First half performance in line with the
Board's expectations
LONDON, Aug. 9, 2022
/PRNewswire/ -- Avast plc (LSE: AVST), together with its
subsidiaries ('Avast', 'the Group', 'Avast Group', or 'the
Company'), a leading global cybersecurity provider, announces its
results for the six-months ended 30 June
2022.
In the first half of 2022 the Group delivered mid-single digit
organic billings growth1 with a good level of
profitability.
RECOMMENDED MERGER OF AVAST PLC WITH NORTONLIFELOCK INC.
('NORTON')
- On 3 August 2022, the CMA
published its provisional findings from its Phase 2 investigation
into the Merger and provisionally concluded that the Merger is not
expected to give rise to a substantial lessening of competition in
the UK. Avast continues to work with Norton and the CMA to enable
the CMA's final report to be issued as soon as practicable
FINANCIAL HIGHLIGHTS
- Billings at $483.7m up 0.2% at
actual rates, or 6.9% on an organic basis
- Adjusted Revenue2 at $472.0m up 0.2% at actual rates, or 2.7% on an
organic basis
- Consumer Direct Revenue at $407.1m up 1.4% at actual rates, or 2.7% on an
organic basis
- Adjusted EBITDA down 7.6% to $249.7m; Adjusted EBITDA margin3 at
52.9%, down 4.4 ppts, primarily driven by investment into Digital
Trust Services ('DTS')
- Strong cash generation, with Unlevered Free Cash Flow of
$217.1m (cash conversion4
of 83%) and Levered Free Cash Flow of $204.3m
- Adjusted fully diluted earnings per share ('EPS') down 14.1% to
$0.17 (versus $0.20 at HY 2021)
- The second interim dividend in respect of 2021 paid in
February 2022 of 11.2 cents per share; total dividend for 2021 of
16.0 cents per share. Declared
conditional interim dividend in respect of 2022 payable in
August 2022 of 4.8 cents per share
- Resilient balance sheet with $378.0m of cash and available
liquidity5
- Leverage remains low, Net debt / LTM ('last twelve months')
Adjusted EBITDA at 1.3x at half year
- On a statutory basis, Revenue down 0.2% due to disposal of
Family Safety mobile business in 2021, Operating profit down
$(54.2)m from $226.7m to $172.6m
driven by higher exceptional costs of $25.3m and higher other costs of $27.8m, fully diluted EPS at $0.13 (versus $0.20
at HY 2021)
OPERATIONAL AND STRATEGIC UPDATES
Consumer Direct KPIs in the half reflect challenging global and
competitive environment offset by Avast initiatives
- Average Products Per Customer6 increased 1.2% to
1.45
- Average Revenue Per Customer7 was up 2.2% to
$50.54
- Number of Customers8 was down 4.4% to 15.64m
Key product initiatives in the first half of 2022
- Avast One saw the introduction of features that support making
Privacy easy (Private Mode, Smart VPN, VPN Kill Switch) and provide
advanced Scam Protection (Email Guardian, Scam Protection for
Android), as well as Online Safety Score, to drive customer
engagement
- SecureLine VPN saw the release of a beta version with the
WireGuard VPN protocol, considered by many experts to be the
fastest and most secure VPN protocol available
- In terms of privacy, the team is experimenting with intelligent
"scan lander" web pages that quickly show users a variety of
privacy-related threats they may be vulnerable to
- On SMB, Avast introduced three new product suites: Essential,
Premium, and Ultimate Business Security, to simplify the buying
experience, and launched USB Protection, a new service that
safeguards company data by preventing employees from using
unauthorised removable storage devices
Awards
- In a study performed by AV-Comparatives, Avast Secure Browser
has been ranked first with a 97% block rate (a two percent increase
on the previous test in January)
- Avast Business Antivirus Pro Plus was ranked 'Top Product' by
AV-TEST, earning top scores on protection, performance, and
usability
In March, Avast announced the withdrawal of the availability of
all products from Russia and
Belarus and suspended all
marketing and sales operations in these countries
Avast completed the acquisition of SecureKey in April, a global
provider of digital identity and authentication solutions.
SecureKey complements Evernym's self-sovereign identity solutions
and together they represent the foundation of Avast's DTS
business
($'m)
|
H1 2022
|
H1 2021
|
Change %
|
Change %
(excluding FX) 9
|
Billings
|
483.7
|
482.7
|
0.2
|
4.7
|
Acquisitions
|
5.8
|
-
|
n/a
|
n/a
|
Discontinued Russia and
Belarus10
|
-
|
3.2
|
n/a
|
n/a
|
Disposal Family Safety
mobile business 11
|
-
|
9.2
|
n/a
|
n/a
|
Discontinued
Business10
|
6.4
|
9.3
|
(30.6)
|
(30.4)
|
Billings excl.
