Avast plc Half Year Results For The Six-Months Ended 30 June 2021

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Avast Software, Inc.

11 Aug, 2021, 06:00 GMT

First half performance in line with the Board's expectations; full year revenue guidance maintained

LONDON, Aug. 11, 2021 /PRNewswire/ -- Avast plc (LSE: AVST), together with its subsidiaries ('Avast', 'the Group' or 'the Company'), a leading global cybersecurity provider, announces its results for the six-months ended 30 June 2021.

Ondrej Vlcek, Chief Executive of Avast, said:

"In line with the Board's expectations, we are pleased to report a resilient set of group results for the first half of 2021, against the backdrop of a strong prior year performance. The Group delivered double-digit organic revenue growth1 and sustained high levels of profitability with Adjusted EBITDA margin at 57.3%2.

"We are optimistic about Avast's prospects for the second half of the year, and as comparator period trends start to normalise, we anticipate a reacceleration of billings growth. The launch of our new flagship Avast One product remains on track for later this year. Our focus remains on driving customer engagement, acquisition and retention, which will require higher levels of margin investment in R&D, innovation and marketing over the medium term."

FINANCIAL HIGHLIGHTS

  • Good overall performance in line with the Board's expectations
  • Billings at $482.7m up 2.9% at actual rates, with organic growth of 0.9%
  • Revenue at $471.3m up 8.8% at actual rates, with organic growth of 10.4%
  • Consumer Direct Revenue at $401.6m, up 15.0% at actual rates, with organic growth of 13.9%
  • Adjusted EBITDA up 11.9% to $270.2m; Adjusted EBITDA margin at 57.3%, up 159bps
  • Adjusted fully diluted earnings per share ('EPS') up 20.5% to $0.20 (versus $0.16 at HY 2020)
  • Final dividend in respect of 2020 paid in June 2021 of 11.2 cents per share; total dividend for the year of 16.0 cents per share, up 8.8%. Declared interim dividend payable in October 2021 of 4.8 cents per share
  • Continued strong cash generation with Unlevered Free Cash Flow up 9.0% to $263.1m and Levered Free Cash Flow up 12.6% to $248.8m
  • Resilient balance sheet with $397.6m of cash and available liquidity3. Net debt / LTM ('last twelve months') Adjusted EBITDA at 1.0x at half year
  • On a statutory basis, Operating profit up $92.2m from $134.5m to $226.7m, fully diluted EPS at $0.20 (versus $0.08 at HY 2020)

OPERATIONAL AND STRATEGIC HIGHLIGHTS

  • Consumer Direct operating KPI's tracked positively. In the six months to June, customers4 were up 1.5% to 16.72m, Average Products Per Customer5 increased 0.8% to 1.42 and Average Revenue Per Customer6 was up 4.4% to $47.61.
  • As the competitive market becomes more dynamic, renewed investment focus has been placed on marketing and other top-of-the-funnel initiatives to drive customer engagement, acquisition and retention activities, which will require higher levels of margin investment over the medium term.
  • Desktop customer retention rates at 69 percent, up 4 ppts since IPO, driven by Avast's customer retention strategies. Renewals in H1 have remained resilient, with only minor degradation in the 'Covid cohort' and evidence of opportunity for further improvement.
  • Avast's privacy service offering was further enhanced. AntiTrack benefited from a user experience redesign. BreachGuard was upgraded with 'Identity Assist', offering ID theft resolution and scam assist.
  • There was continued successful execution on the global growth strategy, with increases in desktop customer numbers in both established markets and target underpenetrated countries, including Ukraine up 17%, Russia up 7%, and Mexico up 5%.
  • The market release of the company's innovative integrated solution Avast One remains on track for the second half of the current year.
  • Avast continued to enrich its SMB offering through product innovation, notably through the launch of the new Avast Business Hub, a state-of-the-art integrated security platform.
  • To advance its business strategy in identity, Avast made two senior executive appointments: a new Senior Vice President and GM of Identity, Charles Walton and a Global Head of Development, Paul Carter.
  • Post period end the Board established a new Security and Privacy Committee to provide oversight in relation to the group's information security strategy, data security, data governance and privacy governance.

