- Net Revenue Increased by 24% to $491 Million and Adjusted
EBITDA Increased by 43% to $234 Million
- Core Direct to Consumer (“DTC”) Subscribers Increased YoY by
16% to 20.1 Million, Up 640 Thousand QoQ
McAfee Corp. (“McAfee,” or the “Company”) (NASDAQ: MCFE), a
global leader in online protection, today announced its financial
results for the three months ended September 25, 2021.
“McAfee delivered another strong quarter, with revenue growing
24% year-over-year,” said Peter Leav, McAfee’s President and Chief
Executive Officer. “Our continued commitment to secure our
customers’ online footprint helped us add 640 thousand net new
direct-to-consumer subscribers, a year-over-year increase of 16% in
Q3. We continue to invest in our online protection services and
diversified go-to-market channel, as consumers increasingly adopt
digital services.”
Third Quarter Fiscal 2021 Financial Highlights from
Continuing Operations
- Net revenue was $491 million, reflecting 24% growth
year-over-year
- Net income of $2,390 million, inclusive of $2,251 million gain,
net of estimated taxes and transaction costs, on the divestiture of
the Enterprise business
- Adjusted EBITDA(1) of $234 million or a 48% Adjusted EBITDA(1)
Margin, inclusive of approximately $21 million in stranded costs
attributed to the divestiture of our Enterprise business
- McAfee’s net cash provided by operating activities was $90
million for the quarter
- McAfee’s Unlevered Free Cash Flow was $132 million for the
quarter
Business Highlights
- Added 640 thousand net new Direct-to-Consumer subscribers
closing the quarter at 20.1 million Core DTC subscribers, compared
to 17.3 million in the same period last year
- Signed a multi-year exclusive relationship with T-Mobile, with
an intrusion detection and protection and credit monitoring
services agreement
- Announced that Gagan Singh joined McAfee as its Executive Vice
President, Chief Product and Revenue Officer
Commenting on the Company’s financial results, Venkat
Bhamidipati, McAfee’s Executive Vice President and Chief Financial
Officer, added, “We delivered solid results in Q3, as continued
strong demand for our holistic consumer security offerings, across
our diversified global go-to-market channels, coupled with our
focus on operational discipline, resulted in $234 million in
Adjusted EBITDA, or 48% Adjusted EBITDA margin.”
About McAfee
McAfee is a global leader in online protection.
www.mcafee.com
(1)
Adjusted EBITDA is a non-GAAP financial
measure, and should be considered in addition to, but not as a
substitute for, information provided in accordance with GAAP.
Use of Non-GAAP Financial Information
In addition to McAfee’s results which are determined in
accordance with generally accepted accounting principles in the
United States (“GAAP”), the Company believes the following non-GAAP
measures presented in this press release are useful in evaluating
its operating performance: adjusted operating income, adjusted
operating income margin, adjusted EBITDA, adjusted EBITDA margin,
adjusted net income, adjusted net income margin, adjusted earnings
per share (“EPS”) and unlevered free cash flow. Certain of these
non-GAAP measures exclude equity-based compensation, depreciation
and amortization expense, transformation expense, restructuring and
transition charges, interest expense, foreign exchange (gain) and
loss, other income (expense), net, provision for income tax
expense, Tax Receivable Agreement (“TRA”) adjustment, income from
Transition Services Agreement (“TSA”), income or loss from
discontinued operations, net of taxes, and other costs we do not
believe are reflective of our ongoing operations. McAfee believes
that these non-GAAP financial measures are provided to enhance the
reader’s understanding of our past financial performance and our
prospects for the future. McAfee’s management team uses these
non-GAAP financial measures in assessing McAfee’s performance, as
well as in planning and forecasting future periods. The non-GAAP
financial information is presented for supplemental informational
purposes only and should not be considered a substitute for
financial information presented in accordance with GAAP, and may be
different from similarly titled non-GAAP measures used by other
companies. A reconciliation is provided herein for each non-GAAP
financial measure to the most directly comparable financial measure
stated in accordance with GAAP. Readers are encouraged to review
the related GAAP financial measures and the reconciliation of these
non-GAAP financial measures to their most directly comparable GAAP
financial measures.
