SYMC

Symantec Corporation (SYMC)

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Symantec (SYMC)

Q3 2012 Earnings Call

January 25, 2012 5:00 pm ET

Executives

Enrique T. Salem - Chief Executive Officer, President and Director

James Beer - Chief Financial Officer and Executive Vice President

Helyn Corcos - Vice President of Investors Relations

Analysts

Brent Thill - UBS Investment Bank, Research Division

Keith Weiss - Morgan Stanley, Research Division

Shaul Eyal - Oppenheimer & Co. Inc., Research Division

Chaitanya Yaramada - Robert W. Baird & Co. Incorporated, Research Division

John S. DiFucci - JP Morgan Chase & Co, Research Division

Jonathan Ho - William Blair & Company L.L.C., Research Division

Philip Winslow - Crédit Suisse AG, Research Division

Brad A. Zelnick - Macquarie Research

Robert P. Breza - RBC Capital Markets, LLC, Research Division

Walter H. Pritchard - Citigroup Inc, Research Division

Aaron Schwartz - Jefferies & Company, Inc., Research Division

Presentation

Operator

Good day, and welcome to Symantec's Third Quarter 2012 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the conference over to Ms. Helyn Corcos, Vice President of Investor Relations. Please go ahead.

Helyn Corcos

Good afternoon, and thank you for joining our call to discuss fiscal third quarter 2012 financial results. With me today are Enrique Salem, Symantec's President and CEO; and James Beer, Symantec's Executive Vice President and CFO. In a moment, I will turn the call over to Enrique. He will discuss Symantec's execution during the quarter, then James will provide highlights of our financial result as well as discuss our guidance assumptions as outlined in the press release. This will be followed by a question-and-answer session.

Today's call is being recorded and will be available for replay on Symantec's Investor Relations website. A copy of today's press release and supplemental financial information are posted on the website and a copy of today's prepared remarks will be available on the website shortly after the call is completed.

Before we begin, I'd like to remind you that we will review our financial results focusing on year-over-year constant currency growth rates unless otherwise stated. Net income, EPS and sequential growth rates are based on as reported results. For the December 2011 quarter, the actual weighted average exchange rate was $1.35 per euro and the end-of-period rate was $1.30 per euro compared to our guided rate of $1.37 per euro. For the December 2010 quarter, the actual weighted average rate was $1.35 per euro and the end-of-period rate was $1.33 per euro. We've included a summary of the year-over-year constant currency and actual growth rates in our press release table and in our supplemental information, which can be accessed on the website.

Some of the information discussed on this call, including our projections regarding revenue, operating results, deferred revenue, cash flow from operations, amortization of acquisition-related intangibles and stock-based compensation for the coming quarter contain forward-looking statements. These statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in the statement. Additional information concerning these risks and uncertainties can be found in the company's most recent periodic reports filed with the U.S. Securities and Exchange Commission. Symantec assumes no obligation to update any forward-looking statement.

In addition to reporting financial results in accordance with Generally Accepted Accounting Principles or GAAP, Symantec reports non-GAAP financial results. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to the most directly comparable GAAP results, which can be found in the press release and on our website.

And now I'd like to introduce our CEO, Mr. Enrique Salem.

Enrique T. Salem

Thank you, Helyn, and good afternoon, everyone. I'm pleased with the team's execution of our information-centric vision. In addition, our strategy to secure and manage information and identities on any device or platform is resonating well with enterprises and consumers globally. We continue to gain traction with our long-term growth initiatives in the areas of cloud computing, mobile and virtualization. In the December 2011 quarter, we continued to build momentum as we delivered our sixth consecutive quarter of consistent execution. We generated better-than-expected revenue, earnings and deferred revenue results on a constant-currency basis. Our performance was driven by market share gains in Backup and strength in Enterprise Security, including DLP, Managed Security Services and Authentication.

Now let's take a closer look at some of the highlights from the quarter. Following on the strength of last year's December quarter results, our focused sales execution, coupled with robust demand for our industry-leading products, drove strong performance across all products and regions. We continue to cross-sell the product portfolio with 41% of our December quarter deals over $1 million, including sales from both of our Enterprise product segments, up from 38% in the year ago period. Our Backup business continues to gain market share. Growth in this business was driven by our unique ability to provide integrated deduplication, backup and virtualization solutions in a variety of form factors. Our investments to create industry-leading appliances are paying off as our appliance business continues to exceed our expectations.

We have signed several large transactions with our NetBackup 5220 appliance, displacing established competitors. Our embedded V-Ray technology continues to differentiate us from the competition. Leading organizations, such as FedEx and NBC Universal use NetBackup with V-Ray because of its ability to provide load balanced, indexed and easily recoverable backups in both physical and virtual environments.

To further extend our lead in Information Management, we are bringing together our on-premise and cloud-based backup archiving eDiscovery and data security solutions. Due to the explosion of electronically stored information, customers are demanding a unified way to proactively classify, retain and discover information while reducing risk and avoiding costs. With tightened integration of our leading archiving and eDiscovery products, we will better protect information, establish retention policies and streamline the eDiscovery process.

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