Gen Digital Inc. (GEN) Earnings Call Transcript

Good afternoon, everyone. Thank you for standing by. My name is Jen, and I will be your conference operator today. Today's call is being recorded, and all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. At this time, for opening remarks, I would like to pass the call over to Ben Lu, Head of Investor Relations.

Thank you, Jen, and good afternoon, everyone. Welcome to Gen's Second Quarter Fiscal Year 2021 Earnings Call. Joining me today are Vincent Pilette, CEO; and Natalie Derse, CFO. As a reminder, there will be a replay of this call posted on the Investor Relations website, along with our slides and press release. . I'd like to remind everyone that during this call, all references to the financial metrics are non-GAAP and all growth rates are year-over-year. A reconciliation of non-GAAP to GAAP measures is included in our press release and earnings presentation. both of which are available on our IR website at investor.gendigital.com. We encourage investors to monitor this website as we post investor orient and information such as news, events and financial filings. Today's call contains statements regarding our business, financial performance and operations, including impact on our business and industry that may be considered forward-looking statements and such statements involve risks and uncertainties that may cause actual results to differ materially from our current expectations. Those statements are based on current beliefs, assumptions and expectations as of today's date, October 28, 2026. We undertake no obligation to update these statements as a result of new information or future events. For more information, please refer to the cautionary statements in our press release and the risk factors in our filings with the SEC, and in particular, our most recent reports on our Form 10-K and Form 10-Q. And now I will turn the call over to Vincent.

