Earnings Preview: Symantec

| About: Symantec Corporation (SYMC)

Symantec (NASDAQ:SYMC) is expected to report Q4 earnings after the market close on Wednesday, May 2, with a conference call scheduled for 5:00 pm ET.


The consensus estimate is 38c for EPS and $1.68B for revenue, according to First Call. Investors were blind-sided by downside Q4 guidance on April 24. Symantec announced preliminary results that fell short of the company's prior guidance for revenue and pro forma EPS, but exceeded prior expectations for deferred revenue. The primary culprit triggering the preliminary results was a 25% year-over-year decline in license revenue, attributed by management primarily to the company's storage business; both storage management and backup declined year-over-year. The company's consumer business also fell shy of expectations, growing only 2% year-over-year. However, the company showed stronger-than-expected growth in its subscriptions businesses -- MSSP, SAAS, security -- which led deferred revenue to grow faster than expected. Guidance for the first quarter was well below consensus, suggesting a continuation of near-term headwinds. Symantec cut its Q4 adjusted EPS view to "about" 38c and its Q4 revenue view to "about" $1.683B.

One positive note was that Symantec reported higher-than-expected deferred revenue, on a preliminary basis, of $3.97B, above prior guidance of $3.915B-$3.935B, based on stronger subscription sales than expected in the enterprise space. With much of the mystery taken out of Q4, investors and traders will mostly turn their attention to Q1 guidance. For Q1, management expects year-over-year change in revenue in the range of -0.5% to +0.5%, implying revenue of $1.645B-$1.661B. For non-GAAP EPS, the company expects a decline of between 5.0%-7.5%, implying a range of 37c-38c. For deferred revenue, the company expects growth of 0.7%-1.3%, implying a range of $3.715B-$3.737B.