Gen Digital Inc (GEN) — Q3 2024 Earnings Call Transcript

Thank you, Victoria, and good afternoon, everyone. Welcome to Gen's third quarter fiscal year 2024 earnings call. Joining me today are Vincent Pilette, CEO, and Natalie Derse, CFO. As a reminder, there'll be a replay of this call posted on the Investor Relations website along with our slides and press release. I'd like to remind everyone that during this call, all references to financial metrics are non-GAAP, and all growth rates are year-over-year, unless otherwise stated. A reconciliation of non-GAAP to GAAP measures is included in our press release and earnings presentation, both of which are available on the IR website at investors.gendigital.com. We encourage investors to monitor this website as we routinely post investor-oriented information such as news and events and financial filings. Today's call contains statements regarding our business, financial performance, and operations, including the impact on our business and industry that may be considered forward-looking statements. Such statements involve risks and uncertainties that may cause actual results to differ materially from our current expectations. Those statements are based on current beliefs, assumptions, and expectations as of today's date, February 1, 2024. We undertake no obligation to update these statements as a result of new information or future events. For more information, please refer to the cautionary statements in our press release and the risk factors in our filings with the SEC, particularly, our most recent reports on Form 10-K and Form 10-Q. And now, I'll turn the call over to Vincent.

Thank you, Jason. Good afternoon, everyone, and welcome to our earnings call. Only a few months ago, we celebrated Gen's one-year anniversary and held our first Investor Day as Gen. We were excited to share our strategy and our plans to expand our customer reach and our product roadmap. We know that we will capture the tremendous opportunity we have in consumer Cyber Safety over the next several years. In Q3, we delivered another consistent quarter of execution towards that goal. We grew Cyber Safety bookings to $1 billion, up 4%, Cyber Safety revenue up 3%, and delivered our 18th consecutive quarter of growth. We drove net subscriber count higher again this quarter, up 330,000 sequentially, with total direct customers finishing the quarter at a record 38.9 million. While we remain focused on accelerating our growth, we continue to demonstrate our ability to operate with strong fiscal discipline, increasing our operating margin by another 80 basis points sequentially, up nearly 7 full points since the Avast merger. Finally, we expanded our earnings power, growing EPS by 10%. At our last Investor Day, we shared long-term goals that included accelerating revenue to mid-single digits, growing EPS by 12% to 15%, and reducing our leverage to less than 3x EBITDA by 2027. As we discussed, our growth plan is underpinned by accelerating our subscriber growth, especially internationally and through partnerships, increasing value to our customers with cross-sell and upsell, and driving Gen's overall retention rate to 80%. We're already making progress here, particularly in our investments to increase Gen's customer base, entering new markets and driving international growth. In Q3, our direct acquisition channels grew double digits in all three regions, leading to broad-based performance. Our mobile solutions continued to see strong traction internationally, capitalizing on growing Internet connectivity in emerging markets. Our solutions are resonating with customers in these markets, and we have an integration roadmap that will enable us to drive more value over the lifecycle. We will continue to invest in these higher-growth markets and channels, as we look to expand our reach. We are also making consistent headway in delivering added value to our current customers as they expand their digital footprint. In Q3, we delivered another strong quarter in cross-sell/upsell activities with ARPU for these customers growing both year-over-year and sequentially in key markets, even though our overall reported ARPU slightly declined sequentially due to shifting mix of customer cohorts in mobile and emerging markets. Of course, progress is not linear and uniform across all of our levers. Overall, Q3 retention was stable sequentially at 77% with continued progress across key brands, but partially offset by mix and other integration-related activities. While slightly behind our aspirations this quarter, we remain on track and confident in our long-term target of 80%. In partner, the timing of a few large deals and the rollout of our solutions into our indirect customer employee base impacted the in-quarter revenue. Overall, the partner channel continues to show strong engagement with a robust and growing pipeline, and a competitive set of partner solutions, which is a key tenet of our strategy. To support our growth plan, we are leveraging our trusted brands and customer-centric approach. Our Cyber Safety capabilities continue to be recognized by leading third parties, and, most importantly, our customers. Recently, Norton and Avast were each named to PC Magazine's list of Best Tech Brands for 2024, and LifeLock's Net Promoter Score, with 67 exiting Q3, an all-time high, driven by our relentless focus on our customers and listening to their feedback. Gen continues to be a leader in the industry and trusted by consumers around the world. Ultimately, we are recognized and trusted because of our technology and our ability to innovate and protect people from their ever-changing and increasingly sophisticated threats they face every day. Last quarter, Avast blocked over 1 billion unique attacks per month, a stunning increase of 50% compared to a year ago, and over 10 billion for all of calendar year 2023. As we have pointed out many times, these threats are not focusing on targeting your PC or your phone, but you as an individual as you live your digital life. Threat actors are not missing a beat and have increasingly moved to web-based threats, such as social engineering and malvertising, as well as ongoing phishing attacks and AI-powered targeted email scams. Our customers are relying on us to out-innovate the threat actors and remain focused on increasing the pace at which we enhance and expand our product portfolio. Q3 was no different. We continued our focus on helping customers live their digital life safely, privately, and confidently. We offered consumers better protection from phishing and email scams, bolstering Norton AntiTrack with private email and adding a new safe email standalone product. We gave our customers a trusted way to navigate the web securely and privately with the launch of Norton private browser, and in identity, we expanded our reach into new countries, in all three regions, and added new features in existing markets. As we mentioned in November, our AI technology has been and remains a key tenet of our strategy. Not only does this powerful AI and deep learning technology empower our core security engines, but we are now bringing AI to the forefront to make our products more interactive and intuitive. In December, as part of our ReputationDefender business, we launched Total Radius. This innovative product, powered by AI, provides a fully-automated analysis of all available online information to help customers quickly identify and protect themselves. To start, we are offering this product through our employee benefit channel. In early-January, we also fully launched Norton Genie, our AI-powered scam detection app. Both Norton Genie and Total Radius are excellent examples of how people can leverage the power of Gen's AI and cutting-edge technology to more easily protect themselves and their loved ones from online threats. I'll conclude by saying that we have a great opportunity ahead and are very confident in achieving our long-term targets we laid out at our Investor Day. The threat landscape is more perilous than ever, and Gen's trusted brands offer the best solutions to consumers to protect and empower their digital lives. We will continue to execute our strategy in a disciplined way to accelerate growth, drive further margin expansion, and create long-term value for all stakeholders. And with that, let me pass it to Natalie to review our quarterly performance in greater detail and our guidance for the next quarter.

