EPS of $0.22 decreased by 24.1% from previous year
Gross margin of 78.8%
Net income of 135.00M
""Norton Genie is now evolving from an AI-powered scam tool into a comprehensive cyber safety assistant, a strategic shift that reflects growing customer demand for broader digital protection."" - Vincent Pilette
Gen Digital Inc (GEN) QQ1 2026 Results: AI-Driven Growth, MoneyLion Integration, and Margin Expansion in a Two-Segment Cyber Guardrails Platform
Executive Summary
Gen Digital delivered a strong start to fiscal 2026, posting a Q1 with bookings and revenue growth exceeding initial expectations. Reported bookings rose ~32% year over year to $1.2 billion, and revenue rose ~30% to $1.26 billion. Management highlighted that an extra fiscal week contributed roughly 9 points to top-line growth, and the MoneyLion acquisition contributed 16 points, driving pro forma revenue growth of ~5% YoY when excluding the extra week and MoneyLion. The company now operates in two synergistic segments: Cyber Safety Platform (CSP), representing about two-thirds of revenue, and Trust-Based Solutions (TBS), about one-third. CSP delivered a robust 61% operating margin, while TBS delivered ~31%, helping Gen achieve a consolidated non-GAAP operating margin of ~52% and non-GAAP EPS of $0.64, up ~20% YoY. Gen raised its full-year revenue guidance by $100 million to $4.8–$4.9 billion and guided Q2 non-GAAP revenue of $1.18–$1.21 billion and non-GAAP EPS of $0.60–$0.62. The MoneyLion integration is progressing on plan with core infrastructure aligned; the first integrated Gen-MoneyLion product is targeted for launch in the fall. Management underscored AI-driven platform evolution (Gen stack, Norton Deepfake Detection, Norton Neo) and a broader AI-first strategy to sustain differentiation amid rising cyber threats. The combination of a large, recurring base (over 76 million paid customers including MoneyLion, ~68 million across direct/partner channels) and accelerating cross-sell opportunities supports a durable growth trajectory, while the company remains focused on reducing leverage toward sub-3x EBITDA by FY2027.
Key Performance Indicators
Revenue
1.26B
QoQ: 24.46% | YoY:30.26%
Gross Profit
990.00M
78.76% margin
QoQ: 22.07% | YoY:27.74%
Operating Income
446.00M
QoQ: 6.95% | YoY:7.21%
Net Income
135.00M
QoQ: -4.93% | YoY:-25.41%
EPS
0.22
QoQ: -4.35% | YoY:-24.14%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $1.26 billion, up 30% YoY; up 24% QoQ (noting the extra fiscal week provided ~9 points) and 5% YoY pro forma excluding the extra week and MoneyLion contribution.
Bookings: $1.2 billion, up 32% YoY; reflects strong demand generation across CSP and the MoneyLion-enabled ecosystem.
Gross margin: 78.8% (gross profit $990 million on revenue $1.257 billion).
Operating income: $650 million, for a 52% operating margin (CSP margin 61%, TBS margin 31%).
Net income and EPS: Net income $398 million; diluted EPS $0.64, up about 20% YoY.
Financial Highlights
Overview of delta drivers and profitability metrics for Q1 2026:
- Revenue: $1.26 billion, up 30% YoY; up 24% QoQ (noting the extra fiscal week provided ~9 points) and 5% YoY pro forma excluding the extra week and MoneyLion contribution.
- Bookings: $1.2 billion, up 32% YoY; reflects strong demand generation across CSP and the MoneyLion-enabled ecosystem.
- Gross margin: 78.8% (gross profit $990 million on revenue $1.257 billion).
- Operating income: $650 million, for a 52% operating margin (CSP margin 61%, TBS margin 31%).
- Net income and EPS: Net income $398 million; diluted EPS $0.64, up about 20% YoY.
- Cash flow and liquidity: Operating cash flow $409 million; free cash flow $405 million; cash and cash equivalents $828 million; liquidity >$2.3 billion including a $1.5 billion revolver.
- Capital allocation: Repurchased ~5 million shares; debt paydown of $180 million; net leverage ~3.4x EBITDA post a $900 million payment for MoneyLion; target debt to EBITDA <3x by end-FY2027; regular quarterly dividend $0.125 per share.
- Customer metrics: Direct paid customers 40.6 million (+0.25 million QoQ); collective paid customers ~68 million; MoneyLion customers ~24 million (+39% YoY) with 8 million lifetime revenue-generating as of Q1; total paid customers including MoneyLion surpassed 76 million.
- Guidance and outlook: FY2026 revenue guidance raised to $4.8–$4.9 billion (YoY growth ~22–25%); non-GAAP EPS guidance $2.49–$2.56 (12–15% annual growth); Q2 non-GAAP revenue guided to $1.18–$1.21 billion; EPS $0.60–$0.62.
