Symantec’s Q1 Earnings Review: Cost Savings Hold the Bottomline As Threat Protection Drags The Revenues

by Trefis Team
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The leader in security software, Symantec (NYSE:SYMC) released its fiscal Q1’17 earnings on August 4th. The company delivered results within its guided range and above market expectations. Symantec witnessed improved performance in Enterprise Security and inline results from consumer security. The EPS continued to grow despite the decline in revenues because of the company’s cost saving program, which helped in increasing the operating margins.

The Blue Coat acquisition, which was just completed on Monday, August 1st, is a step towards increasing the presence in cloud security as Symantec will combine its endpoint threat protection with Blue Coats’s leading cloud security technology.  We believe it will stabilize the decline in revenues which the company has been facing for the last 3 years due to declining PC production.

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See our complete analysis for Symantec

Blue Coat Combination To Act As A Technology Booster

  • Symantec’s threat protection and Blue Coat’s intelligence network will lead to faster identification and elimination of suspicious content as more customers turn to cloud based products.
  • The duo will now be working on mobile protection for the devices which access the cloud services and data outside the network firewall from different locations.
  • Through security analysis technology, the company aims to build products which can detect the behavioral aspects of malicious content to counter the malware more efficiently.
  • Cloud Generation Security Stack technology will allow the enterprises to encrypt or tokenize their data when it moves within the cloud. [1]

Information And Cyber Security Emerge, As Threat Protection And Consumer Security Take A Backseat

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  • The consumer security market has declined in recent years, experiencing a fall of 5.9% in 2015 due to decreased PC sales, which in turn is weighing on the consumer security revenues of Symantec.
  • Threat protection is also lagging behind as smaller players continue to grab a share with their specialized products in contrast to complex portfolios of the big players. [2]
  • Symantec’s Data Loss Prevention is the fastest growing segment, and according to a Group 451 report on DLP, the segment is expected to grow at 22% CAGR from $619 million in 2014 to $1.7 Billion in 2019. With increasing amounts of data, all the big businesses around the world are likely to rely heavily on DLP, leaving Symantec with a good growth opportunity.
  • SIEM (Security Information Event Management) is another potential fast growing area that Symantec can target. A Markets and Markets report on SIEM suggests that the segment’s market may grow from $2.57 billion in 2014 to $4.5 billion in 2019.

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Notes:
  1. Symantec Q1’17 Transcript, Seeking Alpha []
  2. Gartner Software Security Report []
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