Thank you, Vincent, and hello, everyone. For today's call, I will walk through our fiscal Q3 2024 results, followed by our outlook for Q4. I will focus on non-GAAP financials and year-over-year growth rates, unless otherwise stated. Also, please note, this is our first fiscal quarter that includes full financial results from Avast in both periods as we have now passed the anniversary of the closure of the deal. Q3 was another quarter of consistent execution. Q3 revenue was $951 million, up 2% in USD and up 3% in Cyber Safety, excluding legacy business lines. Cyber Safety bookings grew 4% in constant currency, supported by continued growth in cross-sells and our direct acquisition channels. Direct revenue was $837 million, up 3% in constant currency. Our direct customer base expanded for the second consecutive quarter, increasing to 38.9 million, up 330,000 customers sequentially, and adding 0.5 million customers year-over-year. Driving new customer acquisition remains a priority for us and is growing double digits year-over-year. Leading with our expanded product offerings and broadening our geographic efforts, we have deployed incremental marketing spend to capture structural demand growth for Cyber Safety, especially in channels like mobile and international markets. As we move forward, our robust product roadmap will continue to extend our reach into new markets and cohorts, as well as continue to support our retention efforts over the long term across all of our cohorts. On the monetization front, monthly direct ARPU was $7.21 in USD, an increase of $0.12 year-over-year and a decrease of $0.07 sequentially. As previously shared, ARPU is impacted by many factors, including new customer growth, cross-sell adoption, geographic and channel mix. With a stronger growth in our new customer acquisition and traction in mobile in emerging markets, we are seeing the mix impacts on blended ARPU. While lower than the ARPU average, the cohort of customers we are acquiring in these new markets and channels are accretive to our installed base, and we can acquire these new cohorts at a lower acquisition cost, proving to be a healthy ROI on our performance marketing dollars. These cohorts will also blend into our flywheel and offer opportunities for further expansion into our portfolio of products and services, in essence, feeding our cross-sell and upsell opportunity funnel. Within our more mature cohorts, ARPU continues to scale as we drive cross-sell adoption, and this expansion reflects our customers' demand for increased coverage in the ever-changing cyber safety landscape. Turning to retention, our overall customer retention rate remained steady at 77%. As we've shared previously, we made significant progress in our retention rate in the first year as a combined company, yet still have many opportunities to improve retention across cohorts and across brands as we make progress towards our 80% retention rate target over the next few years. Currently, we are focused on driving retention rates up by improving user engagement, introducing new products and features, and clearly demonstrating value to our customers with our best-in-class comprehensive cyber protection offerings and services. As we move forward, we expect to drive additional uplift by continuing to execute on our product migration plans, and even more importantly, by creating hyper-personalized AI-powered customer experiences and incorporating them into our differentiated products and omni-channel go-to-market strategies. Turning to our partner business. Scaling our partner business is a key component to achieving our overall growth plan. Partner revenue was $99 million in Q3, up 4% year-over-year. We continue to drive growth in this channel through employee benefits, with a record pipeline and additional expansion plans. Given the long nature of partner sales cycles, the progress will be non-linear, and we will remain competitive with our offerings to capitalize on partner readiness across multiple channels. Driving our partner business to $0.5 billion remains the longer-term objective, and we are excited to share more progress in the coming quarters. Rounding out our revenue, our legacy business lines contributed $15 million this quarter, down from $23 million in the prior year. As a reminder, we expect legacy to continue declining double digits year-over-year and accounts for less than 2% of our overall