- Channel mix: Direct revenue about 80% derived from existing cyber safety subscriptions and cross-sells; partner revenue growth notably robust (68% reported, 38% pro forma) driven by employee benefits and international partnerships; MoneyLion marketplace adds a new monetization layer via embedded offerings.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
1.26B
30.26%
24.46%
Gross Profit
990.00M
27.74%
22.07%
Operating Income
446.00M
7.21%
6.95%
Net Income
135.00M
-25.41%
-4.93%
EPS
0.22
-24.14%
-4.35%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management takeaways from the earnings call:
- Strategy and AI-first positioning: Gen is accelerating AI-driven protection and personalization, with Norton Genie evolving from an AI scam tool into a comprehensive cyber safety assistant; Norton’s deepfake detection in Norton 360 mobile app and real-time on-device deepfake detection for Windows AI PCs illustrate ongoing AI-enabled threat protection enhancements. Quote: “Norton Genie is now evolving from an AI-powered scam tool into a comprehensive cyber safety assistant, a strategic shift that reflects growing customer demand for broader digital protection.”
- MoneyLion integration and growth initiative: Management stressed the rapid integration of MoneyLion within Gen’s platform and the strong breadth of cross-sell opportunities into financial wellness and the AI-powered marketplace. Quote: “We are ahead of our plans for the integration of MoneyLion, we have fully integrated the core infrastructure… the MoneyLion portfolio and business integration is now underway and on track for completion by the fall.”
- Cross-sell and monetization roadmap: The firm highlighted the plan to introduce a rebranded, integrated product later this year and to drive ARPU through stand-alone or embedded memberships. Quote: “The first integrated product under Gen's brands” is planned for the fall; “we plan to launch the membership side of the business in the second half.”
- Margin resilience and capital discipline: CSP margins at 61% and total company at 52% reflect operating leverage; the company repurchased shares and reduced debt while targeting leverage below 3x by FY2027. Quote: “Our margins remain exceptional, and we're continuing to invest in scalable innovation without compromising returns. We ended the quarter with net leverage to less than 3x EBITDA by the end of fiscal 2027.”
- Financial wellness and risk management: Management emphasized the importance of financial wellness capabilities, LifeLock modernization, and an AI-powered renewal engine to improve retention and reduce costs; 40% of customer issues are now handled autonomously by AI. Quote: “We launched a fully automated AI-powered renewal engine… 40% of customer issues autonomously.”
"Norton Genie is now evolving from an AI-powered scam tool into a comprehensive cyber safety assistant, a strategic shift that reflects growing customer demand for broader digital protection."
— Vincent Pilette
"We are ahead of our plans for the integration of MoneyLion, we have fully integrated the core infrastructure, including workforce alignment and key operating systems. The MoneyLion portfolio and business integration is now underway and on track for completion by the fall when we expect to launch our first integrated product under Gen's brands."
— Vincent Pilette
Forward Guidance
Outlook and assumptions for the remainder of FY2026:
- Revenue and EPS trajectory: Gen raised FY2026 revenue guidance to a range of $4.8B–$4.9B (up from $4.7B–$4.8B), implying 22%–25% year-over-year growth. Non-GAAP EPS guidance is $2.49–$2.56, reflecting a continued 12%–15% annual growth trajectory.
- Quarterly guidance: For Q2 FY2026, non-GAAP revenue guidance is $1.18B–$1.21B and non-GAAP EPS guidance is $0.60–$0.62. Guidance assumes current FX rates (with potential volatility) and continued momentum in MoneyLion (>30% growth) alongside mid-single-digit core CSP growth and continued rapid scale-up in Trust-Based Solutions.
- MoneyLion integration and monetization: The company expects to complete MoneyLion integration by fall and to begin rolling out the integrated products under Gen brands, leveraging the expanded customer base to drive higher lifetime value and lower CAC through cross-sell and embedded offerings.
- AI and platform investment: Gen emphasizes ongoing AI-first product development, AI-native products (e.g., Norton Neo) and platform-wide migrations to the Gen stack to unlock deeper customer insights, higher attribution accuracy, and more personalized recommendations. Guidance assumes continued investment in platform and AI capabilities to sustain mid-to-high single-digit core growth and double-digit growth in financial wellness offerings via MoneyLion.
- Key factors investors should monitor: (1) Progress and timing of MoneyLion integration milestones and cross-sell uptake; (2) AI-driven product performance and adoption (Norton Deepfake Detection, Norton Neo, renewal engine); (3) platform migration progress and data unification outcomes; (4) ARPU evolution through stand-alone and embedded memberships; (5) macro currency volatility and currency impact on reported results; (6) progress toward debt reduction targets and leverage normalization.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
GEN Focus
78.76%
N/A
N/A
N/A
WEX
57.60%
24.70%
8.82%
21.36%
FLT
0.00%
42.50%
7.04%
21.59%
CSGS
48.40%
9.81%
5.70%
26.07%
SQSP
71.30%
-5.27%
-0.05%
8,696.44%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Investment thesis: Gen Digital remains a premier consumer cybersecurity and financial wellness platform with a durable, recurring revenue base and substantial cross-sell opportunities through MoneyLion integration. The QQ1 2026 results demonstrate strong top-line momentum (revenue up 30% YoY, bookings up 32%), robust profitability (52% operating margin, CSP at 61%), and highly cash-generative operations (FY-to-date FCF of $405M). The two-segment architecture provides diversified growth vectors: CSP delivering steady mid-single-digit growth and high-margin contributions, plus Trust-Based Solutions (including LifeLock and MoneyLion) delivering elevated growth, supported by the integration of MoneyLion’s PFM and engine marketplace. The AI-first platform (Gen stack) and risk-managed, data-driven personalization should fuel higher engagement and monetization over time, supporting a path to sustained double-digit growth in the financial wellness component and continued ARPU expansion in CSP.
