions to address consumers’ evolving needs. 3.
Our three primary growth levers are: 1. Extending Reach: Leveraging an omni-channel strategy and building partnerships to broaden privacy and identity protection internationally. 2. Increasing Value: Cross-selling and up-selling, and expanding security, identity and privacy solutions to address consumers’ evolving needs. 3.
The user can choose to add specific premium solutions or upgrade to suites that provide security, identity, and privacy across multiple platforms and devices, thereby becoming a paid customer. Seasonality As is typical for many consumer technology companies, portions of our business are impacted by seasonality. However, we believe the net impact on our business is limited.
The user can choose to add specific premium solutions or upgrade to suites that provide security, identity, and privacy across multiple platforms and devices, thereby becoming a paid customer. 5 Table of Contents Seasonality As is typical for many consumer technology companies, portions of our business are impacted by seasonality.
We continuously target to release new products and features at an accelerated pace and find synergies to integrate current and future technology acquisitions. Our Cyber Safety portfolio provides protection across three key categories in multiple channels and geographies, including security and performance, identity protection, and online privacy.
We continuously aim to release new products and features to outpace evolving threats and find synergies to integrate current and future technology acquisitions. Our cyber safety portfolio provides protection across three key categories in multiple channels and geographies, including security and performance, identity protection, and online privacy.
However, with each new digital interaction comes increased risk and exposure for consumers as cybercriminals use a mix of old and new tactics and technology, including phishing, vishing, smishing, based on machine learning and deep fake, to execute highly advanced threats.
However, with each new digital interaction comes increased risk and exposure for consumers as cybercriminals use a mix of old and new tactics and technologies, including phishing, vishing, smishing, based on machine learning and generative artificial intelligence (AI) technologies, to execute highly advanced threats and attacks.
Our success in helping achieve this mission depends, in large part, on the success of our employees. • General Employee Demographics: As of March 31, 2023, we employed just under 3,700 employees in nearly 30 countries worldwide.
Our success in helping achieve this mission depends, in large part, on the success of our employees. • General Employee Demographics: As of March 29, 2024, we employed just under 3,400 team members in nearly 30 countries worldwide.
As of March 31, 2023, inclusive of our integration of bringing together NortonLifeLock and Avast teams as a combined company, women represented 32% of Gen’s total workforce and held positions in 30% of our leadership.
As of March 29, 2024, inclusive of our integration of bringing together NortonLifeLock and Avast teams as a combined company, women represented 34% of Gen’s total workforce and held positions in 34% of our leadership.
We do what we say and say what we do with integrity. • Play to win. Together. We act with passion, purpose, and energy to win with customers and in the marketplace. We leverage the strength of our global team, knowing we’re more powerful together. Company Overview On September 12, 2022, we completed the merger with Avast (the Merger).
We do what we say and say what we do with integrity. • Play to win. Together. We act with passion, purpose, and energy to win with customers and in the marketplace. We leverage the strength of our global team, knowing we’re more powerful together.
Building a brand centered on trust is critically important, and our focus on ESG helps us earn trust from our customers, employees, investors and shareholders. As such, ESG topics are core to our business strategy: • Environment: Protecting our planet is fundamental to ensuring a safe and sustainable future.
Building a brand centered on trust is critically important to our business success, and our focus on ESG helps us earn trust from our customers, employees, investors and shareholders. As such, ESG topics are core to our business strategy. Examples of our efforts include: • Environment: Helping protect our planet is part of promoting a safe and sustainable future.
Our global technology research organization is focused on applied research projects, with the goal of rapidly creating new products to address consumer trends and grow the business, including defending consumer digital privacy and identity.
The Technology team at Gen is driving the company’s future technologies and innovation and helping guide the consumer cybersecurity industry. Our global technology research organization is focused on applied research projects, with the goal of rapidly creating new products to address consumer trends and grow the business, including defending consumer digital privacy and identity.
The term of the patents we hold is, on average, seventeen years.
The term of the patents we hold is, on average, in excess of ten years.
Over 200 participants have enrolled in this program to date. 10 Table of Contents As part of our ongoing focus on diverse employee development, we continue to extend our participation in McKinsey & Company’s Connected Leaders Academy for our Asian, Black and Hispanic-Latino leaders.
As part of our ongoing focus on diverse employee development, we continue to extend our participation in McKinsey & Company’s Connected Leaders Academy for our Asian, Black and Hispanic-Latino leaders.
To do this, we engage and listen to our customers, and we embrace innovation by deploying a global research and development strategy across our Cyber Safety platform. Our engineering and product management teams are focused on delivering new versions of existing offerings, as well as developing entirely new offerings to drive the company’s global leadership in Cyber Safety.
Our engineering and product management teams are focused on delivering new versions of existing offerings, as well as developing entirely new offerings to drive the company’s global leadership in cyber safety. We are committed to our innovation and research and development efforts.
Cybercriminals have not only expanded their reach, but the sophistication of digital threats and attacks are becoming increasingly more consumer-related. Cybercrime, and the ways in which cybercriminals target consumers, continue to evolve along with behaviors and technology.
Cybercriminals have not only expanded their reach, but the sophistication of digital threats and attacks are becoming increasingly more realistic and believable. The advancement of AI and large language model (LLM) technology is a key driver of this. Cybercrime, and the ways in which cybercriminals target consumers, continue to evolve along with behaviors and technology.
Over time, we plan to drive further growth as we add additional offerings and services for our customers. • Draw strength from our world-class customer service support: We have the largest consumer Cyber Safety customer service support organization in the world.
Over time, we plan to drive further growth as we add additional offerings and services for our customers. • Draw strength from our world-class customer service support: Our global support team seeks to ensure the voice of the consumer is heard and that we put our customers first.
Industry Overview Cyber Safety is a growing market, fueled by the increase in activities online over the years as well as the years ahead. The core markets that we participate in are security, identity and privacy.
Our differentiated approach is powered by our global scale and visibility, geographically distributed cloud data platform, and advanced AI-based automation. 7 Table of Contents Industry Overview Cyber safety is a growing market, fueled by the increase in activities online over the years as well as the years ahead. The core markets that we participate in are security, identity and privacy.
University of Rise (U Rise) leadership program that offers best-in-class content from Harvard ManageMentor to inspire and engage existing and aspiring people leaders provides over 40 course options and group learning opportunities.
Our Rise Mentorship program continues to grow and boasts an active community of mentors and mentees across the world. Our U Rise leadership program that offers best-in-class content from Harvard ManageMentor to inspire and engage existing and aspiring people leaders provides over 40 course options and group learning opportunities. Over 200 participants have enrolled in this program to date.
Risk Factors and elsewhere in this Annual Report on Form 10-K. Our annual ESG and Corporate Responsibility Report can be found at Investor.GenDigital.com/ESG . Human Capital Management At Gen, our mission is to build a comprehensive and easy-to-use integrated portfolio that prevents, detects and responds to cyber threats and cybercrimes in today’s digital world.
Human Capital Management At Gen, our mission is to build a comprehensive and easy-to-use integrated portfolio that prevents, detects and responds to cyber threats and cybercrimes in today’s digital world.
This allows customers to securely transmit and access private information, such as passwords, bank details and credit card numbers, when using public Wi-Fi on PCs, Macs and mobile iOS and Android devices. Norton Privacy Monitor Assistant is an on-demand, white glove service where our agents help our members delete personal information from Data brokers online.
This allows customers to securely transmit and access private information, such as passwords, bank details and credit card numbers, when using public Wi-Fi on PCs, Macs, and mobile iOS and Android devices.
This mission is built upon four foundational pillars: (1) measurement and accountability; (2) fostering an inclusive environment; (3) diversifying our workforce; and (4) employee development and retention, which are designed to support, attract, retain and nurture our talent. Clear and actionable multi-year representation goals are set at the leadership level to support accountability and progress, against our goals.
As part of our culture and leadership fabric, we are committed to increasing diversity through our four pillar DEI strategy. This mission is built upon four foundational pillars: (1) measurement and accountability; (2) fostering an inclusive environment; (3) diversifying our workforce; and (4) employee development and retention, which are designed to support, attract, retain and nurture our talent.
Diversity and inclusion are woven into our people processes and our culture. We ask new hires and employees to self-identify their demographics, and important characteristics to help us better measure the diversity of our applicant pool and of our team to derive insights and actionable people strategies.
We ask new hires and employees to self-identify their demographics and other important characteristics to help us better measure the diversity of our applicant pool and of our team to derive insights and actionable people strategies. We post positions on several diverse recruiting sites and have dedicated budget to support increasing diverse candidate pipelines.
Feedback from our employees is critical, and we have developed an ongoing dialogue with our teams via our quarterly Engage pulse survey on a targeted topic that drives actions and improvements.
Feedback from our employees is critical, and we have developed an ongoing dialogue with our teams via our Engage pulse survey on a targeted topic that drives actions and improvements. • Benefits; Health and Wellness: At Gen, we value our people and are committed to creating a positive and fulfilling experience for everyone through the programs and benefits we offer.
These offerings monitor and block unauthorized traffic from the internet to the device to help protect private and sensitive information when customers are online.
These offerings monitor and block unauthorized traffic from the internet to the device to help protect private and sensitive information when customers are online. Additionally, our all-in-one cybersecurity solutions help small business owners safeguard their team’s online activities, devices and customer data.
We also provide performance and optimization software solutions that frees up space on devices, clears online tracking and helps machines run faster. • Identity Protection (Norton and LifeLock Identity Theft Protection and Restoration, Dark Web Monitoring, Home Title Protect, Social Media Monitoring, Avast Secure Identity): Our Norton and LifeLock identity theft protection solution includes monitoring, alerts and restoration services to help safeguard our customers’ personal information.
We also provide performance and optimization software solutions that frees up space on devices, clears online tracking and helps machines run faster. • Identity Protection (US: LifeLock Identity Theft Protection, Avast and AVG Secure Identity; International: Norton Identity Theft Protection, Dark Web Monitoring): In the US, we offer Identity Theft protection as part of our LifeLock, Avast and AVG brands.
Rise eLearning, a collection of digital, on-demand modules categorized around leadership, health and wellness, business skills, and technical skills, experienced a steady increase in participation during the year with over 1,200 individual learners who have experienced 5000 modules total.
Rise eLearning, a collection of over 5,000 digital, on-demand modules categorized around leadership, health and wellness, business skills, and technical skills, experienced a steady increase in participation during the year with over 2,000 individual learners. We also provide group learning designed around TED Talks on topics including leadership, change management and to support our diversity, equity and inclusion efforts.
Innovation, Research & Development Gen has a long history of innovation, and we plan to continue to invest in research and development to drive our long-term success. As cyber threats evolve, we are focused on delivering a portfolio that protects each element of our customers’ digital lives.
As cyber threats evolve, we are focused on delivering a portfolio that protects each element of our customers’ digital lives. To do this, we engage and listen to our customers, and we embrace innovation by deploying a global research and development strategy across our cyber safety platform.
The combined strengths of Gen created a broader and complementary product portfolio that spans beyond core security, into identity and privacy, and towards adjacent trust-based solutions. Gen is a global company powering Digital Freedom with a family of trusted brands including Norton, Avast, LifeLock, Avira, AVG, ReputationDefender and CCleaner.
Company Overview Gen is a global company powering Digital Freedom with a family of trusted brands including Norton, Avast, LifeLock, Avira, AVG, ReputationDefender and CCleaner.
Our global support team seeks to ensure the voice of the consumer is heard and that we put our customers first. We leverage frequent communication and feedback from our customers to continually improve our solutions and services.
We leverage frequent communication and feedback from our customers to continually improve our solutions and services.
We protect our intellectual property rights and investments in a variety of ways to safeguard our technologies and our long-term success. We work actively in the U.S. and internationally to ensure the enforcement of copyright, trademark, trade secret and other protections that apply to our software products and services.
As we continue to expand our international operations, we have developed a strategy to ensure global distribution of our IP aligns with our long-term strategic objectives, business model, and goals. We work actively in the U.S. and internationally to ensure the enforcement of copyright, trademark, trade secret and other protections that apply to our software products and services.
The information contained, or referred to, on our website, including in any reports that are posted on our website, is not part of this annual report unless expressly noted. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding our filings at http://www.sec.gov .
We also use our website as a tool to disclose important information about the company and comply with our disclosure obligations under Regulation Fair Disclosure. The information contained, or referred to, on our website, including in any reports that are posted on our website, is not part of this annual report unless expressly noted.
This quarterly update includes performance data and program information across environmental stewardship, ethics, community investment, and more; progress made toward our ESG targets; and information on emerging ESG priorities. Additionally, as part of our ESG reporting process, we hold regular meetings with functional leaders to review our ESG disclosures. Our Leadership Team is highly engaged in our ESG efforts.
Additionally, as part of our ESG reporting process, we hold regular meetings with functional leaders to review our ESG disclosures. Our Leadership Team is highly engaged in our ESG efforts. Our Head of Corporate Responsibility and Public Policy provides quarterly updates to our Leadership Team and cross-functional ESG Working Group to review our strategy, progress, and program updates.
According to our most recent research, Norton has 84% global brand awareness, and we are best positioned and number one top of mind in consumer Cyber Safety, according to the 2022 Gen Brand Impact study. 6 Table of Contents Our Cyber Safety Solutions and Services Our broad portfolio of products and services is developed from consumer insights to help us bring to market real solutions to real problems and to engage and educate consumers about Cyber Safety.
Our Cyber Safety Solutions and Services Our broad portfolio of products and services is developed from consumer insights to help us bring to market real solutions to real problems and to engage and educate consumers about cyber safety.
Environmental, Social and Governance (ESG) Our commitment to ESG is a core component of our company Purpose and Mission. The Nominating and Governance Committee of our Board of Directors has oversight over the Company’s ESG strategy, and our full Board of Directors receives a quarterly ESG update.
The Nominating and Governance Committee of our Board of Directors has oversight over the Company’s ESG strategy, and our full Board of Directors receives a quarterly ESG update. This quarterly update includes program information across ethics, community investment, the environment and information on emerging ESG priorities.
It provides for easier participation for employees to give to their favorite nonprofits and for additional global opportunities for volunteering and service in their communities. We cannot guarantee that we will achieve these objectives, and our ability to achieve them is subject to risks and uncertainties both known and unknown, including various risks noted in Item 1A.