total revenue. Turning to profitability. Q3 operating income was $558 million, up 6% year-over-year. We increased operating margin to 59% as we work towards our 60% margin goal we outlined in our long-term model. Every point of operating margin expansion is harder to achieve than the last, but this expanding operating leverage enables us to redirect some of the efficiency gains back into our growth investment framework. You will see us continue to invest in performance marketing to reach new and existing customers, to bolster our product portfolio with differentiated solutions, to amplify our international presence, especially in identity and privacy, and expand into trust-based adjacencies that will touch more parts of the consumers' digital life. These investments help fuel progress in each of our growth levers and strengthen our position to accelerate revenue growth to mid-single digits over the next three years. Q3 net income was $317 million, up 9% year-over-year. Diluted EPS was $0.49 for the quarter, up 10% year-over-year, and up 11% in constant currency. Interest expense related to our debt was approximately $158 million in Q3, resulting in an EPS impact of $0.19. Our non-GAAP tax rate remained steady at 22% and our ending share count was 645 million, down 6 million year-over-year, reflecting the impact of share repurchases. Turning to our balance sheet and cash flow. Q3 ending cash balance was $490 million. We are supported by $2 billion of total liquidity, consisting of our ending Q3 cash balance and a $1.5 billion revolver, and we have no near-term maturities due until April 2025. Q3 operating cash flow was $315 million, and free cash flow was $307 million, which includes approximately $201 million of cash interest payments this quarter. Turning to capital allocation. We remain intentional and balanced with our capital deployment and are committed to returning 100% of excess free cash flow to shareholders. In Q3, we paid down $250 million of our Term Loan B, and are now 3.9 times net leveraged. We also deployed $100 million for opportunistic share repurchases, the equivalent of almost 5 million shares. We have approximately $730 million remaining in our current share buyback program. Finally, we have paid $81 million to shareholders in the form of our regular quarterly dividend of $0.125 per common share. For Q4 fiscal 2024, the Board of Directors approved a regular quarterly cash dividend of $0.125 per common share to be paid on March 13, 2024, for all shareholders of record as of the close of business on February 19, 2024. Please note that the Q3 balance sheet and cash metrics above do not include a $900 million tax refund we received at the end of January, associated with tax capital losses disclosed in our fiscal year '23 10-K. This domestic cash payment increases our liquidity and is available for debt prepayments and/or share repurchases, and reduces our net leverage by 0.4 points to approximately 3.5 times net. With our strong cash flow generation and disciplined capital deployment, we will continue to use a balanced approach in paying down debt and opportunistic share buybacks to help achieve our goals of delivering EPS growth of 12% to 15%, and driving net leverage below 3 times. Now, turning to our Q4 fiscal '24 outlook. For Q4, we expect non-GAAP revenue in the range of $960 million to $970 million. We expect Q4 non-GAAP EPS to be in the range of $0.52 to $0.54. This translates to fiscal year 2024 non-GAAP revenue in the range of $3.805 billion to $3.815 billion, and non-GAAP EPS to be in the range of $1.95 to $1.97. While this guidance is within the full year range we provided in November at our Investor Day, we recognize it's at the low end as a result of some of the factors mentioned earlier. Yet, we remain steadfast in driving our long-term growth plan. We are focused on operational excellence and delivering on our commitments, always in a disciplined and balanced manner. Our key performance indicators are trending in the right direction. Our strategy is working, and our financial model is resilient. We're committed to reinvesting in our business to drive sustainable and profitable mid-single-digit growth and create shareholder value over the long term. We look forward to reporting on our progress in the quarters ahead. As always, thank you for your time today, and I will now turn the call back to the operator to take your questions.