Thanks, Ben, and good afternoon, everyone. Q2 was another beat and raise quarter for Gen. Our revenue and bookings grew double digits and non-GAAP EPS increased 19% year-over-year. Our Cyber Safety Foundation continues to be strong, while trust-based solutions is fueling our next phase of profitable growth. . We ended the quarter with 83 million paid customers, up $2 million sequentially and $6 million from a year ago. And with this momentum, we are raising again our full year guidance. Cyber Safety revenue grew 5%, led by the adoption of comprehensive memberships and continued customer upsells and upgrades. Norton 360, our flagship product, provides the broadest, most advanced protection for consumers in the market and has scaled to over $1.7 billion run rate growing consistently at or above mid-single digit. We also continue to deploy our customer life cycle playbook, delivering the highest renewal lift in several quarters. Trust-based solutions grew 26%, driven by financial wellness adoption and engine diversified partner and vertical strategy. Partner channels grew double digits in both segments as carriers and employers increasingly embed our full suite protection in today's solutions and our marketplace continues to expand its partnership and distribution. These results advance our mission to protect digital lives and help people manage financial needs online. The team at Gen has long prided itself on driving our business with discipline and creating lasting value. That means we manage for durable growth and profitability. We invest where customers demand and returns are the strongest. We constantly improve efficiency and apply shared capabilities across the entire portfolio. This operating model delivers best-in-class margins in our segments, 62% in cyber safety and 30% in trust-based solutions for a 50% blended margin this quarter. In financial wellness, we are focused on margin quality as we scale, simplifying pricing, adding more advances to our own spend accounts and shifting engine mix towards higher-margin first-party demand. The different profiles of our 2 segments: fund continued investments and support our mid- to high teens EPS growth outlook for fiscal year '27. And we see plenty of opportunities to apply our model. Looking ahead to the second half, we are prioritizing our efforts where customer demand and flywheel economics are strongest. We are redesigning Norton 360 with NextGen VPN, Scam protection and CAI. We're building new live lock experiences that connect breach alerts with on-demand AI-driven resolution and we are expanding MoneyLion customer acquisition with a focus on monthly active users, higher income cohorts and a deeper product relationship. Early results are encouraging. Norton 360 beta user engagement increased double digits, and LifeLock's redesigned site lifted mobile conversion also by double digits. We are relentlessly enhancing our portfolio because people increasingly need help. AI makes sophisticated attacks easier to launch and harder to distinguish. The recent PHP vulnerabilities show how advanced AI is accelerating vulnerability exploitation from discovering flows to turning long-standing weaknesses into practical exploits across digital services consumers rely on every day. Our latest tread report funds cams made up more than half of everything we blocked. Attacks grew more personal and local from family impersonation text to AI-generated scan videos in local language. Our real-time telemetry shows e-mail, text and coal can protection, up 30% sequentially. And now as consumers adopt the eye and give agents their credentials, each interaction creates risks that consumers feel even if many don't understand or know how to control them. Identity faces the same trend. Bridge notices to our members rose more than sixfold in the first half and U.S. notices in the first 6 months of '26 exceeded all of '25 people increasingly assume that data is already exposed fill helpless and basically tune out alerts. So we are connecting breach alerts to on-demand AI-driven resolution, giving them a clear and actionable next step. AI also raises a question of trust. Can I trust the person, the message, the action, the agent, Gen combines threats, identity and financial intelligence with trusted permission customer relationships, delivering more relevant protection. As threats grow more complex and more personal, the breadth of our signals and intelligence becomes an even greater advantage giving us the unique ability to power consumers trusted moments. Leveraging that intelligence, our product strategy follows clear customer needs. Let's take financial wellness, for example. Even in the resilient economy, nearly 1 in 4 American households spend almost all of its income on necessities. These families do not need another lender. What they need is an easier way to understand and manage their cash flow and a safe way to bridge a gap on which access is where MoneyLion delivers that value. Building upon the trusted entry door, we offer a cash flow assistance that shows member what it's safe to spend before the next paycheck. MoneyLion Safe, our first interest-bearing premium deposit product now gives them a place to grow their money. And as they build their financial strength, credit builder and identity protection offer core benefits as part of our MoneyLion membership. Together, these features evolve 1 line into a daily financial relationship, where each interaction is improving the next recommendation with a full feature set of secure personal financial management solutions. This is why the vast majority of MoneyLion revenues come from repeat customers, making our PFM solution a durable and valuable part of consumers' financial lives. Our road map is bringing technologies and capabilities together in valuable memberships. And now our distribution is helping us meet demand where it is. With more than half of workers saying financial stress is hurting their productivity, most employers are looking to add benefits to help. Norton Money Workplace brings financial wellness to the employee benefit channel already used by Norton and LifeLock. Recently launched its qualified pipeline already exceeds $30 million ahead of the enrollment season. So serving more needs, reaching people where they are and connecting protection with financial empowerment make our products easier to find, more useful and more connected than ever before. That is the flywheel that we are building, better products and experiences, deep in engagement