We cannot guarantee that we will achieve these objectives, and our ability to achieve them is subject to risks and uncertainties both known and unknown, including various risks noted in Item 1A. Risk Factors and elsewhere in this Annual Report on Form 10-K. Our annual ESG and Corporate Responsibility Report can be found at Investor.GenDigital.com/ESG .
In the event of identity theft, we assign an Identity Restoration Specialist to work directly with customers to help restore their identities. Norton Dark Web Monitoring looks for personal information of our LifeLock, Norton 360 and Norton Identity Advisor Plus members on the Dark Web. Avast Secure Identity provides advanced identity protection including credit monitoring and alerts.
In the event of identity theft, we assign an Identity Restoration Specialist to work directly with customers to help restore their identities, and all plans include reimbursements for losses and expenses incurred ranging up to $3 million.
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In connection with the Merger, effective November 7, 2022, we changed our company name from NortonLifeLock, Inc. to Gen Digital, Inc. (Gen). The Merger accelerated our transformation of consumer Cyber Safety, and increased our user reach and geographic footprint globally.
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According to our most recent research, Norton has 85% global brand awareness, and we are best positioned and top of mind in consumer cyber safety, according to the 2023 Gen Brand Tracker.
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For example, Norton AntiTrack helps keep personal information and browsing activity private by blocking trackers and disguising digital fingerprints online. Avast Driver Updater allows PC users to keep their computer’s drivers up-to-date, improving performance and keeping their device secure from vulnerabilities or bugs caused by outdated drivers.
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These products solve for a specific need, when you need it, and can add on to the value you already have. Please see below for our full set of products by category.
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LifeLock Home Title Protect detects fraud and notifies members if we find changes made to their Home Title.
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Scams have also continued to become more prevalent and sophisticated and we offer real-time scam detection tools such as Norton Genie to help determine if a text, email, social media post or website could be a scam.
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Norton Social Media Monitoring features help keep customers’ social media accounts safer by monitoring them for account takeovers, risky activity and inappropriate content. • Online Privacy (VPN, Privacy Monitor Assistant, AntiTrack, Online Reputation Management, Secure Browser, BreachGuard, Online Security and Privacy Browser Extension): Our VPN solutions enhance security and online privacy by providing an encrypted data tunnel.
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All three products include monitoring of credit reports, the dark web and social media accounts to help safeguard our customers’ personal information. The LifeLock product also offers monitoring of financial accounts.
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Our AntiTrack product helps keep personal information and browsing activity private by blocking trackers and disguising digital fingerprints online. Our Online Reputation Management solutions help extend and strengthen Gen’s privacy capabilities and functionalities, such as the ability to manage online search results, personal branding and digital privacy.
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Outside the US, we offer Norton branded plans that include dark web monitoring in over 50 countries and monitoring of credit, social media and financial accounts, restoration support and identity theft insurance in select countries. • Online Privacy (VPN, multiple personal data protection products, ReputationDefender): Our VPN solutions offered through the Norton, Avast and AVG brands enhance security and online privacy by providing an encrypted data tunnel.
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Our Secure Browser, BreachGuard and other browser extension products provide private, fast and secure browsing across different devices, as well as protect sensitive online information against malicious websites and phishing, data loss, data leaks, data breaches, and collection by third parties and provides assistance from experts when needed.
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We offer a variety of solutions under the Norton and Avast brands to protect customers’ data either by keeping it anonymous while browsing online through our AntiTrack and Secure Browser products or helping customers remove it from public data broker sites through our Privacy Monitor Assistant and BreachGuard products.
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We are committed to our innovation and research & development efforts. The Technology team at Gen is driving the company’s future technologies and innovations, and helping guide the consumer cybersecurity industry.
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ReputationDefender is a white glove service that helps customers manage all aspects of their personal branding online, including search results, social media sites and overall web presence. Innovation, Research and Development Gen has a long history of innovation, and we plan to continue to invest in research and development to drive our long-term success.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIt is possible that they could have a material effect on our corporate tax liability and our global effective tax rate; • Changes in the relative proportions of revenues and income before taxes in the various jurisdictions in which we operate that have differing statutory tax rates; • Changes in the valuation of deferred tax assets and liabilities and the discovery of new information in the course of our tax return preparation process; • The tax effects of significant infrequently occurring events that may cause fluctuations between reporting periods; • Tax assessments, or any related tax interest or penalties, that could significantly affect our income tax expense for the period in which the settlements take place; and • Taxes arising in connection to changes in our workforce, corporate entity structure or operations as they relate to tax incentives and tax rates.
Biggest changeWe will continue to monitor and reflect the impact of such legislative changes in future financial statements as appropriate; • Changes in the relative proportions of revenues and income before taxes in the various jurisdictions in which we operate that have differing statutory tax rates; • Changes in the valuation of deferred tax assets and liabilities and the discovery of new information in the course of our tax return preparation process; • The ultimate determination of our taxes owed in any of these jurisdictions is for an amount in excess of the tax provision we have recorded or reserved for; • The tax effects of, and tax planning and changes in tax rates related to significant infrequently occurring events (including acquisitions, divestitures and restructurings) that may cause fluctuations between reporting periods; • Tax assessments, or any related tax interest or penalties, that could significantly affect our income tax expense for the period in which the settlements take place; and 23 Table of Contents • Taxes arising in connection to changes in our workforce, corporate and legal entity structure or operations as they relate to tax incentives and tax rates.
In the past, we have incurred, and will continue to incur, significant research and development expenses as we focus on organic growth through internal innovation. We believe that we must dedicate significant resources to our research and development efforts to deliver innovative market competitive products and avoid being reliant on third party technology and products.
In the past, we have incurred, and will continue to incur, significant research and development expenses as we focus on organic growth through internal innovation. We believe that we must continue to dedicate significant resources to our research and development efforts to deliver innovative market competitive products and avoid being reliant on third-party technology and products.
To compete successfully, we must maintain an innovative research and development effort to develop new solutions and enhance our existing solutions, effectively adapt to changes in the technology, privacy and data protection standards or trends.
To compete successfully, we must maintain an innovative research and development effort to develop new solutions and enhance our existing solutions, and effectively adapt to changes in the technology, privacy and data protection standards or trends.
If our competitors offer deep discounts on certain solutions or provide offerings, or offer free introductory products that compete with ours, we may need to lower prices or offer similar free introductory products to compete successfully.
If our competitors offer deep discounts on certain solutions, provide offerings, or offer free introductory products that compete with ours, we may need to lower our prices or offer similar free introductory products to compete successfully.
For example, the California Consumer Privacy Act of 2018 (the CCPA) requires, among other things, covered companies to provide new disclosures to California consumers regarding the use of personal information, gives California residents expanded rights to access their personal information that has been collected and allows such consumers new abilities to opt-out of certain sales of personal information.
For example, the California Consumer Privacy Act of 2018 (the CCPA) requires, among other things, covered companies to provide disclosures to California consumers regarding the use of personal information, gives California residents expanded rights to access their personal information that has been collected and allows such consumers new abilities to opt-out of certain sales of personal information.
In addition, audits by tax authorities could result in additional tax payments for prior periods. We are a multinational company dual headquartered in the U.S. and Czech Republic, with our principal executive offices in Tempe, Arizona. As such, we are subject to tax in multiple U.S. and international tax jurisdictions.
In addition, audits by tax authorities could result in additional tax payments for prior periods. We are a multinational company dual headquartered in the U.S. and the Czech Republic, with our principal executive offices in Tempe, Arizona. As such, we are subject to tax in multiple U.S. and international tax jurisdictions.
Our international operations are subject to risks in addition to those faced by our domestic operations, including: • Difficulties staffing, managing, and coordinating the activities of our geographically dispersed and culturally diverse operations; • Potential loss of proprietary information due to misappropriation or laws that may be less protective of our intellectual property rights than U.S. laws or that may not be adequately enforced; • Requirements of foreign laws and other governmental controls, including tariffs, trade barriers and labor restrictions, and related laws that reduce the flexibility of our business operations; • Fluctuations in currency exchange rates, economic instability, and inflationary conditions could make our solutions more expensive or could increase our costs of doing business in certain countries; • Potential changes in trade relations arising from policy initiatives or other political factors; • Regulations or restrictions on the use, import, or export of encryption technologies that could delay or prevent the acceptance and use of encryption products and public networks for secure communications; • Local business and cultural factors that differ from our normal standards and practices, including business practices that we are prohibited from engaging in by the Foreign Corrupt Practices Act and other anti-corruption laws and regulations; • Central bank and other restrictions on our ability to repatriate cash from our international subsidiaries or to exchange cash in international subsidiaries into cash available for use in the United States; • Limitations on future growth or inability to maintain current levels of revenues from international sales if we do not invest sufficiently in our international operations; • Difficulties in staffing, managing, and operating our international operations; • Costs and delays associated with developing software and providing support in multiple languages; • Political, social or economic unrest, war, or terrorism, regional natural disasters, or export controls and trade restrictions, particularly in areas in which we have facilities; and • Multiple and possibly overlapping tax regimes.
Our international operations are subject to risks in addition to those faced by our domestic operations, including: • Difficulties staffing, managing, and coordinating the activities of our geographically dispersed and culturally diverse operations; • Potential loss of proprietary information due to misappropriation or laws that may be less protective of our intellectual property rights than U.S. laws or that may not be adequately enforced; • Requirements of foreign laws and other governmental controls, including tariffs, trade barriers and labor restrictions, and related laws that reduce the flexibility of our business operations; • Fluctuations in currency exchange rates, economic instability and inflationary conditions could make our solutions more expensive or could increase our costs of doing business in certain countries; • Potential changes in trade relations arising from policy initiatives or other political factors; • Regulations or restrictions on the use, import or export of encryption technologies that could delay or prevent the acceptance and use of encryption products and public networks for secure communications; • Local business and cultural factors that differ from our normal standards and practices, including business practices that we are prohibited from engaging in by the Foreign Corrupt Practices Act and other anti-corruption laws and regulations; • Central bank and other restrictions on our ability to repatriate cash from our international subsidiaries or to exchange cash in international subsidiaries into cash available for use in the United States; • Limitations on future growth or inability to maintain current levels of revenues from international sales if we do not invest sufficiently in our international operations; • Difficulties in staffing, managing and operating our international operations; • Costs and delays associated with developing software and providing support in multiple languages; • Political, social or economic unrest, war, terrorism, regional natural disasters, or export controls and trade restrictions, particularly in areas in which we have facilities; and 15 Table of Contents • Multiple and possibly overlapping tax regimes.
Our level of indebtedness could have other important consequences, including the following : • We must use a substantial portion of our cash flow from operations to pay interest and principal on the Amended and Restated Credit Agreement, our existing Senior Notes, and other indebtedness, which reduces funds available to us for other purposes such as working capital, capital expenditures, other general corporate purposes, and potential acquisitions; • We may be unable to refinance our indebtedness or to obtain additional financing for working capital, capital expenditures, acquisitions, or general corporate purposes; 21 Table of Contents • We have significant exposure to fluctuations in interest rates because borrowings under our senior secured credit facilities bear interest at variable rates; • Our leverage may be greater than that of some of our competitors, which may put us at a competitive disadvantage and reduce our flexibility in responding to current and changing industry and financial market conditions; • We may be more vulnerable to an economic downturn or recession and adverse developments in our business; • We may be unable to comply with financial and other covenants in our debt agreements, which could result in an event of default that, if not cured or waived, may result in acceleration of certain of our debt and would have an adverse effect on our business and prospects and could force us into bankruptcy or liquidation; and • Changes by any rating agency to our outlook or credit rating could negatively affect the value of our debt and/or our common stock, adversely affect our access to debt markets, and increase the interest we pay on outstanding or future debt.
Our level of indebtedness could have other important consequences, including the following : • We must use a substantial portion of our cash flow from operations to pay interest and principal on the Amended and Restated Credit Agreement, our existing Senior Notes, and other indebtedness, which reduces funds available to us for other purposes such as working capital, capital expenditures, other general corporate purposes and potential acquisitions; • We may be unable to refinance our indebtedness or to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes; • We have significant exposure to fluctuations in interest rates because borrowings under our senior secured credit facilities bear interest at variable rates; • Our leverage may be greater than that of some of our competitors, which may put us at a competitive disadvantage and reduce our flexibility in responding to current and changing industry and financial market conditions; • We may be more vulnerable to an economic downturn or recession and adverse developments in our business; • We may be unable to comply with financial and other covenants in our debt agreements, which could result in an event of default that, if not cured or waived, may result in acceleration of certain of our debt and would have an adverse effect on our business and prospects and could force us into bankruptcy or liquidation; and • Changes by any rating agency to our outlook or credit rating could negatively affect the value of our debt and/or our common stock, adversely affect our access to debt markets and increase the interest we pay on outstanding or future debt.
These channels involve risks, including: • Our resellers, distributors and telecom service providers are generally not subject to minimum sales requirements or any obligation to market our solutions to their customers; • Our reseller and distributor agreements are generally nonexclusive and may be terminated at any time without cause and our partners may terminate or renegotiate their arrangements with us and new terms may be less favorable due to competitive conditions in our markets and other factors; • Our resellers, distributors and OEMs may encounter issues or have violations of applicable law or regulatory requirements or otherwise cause damage to our reputation through their actions; • Our resellers and distributors frequently market and distribute competing solutions and may, from time to time, place greater emphasis on the sale of competing solutions due to pricing, promotions, and other terms offered by our competitors; • Any consolidation of electronics retailers can increase their negotiating power with respect to software providers such as us and any decline in the number of physical retailers could decrease the channels of distribution for us; • The consolidation of online sales through a small number of larger channels has been increasing, which could reduce the channels available for online distribution of our solutions; and • Sales through our partners are subject to changes in general economic conditions, strategic direction, competitive risks, and other issues that could result in fewer sales, or cause our partners to suffer financial difficulty which could delay payments to us, affecting our operating results.