Hey, Saket.

Hey, Vincent. Hey, Natalie. Thanks for taking my questions here. Hey, how are you?

Hi.

Yeah, good.

Natalie, maybe I'll start with you. Maybe my first question is, the bookings growth of 4% was really good to see. The revenue growth of 2% was a little bit below. I was just wondering if you could help us bridge those two metrics a little bit, and when you think those two growth rates maybe start to converge?

Yeah, sure. Thanks for the question. So first, if I look at it, look, we're proud to be growing bookings for the second quarter in the row in mid-single digits, up 4%. As we spoke to this quarter and last quarter, that growth is driven by the acceleration and the success of cross-sell into a broader portfolio. It's driven by a reacceleration of DTC and customer acquisition, stable retention across the brands, the strength really coming through, not only across broad based, but identity and privacy products that we've introduced. And then, when you look at revenue, keep in mind that that revenue on an as-reported basis, that first of all, includes legacy business lines and, obviously, is on as-reported basis in USD. When you take that out, and you really look at the Cyber Safety revenue, excluding legacy, excluding the FX headwinds, we grew 3%. So, not that far off of the bookings rate of growth. And then, as we continue to scale, and as we continue to quarter after quarter deliver on that bookings growth, that will eventually feed and really converge with revenue rate of growth over time.

Got it. That makes sense. Vincent, for my follow-up question, I wanted to highlight the impressive net additions. Seeing 330,000 was great. However, it seems that the ARPU profile for some of the new additions is changing. It may be early to discuss this, but as you consider the growth strategy in Cyber Safety, should we evaluate different contributions from the installed base compared to ARPU? How do you conceptualize that?

Yeah. And just to bridge first back to your first question at Natalie, I think the two leading indicators we have for this business, that will then flow back into the P&L is the booking growth rate, and Natalie mentioned, our 4%, and then the second one is the customer count growth that we discussed, whether it's indirect or direct. You're right, so we grew sequential or sequentially our direct customer count for the second quarter in a row. We actually achieved a record, right? So, when you take Avast plus NortonLifeLock together at the time of the merger, we are now at a record 38.9 million, and that has been definitely a very strong sign of the quarter. We did discuss at the ID back in November that we'll drive with discipline. Every one of our channels is managed economically positive over the lifecycle of the customers, right? So, the CLV over CAC by all the channels is very important, and rebalancing our marketing investment across all of those channels is essential. If we have a bit more momentum in certain channels, then we're going to capture that presence quickly. For the last two quarters, internationally, in emerging markets, and maybe closer to the security line, which is identity privacy, has been the traction. We also shared at the time that in developed and emerging countries, ARPU is $35 on average in emerging markets. As you move into more developed areas, it's $70. When you get fully mature, ARPU is $135. Now, we feel good because we know we have a very strong capability for cross-selling and upselling. As we continue to mature new channels or enter new channels, and as they mature, there is space there; we have a chance to expose our customers to a broader protection of their digital lives, and that has been our strategy. So, that's how we're doing it. The aggregated metric for total Gen on ARPU, if you want, has to consider that mix, and we're looking at the ARPU across all the channels and then driving the cross-sell/upsell in each one of those.