and trust with customers' permission, relevant context across the platform makes protection and financial tools more useful and personal. Deeper relationships let us serve more of our customers' digital lives, and we continue to see proof of this in our business. The embedded financial wellness synergies remain on track. Engine is active across many Gen partnerships, AI-driven remarketing is scaling cross-sell and demand for new products like nonmoney workplace are all contributing to our confidence as we ramp through second half and fiscal year '28. Our momentum across the business and the proof points of our platform-driven synergies give us the confidence that we can deliver long-term sustainable growth. Our mission is to power digital freedom, which means powering trusted moments in our customers' digital lives, helping them protect what matters and moving forward online with confidence. Digital Life notices every aspect of how people live, work and manage their finances. AI is accelerating that shift, making decisions and acting on people's behind. As Life online grows more complex, trust matters more. Our strategy is to expand from protecting digital life to empowering it for prosperity. 3 connected roles, protect, empower and prosper. We protect people's device, data, identity, privacy and financial accounts. We empowered them with greater control over their identity, reputation and financial wellness, and we help them prosper with better opportunities smarter recommendations and easier transactions. Each trusted moment earns us the permission to support more aspects of their digital lives. That strategy runs on one Gen platform. Across our brands and services, we reach 500 million users and endpoints connect nearly 120 million financial accounts and work with more than 1,300 partners across 25 verticals. Our shared intelligence uses permission context to improve protection, personalization and recommendation. We're seeing that in our customer outcomes, our Norton cross-sell penetration near 30%, and our AI recommender lifts revenue from new Norton cross-sells by mid-single digits. Our AI decisioning agent that reengage abandoned applicants now has its own bookings target, and we are in the early stages, the platform potential is significant. Our AI strategy has grown from 1 assistant to 3 connected layers. First AI built into our products, second protections for people using AI and their agents; and third, a trusted infrastructure, so those agents can transact safely. One platform powers all 3 with protection and customer control at its core. Gen, our first AI native product started with a simple focus protecting against cans. Today, Gen uses context from a cross-gen to guide people on safety, identity and financial wellness. The same foundation now powers other AI native products such as Norton Neo with Agentic VPN and Norton familiar assistants. The second layer became urgent this quarter, Agentic AI for consumers move from prediction to reality. Personal agents for major platforms reach millions within weeks with access to e-mails, passwords and money. Soon after researches short how that access could be turned against users where an agent becomes an inside threat if left unprotected. We pioneered Agent Trusthub to address these risks. Its green skills before use, monitors agents and protection to a Sandbox safe zone with legal scans across LLM answers. Skills that have been scanned and marked save by our technology in the leading agent marketplace have been installed over 100 million tonnes by users and their agents. The latest Norton 360 release also bring this capability into SAFeAI, addressing customer top questions, how do I keep my AI agents in check? The third layer is just beginning. This holiday season, agents will shop and pay for people, but the liability when they get it wrong remain unclear. Financial institutions face the same challenges. Some block outside agents, other are opening up. both need infrastructure for consent, eligibility, compliance and fraud. Engine is building that infrastructure inside our marketplace modules and we launched the first interim shopping experience built for AI agents in September, and MoneyLion already use this engine to help people and their agents compare savings products. Our Gen lab has more to come as the market evolves. Some of you have asked me whether personal agents reduce the need for what we do. data point the other way. AI and agents create more ways for threats to reach consumers. And as people adopt these tools, the need for safety and trust grows with them. We don't expect Agent capabilities to contribute materially to revenue in this fiscal year, but this is about positioning Gen for the next decade of digital trust that will be decided. Before I close, I want to address capital allocation and M&A. Our first priority is investing organically where customer needs are and returns are strongest. We have built a durable business that generates nearly $2 billion in annual free cash flow and we returned excess cash through share buyback or debt repayment, while maintaining a strong balance sheet. That framework has not changed. What also has not changed is that M&A remains part of our growth strategy and an accelerator to furthering our mission. We continuously assess consumer needs, engage these companies and explore opportunities to expand capabilities and reach. But our organic plan stand on its own and our outlook for this year and the next does not depend on an acquisition, whether we build, partner or acquire each decision must stand on its merit and return on invested capital. In line with our track record, we stayed disciplined and act in the long-term interest of our shareholders. We don't comment on specific targets or rumors. Out of respect for our strategic work and the business partners we engage with. But to avoid any misunderstanding, let me be clear, we are not working on the transformative acquisition today. The Gen team remains focused on serving customers, improving our products and building for the AI era. We have strengthened our growth model by focusing on customer needs, connecting our capabilities on 1 platform and investing with discipline. In the second half, we will demonstrate once again that we can keep doing all 3. I'm confident in our team, our plan and our ability to deliver. So thank you to the Gen team for bringing this mission to life every day. And with that, let me turn it over to Natalie to walk you through the financials.

