As it indicated in its prelims announcement last week, storage and subscriptions were the joint culprits for Q4 revenue and adjusted earnings that were pretty much flat yoy at Symantec. A rise in EPS was due to the sale of a joint venture. The share price that had fallen following its prelims fell again last night – it has lost c9% since the prelim announcement.
Subscriptions are rising nicely with the Q4 proportion standing at 41% (vs 38%) but the flipside of this increase was lower licence sales, which declined 26%. The result was revenue of $1.68bn (vs $1.67bn) and down from Symantec’s guidance of $1.72bn - $1.73bn. The operating margin fell from 14.3% to 11.4%.
Looking for bright spots in the results, at least it was storage and server management that saw declines (6% down), rather than security (security and compliance was up 8%). The services division was also down, by 4%. If Symantec were unable to make security sales move forward, that would indicate a major underlying problem.
International revenue rose 4%, but EMEA fared badly with revenue down 5% in Q4. As Is becoming common, AsiaPac was the growth region with 19% revenue growth.
For the full year revenue was up 9% to $6.73bn (6% at constant currency), producing net profit of $1.17bn. The operating margin rose from 14.2% to 16%. The revenue increase was attributable to ‘service’ based offerings - SaaS, and managed security services, plus data loss prevention which does bode well for the future. The problem with Symantec is that it is stuttering when it should be flying and segments within the business are developing at different rates which must make management and execution challenging.