Got it. That makes sense. I'll get back in queue to ask my next one. Thanks very much.

Thank you.

Hey, Hamza.

Good evening. Thank you for taking my question.

Good.

Vincent, I understand that progress is not always linear across every metric, but clearly the ARPU did come in below your expectation. I'm wondering if it's just a function of the higher mix of incremental international mobile subs, or did the churn rate for your higher-paying subscribers, the NortonLifeLock subscriber, if you will, come down more than you would have expected or didn't improve as much as you'd expected?

Yeah. So, let me address both and they combine, obviously, in the dynamic. Definitely, the ARPU is still growing year-over-year, but it's sequentially down, it's driven by mix. We are not discounting more in each one of the channels. We didn't see anything outside of the normal business dynamic that we had seen in prior quarters. To be honest with you, we love all of our channels, and where we see momentum, we're going to allocate some of the marketing dollars. This quarter was maybe a little more allocated towards lower ARPU channels, but very economically positive in the long term. We feel good about that. So that's the entire ARPU dynamic mix shift. When you talk about retention, we were stable quarter-over-quarter. We're actually improving in key areas but were slightly below our plan, and we were doing real-time allocation of our resources. We're also preparing to transition to a common platform this year, which is the big rollout of our new product set and merging the different campaigns. We understood that there had to be some trade-offs with the day-to-day drive of the activity. We did not improve as much as we had in our brand, if you want. But we feel really good, and I think as we continue to progress quarter-on-quarter, it may not be exactly linear, but feel very good that we will get to our 80%, Hamza.

Got it. Regarding the topic, I understand that your main focus is to continue providing value through upselling and cross-selling. However, unless I'm mistaken, it seems you haven't increased prices over the past couple of years, even with record-high inflation while some competitors have. I'm interested in your thoughts on possibly raising prices to reflect the value you're delivering going forward.

So, pricing is very strategic to us, right, and we really are pricing for value. So, we constantly innovate, add new features, and then keep our price constant with markets. When you say we didn't take a price increase, that's not true. We always price for the value we deliver into the market, adding new features. The growth rate you mentioned, cross-sell/upsell, is definitely one of our two key levers for growth, right? We also, obviously, want to continue to expand. I’m very pleased to have new customers coming in last quarter and this quarter. We want to expand and continue to expand with partners to provide Cyber Safety solutions. We're looking at the overall, if you want, as a balanced approach, delivering and pricing for them.

All right. Okay. I'll hop back in the queue. Thank you.

Hey, Peter.

Thank you for taking my question. To follow up on the previous comments, when did you start noticing these dynamics since we last met in November? Was it in the middle or toward the end of the quarter? I'm curious about when you began to see the mix shift within the channel. Also, what are your expectations for Q4 and next year as you consider the current situation?

Yeah. So, as we reported, Q2 was the first quarter of sequential growth. As you know, we said we're finishing strongly in September with good momentum outside of the US and in international and emerging markets. That's what we indicated at Analyst Day, regarding the profile of customers in those markets, so we can model them. Obviously, they carried into Q3 at a stronger pace than we anticipated. We told you it would slow down; we didn't know it was sustainable. We saw it was sustainable and continued to put marketing dollars into those trends. Going into Q4 now, we have two quarters of sequential experience with it, and we plan to continue into Q4. We'll give more indications when we provide the annual guidance for '25 in May. Plenty of things can happen between now and then, especially making progress in retention. In terms of retention, as I mentioned, we made good progress across the brands. I see nothing changing from a fundamental standpoint, and we have the aspiration to bring the Avast brands to be closer to where Norton is. We're making good progress there in terms of balancing certain initiatives for platform integrations that were more day-to-day through the quarter as we were preparing for integration.