Thank you, Vincent, and hello, everyone. For today's call, I will go through our Q2 fiscal 2027 results and our raised outlook for full year fiscal '27. I will focus on non-GAAP financials and adjusted year-over-year growth rates, unless otherwise stated. Now on to our results. We delivered another strong quarter with our key metrics, all up double digits from revenues to operating income to EPS to free cash flow. Our Q2 revenue grew 12% to $1.37 billion, beating the high end of our guidance. Our bookings were up 10% and to $1.35 billion and marked the sixth consecutive quarter of double-digit growth with consistent growth across both our cyber safety and trust-based Solutions segments. Not only did revenues come in better than expected, we delivered that upside with strong incremental operating drop-through with operating profit dollars up 10%. Operating margin for the quarter was consistent at 50% and even as we continue to invest in multiple initiatives across product and marketing. The continued strength in our business gives us confidence that our solutions and products are serving our customers' needs and pain points and sets up the momentum for us to lean into our investments in the second half. For the Cyber Safety segment, revenue grew 5%. Bookings were also up mid-single digits. The durability of our cyber safety growth continues to be supported by both new and existing customers migrating to an all-in-one membership suite and/or adopting multiple point products. As financial scans, AI threats, deep fakes and travel security threats proliferate, we are seeing strong adoption of our higher-tier Norton 360 memberships, which reached another record high as a percentage of our total membership. These memberships not only deliver best-in-class solutions such as identity, scam protection and VPN features, but all these products are integrated across a single platform that leverages the vast amount of trusted, unique and permission data to create a more holistic and unified experience for our members. This intelligence continues to power and enhance our AI cyber safety product recommender, turning the behavioral economics of different cohorts within our existing base into personalized offer decisioning and campaigns directly impacting the performance of cross-sells and upsells in Norton this quarter, which were up double digits. As we move members up in membership tiers and onto multi-products, both retention and ARPU for these cohorts are increasing by 5 to 10 points. That slide wheel is strengthening, and we will continue feeding it with our future innovation. Additionally, our international expansion efforts are now translating to revenue with broad-based growth rates year-over-year across the geographic regions on the back of strong demand cross-sells and retention. We will continue to push on each lever with our expanded portfolio, leveraging our scale distribution, our partners, our existing customer base and our CLV playbook to drive continued cyber safety growth. Cyber Safety margins reached a record high of 62% in the quarter, demonstrating the strength of our platform capabilities to drive incremental margins. Looking ahead, we will continue to manage Cyber Safety to mid-single-digit revenue growth and a 60% plus operating margin and continue our track record of rigorous operational discipline. In Q2, Trust-based Solutions bookings and revenues increased 24% and 26%, respectively. Performance of our identity portfolio remained consistent. Last quarter, we talked about a reimagined LifeLock product experience, which has enabled us to drive adoption uplift to key features like financial monitoring through contextual and personalized prompts and convert more customers to higher-tier identity offerings. While we are still in the initial phase of the rollout, these early signs suggest that consumers are seeing and embracing the value of LifeLock's identity protection solutions and underwrite the trust that we have built with consumers. Personal Financial Management continued the growth momentum we have recently seen in the business. As the economic backdrop evolves, consumers face an increasing need to balance their cash flow needs with a more rigid timing of their paychecks. Our Instacash solution helps bridge those critical cash flow gaps and delivered another strong quarter of origination volume growth in Q2 with Instacash onboarding a record number of new users and increased usage measured as advances per user. This demonstrates the strong appeal and value of our solution and gives us the foundation to continue to innovate across our MoneyLion portfolio. While we only recently launched MoneyLion on membership, it is showing promising early signs of better engagement as members shift more of their savings in direct deposits to MoneyLion. In Q2, our engine marketplace continued its strong momentum with growth across multiple categories, demonstrating the breadth and depth of our diverse product offerings to our partners and consumers. During the quarter, our top of funnel match product inquiries, which is a proxy for consumer interest in our marketplace and our diversified product offering more than doubled versus last year. In the quarter, we added 18 new partners with an even larger sales pipe of new partners to be onboard in the coming quarters. Trust-based Solutions margin was stable at 30% in the quarter with operational gains supporting strong double-digit growth in financial wellness. Our data science team continues to drive efficiencies with various initiatives such as enhancing our AI decisioning agent flows and contextualized offers that improves our converting yields. As we have stated in the past, our margin in this segment will be driven by product mix but as you