These channels involve risks, including: • Our resellers, distributors and telecom service providers are generally not subject to minimum sales requirements or any obligation to market our solutions to their customers; • Our reseller and distributor agreements are generally nonexclusive and may be terminated at any time without cause and our partners may terminate or renegotiate their arrangements with us and new terms may be less favorable due to competitive conditions in our markets and other factors; • Our resellers, distributors and OEMs may encounter issues or have violations of applicable law or regulatory requirements or otherwise cause damage to our reputation through their actions; 14 Table of Contents • Our resellers and distributors frequently market and distribute competing solutions and may, from time to time, place greater emphasis on the sale of competing solutions due to pricing, promotions and other terms offered by our competitors; • Any consolidation of electronics retailers can increase their negotiating power with respect to software providers such as us and any decline in the number of physical retailers could decrease the channels of distribution for us; • The consolidation of online sales through a small number of larger channels has been increasing, which could reduce the channels available for online distribution of our solutions; and • Sales through our partners are subject to changes in general economic conditions, strategic direction, competitive risks, and other issues that could result in fewer sales, or cause our partners to suffer financial difficulty which could delay payments to us, affecting our operating results.
We anticipate additional competition as new participants enter the Cyber Safety market and as our current competitors seek to increase their market share and expand their existing offerings. Some of our competitors have greater financial, technical, marketing, or other resources than we do, including in new Cyber Safety and digital life segments.
We have seen and anticipate additional competition as new participants enter the cyber safety market and as our current competitors seek to increase their market share and expand their existing offerings. Some of our competitors have greater financial, technical, marketing, or other resources than we do, including in new cyber safety and digital life segments.
Our solutions are complex and operate in a wide variety of environments, systems and configurations, which could result in failures of our solutions to function as designed. Because we offer very complex solutions, errors, defects, disruptions, or other performance problems with our solutions may and have occurred.
Our solutions are complex and operate in a wide variety of environments, systems and configurations, which could result in failures of our solutions to function as designed. Because we offer very complex solutions, errors, defects, disruptions, or other performance problems with our solutions may occur and have occurred.
We are frequently involved in litigation and other proceedings, including, but not limited to, patent litigation, class actions, and governmental claims or investigations, some of which may be material initially or become material over time.
We are frequently involved in litigation and other proceedings, including, but not limited to, class actions and governmental claims or investigations, some of which may be material initially or become material over time.
Our current and future interest rate hedging may fail to protect or could adversely affect us because, among other things: • Interest rate hedging can be expensive, particularly during periods of rising and volatile interest rates; 22 Table of Contents • Available interest rate hedging may not correspond directly with the interest rate risk for which protection is sought; • The duration of the hedge may not match the duration of the related liability or asset; • The credit quality of the party owing money on the hedge may be downgraded to such an extent that it impairs our ability to sell or assign our side of the hedging transaction; • The party owing money in the hedging transaction may default on its obligation to pay; and • We may purchase a hedge that turns out not to be necessary (i.e., a hedge that is out of the money).
Our current and future interest rate hedging may fail to protect or could adversely affect us because, among other things: • Interest rate hedging can be expensive, particularly during periods of rising and volatile interest rates; • Available interest rate hedging may not correspond directly with the interest rate risk for which protection is sought; • The duration of the hedge may not match the duration of the related liability or asset; • The credit quality of the party owing money on the hedge may be downgraded to such an extent that it impairs our ability to sell or assign our side of the hedging transaction; • The party owing money in the hedging transaction may default on its obligation to pay; and • We may purchase a hedge that turns out not to be necessary (i.e., a hedge that is out of the money).
Our estimates with respect to the useful life or ultimate recoverability of our carrying basis of assets, including purchased intangible assets, could change as a result of such assessments and decisions. Our loss contingencies may include liabilities for contracts that we cannot cancel, reschedule or adjust with suppliers.
Our estimates with respect to the useful life or ultimate recoverability of our carrying basis of assets, including purchased intangible assets, could change as a result of such assessments and decisions. Our loss contingencies have and may continue to include liabilities for contracts that we cannot cancel, reschedule or adjust with suppliers.
We could also face legal action from individuals, business partners, and regulators in connection with data breaches, which would result in increased costs and fees incurred in our defense against those proceedings, and/or payment of any regulatory penalties. 17 Table of Contents We collect, use, disclose, store or otherwise process personal information, which subjects us to privacy and data security laws and contractual commitments.
We could also face legal action from individuals, business partners, and regulators in connection with data breaches, which would result in increased costs and fees incurred in our defense against those proceedings, and/or payment of any regulatory penalties. We collect, use, disclose, store or otherwise process personal information, which subjects us to privacy and data security laws and contractual commitments.
Our customer retention rates may decline or fluctuate due to a variety of factors, including the following: • Our customers’ levels of satisfaction or dissatisfaction with our solutions and the value they place on our solutions; • The quality, breadth, and prices of our solutions; • Our general reputation and events impacting that reputation; • The services and related pricing offered by our competitors; including increasing availability and efficacy of free solutions; • Disruption by new services or changes in law or regulations that impact the need for efficacy of our products and services; • Changes in auto-renewal and other consumer protection regulations; • Our customers’ dissatisfaction with our efforts to market additional products and services; • Our customer service and responsiveness to the needs of our customers; • Changes in our target customers’ spending levels as a result of general economic conditions, inflationary pressures or other factors; and • The quality and efficacy of our third-party partners who assist us in renewing customers’ subscriptions.
Our customer retention rates may decline or fluctuate due to a variety of factors, including the following: • Our customers’ levels of satisfaction or dissatisfaction with our solutions and the value they place on our solutions; • The quality, breadth, and prices of our solutions, including solutions offered in emerging markets; • Our general reputation and events impacting that reputation; • The services and related pricing offered by our competitors; including increasing the availability and efficacy of free solutions; • Disruption by new services or changes in law or regulations that impact the need for or efficacy of our products and services; • Changes in auto-renewal and other consumer protection regulations; 13 Table of Contents • Our customers’ dissatisfaction with our efforts to market additional products and services; • Our customer service and responsiveness to the needs of our customers; • Changes in our target customers’ spending levels as a result of general economic conditions, inflationary pressures or other factors; and • The quality and efficacy of our third-party partners who assist us in renewing customers’ subscriptions.
The occurrence of a natural disaster, an act of terrorism state-sponsored attacks, a pandemic, geopolitical tensions or armed conflicts, and similar events could result in a decision to close the facilities without adequate notice or other unanticipated problems, which in turn, could result in lengthy interruptions in the delivery of our products and services, which could negatively impact our sales and operating results.
The occurrence of a natural disaster, an act of terrorism state-sponsored attacks, a pandemic, geopolitical tensions or armed conflicts, and similar events could result in a 17 Table of Contents decision to close the facilities without adequate notice or other unanticipated problems, which in turn, could result in lengthy interruptions in the delivery of our products and services, which could negatively impact our sales and operating results.
Additionally, our ability to recognize the financial statement benefit of tax refund claims is subject to change based on a number of factors, including but not limited to, changes in facts and circumstances, changes in tax laws, correspondence with both IRS and State tax authorities, and the results of tax audits and related proceedings, which may take several years or more to resolve.
Additionally, our ability to recognize the financial statement benefit of tax refund claims is subject to change based on a number of factors, including but not limited to, changes in facts and circumstances, changes in tax laws, correspondence with tax authorities, and the results of tax audits and related proceedings, which may take several years or more to resolve.
Our ability to meet expenses, comply with the covenants under our debt instruments, pay interest and repay principal for our substantial level of indebtedness depends on, among other things, our operating performance, competitive developments, and financial market conditions, all of which are significantly affected by financial, business, economic and other factors.
Our ability to meet expenses, comply with the covenants under our debt instruments, pay interest and repay principal for our substantial level of indebtedness depends on, among other things, our operating performance, competitive developments, and 20 Table of Contents financial market conditions, all of which are significantly affected by financial, business, economic and other factors.
Any decision to limit investment in or dispose of or otherwise exit businesses may result in the recording of special charges, such as technology-related write-offs, workforce reduction costs, charges relating to consolidation of excess facilities, or claims from third parties who were resellers or users of discontinued products.
Any decision to limit investment in or dispose of or otherwise exit businesses has and may continue to result in the recording of special charges, such as technology-related write-offs, workforce reduction costs, charges relating to consolidation of excess facilities, or claims from third parties who were resellers or users of discontinued products.
Our competitors could gain market share from us if any of these strategic partners replace our solutions with those of our competitors or with their own solutions. Similarly, they could gain market share from us if these partners promote our competitors’ solutions or their own solutions more than our solutions.
Our competitors could gain market share from us if any of these strategic partners replace our solutions with those of our competitors or with their own solutions. Similarly, they could gain market share from us if these partners promote our competitors’ solutions or their own solutions more frequently or more favorably than our solutions.
Further, our estimates relating to the liabilities for excess facilities are affected by changes in real estate market conditions. Additionally, we are required to evaluate goodwill impairment on an annual basis and between annual evaluations in certain circumstances, and future goodwill impairment evaluations may result in a charge to earnings.
Further, our estimates relating to the liabilities for excess facilities are affected by changes in real estate market conditions. Additionally, we are required to evaluate goodwill impairment on an annual basis and between annual evaluations in certain circumstances. Goodwill impairment evaluations have previously and may result in a charge to earnings.
Our solutions, systems, websites and the data on these sources have been and may continue to be subject to cybersecurity events that could materially harm our reputation and future sales.
Our solutions, systems, websites and the data on these sources have been in the past and may continue to be subject to cybersecurity events that could materially harm our reputation and future sales.
Any of the foregoing factors could cause the trading price of our outstanding securities to fluctuate significantly. Changes to our effective tax rate, including through the adoption of new tax legislation or exposure to additional income tax liabilities, could increase our income tax expense and reduce (increase) our net income (loss), cash flows and working capital.
Any of the foregoing factors could cause the trading price of our outstanding securities to fluctuate significantly. RISK RELATED TO TAXES Changes to our effective tax rate, including through the adoption of new tax legislation or exposure to additional income tax liabilities, could increase our income tax expense and reduce (increase) our net income (loss), cash flows and working capital.
We may need to change our pricing models to compete successfully. The intense competition we face, in addition to general and economic business conditions (including economic volatility, recent bank failures, and increased inflation and interest rates, among other things), may put pressure on us to change our pricing practices.
We may need to change our pricing models to compete successfully. The intense competition we face, in addition to general and economic business conditions (including economic volatility, bank failures, and high inflation and interest rates, among other things), may put pressure on us to change our pricing practices.
The methodologies used to measure these metrics require 14 Table of Contents judgment and are also susceptible to algorithms or other technical errors. We continually seek to improve our estimates of our user base, and these estimates are subject to change due to improvements or revisions to our methodology.
The methodologies used to measure these metrics require judgment and are also susceptible to algorithms or other technical errors. We continually seek to improve our estimates of our user base, and these estimates are subject to change due to improvements or revisions to our methodology.
The focus from regulators, customers, certain investors, employees, and other stakeholders concerning environmental, social and governance (ESG) matters and related disclosures, both in the United States and internationally, have resulted in, and are likely to continue to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting ESG-related requirements and expectations.
The focus from regulators, customers, certain investors, employees, and other stakeholders concerning environmental, social and governance (ESG) matters and related disclosures, both in the United States and internationally, has resulted in, and is likely to continue to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting ESG-related requirements and expectations.
Additionally, in the event we did not previously accrue for such 20 Table of Contents litigation or proceeding in our financial statements, we may be required to record retrospective accruals that adversely affect our results of operations and financial condition.
Additionally, in the event we did not previously accrue for such litigation or proceeding in our financial statements, we may be required to record retrospective accruals that adversely affect our results of operations and financial condition.
We face competition from a broad range of companies, including software vendors focusing on Cyber Safety solutions such as Bitdefender, Kapersky, McAfee and Trend Micro, operating system providers such as Apple, Google and Microsoft, and companies such as Nord, Life360, Last Pass and others that currently specialize in one or a few particular segments of the market and many of which are expanding their product portfolios into different segments.
We face competition from a broad range of companies, including software vendors focusing on cyber safety solutions such as Bitdefender, Kaspersky, McAfee and Trend Micro, operating system providers such as Apple, Google and Microsoft, and companies such as Nord, Life360, LastPass and others that currently specialize in one or a few particular segments of the market and many of which are expanding their product portfolios into different segments.
Any failure or perceived failure by us to comply with such obligations may result in governmental enforcement actions, fines, litigation, or public statements against us by consumer advocacy groups or others and could cause our customers to lose trust in us, which could have an adverse effect on our reputation and business.
Any failure or perceived failure by us to comply with such obligations has previously and may in the future result in governmental enforcement actions, fines, litigation or public statements against us by consumer advocacy groups or others and could cause our customers to lose trust in us, which could have an adverse effect on our reputation and business.
Hedging or other mitigation actions to mitigate against interest rate exposure may adversely affect our earnings, limit our gains or result in losses, which could adversely affect cash available for distributions. We have previously and may in the future enter into interest rate swap agreements or pursue other interest rate hedging strategies.
Hedging or other mitigation actions to mitigate against interest rate exposure may adversely affect our earnings, limit our gains or result in losses, which could adversely affect cash available for distributions. 21 Table of Contents We have previously and may in the future enter into interest rate swap agreements or pursue other interest rate hedging strategies.
In addition to competing with these vendors directly for sales to end-users of our solutions, we compete with them for the opportunity to have our solutions bundled with the offerings of our strategic partners, such as computer hardware original equipment manufacturers (OEMs), internet service providers (ISPs), operating systems and telecom service providers.
In addition to competing with these vendors directly for sales to end-users of our solutions, we compete with them for the opportunity to have our solutions bundled with the offerings of our strategic partners, such as computer hardware OEMs, internet service providers, operating systems and telecom service providers.