Thanks. I think one of the comments you made was interesting, that caught my eye, was the record pipeline for the employee benefit channel. Maybe just if you can double down there and kind of let us know how that cohort of customers varies versus your traditional channel? Maybe talk about what the ARPU effect for those, like the churn for those customers. Just curious anything that you can share when that becomes more meaningful to you guys. Thank you.

Definitely. In partner, we have multiple channels, right? So, employee benefits is one of them. We have telcos, retail, and we have strategic partners as well, and they all behave slightly differently. They also have a different relationship between your bookings and your revenue compared to our normal DTC business, which is 90% of our business as you know. In terms of the employee benefits channel, we continue to grow the pipeline. We've been growing double digits, but maybe we're a bit overoptimistic regarding closing certain deals that would then carry immediate impact here during sign-up times, and those will be delayed and carried into fiscal '25. They're not lost deals, but it takes time to deploy. We're also deploying into those installed base higher value proposition, which may start initially as basic identity protection and adding all the way to the full membership structure with ReputationDefender, a new product, and those taking a little bit more time. Each channel may have different ARPU; their employee base is very close to LifeLock, maybe 20% or 25% lower than the average but very close to it.

Hey, Matt.

Hi, everyone. I hope you're doing well. Thank you for your time. My questions are somewhat similar to those that have already been asked, particularly regarding ARPU. You've addressed this a few times. While I understand that you don't provide guidance on net additions and ARPU, is it reasonable to expect continued mix pressure as part of your Q4 guidance? There seems to be a long-term upward bias to ARPU, but could you provide more clarity on your Q4 assumptions?

I think we are seeing two quarters of positive momentum, which is promising. It’s important to look beyond the overall average revenue per user, which has declined sequentially, and focus on our consistent addition of new customers over these two quarters. We need to dive deeper into what’s happening at the cohort level. Regarding ARPU, if we analyze it closely, our core online business is experiencing growth in ARPU, which has been the case for many quarters, especially as we successfully increase cross-sell adoption. This has been a growth driver for us recently and will continue to be crucial as we move forward, especially with our expanding international reach and robust product offerings. The economics of our other cohorts are strong; we’ve been clear that we will keep investing in marketing to fuel growth and diversification, but we do so responsibly. Even though our top-level metrics show a blended decline quarter-over-quarter, the health of the individual cohorts is encouraging. Looking ahead at customer acquisition, we concentrate on what products and solutions our customers choose and ensure we prioritize sustainable and profitable growth across all channels and markets. We focus our marketing efforts on the most promising opportunities, and the results may vary from quarter to quarter as we adapt our strategies. We aim for a balanced and disciplined approach to maintain the diversity that benefits Gen.

Got it. Super helpful. Thanks, Natalie. I wanted to follow up on the earlier question regarding employee benefit revenue. We see this as a significant opportunity for you all. Just to clarify, you mentioned that the revenue that slipped out of Q3 won't be expected in Q4; it's more a timing issue for fiscal '25. Is that the correct way to understand the deals that didn't close this quarter?

Yeah, definitely a few key deals slipped into fiscal year '25, and we did not include them in our Q4 forecast.

That's another one where I want to make sure that we...

It sounds like there was a significant opportunity that you identified. Just to clarify, you mentioned that the revenue that was expected in Q3 will not be realized in Q4 and is more of a timing issue for fiscal year '25. Is that accurate regarding the deals that didn't close this quarter? Yes, definitely a few key deals have moved to fiscal year '25, and we have not accounted for them in our Q4 forecast. That's another point I want to ensure we address.