can see in our past few quarters, we've been able to achieve consistent margins even while we continue to invest behind our growth categories. Direct revenue of $1.074 billion was up 6%, in line with our prior quarterly trends. Our partner channel achieved accelerated revenue growth of 40% and to $295 million with double-digit growth across multiple channels, including employee benefits, financial marketplace and our telco channel. Our omnichannel strategy and our partner business, which now represents over 20% of our total revenue, represents a multiplayer on top of our direct-to-consumer product offerings in new markets, geographies and channels. Q2 paid customers increased to $83 million, up from $81 million last quarter and $77 million last year, with consistent performance from our Cyber Safety and identity subscriber base and expansion into new partners and verticals. Our Q2 OpEx was $415 million or 30% of sales, down 150 basis points sequentially and down 230 basis points from last year AI-driven efficiencies are providing us leverage across many parts of our operations. Our AI creative studio produced 4x to add assets of last year at a fraction of agency costs our latest LifeLock campaign was our first with 85% AI-generated themes. In customer support, AI now resolves roughly half of context end-to-end at lower support costs and with higher service levels. In engineering, 75% of the code we shipped in the first half was AI written and productivity is up 20% since the beginning of our fiscal year. These gains are how we fund the growth agenda while protecting margins. Profitable growth remains the target with EPS growth as our guiding principle. We continue to invest in sales and marketing to drive both top of the funnel awareness and customer conversion and upsell while maintaining our discipline around COB and C and CAC. We also continued to achieve efficiencies across our R&D efforts as we scale our top line with R&D spend of $96 million or 7% of sales. G&A discipline continued at less than 3% of sales. Our Q2 non-GAAP operating margin was stable at 50% sequentially, and our operating income rose 10% year-over-year to $686 million. While our reported margin is a function of product mix, we have delivered an expanding and efficient return on invested capital. If you look at our results over the past few years, as we scale the business, drive operating leverage, our ROIC has improved consistently. This is how we measure our business investments and capital deployment, ensuring a high return on capital as we further scale our business organically and inorganically. Q2 net income was $444 million, while non-GAAP diluted EPS was $0.74, up 19% year-over-year and exceeded our guided range of $0.71 to $0.73. Interest expense was $118 million in Q2, and our non-GAAP tax rate stayed at 22%. We spent nearly $250 million in the quarter on shareholder returns across dividends and share repurchases. Our commitment to shareholders and our operating principle is to deliver EPS growth faster than revenue growth. We have various levers to achieve this goal, ranging from expanding margins across our various product lines, debt repayment and share buybacks. Now let me talk about our balance sheet and cash flow. We ended Q2 with $589 million in cash, up from $564 million in Q1. We generated $326 million in operating cash flow and $323 million in free cash flow. Our net leverage is now below 2.9x as we paid down $45 million of our debt in the quarter. We also paid $76 million in dividends. For Q2 fiscal 2027, the Board of Directors approved a regular quarterly cash dividend of $0.125 per common share to be paid on December 9, 2027, for all shareholders of record as of the close of business on November 16, 2026 -- to be paid on December 9, 2026, for all shareholders of record as of the close of business on November 16, 2026. We repurchased $171 million of our shares outstanding. We have $1.8 billion remaining in our current program, and we will continue to repurchase shares as we believe that our current share price is not reflective of our actual performance and value. There are no changes in our guiding capital allocation principles. We will continue to deploy our capital in a disciplined and balanced section. In summary, we delivered first half results with strong momentum across our portfolio while maintaining our operating margin and achieved high teens EPS growth. With this position of strength and several new product introductions in the coming quarters, we are confident in our ability to capture the various growth opportunities in front of us in the second half. Now let me discuss our Q3 and raised fiscal 2027 guidance and some of the assumptions that underpin it. We expect Q3 to be another strong quarter with revenue of $1.365 billion to $1.39 billion, up 10% to 12%. We are raising and narrowing our fiscal 2027 revenue to $5.465 billion to $5.515 billion, reflecting growth of 10% to 11% versus prior guidance of 9% to 11%. We expect Q3 non-GAAP EPS to be in the range of $0.73 to $0.75, representing growth of 15% to 18%, and we are raising fiscal 2027 non-GAAP EPS to $2.93 and to $2.98, up 16% to 18% year-over-year versus our prior guidance range of 14% to 18%. Our expanded strategic levers of growth, combined with strong profitability across each business line enable us to deliver high teens earnings growth this year outperforming our prior midterm target of 12% to 15% EPS growth. I want to thank all Gen employees around the world for their contribution to this success, and we look forward to delivering great value for our employees customers and shareholders. As always, thank you for your time today, and I will now turn the call back to the operator to take your questions. Operator?SPEAKER01