Factors associated with our industry, the operation of our business, and the markets for our solutions may cause our quarterly financial results to fluctuate, including but not limited to: • Fluctuations in demand for our solutions; • Disruptions in our business operations or target markets caused by, among other things, terrorism or other intentional acts, outbreaks of disease, or earthquakes, floods, or other natural disasters; • Entry of new competition into our markets; • Technological changes in our markets; • Our ability to achieve targeted operating income and margins and revenues; • Competitive pricing pressure or free offerings that compete with one or more of our solutions; • Our ability to timely complete the release of new or enhanced versions of our solutions; • The amount and timing of commencement and termination of major marketing campaigns; • The number, severity, and timing of threat outbreaks and cyber security incidents; • Loss of customers or strategic partners or the inability to acquire new customers or cross-sell our solutions; • Changes in the mix or type of solutions and subscriptions sold and changes in consumer retention rates; • The rate of adoption of new technologies and new releases of operating systems, and new business processes; • Consumer confidence and spending changes; • The outcome or impact of litigation, claims, disputes, regulatory inquiries, or investigations; • The impact of acquisitions (and our ability to achieve expected synergies or attendant cost savings), divestitures, restructurings, share repurchase, financings, debt repayments and investment activities; • Changes in U.S. and worldwide economic conditions, such as economic recessions, the impact of inflation, fluctuations in foreign currency exchange rates and changes in interest rates, conflicts including Russia’s invasion of Ukraine, and other global macroeconomic factors on our operations and financial performance; 23 Table of Contents • The publication of unfavorable or inaccurate research reports about our business by cybersecurity industry analysts; • The success of our ESG initiatives; • Changes in tax laws, rules, and regulations; • Changes in tax rates, benefits, and expenses; and • Changes in consumer protection laws and regulations.
Factors associated with our industry, the operation of our business, and the markets for our solutions may cause our quarterly financial results to fluctuate, including but not limited to: • Fluctuations in demand for our solutions; • Disruptions in our business operations or target markets caused by, among other things, terrorism or other intentional acts, outbreaks of disease, or earthquakes, floods or other natural disasters; • Entry of new competition into our markets; • Technological changes in our markets; • Our ability to achieve targeted operating income and margins and revenues; • Competitive pricing pressure or free offerings that compete with one or more of our solutions; • Our ability to timely complete the release of new or enhanced versions of our solutions; • The amount and timing of commencement and termination of major marketing campaigns; 22 Table of Contents • The number, severity and timing of threat outbreaks and cyber security incidents; • Loss of customers or strategic partners or the inability to acquire new customers or cross-sell our solutions; • Changes in the mix or type of solutions and subscriptions sold and changes in consumer retention rates; • The rate of adoption of new technologies and new releases of operating systems, and new business processes; • Consumer confidence and spending changes; • The outcome or impact of litigation, claims, disputes, regulatory inquiries or investigations; • The impact of acquisitions (and our ability to achieve expected synergies or attendant cost savings), divestitures, restructurings, share repurchase, financings, debt repayments, equity investments and other investment activities; • Changes in U.S. and worldwide economic conditions, such as economic recessions, the impact of inflation, fluctuations in foreign currency exchange rates including the weakening of foreign currencies relative to USD, which has and may in the future negatively affect our revenue expressed in USD, changes in interest rates, geopolitical conflicts, and other global macroeconomic factors on our operations and financial performance; • The publication of unfavorable or inaccurate research reports about our business by cybersecurity industry analysts; • The success of our ESG initiatives; • Changes in tax laws, rules and regulations; • Changes in tax rates, benefits and expenses; and • Changes in consumer protection laws and regulations.
Furthermore, the laws of some foreign countries do not offer the same level of protection of our proprietary rights as the laws of the U.S., and we may be subject to the unauthorized use of our products in those countries. The unauthorized copying or use of our products or proprietary information could result in reduced sales of our products.
Furthermore, the laws of some foreign countries do not offer the same level of protection of our proprietary rights as the laws of the United States, and we may be subject to the unauthorized use of our products in those countries. The unauthorized copying or use of our products or proprietary information could result in reduced sales of our products.
In addition, any legal action to protect proprietary information that we may bring or be engaged in, could be costly, may distract management from day-to-day operations, and may lead to additional claims against us, which could adversely affect our operating results.
In addition, any legal action to protect proprietary information 19 Table of Contents that we may bring or be engaged in, could be costly, may distract management from day-to-day operations and may lead to additional claims against us, which could adversely affect our operating results.
In response to changes in industry structure and market conditions, we may be required to strategically reallocate our resources and consider restructuring, disposing of, or otherwise exiting certain businesses.
In response to changes in industry structure and market conditions, we have been and may continue to be required to strategically reallocate our resources and consider restructuring, disposing of, or otherwise exiting certain businesses.
Third parties may also develop similar or superior technology independently by designing around our patents. Our consumer agreements do not require a signature and therefore may be unenforceable under the laws of some jurisdictions.
Third parties have previously and may in the future also develop similar or superior technology independently by designing around our patents. Our consumer agreements do not require a signature and therefore may be unenforceable under the laws of some jurisdictions.
Any such circumstance could adversely affect our ability to attract and maintain customers as well as strategic partners, cause us to suffer negative publicity or damage to our brand, and subject us to legal claims and liabilities or regulatory penalties.
Any such circumstance could adversely affect our ability to attract and maintain customers as well as strategic partners, cause us to suffer negative publicity or damage to our brand, and 16 Table of Contents subject us to legal claims and liabilities or regulatory penalties.
These activities have and may continue to involve a number of risks and challenges, including: • Complexity, time and costs associated with managing these transactions, including the integration of acquired and the winding down of divested business operations, workforce, products, IT systems and technologies; • Challenges in retaining customers of acquired businesses, or providing the same level of service to existing customers with reduced resources; • Diversion of management time and attention; 13 Table of Contents • Loss or termination of employees, including costs associated with the termination or replacement of those employees; • Assumption of liabilities of the acquired and divested business or assets, including pending or future litigation, investigations or claims related to the acquired business or assets; • Addition of acquisition-related debt; • Difficulty in entering into or expanding in new markets or geographies; • Increased or unexpected costs and working capital requirements; • Dilution of stock ownership of existing stockholders; • Ongoing contractual obligations and unanticipated delays or failure to meet contractual obligations; • Substantial accounting charges for acquisition-related costs, asset impairments, amortization of intangible assets and higher levels of stock-based compensation expense; and • Difficulty in realizing potential benefits, including cost savings and operational efficiencies, synergies and growth prospects from integrating acquired businesses.
Our acquisition and divestiture activities have and may continue to involve a number of risks and challenges, including: • Complexity, time and costs associated with managing these transactions, including the integration of acquired and the winding down of divested business operations, workforce, products, IT systems and technologies; • Challenges in retaining the customers of acquired businesses, providing the same level of service to existing customers with reduced resources, or retaining the third-party relationships, including with suppliers, service providers, and vendors, among others; • Diversion of management time and attention; • Loss or termination of employees, including costs and potential institutional knowledge loss associated with the termination or replacement of those employees; • Assumption of liabilities of the acquired and divested business or assets, including pending or future litigation, investigations or claims related to the acquired business or assets; • Addition of acquisition-related debt; • Difficulty entering into or expanding in new markets or geographies; • Increased or unexpected costs and working capital requirements; • Dilution of stock ownership of existing stockholders; • Ongoing contractual obligations and unanticipated delays or failure to meet contractual obligations; • Substantial accounting charges for acquisition-related costs, asset impairments, amortization of intangible assets and higher levels of stock-based compensation expense; and • Difficulty in realizing potential benefits, including cost savings and operational efficiencies, synergies and growth prospects from integrating acquired businesses.
Pursuant to the agreements, we will effectively convert $1 billion of our variable rate borrowings under Term A Facility to fixed rates, with $500 million at a fixed rate of 3.762% and $500 million at a fixed rate of 3.550%.
Pursuant to the agreements, we have effectively converted $1 billion of our variable rate borrowings under Term A Facility to fixed rates, with $500 million at a fixed rate of 3.762% and $500 million at a fixed rate of 3.550%.
The development and introduction of new solutions involve significant commitments of time and resources and are subject to risks and challenges including but not limited to: • Lengthy development cycles; • Evolving industry and regulatory standards and technological developments by our competitors and customers; • Rapidly changing customer preferences; • Evolving platforms, operating systems, and hardware products, such as mobile devices; • Product and service interoperability challenges with customer’s technology and third-party vendors; • The integration of products and solutions from acquired companies; • Availability of engineering and technical talent; • Entering new or unproven market segments; and • Executing new product and service strategies. 12 Table of Contents In addition, third parties, including operating systems and internet browser companies, may limit the interoperability of our solutions with their own products and services, in some cases to promote their own offerings.
The development and introduction of new solutions involve significant commitments of time and resources and are subject to risks and challenges including but not limited to: • Lengthy development cycles; • Evolving industry and regulatory standards and technological developments, including AI and machine learning, by our competitors and customers; • Rapidly changing customer preferences and accurately anticipating technological trends or needs; • Evolving platforms, operating systems, and hardware products, such as mobile devices; • Product and service interoperability challenges with customer’s technology and third-party vendors; • The integration of products and solutions from acquired companies; • Availability of engineering and technical talent; • Entering new or unproven market segments; and • Executing new product and service strategies. 11 Table of Contents In addition, third parties, including operating systems and internet browser companies, have in the past and may in the future limit the interoperability of our solutions with their own products and services, in some cases to promote their own offerings or those of our competitors.
Seasonal behavior in orders has historically occurred in the third and fourth quarters of our fiscal year, which include the important selling periods during the holidays in our third quarter, as well as follow-on holiday purchases and the U.S. tax filing season, which is typically in our fourth quarter.
Portions of our business are impacted by seasonality. Seasonal behavior in orders has historically occurred in the third and fourth quarters of our fiscal year, which include the important selling periods during the holidays in our third quarter, as well as follow-on holiday purchases and the U.S. tax filing season, which is typically in our fourth quarter.
This could delay the development of our solutions or our solutions may be unable to operate effectively. This could also result in decreased demand for our solutions, decreased revenue, harm to our reputation, and adversely affect our business, financial condition, results of operations, and cash flows.
Any such actions by third parties could delay the development of our solutions or our solutions may be unable to operate effectively. This could also result in decreased demand for our solutions, decreased revenue, harm to our reputation, and adversely affect our business, financial condition, results of operations, and cash flows.
Similarly, if external factors, such as economic conditions, market trends, or business combinations require us to raise our prices, our ability to acquire new customers and retain existing customers may be diminished. Any such changes may reduce revenue and margins and could adversely affect our financial results. Additionally, our business may be affected by changes in the macroeconomic environment.
Similarly, if external factors, such as economic conditions, market trends, or business combinations require us to raise our prices, our ability to acquire new customers and retain existing customers may be diminished. Any such changes may reduce revenue and margins and could adversely affect our financial results.
RISKS RELATED TO OUR LIQUIDITY AND INDEBTEDNESS There are risks associated with our outstanding and future indebtedness that could adversely affect our financial condition. As of March 31, 2023, we had an aggregate of $9,899 million of outstanding indebtedness that will mature in calendar years 2025 through 2030, and $1,500 million available for borrowing under our revolving credit facility.
RISKS RELATED TO OUR LIQUIDITY AND INDEBTEDNESS There are risks associated with our outstanding and future indebtedness that could adversely affect our financial condition. As of March 29, 2024, we had an aggregate of $8,716 million of outstanding indebtedness that will mature in calendar years 2025 through 2030, and $1,500 million available for borrowing under our revolving credit facility.
Similarly, experienced computer programmers or other sophisticated individuals or entities, including malicious hackers, state-sponsored organizations, and insider threats including actions by employees and third-party service providers, could or have attempted to penetrate, and in some cases have penetrated, our network security or the security of our vendors or suppliers.
These attacks may target us, our partners, suppliers, vendors or customers. Similarly, experienced computer programmers or other sophisticated individuals or entities, including malicious hackers, state-sponsored organizations, and insider threats including actions by employees and third-party service providers, have attempted to penetrate, and in some cases have penetrated, our network security or the security of our vendors or suppliers.
We could be required to modify a current tax or accounting position as a result of any such change, and this could adversely affect our reported financial results and could change the way we conduct our business.
We could be required to modify a current tax or accounting position as a result of any such change, and this could adversely affect our reported financial results and could change the way we conduct our business. Item 1B. Unresolved Staff Comments None.
If we fail to attract, retain and motivate new or existing personnel, our business, results of operations and future growth prospects could suffer. Volatility in our stock price may from time to time adversely affect our ability to recruit or retain employees.
Additionally, changes in immigration laws could impair our ability to attract and retain highly qualified employees. If we fail to attract, retain and motivate new or existing personnel, our business, results of operations and future growth prospects could suffer. Volatility in our stock price may from time to time adversely affect our ability to recruit or retain employees.
Third parties have claimed and, from time to time, additional third parties may claim that we infringe their proprietary rights, which has previously and could in the future cause us to incur significant legal expenses and prevent us from selling our products.
From time to time we are party to lawsuits and investigations, and third parties have claimed and additional third parties in the future may claim that we infringe their proprietary rights, which has previously and could in the future require significant management time and attention, cause us to incur significant legal expenses and prevent us from selling our products.
The ultimate extent to which Russia’s invasion of Ukraine or other future conflicts may negatively impact our business, financial condition and results of operations will depend on future developments, which are highly uncertain, difficult to predict and subject to change. 16 Table of Contents Our future success depends on our ability to attract and retain personnel in a competitive marketplace.
The ultimate extent to which such conflicts may negatively impact our business, financial condition and results of operations will depend on future developments, which are highly uncertain, difficult to predict and subject to change. Our future success depends on our ability to attract and retain personnel in a competitive marketplace.
Several recent, highly publicized data security breaches, including large-scale attacks by foreign nation state actors and a significant uptick in ransomware/extortion attacks at other companies, have heightened consumer awareness of this issue and may embolden individuals or groups to target our systems or those of our strategic partners or enterprise customers.
Several recent, highly publicized data security breaches, such as the large-scale attacks by foreign nation state actors, the global incident involving the MOVEit file transfer software, and a significant uptick in ransomware/extortion attacks at other companies, have heightened consumer awareness of this issue and may embolden individuals or groups to target our systems or those of our strategic partners or enterprise customers.
When a data breach occurs, our information technology systems and infrastructure can be subject to damage, compromise, disruption, and shutdown due to attacks or breaches by hackers or other circumstances, such as error or malfeasance by employees or third-party service providers or technology malfunction.
When a data breach occurs, our information technology systems and infrastructure can be subject to damage, compromise, disruption, and shutdown due to attacks or breaches by hackers or other circumstances, such as error or malfeasance by employees or third-party service providers, phishing, social engineering, account takeovers, vulnerability exploitation, misconfigurations, ransomware, or technology malfunction.