($'m)

H1 2021

H1 2020

Change %

Change %
(excluding FX) 7

Billings

482.7

469.1

2.9

(1.1)

Acquisitions

0.0

-

n/a

n/a

Disposal Family Safety mobile business 8

-

8.2

n/a

n/a

Discontinued Business9 

1.3

2.4

(47.5)

(48.5)

Billings excl. Acquisitions, Disposals and Discontinued
business

481.4

458.5

5.0

0.9

($'m)

H1 2021

H1 2020

Change %

Change %
(excluding FX)

Revenue

471.3

433.1

8.8

7.7

Acquisitions

0.0

-

n/a

n/a

Disposal Family Safety mobile business

-

8.2

n/a

n/a

Discontinued Business

1.3

3.3

(61.7)

(62.4)

Revenue excl. Acquisitions, Disposals and Discontinued
business

470.0

421.6

11.5

10.4

($'m)

H1 2021

H1 2020

Change %

Adjusted EBITDA

270.2

241.4

11.9

Adjusted EBITDA Margin %

57.3

55.7

1.6 ppts

Adjusted Net Income

205.8

169.8

21.2

Net Debt

527.0

817.0

(35.5)





Statutory Results:

($'m)

H1 2021

H1 2020

Change %

Revenue

471.3

433.1

8.8

Operating profit

226.7

134.5

68.5

Net Income

205.8

86.5

Fav10

Net Cash Flows from operating activities

256.8

225.8

13.7

RECOMMENDED MERGER OF AVAST PLC WITH NORTONLIFELOCK INC.

On 10 August 2021, the Boards of NortonLifeLock, Inc. ("Norton") and the Company reached agreement on the terms of a recommended merger of Company with Norton, in the form of a recommended offer by Nitro Bidco Limited, a wholly owned subsidiary of Norton, for the entire issued and to be issued ordinary share capital of the Company (the "Merger"). It is intended that the Merger will be affected by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act. Further details relating to the offer by Norton, including the offer price and conditionality, is set out in the announcement made by Norton on 10 August 2021 pursuant to Rule 2.7 of the City Code on Takeovers and Mergers ("Code").

RESULTS PRESENTATION RECORDING AND LIVE Q&A

A recording of the results webcast presentation will shortly be available on the Company website at https://investors.avast.com. Avast management will also hold a live Q&A session for analysts and investors at 9:00 AM BST today (11 August 2021), addressing both results and the recommended merger. Please register at the Company website to participate.

ENQUIRIES

Investors and analysts:
Peter Russell, Director of IR
IR@avast.com

Media:
Stephanie Kane, VP PR and Corporate Communications
pr@avast.com

Notes:

Throughout the Half Year Report a number of alternative performance measures are used to provide users with a clearer picture of the performance of the business. This is in line with how management monitor and manage the business day-to-day. Definitions and details are provided below. Further definitions (see 'PRESENTATION OF RESULTS AND DEFINITIONS') and reconciliations (see 'FINANCIAL REVIEW') of non-GAAP measures are included in the notes to the financial statements.

All dollar figures throughout the report are at actual currency rates unless otherwise indicated.

1 Organic growth rate excludes the impact of FX, acquisitions, business disposals and discontinued business. It excludes current period billings and revenue of acquisitions until the first anniversary of their consolidation.

2 Adjusted EBITDA margin percentage is defined as Adjusted EBITDA divided by Revenue.

3 Total available liquidity includes cash and cash equivalents balance as at 30 June 2021 of $357.6m and revolving credit facility of $40m (not drawn at 30 June 2021).

4 Users who have at least one valid paid Consumer Direct subscription (or licence) at the end of the period.

5 APPC defined as the Consumer Direct simple average valid licences or subscriptions for the period of the last twelve months divided by the simple average number of Customers during the same period.

6 ARPC defined as the Consumer Direct revenue for the period of the last twelve months divided by the simple average number of Customers during the same period.

7 Growth rate excluding currency impact calculated by restating 2021 actual to 2020 FX rates (see "Principal exchange rates applied"). Deferred revenue is translated to USD at the date of invoice and is therefore excluded when calculating the impact of FX on revenue.

8 On April 16, 2021 the Group sold a portfolio of mobile parental controls services including location features, content filtering and screen time management to Smith Micro Software Inc ('Family Safety mobile business'). Billings and revenue until close of the transaction have been included in the calculation of organic growth together with comparable periods in the baseline.

9 In January 2020 Avast decided to terminate the provision of anonymized data to its data analytics business, Jumpshot, having concluded that the business was not consistent long term with the Group's privacy priorities as a global cybersecurity company. As the company is also exiting its toolbar-related search distribution business (which had previously been an important contributor to AVG's revenues) and the browser clean-up business, the growth figures exclude all of these (referred to above and throughout the report as "Discontinued Business"), which are negligible. The Discontinued Business does not represent a discontinued operation as defined by IFRS 5 since it either has not been disposed of but rather it is being continuously scaled down or it is considered to be neither a separate major line of business, nor geographical area of operations.

10 'Fav' in change % represents a favorable growth rate figure over 100 per cent, 'Unf' represents an unfavorable decline greater than negative 100 percent.

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Related Links

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