[Operator Instructions] Your first question comes from the line of Roger Boyd with UBS.

Vincent, congrats on the nice results. I wanted to see if you could maybe expand on customer interest you're seeing in some of the personal AI security products like SAFE AI. Any metric you can share around kind of demand adoption of these products? And to what extent are they driving some of the healthy uplifts you're seeing on Norton 360? And then I have a follow-up for Natalie.

Yes, that's obviously the question of the day everybody has in mind, right? And if you recall, Roger, we started to see some movement with Open Claude at the beginning of the year and then news and other Agentic solutions now are kind of wide spreading by the millions across consumers. It's -- it's a fun experience. We haven't really seen yet a full set of use cases that will be repeated. But I think the shopping season that's coming is going to be a a great proof point. Those Agentic solution or those agents bring new risk services for consumers. They connect their e-mail, they connect their credit card, they connect multiple things. And even if you think that you pass road is protected because you have a password solution or your credit card, it's protected because you have a special wallet. The truth is your agent might go and find a scam website thinking it's a real one buy something for you that will never show up. So the risk is definitely pushing ahead. And as you know, we started with building the agent Trust hub to validate your agented skills in an open flow environment. We're now moving that into the consumer hands, making sure that they can stay in control of their agents or agentic solutions. We have other ambitions to move from a full security agent into a secure agent, meaning an agentic solution that is secure in nature help you do some of those activities. NFA a nonfamily assistant or even Norton Neo are built with that in mind. I would think it's early I don't expect significant material revenue impact from that here now. But adoption will be an interesting one to go. Many investors ask me, do you see us trying to unsubscribe your services? The truth is we've seen the highest retention rate this quarter across our brands. And I think the overall angst, if you want, that this agent solutions bring is just increasing the need for protection. And if you ask me if I've already seen a muse agent buying one of Norton 360, the answer is no. But hopefully, it should not -- it should start very soon because -- in this environment, our consumer will want to be protected. .

That's great color. And then Natalie, really strong partner growth in the quarter. Wondering if you could expand on the magnitude of growth you're seeing, particularly within the employee benefits channel, it sounds like there's a fair amount of excitement heading into open enrollment. You noted the pipeline for Norton money into that channel. Just would love to hear your kind of thoughts on how you're thinking about both the cyber safety product as well as new products like Norton Money in that channel?

Yes. We're really excited about employee benefits. We've been building that quality of brokers, there's the sales effectiveness of that channel and just building that pipeline out for many quarters in a row but to be quite honest, this quarter growth in employee benefits has been the highest it's been in 5-plus quarters. So I'm really excited to see not only the cyber safety products continue to be a strong growth contributor for us. But now again, as we expand into delivering and bringing more of the financial wellness products into that pipeline. Very excited about it. The pipeline has never been stronger and now we've got a wider portfolio of products to sell.

Your next question comes from the line of Rob Coolbrith with Evercore ICI.

Congratulations on the strong results. On news in particular, I think there was an initial wave of concern since died down, I think, a bit around the sort of subscription audit that News is offering to perform for consumers. . Did you see any initial uptick in cancels or people turning off auto renewal at all? And maybe you could just talk about generally these consumer agents as both maybe a potential threat, but also an opportunity for you. And just a man, I think you also talked about improvements in engagement across the services. We always think of engagement and sort of the anecdotal churn, but just any -- maybe you could tell us more about the levels of engagement that you drive with consumers consistently, how those have been trending? And how you see that relating to renewal rates.

Absolutely. So let me decompose first the news of broader the use of agents for by consumers, applying different use cases and subscription was one of those use cases. The next one is shopping. And actually, I think shopping is ahead of that. So no, we have not seen any increase in subscription. I would point you to this quarter was actually in the last 4 quarters, the highest renewal rate, and we've seen solid demand for our product. So I would say that, that anxiety, if you want to be protected, it's maybe even more reinforced, we've seen a genetic solution or agent called the genetic hackers, reviving all vulnerabilities, as you know, it has impacted more of the enterprise or enterprises I think indirectly, it floats that back to consumers with personal data and other information to lead and then create an increase in scan, which we also have seen this quarter. I think, so the need to be protected from that perspective is not increasing. That's one side of the equation. For us, the other side, which is really where we spend our time on is making sure we can participate into that Agentic new economy and provide our security agents and move that security agent into a secure agent applications where you can use PII data, but making sure that your agent doesn't fall on a scam website or other impacts. I think those are all opportunities coming to fruition. I don't think it's the next quarter or the next 12 months that's going to materially impact it. But we will be right there with new solutions, stay tuned for innovation, and it's about really preparing for the next decade and making gen relevant. So from that perspective, we're super excited. The topic of engagement, as you know, and you've been following us for a few years now, is a broad topic where we've been talking about that for 5, 6 years, right? We moved to be originally data and device security agents and then move that into really protecting your digital life as a user. And then we want to move from protecting to empowering and now empowering to you to make better decisions to improve your wellness or your prosperity. That's a broad mission, multi-decade mission, and it starts at the core, making sure that you've moved from what was a decade ago, a passive reliable software to still be a reliable but engaging application and use case. Genie inside the applications, the redesign of non-360 when customers spend more time in the application to find or to set up the relevant set up, sorry, and to make sure that they are protected the way are they want from a personalization perspective, bringing then more around the identity, the privacy, the privacy, the ability to manage your reputations. All of that goes into this line of people spending more time with the applications in a positive manner.