A change in accounting pronouncements or taxation rules or practices could have a significant effect on our reported results and may affect our reporting of transactions completed before the change is effective.
A change in accounting pronouncements or taxation rules or practices could have a significant effect on our reported results and may affect our reporting of transactions completed before the change is effective. New accounting pronouncements, taxation rules and varying interpretations of accounting pronouncements or taxation rules have occurred in the past and may occur in the future.
Failure on our part to anticipate changes in our markets and to develop solutions and enhancements that meet the demands of those markets or to effectively compete against our competitors will significantly impair our business, financial condition, results of operations, and cash flows. Our acquisitions and divestitures create special risks and challenges that could adversely affect our financial results.
Failure on our part to anticipate changes in our markets and to develop solutions and enhancements that meet the demands of those markets or to effectively compete against our competitors will significantly impair our business, financial condition, results of operations, and cash flows.
Following the Merger with Avast, we derive a significant portion of our revenues from customers located outside of the U.S., and we have substantial operations outside of the U.S., including engineering, finance, sales and customer support.
Following the acquisition of Avast, we derive a significant portion of our revenues from customers located outside of the United States, and we have substantial operations outside of the United States, including engineering, finance, sales and customer support.
If we fail to achieve progress with respect to our ESG-related initiatives, goals or commitments on a timely basis, or at all, 19 Table of Contents or if our ESG-related data, processes and reporting are incomplete or inaccurate, our reputation, business, financial performance and growth could be adversely affected.
If we fail to achieve progress with respect to our ESG-related initiatives, goals or commitments on a timely basis, or at all, or if our ESG-related data, processes and reporting are incomplete or inaccurate, our reputation, business, financial performance and growth could be adversely affected. We are affected by seasonality, which may impact our revenue and results of operations.
Fluctuations in our quarterly financial results have affected the trading price of our stock in the past and could affect the trading price of our stock in the future. Our quarterly financial results have fluctuated in the past and are likely to vary in the future due to a number of factors, many of which are outside of our control.
Our quarterly financial results have fluctuated in the past and are likely to vary in the future due to a number of factors, many of which are outside of our control.
As an example, a threat actor could exploit a new vulnerability before we complete our remediation work or identify a vulnerability that we did not effectively remediate. If that happens, there could be unauthorized access to, or acquisition of, data we maintain, and damage to our systems.
Threat actors have previously and could in the future exploit a new vulnerability before we complete our remediation work or identify a vulnerability that we did not effectively remediate. If that happens, there could be unauthorized access to, or acquisition of, data we maintain, and damage to our systems.
We may also face pressure to lower our prices in order to compete in emerging markets, which could adversely affect revenue derived from our international operations.
We also have and may continue to face pressure to lower our prices in order to compete in emerging markets, which has previously and could in the future adversely affect revenue derived from our international operations.
Our business has not been materially impacted to date by Russia’s invasion of Ukraine and retaliatory sanctions against the Russian Federation and Belarus; however, it is not possible to predict the broader consequences of this conflict or other conflicts that may arise in the future, which could include geopolitical instability and uncertainty; adverse impacts on global and regional economic conditions and financial markets, including significant volatility in credit, capital, and currency markets; reduced economic activity; changes in laws and regulations affecting our business, including further sanctions or counter-sanctions which may be enacted; and increased cybersecurity threats and concerns.
It is not possible to predict the broader consequences of geopolitical conflicts, such as the Russia-Ukraine conflict, and the numerous conflicts in the Middle East, and other conflicts that may arise in the future, which could include geopolitical instability and uncertainty; adverse impacts on global and regional economic conditions and financial markets, including significant volatility in credit, capital, and currency markets; reduced economic activity; changes in laws and regulations affecting our business, including further sanctions or counter-sanctions which may be enacted; and increased cybersecurity threats and concerns.
Our failure to sell additional solutions to our existing customers could adversely affect our ability to grow our business. An important part of our growth strategy involves continued investment in direct marketing efforts, indirect partner distribution channels, freemium channels, our sales force, and infrastructure to add new customers.
An important part of our growth strategy involves continued investment in direct marketing efforts, indirect partner distribution channels, freemium channels, our sales force, and infrastructure to add new customers.
As part of our business strategy, we may acquire or divest businesses or assets. For example, in 2019, we completed the sale of certain of our enterprise security assets to Broadcom Inc. (the Broadcom sale), in January 2021, we completed the acquisition of Avira, and in September 2022, we completed the Merger with Avast.
For example, in 2019, we completed the sale of certain of our enterprise security assets to Broadcom Inc. (the Broadcom sale), in January 2021, we completed the acquisition of Avira, and in September 2022, we completed the acquisition of Avast.
Such attempts are increasing in number and in technical sophistication, and could expose us and the affected parties, to risk of loss or misuse of proprietary, personal or confidential information or disruptions of our business operations.
Such attempts are increasing in number and in technical sophistication, including through the use of AI, and have in the past and could in the future expose us and the affected parties, to risk of loss or misuse of proprietary, personal or confidential information or disruptions of our business operations. In addition, our internal IT environment continues to evolve.
Macroeconomic factors, such as rising inflation and interest rates, and capital market volatility could negatively influence our future acquisition opportunities.
Macroeconomic factors, such as high inflation, high interest rates, and volatility in foreign currency exchange rates and capital markets could negatively influence our future acquisition opportunities.
In addition, our ability to generate revenue and maintain or improve our results of operations partly depends on our ability to cross-sell our solutions to our existing customers and to convert existing non-paying customers to paying customers. We may not be successful in cross-selling our solutions because our customers may find our additional solutions unnecessary or unattractive.
In addition, our ability to generate revenue and maintain or improve our results of operations partly depends on our ability to cross-sell our solutions to our existing customers and to convert existing non-paying customers to paying customers and add new customers.
Our solutions are discretionary purchases, and customers may reduce or eliminate their discretionary spending on our solutions during a difficult macroeconomic environment.
Additionally, changes in the macroeconomic environment have previously and may continue to affect our business. Our solutions are discretionary purchases, and customers may reduce or eliminate their discretionary spending on our solutions during a difficult macroeconomic environment.
Government entities may continue their efforts, or implement additional efforts, to combat inflation, which may include continuing to raise interest rate benchmarks or maintaining interest rate benchmarks at elevated levels.
While the Federal Reserve has recently held inflation rates steady, global inflation remains high and government entities may continue their efforts, or implement additional efforts, to combat inflation, which may include continuing to raise interest rate benchmarks or maintaining interest rate benchmarks at elevated levels.
We communicate certain ESG-related initiatives, goals, and/or commitments regarding environmental matters, diversity, responsible sourcing and social investments, and other matters, on our website, in our filings with the SEC, and elsewhere.
Similarly, the Corporate Sustainability Reporting Directive will require large EU companies to make detailed disclosures in relation to certain sustainability-related issues. We communicate certain ESG-related initiatives, goals, and/or commitments regarding environmental matters, diversity, responsible sourcing and social investments and other matters on our website, in our filings with the SEC and elsewhere.
Numerous factors, however, may impede our ability to attract free users, convert these users into paying customers and retain them. If we fail to manage our sales and distribution channels effectively, or if our partners choose not to market and sell our solutions to their customers, our operating results could be adversely affected.
If we fail to manage our sales and distribution channels effectively, or if our partners choose not to market and sell our solutions to their customers, our operating results could be adversely affected.
If we fail to manage our sales and distribution channels successfully, these channels may conflict with one another or otherwise fail to perform as we anticipate, which could reduce our sales and increase our expenses as well as weaken our competitive position. 15 Table of Contents Changes in industry structure and market conditions could lead to charges related to discontinuance of certain of our products or businesses and asset impairments.
If we fail to manage our sales and distribution channels successfully, these channels may conflict with one another or otherwise fail to perform as we anticipate, which could reduce our sales and increase our expenses as well as weaken our competitive position.
We may have to lower our prices or make other changes to our pricing model to address these dynamics, any of which could adversely affect our business and financial results.
We may have to lower our prices or make other changes to our pricing model to address these dynamics, any of which could adversely affect our business and financial results. Many of Avira’s and Avast’s users are freemium subscribers, meaning they do not pay for its basic services.
Further, the new California Privacy Rights Act (the CPRA) significantly modifies the CCPA and there are new similar and overlapping state privacy laws in Colorado, Connecticut, Virginia, Utah, and Iowa. These new laws may result in additional uncertainty and require us to incur additional costs and expenses in our effort to comply.
Further, the California Privacy Rights Act (the CPRA) significantly modifies the CCPA and there are new similar and overlapping state privacy laws in at least 10 other U.S. states, which all go into effect by January 1, 2026. These new laws may result in additional uncertainty and require us to incur additional costs and expenses in our effort to comply.
These new customers, if any, may renew their subscriptions at lower rates than we have experienced in the past, which could affect our financial results.
New customers, if any, may subscribe or renew their subscriptions at lower rates than we have experienced in the past, introducing uncertainty about their economic attractiveness and potentially impacting our financial results.
For example, developing and acting on ESG-related initiatives and collecting, measuring and reporting ESG-related information and metrics can be costly, difficult and time consuming and is subject to evolving reporting standards, including the SEC’s proposed climate-related reporting requirements.
For example, developing and acting on ESG-related 18 Table of Contents initiatives and collecting, measuring and reporting ESG-related information and metrics can be costly, difficult and time consuming and is subject to evolving reporting standards, including the SEC’s climate-related reporting requirements and the recent California legislation, which includes disclosure requirements relating to voluntary carbon offsets and a wide range of environmental marketing claims.
Our future success depends upon our ability to recruit and retain key management, technical (including cyber security experts), sales, marketing, e-commerce, finance, and other personnel. As a result of the Merger with Avast, we have expanded our leadership team.
Our future success depends upon our ability to recruit and retain key management, technical (including cyber security and AI experts), sales, marketing, e-commerce, finance and other personnel. Our officers and other key personnel are “at will” employees and we generally do not have employment or non-compete agreements with our employees.
Third parties have claimed and, from time to time, additional third parties may claim that we have infringed their intellectual property rights, including claims regarding patents, copyrights, and trademarks.
Additionally, third parties have claimed and, from time to time, additional third parties may claim that we have infringed their intellectual property rights, including claims regarding patents, copyrights and trademarks. For additional information on such claims, please refer to Note 18 of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K.
Pillar One allows countries to reallocate a portion of residual profits earned by multinational enterprises (MNE), with an annual global turnover exceeding €20 billion and a profit margin over 10%, to other market jurisdictions. Pillar Two requires MNEs with an annual global turnover exceeding €750 million to pay a global minimum tax of 15%.
OECD and many countries have proposed to reallocate a portion of profits of large multinational enterprises (MNE) with an annual global turnover exceeding €20 billion to markets where sales arise (Pillar One), as well as enact a global minimum tax rate of 15% for MNE with an annual global turnover exceeding €750 million (Pillar Two ) .
Such government efforts, along with other interest rate pressures arising from an inflationary economic environment, have led to higher financing costs and have had and may continue to have a material adverse effect on our business, financial condition and results of operations.
Such government efforts, along with other interest rate pressures arising from an inflationary economic environment, have led to higher financing costs. For example, recent elevated interest rates have resulted in an increase in our cost of debt.
There is also no guarantee that a series of issues may not be determined to be material at a later date in the aggregate, even if they may not be material individually at the time of their occurrence.
A data breach may result in significant legal, financial, and reputational harm, including government inquiries, enforcement actions, litigation, and negative publicity. A series of breaches may be determined to be material at a later date in the aggregate, even if they may not be material individually at the time of their occurrence.
If these systems or their functionality do not operate as we expect them to, we may be required to expend significant resources to make corrections or find alternative sources for performing these functions. 18 Table of Contents We are dependent upon Broadcom for certain engineering and threat response services, which are critical to many of our products and business.
There are no assurances that data recovery in the event of a disaster would be effective or occur in an efficient manner. If these systems or their functionality do not operate as we expect them to, we may be required to expend significant resources to make corrections or find alternative sources for performing these functions.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeRepurchases of our equity securities Under our stock repurchase programs, shares may be repurchased on the open market and through accelerated stock repurchase transactions. As of March 31, 2023, we had $870 million remaining authorized to be completed in future periods with no expiration date. No shares were repurchased during the three months ended March 31, 2023.
Biggest change(2) Under our stock repurchase programs, shares may be repurchased on the open market and through accelerated stock repurchase transactions. As of March 29, 2024, we had $429 million remaining authorized to be completed in future periods with no expiration date.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN Among Gen Digital Inc., the S&P 500 Index and the S&P Information Technology Index This performance graph shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of Gen Digital under the Securities Act or the Exchange Act.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN Among Gen Digital Inc., the S&P 500 Index and the S&P Information Technology Index This performance graph shall not be deemed “soliciting material” or to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act or the Exchange Act.
Stock performance graph The graph below compares the cumulative total stockholder return on our common stock with the cumulative total return on the S&P 500 Composite Index and the S&P Information Technology Index for the five fiscal years ended March 31, 2023 (assuming the initial investment of $100 in our common stock and in each of the other indices on the last day of trading for fiscal 2018 and the reinvestment of all dividends).
Stock performance graph The graph below compares the cumulative total stockholder return on our common stock with the cumulative total return on the S&P 500 Composite Index and the S&P Information Technology Index for the five fiscal years ended March 29, 2024 (assuming the initial investment of $100 in our common stock and in each of the other indices on the last day of trading for fiscal 2019 and the reinvestment of all dividends).
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Stock symbol and stockholders of record Our common stock is traded on the Nasdaq Global Select Market under the symbol “GEN”. As of March 31, 2023, there were 3,694 stockholders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Stock symbol and stockholders of record Our common stock is traded on the Nasdaq Global Select Market under the symbol “GEN”. As of March 29, 2024, there were 3,148 stockholders of record.
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Repurchases of our equity securities Stock repurchases during the three months ended March 29, 2024 were as follows: (In millions, except per share data) Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (2) December 30, 2023 to January 26, 2024 — $ — — $ 729 January 27, 2024 to February 23, 2024 14 $ 21.37 14 $ 429 February 24, 2024 to March 29, 2024 — $ — — $ 429 Total number of shares repurchased 14 14 (1) The number of shares repurchased is reported on trade date.