I want to emphasize that the EB funnel is incredibly strong and has never been in a better position. The team is working on diversifying and expanding while also improving quality. We have a range of deals in progress, and we're maintaining a disciplined approach with a focus on operational excellence. The team is performing exceptionally well. As we handle these deals, we act as strong partners, connecting our partners with valuable collaborators. However, the integration of customers and EB deals can become complicated depending on their size. We're committed to fulfilling our promises, and as our clients navigate their integrations, timing issues can sometimes arise. That's how I suggest you view the situation. The EB funnel has never been stronger.

Thanks a lot, Natalie. Thanks a lot, Vincent.

Thanks.

Hey. Thanks for taking my question. I just have two.

Hi, Jonathan.

Could you please discuss deal linearity throughout the quarter? Additionally, can you provide any insight into how aggressive you intend to be with buybacks given the recent cash injection?

Yes. So, the deal linearity; our partner channels are so diverse. I know you attended the Investor Day, but for everybody else on the call, we've talked about how many different channels are in partner, and quarter in, quarter out, the timing of those deals and the diversity of those channels, how they come together, they won't be linear. What I would reiterate is that what we talked about at our Investor Day, and I would reiterate here is the partner channel is very, very critical for us. We laid out a growth plan over the long term to add about $100 million of incremental partner revenue. The teams are aligned to that, driving towards that, and we'll stay focused on that goal and give you progress updates along the way. And then, in terms of share buybacks, I don't really want to comment on being conservative or aggressive, but we will definitely have balanced capital allocation. We had already earmarked a balanced approach across share buybacks and accelerated debt pay down for Q4. Again, as we laid out for you in November, we'll continue that balanced approach. The $900 million is now available for us to deploy. We already have that in and ready to go in terms of how we're going to deploy that in Q4.

Got it. Thank you.

Sure.

Hey, guys, thanks for fitting me back in. Maybe just one follow-up, if I could. Natalie, maybe for you, so the pipeline in the employee benefits and the partner business sounds great. Just given some of the deal dynamics that didn't necessarily benefit here in Q3, and what we are now assuming in Q4, I was just wondering if you could put a finer point on what the revenue impact was here in Q3. I mean, clearly, there's some ARPU impacts right that we've talked about quite a bit. But I'm curious how much of that partner business maybe contributed to some of the revenue delta in the quarter.

I would say, let's focus on the overall number. Based on our Q3 performance compared to the midpoint of our guidance, we had about a $5 million shortfall. However, this isn't material. Several factors contributed to this, including the $5 million shortfall at midpoint and our delivery on the lower end. Partner deals played a role, and when we discuss growth drivers and the mix of customers in the funnel, that had some effect as well. There was also a bit of foreign exchange impact. Overall, none of the individual items are material, all adding up to about a $5 million difference.

Got it. Very helpful. Thanks.

Thank you.

Thank you. Just for my final, I wanted to sneak in a product question here for Vincent. Just given that the threat environment that we're seeing with the rise of ransomware, AI deepfakes, just the elections that are happening globally around the world, it seems like cybersecurity is as much of a problem for organizations as it is for consumers. I'm curious, what are you doing with your partners and customers to educate them on proper cyber hygiene? Specifically, on the AI deepfake issue, are there any products on the roadmap that could potentially deal with that going forward?

Yeah, absolutely. We have a lot of activities with partners, that's why the partner channel is so strategic. As we embed security and concerns into the solutions that the consumer buys, and then directly with the consumer, we have a full set of activities in terms of educating and reminding them. Hygiene, as you know, in cybersecurity is a big component of that. We're definitely using more and more AI, as Ondrej mentioned at the ID, using AI to combat AI. The shift toward a personalized, interactive, intuitive cyber safety companion is absolutely essential. We launched Norton Genie as an example of early on what we can do to try to identify some of those fake scams that will become more sophisticated. Our products will become more powerful as we can scan the entire spectrum of digital threats. You will see the evolution of cyber safety for consumers becoming more embedded and personalized to individual behaviors.

Thank you.

Great. Yeah, thanks, Hamza. This concludes our conference call today. Thanks for joining.