Key catalysts include: (1) fall launch of the first integrated Gen-MoneyLion product; (2) continued momentum in MoneyLion’s marketplace and PFM growth with cross-sell to Gen’s base; (3) ongoing platform migrations to the Gen stack enabling AI-driven personalization and better data synergy; (4) ongoing deleveraging toward sub-3x EBITDA by FY2027; (5) expansion of AI capabilities (Norton Neo, deepfake detection) improving product value and defensibility. Risks to monitor include integration execution risk, regulatory/privacy developments, FX volatility, and the competitive dynamic in cybersecurity and financial wellness offerings. Overall, Gen’s combination of strong profitability, cash generation, and strategic AI-forward product roadmap supports a constructive long-term investment thesis, contingent on successful execution of MoneyLion integration and platform-scale monetization.
Key Investment Factors
Growth Potential
Two-segment model (Cyber Safety Platform and Trust-Based Solutions) with a large installed base (~76M paid customers) and a growing, embedded financial wellness ecosystem via MoneyLion creates multiple levers for sustained revenue growth: cross-sell/upsell to existing customers, expansion of MoneyLion’s PFM and engine marketplace, and monetization through embedded financial products. The company’s AI-first strategy, platform unification (Gen stack), and new products (Norton Neo, Deepfake Detection) are designed to boost engagement, retention, and ARPU over time. The fall integrated product launch and double-digit growth in the MoneyLion segment suggest upside beyond the current guidance if cross-sell adoption accelerates.
Profitability Risk
Key risks include (a) execution risk related to the full integration of MoneyLion and realization of cross-sell synergies; (b) ongoing cyber threat landscape evolution potentially impacting customer churn or protection pricing; (c) macroeconomic volatility affecting consumer discretionary spend and FX fluctuations; (d) elevated leverage given substantial debt load (long-term debt ~$8.58B and net debt ~$8.04B at quarter-end) with a target to <3x EBITDA by FY2027; (e) regulatory and privacy risk in the data-heavy, AI-driven ecosystem; (f) competitive dynamics in consumer cybersecurity and financial wellness markets.
Financial Position
Balance sheet shows a sizable asset base and high goodwill/intangible assets (~$13.316B), with total debt of ~$8.573B and net debt ~$8.035B; cash and equivalents of $828M and an available $1.5B revolver provide liquidity worth over $2.3B. The company maintains a strong operating cash flow ($409M) and free cash flow ($405M) on a quarterly basis, enabling opportunistic buybacks and deleveraging. The strategy to reach <3x EBITDA by end-FY2027 aligns with disciplined capital allocation, though the current leverage remains elevated given the MoneyLion acquisition and related cash outlays.
SWOT Analysis
Strengths
Large, diversified consumer cyber safety platform with ~76 million paid customers (direct plus partner) and a growing LifeLock/MoneyLion ecosystem.
Two synergistic operating segments (Cyber Safety Platform and Trust-Based Solutions) with differentiated margin profiles and scalable cross-sell opportunities.
Strong gross margins (~78.8% in Q1) and high-margin CSP (61%) versus TBS (31%), enabling substantial operating leverage.
AI-first product strategy and platform unification (Gen stack) to improve customer insights, retention, and upsell potential.
Robust free cash flow generation and a disciplined capital allocation framework (share repurchases, debt reduction, dividend payments).
Weaknesses
Significant existing debt load and elevated net leverage (net debt ~$8.04B; net leverage ~3.4x) with a plan to reach <3x EBITDA by FY2027.
Reliance on near-term MoneyLion integration to sustain elevated growth and margin expansion; integration risk and potential execution delays.
Complex reporting framework changes (two segments, additional KPIs) may create short-term investor confusion during transition.
Opportunities
Monetization expansion via MoneyLion’s B2B2C marketplace and embedded financial wellness offerings across Gen’s base.
Further ARPU uplift through cross-sell and tiered memberships (e.g., LifeLock + financial wellness features) and standalone products.
Global expansion via international partnerships (e.g., Japan distribution deal for Norton ID Advisor) and higher attach rates in partner channels.
AI-driven product enhancements (Norton Neo, Deepfake Detection) and renewal engine to uplift retention and reduce costs.
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