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In May 2024, our Board of Directors authorized a new stock repurchase program through which we may repurchase shares of our common stock in an aggregate amount of up to $3 billion with no fixed expiration.
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This new stock repurchase program will supersede any amounts under the prior stock repurchase programs. 26 Table of Contents Item 6. [Reserved] 27 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFiscal 2023, 2022 and 2021 in this report refers to fiscal years ended March 31, 2023, April 1, 2022 and April 2, 2021, respectively, each of which was a 52-week year. 27 Table of Contents Key financial metrics The following table provides our key financial metrics for fiscal 2023 compared with fiscal 2022: Fiscal Year (In millions, except for per share amounts) 2023 2022 Net revenues $ 3,338 $ 2,796 Operating income (loss) $ 1,227 $ 1,005 Net income (loss) $ 1,349 $ 836 Net income (loss) per share - diluted $ 2.16 $ 1.41 Net cash provided by (used in) operating activities $ 757 $ 974 As of (In millions) March 31, 2023 April 1, 2022 Cash, cash equivalents and short-term investments $ 750 $ 1,891 Contract liabilities $ 1,788 $ 1,306 • Net revenues increased $542 million, primarily due to revenue attributable to the contribution from Avast, which was acquired during the second quarter of fiscal 2023, and higher sales in both our consumer security and identity and information protection products, partially offset by unfavorable foreign currency fluctuations. • Operating income (loss) increased $222 million, primarily due to operating income attributable to Avast, which was acquired during the second quarter of fiscal 2023, and cost synergies post-acquisition, partially offset by unfavorable foreign currency fluctuations. • Net income (loss) increased $513 million and net income per share increased $0.75, primarily due to an income tax benefit in fiscal 2023, and increased operating income, partially offset by an increase in interest expense associated with our new senior credit facilities and two senior notes. • Cash, cash equivalents and short-term investments decreased by $1,141 million compared to April 1, 2022, primarily due to the completion of the Merger, repurchases of our common stock, income taxes paid, dividends paid to shareholders, and voluntary prepayment of our Term B facility, offset by proceeds from the issuance of the senior credit facilities and the two senior notes.
Biggest changeFinancial summary The following table provides our key financial metrics for fiscal 2024 compared with fiscal 2023: Fiscal Year (In millions, except for per share amounts) 2024 2023 Net revenues $ 3,812 $ 3,338 Operating income (loss) $ 1,122 $ 1,227 Net income (loss) $ 616 $ 1,349 Net income (loss) per share - diluted $ 0.96 $ 2.16 Net cash provided by (used in) operating activities $ 2,064 $ 757 As of (In millions) March 29, 2024 March 31, 2023 Cash and cash equivalents $ 846 $ 750 Contract liabilities $ 1,806 $ 1,788 • Net revenues increased $474 million, primarily due to an additional five and a half months of revenue contribution from Avast, up $419 million as compared to the corresponding period, which was acquired during the second quarter of fiscal 2023 in September 2022, and higher sales in both our consumer security and identity and information protection products, partially offset by unfavorable foreign currency fluctuations. • Operating income (loss) decreased $105 million, primarily due to an increase in legal accrual related to ongoing litigation and an increase in amortization of intangible assets recognized as a result of our acquisition of Avast.
Material Cash Requirements Our principal cash requirements are primarily to meet our working capital needs and support on-going business activities, including payment of taxes and cash dividends, payment of contractual obligations, funding capital expenditures, servicing existing debt, repurchasing shares of our common stock and investing in business acquisitions and mergers.
Material Cash Requirements Our principal cash requirements are primarily to meet our working capital needs, support on-going business activities, including payment of taxes and cash dividends, payment of contractual obligations, funding capital expenditures, servicing existing debt, repurchasing shares of our common stock and investing in business acquisitions and mergers.
OVERVIEW Gen Digital Inc. is a global company powering Digital Freedom with a family of trusted consumer brands including Norton, Avast, LifeLock, Avira, AVG, ReputationDefender and CCleaner. Our core Cyber Safety portfolio provides protection across three key categories in multiple channels and geographies, including security and performance, identity protection, and online privacy.
OVERVIEW Gen is a global company powering Digital Freedom with a family of trusted consumer brands including Norton, Avast, LifeLock, Avira, AVG, ReputationDefender and CCleaner. Our core cyber safety portfolio provides protection across three key categories in multiple channels and geographies, including security and performance, identity protection, and online privacy.
As a result, we are exposed to foreign exchange gains or losses, which impact our operating results. As part of our foreign currency risk mitigation strategy, we have entered into monthly foreign exchange forward contracts to hedge foreign currency balance sheet exposure. In addition, in early 2022, worldwide inflation began to increase.
As a result, we are exposed to foreign exchange gains or losses, which impact our operating results. As part of our foreign currency risk mitigation strategy, we have entered into monthly foreign exchange forward contracts to hedge certain foreign currency balance sheet exposure. In addition, in early 2022, worldwide inflation began to increase.
CRITICAL ACCOUNTING ESTIMATES The preparation of our Consolidated Financial Statements and related notes in accordance with generally accepted accounting principles in the U.S. (GAAP) requires us to make estimates, including judgments and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.
CRITICAL ACCOUNTING ESTIMATES The preparation of our Consolidated Financial Statements and related notes in accordance with generally accepted accounting principles in the U.S. requires us to make estimates, including judgments and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.
A summary of our significant accounting policies is included in Note 1, and a description of recently adopted accounting pronouncements and the Company’s expectation of the impact on our Consolidated Financial Statements and disclosures are included in Note 2 of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
A summary of our significant accounting policies is included in Note 1, and a description of recently adopted accounting pronouncements and our expectation of the impact on our Consolidated Financial Statements and disclosures are included in Note 2 of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
(4) Transition tax payments on previously untaxed foreign earnings of foreign subsidiaries under the Tax Cuts and Jobs Act, which may be paid through July 2025. (5) Payments for various non-cancelable operating lease agreements that expire on various dates through fiscal 2028. The amounts in the table above exclude expected sublease income.
(4) Transition tax payments on previously untaxed foreign earnings of foreign subsidiaries under the Tax Cuts and Jobs Act, which may be paid through July 2025. (5) Payments for various non-cancelable operating lease agreements that expire on various dates through fiscal 2030. The amounts in the table above exclude expected sublease income.
Should any of our estimates and assumptions change or prove to have been incorrect, it could have a material impact on our Consolidated Financial Statements for that reporting period. 29 Table of Contents RESULTS OF OPERATIONS We have elected to omit discussion on the earliest of the three years presented in the Consolidated Financial Statements of this Annual Report on Form 10-K.
Should any of our estimates and assumptions change or prove to have been incorrect, it could have a material impact on our Consolidated Financial Statements for that reporting period. RESULTS OF OPERATIONS We have elected to omit discussion on the earliest of the three years presented in the Consolidated Financial Statements of this Annual Report on Form 10-K.
We maintain director and officer insurance, which may cover certain liabilities arising from our obligation to indemnify our directors and officers. Refer to Note 18 of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further information on our indemnifications.
We maintain director and officer insurance, which may cover certain liabilities arising from our obligation to indemnify our directors and officers. Refer to Note 18 of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further information on our indemnifications. 35 Table of Contents
We have based our estimates on historical experience and on various assumptions that we believe to be reasonable under the circumstances. We evaluate our estimates on a regular basis and make changes accordingly. Management believes that the accounting estimates employed and the resulting amounts are reasonable; however, actual results may differ from these estimates.
We have based our estimates, judgements and assumptions on historical experience and on various other factors we believe to be reasonable under the circumstances. We evaluate our estimates, judgements and assumptions on a regular basis and make changes accordingly. Management believes that the accounting estimates employed and the resulting amounts are reasonable; however, actual results may differ from these estimates.
ARPU is calculated as estimated direct customer revenues for the period divided by the average direct customer count for the same period, expressed as a monthly figure. Non-GAAP estimated direct customer revenues and ARPU have limitations as analytical tools and should not be considered in isolation or as a substitute for GAAP estimated direct customer revenues or other GAAP measures.
ARPU is calculated as estimated direct customer revenues for the period divided by the average direct customer count for the same period, expressed as a monthly figure. Non-GAAP estimated direct customer revenues and ARPU have limitations as analytical tools and should not be considered in isolation or as a substitute for U.S. GAAP estimated direct customer revenues or other U.S.
However, our future liquidity and capital requirements may vary materially from those as of March 31, 2023 depending on several factors, including, but not limited to, economic conditions; political climate; the expansion of sales and marketing activities; the costs to acquire or invest in businesses; and the risks and uncertainties discussed in “Risk Factors” in Item 1A.
However, our future liquidity and capital requirements may vary materially from those as of March 29, 2024 depending on several factors, including, but not limited to, economic conditions; political climate; the expansion of sales and marketing activities; the costs to acquire or invest in businesses; and the risks and uncertainties discussed in “Risk Factors” in Item 1A.
Making estimates and judgments about future events is inherently unpredictable and is subject to significant 28 Table of Contents uncertainties, some of which are beyond our control. Should any of these estimates and assumptions change or prove to have been incorrect, it could have a material impact on our results of operations, financial position and cash flows.
Making estimates, judgments and assumptions about future events is inherently unpredictable and is subject to significant uncertainties, some of which are beyond our control. Should any of these estimates, judgements or assumptions change or prove to have been incorrect, it could have a material impact on our results of operations, financial position and cash flows.
See Note 10 of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further information about our debt and debt covenants. (2) Interest payments calculated based on the contractual terms of the related debt instruments. Interest on variable rate debt was calculated using the interest rate in effect as of March 31, 2023.
See Note 10 of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further information about our debt and debt covenants. (2) Interest payments calculated based on the contractual terms of the related debt instruments. Interest on variable rate debt was calculated using the interest rate in effect as of March 29, 2024.
Management believes the following critical accounting policies reflect the significant estimates and assumptions used in the preparation of our Consolidated Financial Statements.
Management believes the following critical accounting policies reflect the significant estimates used in the preparation of our Consolidated Financial Statements.
Due to the uncertainty with respect to the timing of future cash flows associated with our unrecognized tax benefits and other long-term taxes as of March 31, 2023, we are unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities.
Due to the uncertainty with respect to the timing of future cash flows associated with our unrecognized tax benefits and other long-term taxes as of March 29, 2024, we are unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities.
Based on past performance and current expectations, we believe that our existing cash and cash equivalents, together with cash generated from operations and amounts available under our Revolving Facility (as defined below), will be sufficient to meet our working capital needs, support on-going business activities and finance the expected synergy costs related to the Merger through at least the next 12 months and to meet our known long-term contractual obligations.
Based on past performance and current expectations, we believe that our existing cash and cash equivalents, together with cash generated from operations and amounts available under our Revolving Facility, will be sufficient to meet our working capital needs, support on-going business activities and finance the expected synergy costs related to the acquisition of Avast through at least the next 12 months and to meet our known long-term contractual obligations.
We apply judgment in the recognition and measurement of current and deferred income taxes which includes the following critical accounting estimates. We use a two-step process to recognize liabilities for uncertain tax positions.
We apply judgment in the recognition and measurement of current and deferred income taxes which includes the following critical accounting estimates. We use a two-step process to recognize liabilities for unrecognized tax benefits.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the fiscal year ended April 1, 2022 for year-over-year comparisons of the results of operation between fiscal 2022 and fiscal 2021 as well as discussion of fiscal 2021 performance metrics and cash flow activity, all of which are incorporated herein by reference.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the fiscal year ended March 31, 2023 for year-over-year comparisons of the results of operation between fiscal 2023 and fiscal 2022 as well as discussion of fiscal 2022 performance metrics and cash flow activity, all of which are incorporated herein by reference.
Due to the close of the Merger with Avast in the second quarter of fiscal 2023, the fiscal 2023 ARPU is based on the average ARPU for the second, third, and fourth quarter of fiscal 2023, but excludes the first quarter of fiscal 2023.
(3) Due to the close of the acquisition of Avast in the second quarter of fiscal 2023, the fiscal 2023 ARPU is based on the average ARPU for the second, third, and fourth quarter of fiscal 2023, but excludes the first quarter of fiscal 2023.
We monitor annual retention rate to evaluate the effectiveness of our strategies to improve renewals of subscriptions. Net revenues by geographic region Percentage of revenue by geographic region as presented below is based on the billing location of the customer.
We monitor the retention rate to evaluate the effectiveness of our strategies to improve renewals of subscriptions. Net revenues by geographical region Percentage of revenue by geographical region as presented below is based on the billing location of the customers.
Significant contractual obligations The following is a schedule of our significant contractual obligations and commitments as of March 31, 2023. The expected timing and amount of short-term and long-term payments of the obligations in the following table is estimated based on current information.
Significant contractual obligations The following is a schedule of our principal commitments as of March 29, 2024. The expected timing and amount of short-term and long-term payments of the obligations in the following table is estimated based on current information.
Cash flows The following table summarizes our cash flow activities in fiscal 2023 and 2022: Fiscal Year (In millions) 2023 2022 Net cash provided by (used in): Operating activities $ 757 $ 974 Investing activities $ (6,547) $ 326 Financing activities $ 4,681 $ (333) Increase (decrease) in cash and cash equivalents $ (1,137) $ 954 See Note 7 of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for our supplemental cash flow information.
Cash flows The following table summarizes our cash flow activities in fiscal 2024 and 2023: Fiscal Year (In millions) 2024 2023 Net cash provided by (used in): Operating activities $ 2,064 $ 757 Investing activities $ 2 $ (6,547) Financing activities $ (1,961) $ 4,681 Increase (decrease) in cash and cash equivalents $ 96 $ (1,137) See Note 7 of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for our supplemental cash flow information.
The following table sets forth our Consolidated Statements of Operations data as a percentage of net revenues for the periods indicated: Fiscal Year 2023 2022 Net revenues 100 % 100 % Cost of revenues 18 15 Gross profit 82 85 Operating expenses: Sales and marketing 20 22 Research and development 9 9 General and administrative 9 14 Amortization of intangible assets 5 3 Restructuring and other costs 2 1 Total operating expenses 46 49 Operating income (loss) 37 36 Interest expense (12) (5) Other income (expense), net (1) 6 Income (loss) before income taxes 24 37 Income tax expense (benefit) (16) 7 Net income (loss) 40 % 30 % Note: The percentages may not add due to rounding.
