Symantec Q4’17 Earnings Review : Product Upgrades Can Be The Key To Symantec’s Growth

by Trefis Team
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Symantec (NYSE:SYMC) released its earnings on May 10th. Symantec managed to grow both its consumer as well as enterprise security’s net revenues. Consumer business was helped by the benefits from the LifeLock acquisition and the enterprise security was supported by strong innovations and new products. However, the company went onto miss the analyst estimates of the top line which resulted in a 5% fall in the stock price during Thursday’s trading session.

Higher revenues, cost savings, and synergies from acquisitions resulted in a 27% increase in the non-GAAP EPS. Going forward, the company is targeting $400 million of cost savings and $150 million of cost synergies by the end of FY’18, out of which it has managed to materialize $300 million in FY’17. It is also targeting synergies of $80 million by 2020 from the LifeLock acquisition.

The enterprise business remained strong and will likely lead the growth in the future because of an updated product pipeline post Blue Coat acquisition. On the other hand, organic decline in the consumer division is still posing concerns about the sluggish consumer security market, which can continue to bother the business going forward.

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See our complete analysis for Symantec

New Products Have Put Enterprise Security On A Potential Launch Pad

The Blue Coat acquisition has strengthened Symantec’s threat intelligence resulting in a strong integrated cyber defense platform which is gaining traction with the enterprise customers. Enterprise division’s top-line experienced tailwinds from the innovations in the cloud security wherein Symantec has combined its DLP features with Blue Coat’s expertise in CASB and cloud proxy. SEP 14 (Symantec Endpoint 14), with features such as artificial intelligence for threat detection has become instrumental for the future growth in the top-line. In addition, the company is all set to release converged endpoint and EDR (Endpoint Detection & Response) in the near future.

With all these innovations and new products, Symantec’s position in enterprise security market has strengthened amidst growing competition from the likes of Cisco and Microsoft.  Given the fact that the company’s market share has been sensitive to new and innovative products in the recent past, we can look forward to future organic gains in the enterprise business as Symantec is quickly upgrading its product portfolio to meet the changing security demands of the enterprises.

Consumer Security’s Performance Can Improve, But Market Conditions Might Take A Toll On Revenues

Symantec’s consumer security revenues finally took a step forward after a long time because of benefits from the LifeLock acquisition. However, excluding these benefits, the organic revenues of the consumer business continued to fall by 5%. This fall has slowed down due to higher renewal metrics driven by mobile solutions and new privacy technology. Now Symantec has added LifeLock’s identity theft features in Norton which can result in higher demand for the product as the customers won’t have to spend separately for the Identity protection services. However, we believe that sluggish market conditions due to low PC sales can offset these benefits to some extent leading to the stagnation of growth in this division’s revenues, despite an increase in the market share.

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