Company Reports

On Sept. 24, the Financial Times reported that Gen Digital, a cybersecurity company, is in early discussions to acquire domain registrar GoDaddy. Following the report, GoDaddy's shares surged 11% but partly pulled back, while Gen Digital's fell as much as 12% over the day.

Gen kicked off fiscal 2027 with financial results that includes sales growing 6% to $1.34 billion and its adjusted EPS growing 12% to $0.71. The firm's channel partner sales drove much of the topline expansion, growing 34% year over year. The firm raised its topline and EPS outlook for fiscal 2027.

Gen Digital reported a strong close to fiscal 2026, with sales growing 27% to $5 billion and its adjusted earnings per share up 14% to $0.67. The firm's 2027 outlook calls for sales growth of 7.5% and adjusted EPS growth of 13%, both at the midpoint of the guidance range.

We view Gen Digital as a solid vendor in the consumer-oriented security space. With offerings ranging from security, identity protection, and privacy, Gen has its fingers in many consumer-focused pies. However, as we look at the overall consumer-focused cybersecurity space, we see cutthroat competition, a lack of pricing power, and a lack of evident customer switching costs. With these factors top of mind, we expect Gen's future growth prospects to be in the low single digits.

Anthropic confirmed the existence of an upcoming model after Fortune first reported plans for it on March 26. This new model, named either Mythos or Capybara, is reportedly much better than existing models at finding cyber vulnerabilities. This news sent our cyber coverage down 5% on average.

Over the last few months, investors have become increasingly worried about the future of software economic moats as fears of software disintermediation driven by artificial intelligence have grown.

We view Gen Digital as a strong vendor in the consumer-oriented security space. With offerings ranging from security, identity protection, and privacy, Gen has its fingers in many consumer-focused pies. However, as we look at the overall consumer-focused cybersecurity space, we see cutthroat competition, a lack of pricing power, and a lack of evident customer switching costs. With these factors top of mind, we expect Gen's future growth prospects to be in the low single digits.

Gen Digital reported solid fiscal third-quarter results, with sales growing 26% to $1.24 billion and adjusted earnings per share expanding 13% to $0.64. The top line was bolstered by the recent MoneyLion purchase, although integration costs associated with the acquisition weighed on margins.

Gen Digital closed out its second quarter of fiscal 2026 with a set of solid results, with the firm's sales growing 25% to $1.22 billion and adjusted EPS growing 15% to $0.62. As the firm works through its large MoneyLion acquisitions, its margins have contracted year over year.

Gen posted a solid quarter with top-line growth of 30%, largely driven by standout MoneyLion growth of 45% year over year. Non-GAAP operating margins were stable at 52%, while the company saw steady customer gains and bookings up 32% year over year.

Gen Digital reported solid fourth-quarter fiscal 2025 results that exceeded our expectations on both the top and bottom lines. The firm's sales grew 5% year over year, driven by an uptick in its user count and partner channel sales, with margins expanding on the back of continued focus on fiscal discipline. Management views that, while Gen is not immune to downturns, the subscription-based and auto-renewing business will be resilient to macroeconomic uncertainty, supported by strong demand for cyber safety. However, we think that as a consumer-facing cybersecurity player, Gen is more susceptible to macro headwinds, with individuals more prone to cutting their security spending. Thus, we maintain our fair value estimate of $25 per share, and with the stock trading slightly higher after hours, we see Gen as fairly valued.

We view Gen Digital as a strong vendor in the consumer-oriented security space. With offerings ranging from security, identity protection, and privacy, Gen has its fingers in many consumer-focused pies. However, as we look at the overall consumer-focused cybersecurity space, we see cutthroat competition, a lack of pricing power, and a lack of evident customer switching costs. With these factors top of mind, we expect Gen's future growth prospects to be in the low single digits.