The following table sets forth our Consolidated Statements of Operations data as a percentage of net revenues for the periods indicated: Fiscal Year 2024 2023 Net revenues 100 % 100 % Cost of revenues 19 18 Gross profit 81 82 Operating expenses: Sales and marketing 19 20 Research and development 9 9 General and administrative 16 9 Amortization of intangible assets 6 5 Restructuring and other costs 1 2 Total operating expenses 51 46 Operating income (loss) 29 37 Interest expense (18) (12) Other income (expense), net 0 (1) Income (loss) before income taxes 12 24 Income tax expense (benefit) (4) (16) Net income (loss) 16 % 40 % Note: The percentages may not add due to rounding.
Users who have indirectly purchased and/or registered for our products or solutions through partners are excluded unless such users convert or renew their subscription directly with us or sign up for a paid membership through our web stores or third-party app stores.
We exclude users on free trials from our direct customer count. Users who have indirectly purchased and/or registered for our products or solutions through partners are excluded unless such users convert or renew their subscription directly with us or sign up for a paid membership through our web stores or third-party app stores.
Direct customer revenue currently includes Mobile App Store customers, and legacy revenues includes revenues from products or solutions from markets that we have exited and in which we no longer operate, have been discontinued or identified to be discontinued, or remain in maintenance mode as a result of integration and product portfolio decisions.
(2) Legacy revenues includes revenues from products or solutions from markets that we have exited and in which we no longer operate, have been discontinued or identified to be discontinued, or remain in maintenance mode as a result of integration and product portfolio decisions.
We have incurred and expect to incur cash expenditures for severance and termination benefits, contract terminations, facilities closures, and the sale of underutilized facilities as well as stock-based compensation charges for accelerated equity awards for certain terminated employees.
We have incurred and expect to incur cash expenditures for severance and termination benefits, contract terminations, facilities closures, and the sale of underutilized facilities as well as stock-based compensation charges for accelerated equity awards for certain terminated employees. We expect that we will incur total costs up to $150 million following the completion of the acquisition.
During fiscal 2023, we made $43 million in cash payments related to the September 2022 Plan. See Note 12 of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further cash flow information associated with our restructuring activities.
These actions are expected to be completed by the end of fiscal 2025. During fiscal 2024, we made $41 million in cash payments related to the September 2022 Plan. See Note 12 of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further cash flow information associated with our restructuring activities.
See Note 13 of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further information. 35 Table of Contents Indemnifications In the ordinary course of business, we may provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners, subsidiaries, and other parties with respect to certain matters, including, but not limited to, product warranties and losses arising out of our breach of agreements or representations and warranties made by us, including claims alleging that our software infringes on the intellectual property rights of a third party.
Indemnifications In the ordinary course of business, we may provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners, subsidiaries, and other parties with respect to certain matters, including, but not limited to, product warranties and losses arising out of our breach of agreements or representations and warranties made by us, including claims alleging that our software infringes on the intellectual property rights of a third party.
Net revenues Fiscal Year % Change (In millions, except for percentages) 2023 2022 2023 vs. 2022 Net revenues $ 3,338 $ 2,796 19 % Fiscal 2023 compared to fiscal 2022 Net revenues increased $542 million, primarily due to a $406 million increase in sales of our consumer security products and a $117 million increase in sales of our identity and protection products.
Net revenues Fiscal Year % Change (In millions, except for percentages) 2024 2023 2024 vs. 2023 Net revenues $ 3,812 $ 3,338 14 % Fiscal 2024 compared to fiscal 2023 Net revenues increased $474 million, primarily due to a $388 million increase in sales of our consumer security products and a $88 million increase in sales of our identity and protection products.
We bring award-winning products and services in cybersecurity, privacy and identity protection to approximately 500 million users in more than 150 countries so they can live their digital lives safely, privately, and confidently today and for generations to come.
We bring award-winning products and services in cybersecurity, privacy and identity protection to approximately 500 million users in more than 150 countries so they can live their digital lives safely, privately, and confidently today and for generations to come. Fiscal calendar We have a 52/53-week fiscal year ending on the Friday closest to March 31.
Share repurchase program Under our share repurchase program, we may purchase shares of our outstanding common stock through accelerated stock repurchase transactions and open market transactions (including through trading plans intended to qualify under Rule 10b5-1 under the Exchange Act).
Any future dividends and dividend equivalents will be subject to the approval from our Board of Directors. Stock repurchase program Under our stock repurchase program, we may purchase shares of our outstanding common stock on the open market (including through trading plans intended to qualify under Rule 10b5-1 under the Exchange Act) and through accelerated stock repurchase transactions.
The participation exemption system under current U.S. federal tax regulations generally allows us to make distributions of non-U.S. earnings to the U.S. without incurring additional U.S. federal tax; however, these distributions may be subject to applicable state or non-U.S. taxes.
The participation exemption system under current U.S. federal tax regulations generally allows us to make distributions of non-U.S. earnings to the U.S. without incurring additional U.S. federal tax; however, these distributions may be subject to applicable state or non-U.S. taxes. Debt We have an undrawn revolving credit facility of $1,500 million, which expires in September 2027.
Cash and cash equivalents As of March 31, 2023, we had cash, cash equivalents and short-term investments of approximately $750 million, of which $572 million was held by our foreign subsidiaries. Our cash, cash equivalents and short-term investments are managed with the objective to preserve principal, maintain liquidity and generate investment returns.
Repurchases of common stock in fiscal 2023 were $904 million. Cash and cash equivalents As of March 29, 2024, we had cash and cash equivalents of approximately $846 million, of which $379 million was held by our foreign subsidiaries. Our cash and cash equivalents are managed with the objective to preserve principal, maintain liquidity and generate investment returns.
Such a change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision in the period. Loss contingencies We are subject to contingencies that expose us to losses, including various legal and regulatory proceedings, asserted and potential claims that arise in the ordinary course of business.
Loss contingencies We are subject to contingencies that expose us to losses, including various legal and regulatory proceedings, asserted and potential claims that arise in the ordinary course of business.
The following table summarizes supplemental key performance metrics for our solutions: Fiscal Year (2) (In millions, except for per user amounts and percentages) 2023 (3) 2022 Direct customer revenue (1) $ 2,933 $ 2,488 Partner revenues $ 341 $ 269 Total Cyber Safety revenues $ 3,274 $ 2,757 Legacy revenues $ 66 $ 50 Direct customer count (at quarter-end) 38.2 24.4 Direct average revenue per user (ARPU) $ 7.10 $ 8.63 Annual retention rate (4) 76 % 84 % (1) Non-GAAP Direct customer revenue differs from GAAP direct customer revenue in fiscal 2023 and 2022 because it excludes a $2 million and $11 million, respectively, reduction of revenue from contract liability purchase accounting adjustments.
The following table summarizes supplemental key performance metrics for our solutions: Fiscal Year (In millions, except for per user amounts and percentages) 2024 2023 Direct customer revenue (1) $ 3,353 $ 2,933 Partner revenues $ 396 $ 341 Total cyber safety revenues $ 3,749 $ 3,274 Legacy revenues (2) $ 63 $ 66 Direct customer count (at quarter-end) 39.1 38.2 Direct average revenue per user (ARPU) (3) $ 7.25 $ 7.10 Retention rate 77 % 76 % (1) Non-GAAP Direct customer revenue differs from U.S.
In response to the heightened levels of inflation, central banks, including the U.S. Federal Reserve and the European Central Bank, raised interest rates significantly in 2022, resulting in an increase in our cost of debt. Interest rates have increased and are expected to continue to increase in 2023, although at a slower rate.
In response to the heightened levels of inflation, central banks, including the U.S. Federal Reserve and the European Central Bank, raised interest rates significantly in 2022, resulting in an increase in our cost of debt. Although inflation rates slowed in 2023, global inflation remains high in 2024 and has impacted our results due to higher costs.
(4) The annual retention rate for fiscal 2023 includes the customer portfolio acquired through our Merger with Avast. We define direct customer count as active paid users of our products and solutions who have a direct billing and/or registration relationship with us at the end of the reported period.
We define direct customer count as active paid users of our products and solutions who have a direct billing and/or registration relationship with us at the end of the reported period. Average direct customer count presents the average of the total number of direct customers at the beginning and end of the applicable period.
This was partially offset by the $400 million repayment of our 3.95% Senior Notes, $1,010 million repayment of our Initial Term Loan, $703 million repayment of our Delayed Draw Term Loan, settlement of the $525 million principal, $250 million prepayment of our Term B Facility, and $59 million mandatory amortization payments of our Term Facility A and B, $100 million equity rights associated with our New 2.0% Convertible Notes, and common stock repurchases of $904 33 Table of Contents million.
In contrast, fiscal 2023 reflects $8,954 million of aggregate proceeds: $3,910 million from Term A Facility, $3,690 million from Term B Facility, $900 million from the 6.75% Senior Notes and $600 million from the 7.125% Senior Notes, net of $146 million of debt issuance costs, offset by the $400 million repayment of our 3.95% Senior Notes, $1,010 million repayment of our Initial Term Loan, $703 million repayment of our Delayed Draw Term Loan, the settlement of the $525 million principal and $100 million equity rights associated with our New 2.0% Convertible Notes, $250 million prepayment of our Term B Facility, and $59 million mandatory amortization payments of our Term A and Term B Facility.
Cash from financing activities Our cash flows provided by financing activities in fiscal 2023 increased $5,014 million, primarily due to proceeds from the issuance of debt, partially offset by repayment of debt and the continuation of our stock repurchase program.
Cash from financing activities Our cash flows provided by and used in financing activities in fiscal 2024 decreased $6,642 million, primarily due to lower repayments of debt and repurchases of common stock under our repurchase program and by the absence of proceeds from the issuance of debt during the fiscal 2023.
Research and development expense increased $60 million, primarily due to a $39 million increase of headcount and IT costs, a $12 million increase of stock-based compensation expense and a $10 million increase in outside services and software expense.
Research and development expense increased $19 million, due to a $10 million increase in headcount and outside services and a $10 million increase in cloud hosting costs.
It is inherently difficult and subjective to estimate such amounts, as this requires us to determine the probability of various outcomes. We re-evaluate these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit and new audit activity.
It is inherently difficult and subjective to estimate such amounts, as this requires us to determine the probability of various outcomes. We re-evaluate these unrecognized tax benefits on a quarterly basis.
Restructuring In connection with the Merger, our Board of Directors approved a restructuring plan (the September 2022 Plan) to realize cost savings and operational synergies, which became effective upon the close of the Merger on September 12, 2022.
The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions and other investment opportunities. 34 Table of Contents Restructuring In connection with the acquisition of Avast, our Board of Directors approved a restructuring plan (the September 2022 Plan) to realize cost savings and operational synergies, which became effective upon the close of the acquisition on September 12, 2022.
Volatile market conditions related to Russia’s invasion of Ukraine and retaliatory sanctions against the Russian Federation and Belarus, the COVID-19 pandemic and other macroeconomic events have, at times, and may in the future negatively impact our results of operations and cash flows.
Volatile market conditions related to geopolitical conflicts and other macroeconomic events have, at times, affected our results of operations and cash flows in non-material ways; however, geopolitical conflicts and other macroeconomic events may in the future materially impact our results of operations and cash flows.
This was partially offset by a $40 million increase in outside services due to the Merger with Avast, $25 million increase of stock-based compensation expense and a $16 million increase in headcount costs. Amortization of intangible assets increased $87 million as a result of the Merger with Avast.
This was partially offset by a $65 million decrease in acquisition and integration costs related to our acquisition of Avast. Amortization of intangible assets increased $61 million as a result of the acquisition of Avast. Restructuring and other costs decreased $12 million, primarily due a $10 million decrease in stock-based compensation expense.
Due to our subscription-based business model, the effect of recent macroeconomic events may not be fully reflected in our results of operations until future periods, if at all. For a further discussion of the potential impacts of the global macroeconomic conditions on our business , please see “Risk Factors” in Item 1A.
For a further discussion of the potential impacts of the global macroeconomic conditions on our business , please see “Risk Factors” in Item 1A.
(In millions) Short-Term Payments Long-Term Payments Total Contractual obligations: Debt (principal payments) (1) $ 233 $ 9,666 $ 9,899 Interest payments on debt (2) 530 2,372 2,902 Purchase obligations (3) 320 122 442 Deemed repatriation taxes (4) 128 310 438 Operating leases (5) 28 33 61 Total $ 1,239 $ 12,503 $ 13,742 (1) As of March 31, 2023, our total outstanding principal amount of indebtedness is comprised of $7,292 million in Term Loans, $2,600 million in Senior Notes and $7 million in mortgage loans.
(In millions) Short-Term Payments Long-Term Payments Total Contractual obligations: Debt (principal payments) (1) $ 175 $ 8,541 $ 8,716 Interest payments on debt (2) 572 1,866 2,438 Purchase obligations (3) 324 186 510 Deemed repatriation taxes (4) 171 139 310 Operating leases (5) 15 42 57 Total $ 1,257 $ 10,774 $ 12,031 (1) As of March 29, 2024, our total outstanding principal amount of indebtedness is comprised of $6,110 million in Term Loans, $2,600 million in Senior Notes and $6 million in mortgage loans.
See Note 13 of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for information about the tax capital loss. LIQUIDITY, CAPITAL RESOURCES AND CASH REQUIREMENTS Liquidity and Capital Resources We have historically relied on cash generated from operations, borrowings under credit facilities, issuances of debt and proceeds from divestitures for our liquidity needs.
See Note 13 of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for information about our unrecognized tax benefits.
Non-operating income (expense), net Fiscal Year $ Change (In millions) 2023 2022 2023 vs. 2022 Interest expense $ (401) $ (126) $ (275) Interest income 15 — 15 Foreign exchange gain (loss) (8) (2) (6) (Loss) gain on early extinguishment of debt (9) (3) (6) Gain on sale of properties — 175 (175) Other (20) (7) (13) Non-operating income (expense), net $ (423) $ 37 $ (460) Fiscal 2023 compared to fiscal 2022 Non-operating income (expense), net, decreased $460 million in income, primarily due to the absence of the $175 million gain on the sale of certain land and buildings in Mountain View, California during the second quarter of fiscal 2022 and an increase in interest expense associated with borrowings under our senior credit facilities (as defined below) and two senior notes, which were issued during the second quarter of fiscal 2023.