Great. If I could try one more quickly. Thank you for the clarification on transformative M&A. Just wondering, though, if you could maybe comment, do you have any ambition over the medium to long term to serve the SMB market or the so entrepreneur market in a more significant way with either both cybersecurity and financial services products.

I think you've seen the proof points of our current portfolio, right? When we acquire Avas, people were wondering what did we do, we're really scaling up and redesigning the platform be modular, to be underlying every ad that's coming in. And when we acquire MoneyLion, people were wondering how that fits. And I think you've seen more and more of that proof point where financial wellness and security are part of an overall digital lives. And through the platform, we can deliver in an Agentic way, modular white label through the different customer journeys, the value they require. We definitely have ambition to serve more of that digital life. But as I mentioned, it's earned one moment at a time. And every time we earn more and more of that to us the next [indiscernible] is an opportunity for us to go and help the consumer deliver it. When we talk about consumer, it's broadly defined. So it also includes your circle your family and it also includes, I would say, micro businesses or solopreneurs people who are -- who have a personal digital life and the professional apps and sometimes those 2 overlap, they have a behavior in terms of purchases and online behavior that's very equal to a consumer it's for their professional earnings. And as you know, with other small businesses, and you'll see more of our portfolio will address some of those needs in a broadly defined way.

Your next question comes from the line of Joseph Gallo with Jefferies.

Can you talk a little bit more about the $100 million in revenue synergies, that target and the timing? Where do you expect that to materialize? Is that all financial wellness? Or are you seeing any other areas of unexpected benefit?

No, of course, yes, let me quickly do it. So just for other people in front, didn't know what we're talking about. . We identified that financial wellness coming from the underlying technology of MoneyLion and engine to be cross-sold or spread across the overall Gen portfolio and an acceleration on top of that normal business growth rate, if you want. There's a few areas, obviously, in my script. I've mentioned one obvious one on Money workplace is actually built on a white labeled money line technology that we then bring and sell with the Norton LifeLock into the employee benefit channel a very good first reception on the overall funnel. We just introduced the product. They'll go to the the onboarding season, as you know, in the employee benefit channels and revenue will enroll over the following 12 months. the marketplace to be included in our various properties into LifeLock into Northern money is another set of use and then selling the marketplace to Gen partnerships like Equifax are all part of that synergies. We feel well on track. We had indicated last quarter. that it would ramp in the second half, which it is, and would run its run rate or accelerate its run rate through fiscal year '28.

That's really helpful and great to hear. And maybe just a follow-up. Operating margins were really impressive, considering the mix shift in the business. what can the margin profile of trust-based solutions be over time, especially as you move more into that high-margin first-party demand?

Yes. There's definitely a lot of puts and takes related to the mix of that segment, especially when you get into the financial ones, in terms of the margin architecture though, we've consistently said we're going to run that segment at approximately 30% as we navigate through that mix and we look at the different levels -- different areas of growth. . Because we want to make sure that we're preserving any of the volume upside that's coming through in a profitable way to reinvest for even more growth. So yes, as we're on a path in that through the lens of the synergies that Vincent just talked about, to drive more and more and more adoption of our products. Products on the marketplace that are transacting first party versus third party there will be margin implications to all of those different products and segments that we've got within that business segment. And as they come together, we think we're going to be able to drive productivity, drive efficiencies and really drive the overall margin architecture relatively consistent to where we're at today.