We view Gen Digital as a strong vendor in the consumer-oriented security space. With offerings ranging from security, identity protection, and privacy, Gen has its fingers in many consumer-focused pies. However, as we look at the overall consumer-focused cybersecurity space, we see cutthroat competition, a lack of pricing power, and a lack of evident customer switching costs. With these factors top of mind, we expect Gen's future growth prospects to not be in excess of low single digits.

Gen Digital reported solid third-quarter fiscal 2025 financial results. The firm's sales grew 4% year over year and its operating margin expanded 270 basis points to 38%.

Gen Digital reported solid second-quarter fiscal 2025 financial results. The firm's sales grew 3% year over year, driven by an uptick in its user count and partner channel sales. Gen's adjusted operating margins also expanded to 58.2%, due to its continued focus on fiscal discipline.

We have maintained our $21 per share fair value estimate for no-moat Gen Digital after the firm kicked off fiscal 2025 with a set of solid financial results, almost entirely in line with our estimates. As a consumer-facing cybersecurity player, Gen is more susceptible to macro headwinds, with individuals more prone to cutting their security spending as inflation eats into their paychecks. Despite this pressure, we remain impressed by the firm’s ability to eke out additional operating leverage from its business, providing investors with continuous improvement in profitability despite the tepid sales expansion. As we think of the long term, however, we think Gen’s exposure to the commodity-like consumer security market is a structural barrier preventing it from building an economic moat around its business. With shares trading slightly up after hours, we continue to view Gen’s shares as overvalued. For investors seeking cybersecurity exposure, we’d recommend wide-moat Fortinet, a high-quality security vendor currently trading in the four-star territory.

We view Gen Digital as a strong vendor in the consumer-oriented security space. With offerings ranging from security, identity protection, and privacy, Gen has its fingers in many consumer-focused pies. However, as we look at the overall consumer-focused cybersecurity space, we see cutthroat competition, a lack of pricing power, and a lack of evident customer switching costs. With these factors top of mind, we expect Gen's future growth prospects to not be in excess of low single digits.

We are maintaining our $21 fair value estimate for no-moat Gen Digital after the firm closed the chapter on fiscal 2024 with a set of strong results, largely in line with our estimates. Despite operating in a tough macro environment, especially in the consumer-facing security market that is more prone to macro pressures, we remain impressed with Gen’s ability to incrementally improve its profitability while also growing in the low single digits. With an eye on the long term, however, we reiterate our view that consumer-facing security is a commodity-like market, with little switching costs and plenty of price competition. We believe investors also viewed the results as largely positive, especially considering the tumultuous macroeconomic backdrop, with shares trading up after Gen’s earnings report. While we view the firm’s shares as fairly valued, we’d ask investors seeking security exposure to focus on moatier security names such as Fortinet and Zscaler that trade at discounts to our fair value estimates.

We are maintaining our $21 fair value estimate for no-moat Gen Digital after the firm closed out its third quarter of fiscal 2024 with a top line below our estimates offset by profitability ahead of our forecasts. We appreciate the firm’s commitment to profitability during a time of macro uncertainty that has impacted demand in consumer-facing cybersecurity. While we expect Gen to incrementally expand its margins over our five-year explicit forecast, we remain pessimistic on the overall space Gen occupies as a large player in a commodity-like consumer security market. We think investors were left unimpressed by Gen’s topline growth as shares traded down sharply after hours. We view shares as fairly valued after the sell-off and would encourage investors seeking cybersecurity exposure to consider Fortinet, a wide-moat security vendor that is also trading in the three-star range.

We are maintaining our $21 fair value estimate for no-moat Gen Digital after the firm reported a solid second quarter largely in line with our prior estimates. Along with the second-quarter results, the firm also hosted an investor day, detailing its long-term operating model and reiterating the cost synergies the firm expects to extract following its Avast acquisition in calendar 2022. While we expect Gen’s adjusted operating margin to expand over our explicit forecast, we view Gen as a no-moat business, primarily due to its presence in a commodity-like consumer security market that has limited customer switching costs. Following the earnings report, Gen’s shares are trading in the 3-star range and fairly valued.