Non-operating income (expense), net Fiscal Year $ Change (In millions) 2024 2023 2024 vs. 2023 Interest expense $ (669) $ (401) $ (268) Interest income 25 15 10 Foreign exchange gain (loss) 3 (8) 11 Gain (loss) on early extinguishment of debt — (9) 9 Gain (loss) on equity investments (40) (7) (33) Gain (loss) on sale of properties 9 — 9 Other 9 (13) 22 Non-operating income (expense), net $ (663) $ (423) $ (240) Fiscal 2024 compared to fiscal 2023 Non-operating income (expense), net, increased $240 million, primarily due to an increase in interest expense associated with borrowings under our senior credit facilities (as defined below) and two senior notes, which were issued during the second quarter of fiscal 2023, and a $33 million increase in loss on equity investments related to the impairment of one of our non-marketable equity investments. 32 Table of Contents Provision for income taxes Fiscal Year (In millions, except for percentages) 2024 2023 Income (loss) before income taxes $ 459 $ 804 Income tax expense (benefit) $ (157) $ (545) Effective tax rate (34) % (68) % Fiscal 2024 compared to fiscal 2023 Our effective tax rate increased primarily due to a one-time income tax benefit as a result of a tax capital loss in fiscal 2023 partially offset by an income tax benefit as a result of an operational and legal entity restructuring in fiscal 2024.
Our capital allocation strategy is to balance driving stockholder returns, managing financial risk and preserving our flexibility to pursue strategic options, including acquisitions and mergers. Historically, this has included a quarterly cash dividend, the repayment of debt and the repurchase of shares of our common stock.
Historically, this has included a quarterly cash dividend, the repayment of debt and the repurchase of shares of our common stock.
We believe that eliminating the impact of this adjustment improves the comparability of revenues between periods. In addition, although the adjustment amounts will never 30 Table of Contents be recognized in our GAAP financial statements, we do not expect the acquisitions to affect the future renewal rates of revenues excluded by the adjustments.
GAAP financial statements, we do not expect the acquisitions to affect the future renewal rates of revenues excluded by the adjustments.
Restructuring and other costs increased $38 million, primarily due to severance and termination benefit costs in connection with the September 2022 Plan. See Note 12 of the Notes to the Consolidated Financial Statements for details of the fiscal 2023 restructuring activities.
See Note 12 of the Notes to the Consolidated Financial Statements for details of the fiscal 2024 restructuring activities.
We monitor ARPU because it helps us understand the rate at which we are monetizing our consumer customer base.
GAAP measures. We monitor ARPU because it helps us understand the rate at which we are monetizing our consumer customer base. Retention rate is defined as the percentage of direct customers as of the end of the period from one year ago who are still active as of the most recently completed fiscal period.
Dividends On May 11, 2023, we announced a cash dividend of $0.125 per share of common stock to be paid in June 2023.
See Note 10 of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further information regarding financial ratios and debt covenant compliance. Dividends On May 9, 2024, we announced a cash dividend of $0.125 per share of common stock to be paid in June 2024.
Fiscal 2023 compared to fiscal 2022 Sales and marketing expense increased $60 million, primarily due to a $36 million increase in headcount and IT costs, a $23 million increase in outside services and software expenses, and a $15 million increase of stock-based compensation expense. This was partially offset by $17 million in sales and marketing efficiencies.
Fiscal 2024 compared to fiscal 2023 Sales and marketing expense increased $51 million, due to a $32 million increase in advertising, a $9 million increase in occupancy and IT costs, and an $8 million increase in headcount and outside services.
Fiscal Year 2023 2022 Americas 68 % 70 % EMEA 21 % 18 % APJ 11 % 12 % The Americas include U.S., Canada, and Latin America; EMEA includes Europe, Middle East, and Africa; APJ includes Asia Pacific and Japan.
When changes occur, we recast historical amounts to match the current methodology, such as for fiscal 2023 where we aligned allocation methodologies across similar product categories. The Americas include U.S., Canada, and Latin America; EMEA includes Europe, Middle East, and Africa; APJ includes Asia Pacific and Japan.
Therefore, $509 million in long-term income taxes payable has been excluded from the contractual obligations table.
Therefore, $1,346 million in long-term income taxes payable has been excluded from the contractual obligations table. See Note 13 of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further information.
This was inclusive of $113 million of foreign exchange headwinds, primarily in our consumer security products. Performance Metrics We regularly monitor a number of metrics in order to measure our current performance and estimate our future performance. Our metrics may be calculated in a manner different than similar metrics used by other companies.
Our metrics may be calculated in a manner different than similar metrics used by other companies.
Cost of revenues Fiscal Year % Change (In millions, except for percentages) 2023 2022 2023 vs. 2022 Cost of revenues $ 589 $ 408 44 % Fiscal 2023 compared to fiscal 2022 Our cost of revenues increased $181 million, primarily due to a $97 million increase in the amortization of acquired intangible assets as a result of our Merger with Avast, $52 million increase in payment processing fees, $27 million increase in revenue share costs and royalty charges, and $10 million increase in cloud hosting cost, offset by $6 million decrease in technical support costs. 31 Table of Contents Operating expenses Fiscal Year % Change (In millions, except for percentages) 2023 2022 2023 vs. 2022 Sales and marketing $ 682 $ 622 10 % Research and development 313 253 24 % General and administrative 286 392 (27) % Amortization of intangible assets 172 85 102 % Restructuring and other costs 69 31 123 % Total $ 1,522 $ 1,383 10 % Our operating expenses increased in fiscal 2023 compared to fiscal 2022 primarily due to increased headcount, stock-based compensation and restructuring costs, in connection with the Merger which was completed during the second quarter of fiscal 2023.
Operating expenses Fiscal Year % Change (In millions, except for percentages) 2024 2023 2024 vs. 2023 Sales and marketing $ 733 $ 682 7 % Research and development 332 313 6 % General and administrative 604 286 111 % Amortization of intangible assets 233 172 35 % Restructuring and other costs 57 69 (17) % Total $ 1,959 $ 1,522 29 % Our operating expenses increased in fiscal 2024 compared to fiscal 2023 primarily due to an increase in legal accruals and amortization of intangible assets.
Refer to Note 4 of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further information about this business combination. Fiscal calendar and basis of presentation We have a 52/53-week fiscal year ending on the Friday closest to March 31.
Debt instruments As of March 29, 2024, our total outstanding principal amount of indebtedness is summarized as follows. See Note 10 of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further information on our debt.
GLOBAL MACROECONOMIC CONDITIONS Our results of operations and cash flows are subject to fluctuations due to inflation, changes in foreign currency exchange rates relative to U.S. dollars, our reporting currency, changes in interest rates, as well as recession risks, which may persist for an extended period.
Additionally, we paid out a total of $323 million in quarterly dividends and carried out $1,183 million in debt pay downs, including $950 million in voluntary prepayments applied exclusively to the Term B facility. • During fiscal 2024, we increased net Direct customers by 0.9 million, increased monthly Direct ARPU by $0.15, and increased our Direct retention rate by 1%. • During fiscal 2024, we received an $899 million income tax refund related to the filing of our fiscal 2023 tax return, which was recorded net of allowances as part of Other current assets in the Condensed Consolidated Balance Sheets as of March 31, 2023. 28 Table of Contents GLOBAL MACROECONOMIC CONDITIONS Our results of operations and cash flows are subject to fluctuations due to inflation, changes in foreign currency exchange rates relative to U.S. dollars, our reporting currency, changes in interest rates, as well as recession risks, any of which may persist for an extended period.
Removed
Fiscal Year Highlights • In June 2022, we fully repaid the principal and accrued interest under the 3.95% Senior Notes due June 2022, which had an aggregate principal amount outstanding of $400 million.
Added
Fiscal 2024, 2023 and 2022 in this report refers to fiscal years ended March 29, 2024, March 31, 2023 and April 1, 2022, respectively, each of which was a 52-week year.
Removed
In addition, we paid $7 million of accrued and unpaid interest through the redemption date. • In August 2022, we settled the $525 million principal and conversion rights of our New 2.0% Convertible Notes in cash. The aggregate settlement amount of $630 million was based on $20.41 per underlying share into which the New 2.0% Convertible Notes were convertible.
Added
This is partially offset by the increase in net revenues discussed above and cost synergies post-acquisition. • Net income (loss) decreased $733 million and net income per share decreased $1.20, primarily due by the absence of the income tax benefit as a result of a tax capital loss in fiscal 2023, decreased operating income discussed above and increased interest expense associated with our senior credit facilities and two senior notes. • Cash and cash equivalents increased by $96 million compared to March 31, 2023, primarily due to cash generated from operating activities during fiscal 2024.
Removed
In addition, we paid $5 million of accrued and unpaid interest through the date of settlement.
Added
This is offset by dividends paid to shareholders, voluntary prepayments of our Term B facility, a mandatory principal amortization payment of our Term A facility, and repurchases of our common stock. • During fiscal 2024, we returned $1,947 million of capital back to shareholders and bondholders.
Removed
The repayments resulted in an adjustment to stockholders’ equity of $100 million. • In September 2022, we issued two series of senior notes, consisting of 6.75% Senior Notes due 2027 and 7.125% Senior Notes due 2030, for an aggregate principal of $1,500 million. • In January 2023, we made a voluntary prepayment of $250 million for our senior credit facilities, which was applied exclusively to the Term B Facility. • During fiscal 2023, we repurchased 40 million shares of our common stock for an aggregate amount of $904 million and paid a total of $314 million in quarterly dividends to shareholders.
Added
This was achieved through the repurchase of 21 million shares of our common stock, totaling $441 million.
Removed
Merger with Avast On September 12, 2022, we completed the Merger with Avast with the issuance of 94,201,223 shares of our common stock to Avast shareholders and cash consideration of $6,910 million, which includes repayment of Avast’s outstanding debt.
Added
Due to our subscription-based business model, the effect of recent macroeconomic events may not be fully reflected in our results of operations until future periods, if at all. Inflation, interest rates and foreign exchange rates remained volatile in 2023 and fluctuations in these indicators are uncertain and could result in further adverse impacts to our reported results.
Removed
In connection with the Merger, we changed our corporate name to Gen Digital Inc. and became dual headquartered in Tempe, Arizona and Prague, Czech Republic, although our principal executive offices remain in Tempe, Arizona.
Added
There is judgement and complexity involved in assessing if the tax position is more likely than not.
Removed
Prior to the Merger, Avast was a global leader in consumer cybersecurity, offering a comprehensive range of digital security and privacy products and services that protected and enhanced users’ online experiences.
Added
This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, 29 Table of Contents effectively settled issues under audit and new audit activity. Such a change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision in the period.
Removed
The Merger enables us to create a broad and complementary consumer product portfolio beyond core security and towards adjacent trust-based solutions and achieve greater geographic diversification and access to a larger user base. We believe this combination will accelerate the transformation of global consumer Cyber Safety.
Added
This was inclusive of $25 million of foreign exchange headwinds, primarily in our consumer security products and a $419 million increase from revenue contribution from Avast due to the additional five and a half months as compared to the corresponding period.
Removed
All financial information related to Avast that is discussed below in key financial metrics, results of operations and liquidity and capital resources is inclusive as of the Closing Date.
Added
Performance Metrics We regularly monitor a number of metrics in order to measure our current performance and estimate our future performance. We believe these key operating metrics are useful to investors because management uses these metrics to assess the growth of 30 Table of Contents our business and the effectiveness of our marketing and operational strategies.
Removed
Upon close of the Merger with Avast, we entered into the Amended and Restated Credit Agreement (Credit Agreement) with certain financial institutions, in which they agreed to provide us with (i) a $1,500 million revolving credit facility (Revolving Facility), (ii) a $3,910 million term loan A facility (Term A Facility), (iii) a $3,690 million term loan B facility (Term B Facility) and (iv) a $750 million tranche A bridge loan (Bridge Loan) (collectively, the senior credit facilities).

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeInterest rate risk As of March 31, 2023, we had $2,607 million in aggregate principal amount of fixed-rate Senior Notes, with a carrying amount and a fair value of $2,593 million, based on Level 2 inputs. The fair value of these notes fluctuates when interest rates change.
Biggest changeInterest rate risk As of March 29, 2024, we had $2,606 million in aggregate principal amount of fixed-rate Senior Notes, with a carrying amount and a fair value of $2,624 million, based on Level 2 inputs. The fair value of these notes fluctuates when interest rates change.
Since these notes bear interest at fixed rates, financial statement risk associated with changes in interest rates is limited to future refinancing of current debt obligations.
Since these notes bear interest at fixed rates, the financial statement risk associated with changes in interest rates is limited to future refinancing of current debt obligations.
Pursuant to the agreements, we will effectively convert $1 billion of our variable rate borrowings under Term A Facility to fixed rates, with $500 million at a fixed rate of 3.762% and $500 million at a fixed rate of 3.55%.
Pursuant to the agreements, we have effectively converted $1 billion of our variable rate borrowings under Term A Facility to fixed rates, with $500 million at a fixed rate of 3.762% and $500 million at a fixed rate of 3.55%.
A hypothetical 100 basis point increase or decrease in interest rates would have resulted in a $26 million increase or $28 million decrease in the fair values of our floating to fixed rate interest swaps at March 31, 2023.
A hypothetical 100 basis point increase or decrease in interest rates would have resulted in a $18 million increase or $18 million decrease in the fair values of our floating to fixed rate interest swaps at March 29, 2024.
As of March 31, 2023, we also had $7,292 million outstanding debt with variable interest rates based on the Secured Overnight Financing Rate (SOFR). A hypothetical 100 basis point change in SOFR would have resulted in a $73 million increase in interest expense on an annualized basis.
As of March 29, 2024, we also had $6,110 million outstanding debt with variable interest rates based on the Secured Overnight Financing Rate (SOFR). A hypothetical 100 basis point change in SOFR would have resulted in a $61 million increase in interest expense on an annualized basis.

Other GENVR 10-K year-over-year comparisons