Acquisitions, Disposals
and Discontinued
business
|
471.5
|
461.0
|
2.3
|
6.9
|
($'m)
|
H1 2022
|
H1 2021
|
Change %
|
Change %
(excluding FX)
|
Adjusted
Revenue
|
472.0
|
471.3
|
0.2
|
1.3
|
Acquisitions
|
6.6
|
-
|
n/a
|
n/a
|
Discontinued Russia and
Belarus
|
-
|
1.0
|
n/a
|
n/a
|
Disposal Family Safety
mobile business
|
-
|
9.2
|
n/a
|
n/a
|
Discontinued
Business
|
6.4
|
9.3
|
(30.6)
|
(30.4)
|
Adjusted Revenue
excl. Acquisitions, Disposals
and Discontinued
business
|
458.9
|
451.8
|
1.6
|
2.7
|
($'m)
|
|
H1 2022
|
H1 2021
|
Change %
|
Adjusted
EBITDA
|
|
249.7
|
270.2
|
(7.6)
|
Adjusted EBITDA Margin
%
|
|
52.9
|
57.3
|
(4.4) ppts
|
Adjusted Net
Income
|
|
178.0
|
205.8
|
(13.5)
|
Net Debt
|
|
649.7
|
527.0
|
23.3
|
|
|
|
|
|
|
Statutory Results:
($'m)
|
|
H1 2022
|
H1 2021
|
Change %
|
Revenue
|
|
470.3
|
471.3
|
(0.2)
|
Operating
profit
|
|
172.6
|
226.7
|
(23.9)
|
Net Income
|
|
141.0
|
205.8
|
(31.5)
|
Net Cash Flows from
operating activities
|
|
190.6
|
263.1
|
(27.6)
|
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 the 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 2006. Further details relating to the offer by Norton
is set out in the announcement made by Norton on 11 August 2021 pursuant to Rule 2.7 of the City
Code on Takeovers and Mergers ("Code") and the scheme document
published by the Company on 28 October
2021.
On 3 August 2022, the UK's
Competition and Markets Authority (the "CMA") published its
provisional findings that the Merger was not expected to give rise
to a substantial lessening of competition in the
UK and Norton and Avast published their response
to the CMA's findings. As stated in that announcement, Norton
intends to continue to work with the CMA and with Avast to enable
the CMA's final report to be issued as soon as
practicable. The statutory deadline for publication of the
CMA's final report is 8 September 2022 (unless extended).
PUBLICATION
A copy of the half year report will shortly be available on the
Company website at https://investors.avast.com.
ENQUIRIES
Investors and analysts:
Paul Carter and Anca Timpescu,
Investor Relations
IR@avast.com
Media:
Stephanie Kane, VP PR and Corporate
Communications
mediarelations@avast.com
Tavistock
+44 20 7920 3150
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This announcement contains certain forward-looking statements
that are subject to the usual risk factors and uncertainties
associated with the Company's business. Whilst the Company believes
the expectations reflected herein to be reasonable in the light of
the information available to them at this time, the actual outcome
may be materially different owing to factors beyond the Company's
control or within the Company's control where, for example, the
Company decides on a change of plan or strategy. Accordingly, no
reliance may be placed on the figures contained in such
forward-looking statements.
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
including discontinued sales in Russia and Belarus. It excludes current period billings
and revenue of acquisitions until the first anniversary of their
consolidation.
2 Adjusted Revenue represents the Group's
reported revenue adjusted for the Deferred Revenue Haircut
Reversal. Under IFRS 3, Business Combinations, an acquirer must
recognise assets acquired and liabilities assumed at fair value as
of the acquisition date. The process of determining the fair value
of deferred revenues acquired often results in a significant
downward adjustment to the target's book value of deferred
revenues. The reversal of the downward adjustment to the book value
of deferred revenues of companies the Group has acquired during the
periods under review is referred to as the "Deferred Revenue
Haircut Reversal".
3 Adjusted EBITDA
margin percentage is defined as Adjusted EBITDA divided by Adjusted
Revenue.
4 Cash conversion is
defined as Unlevered Free Cash Flow divided by Adjusted Cash
EBITDA.
5 Total available
liquidity includes cash and cash equivalents balance as at
30 June 2022 of $338.0m and revolving credit facility of
$40m (not drawn at 30 June 2022).
6 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.
7 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.
8 Users who have at least one
valid paid Consumer Direct subscription (or licence) at the end of
the period.
9 Growth rate excluding
currency impact calculated by restating 2022 actual to 2021 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.
10 Growth figures exclude
Discontinued Business, which includes toolbar-related search
distribution business and the browser clean-up, which had
previously been an important contributor to AVG's revenues, and the
Google Chrome Distribution business. Together these businesses are
referred to above as "Discontinued Business". 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. In H1 2022 the Group suspended its activities in
Russia and Belarus in response to the military conflict
in Ukraine. These sales, which do
not represent a discontinued operation as defined by IFRS 5, are
also excluded from the growth figures. These sales didn't represent
a separate segment or operation of the
Group.
11 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 excluded in the
calculation of organic growth from the baseline.
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SOURCE Avast Software, Inc.