Presentation of Financial Measures
McAfee Corp. (the “Corporation”) was incorporated in Delaware on
July 19, 2019. The Corporation was formed for the purpose of
completing an initial public offering (the “IPO”) and related
transactions in order to carry on the business of Foundation
Technology Worldwide LLC (“FTW”) and its subsidiaries (the
Corporation, FTW and its subsidiaries are collectively the
“Company”). The Corporation, as the sole managing member of FTW,
exclusively operates and controls the business and affairs of FTW.
The Corporation consolidates the financial results of FTW and
reports a redeemable noncontrolling interest (“RNCI”) related to
the LLC Units and Management Incentive Units (MIUs) not owned by
the Corporation.
MCAFEE CORP.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions except per share
amounts)
Three Months Ended
Nine Months Ended
September 25,
2021
September 26,
2020
September 25,
2021
September 26,
2020
Net revenue
$
491
$
395
$
1,400
$
1,132
Cost of sales
118
112
349
321
Gross profit
373
283
1,051
811
Operating expenses:
Sales and marketing
91
87
264
225
Research and development
48
35
138
109
General and administrative
51
43
143
141
Amortization of intangibles
13
36
63
108
Restructuring and transition charges (Note
9)
27
—
35
1
Total operating expenses
230
201
643
584
Operating income
143
82
408
227
Interest expense
(61
)
(72
)
(170
)
(222
)
Foreign exchange gain (loss), net
14
(43
)
29
(49
)
Other income (expense), net
(292
)
(1
)
(301
)
—
Income (loss) from continuing operations
before income taxes
(196
)
(34
)
(34
)
(44
)
Provision for income tax expense
(benefit)
(166
)
5
(159
)
—
Income (loss) from continuing
operations
(30
)
(39
)
125
(44
)
Income from discontinued operations, net
of taxes
2,420
39
2,467
75
Net income
$
2,390
$
—
$
2,592
$
31
Less: Net income attributable to
redeemable noncontrolling interests
1,648
N/A
1,784
N/A
Net income attributable to McAfee
Corp.
$
742
N/A
$
808
N/A
Net income (loss) attributable to McAfee
Corp.:
Loss from continuing operations
attributable to McAfee Corp.
$
(92
)
N/A
$
(40
)
N/A
Income from discontinued operations
attributable to McAfee Corp.
834
N/A
848
N/A
Net income attributable to McAfee
Corp.
$
742
N/A
$
808
N/A
Earnings per share attributable to McAfee
Corp., basic and diluted:
Continuing operations
$
(0.54
)
N/A
$
(0.24
)
N/A
Discontinued operations
4.90
N/A
5.11
N/A
Earnings per share, basic and
diluted(1)
$
4.36
N/A
$
4.87
N/A
Weighted-average shares outstanding, basic
and diluted
170.3
N/A
165.9
N/A
(1)
Basic and diluted earnings per share of
Class A common stock are not applicable prior to the initial public
offering (“IPO”) and related Reorganization Transactions (as
defined in Note 1 to the condensed consolidated financial
statements to be included in our 2021 Q3 quarterly report on Form
10-Q to be filed with Securities Exchange Commission). See Note 15
Earnings Per Share in the notes to the condensed consolidated
financial statements for the number of shares used in the
computation of earnings per share of Class A common stock and the
basis for the computation of earnings per share.
MCAFEE CORP.
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(in millions, except share and
per share amounts)
September 25, 2021
December 26, 2020
Assets
Current assets:
Cash and cash equivalents
$
848
$
231
Accounts receivable, net
124
102
Deferred costs
171
137
Receivable from Enterprise Business
116
—
Other current assets
36
42
Held-for-sale assets
31
—
Current assets of discontinued
operations
—
402
Total current assets
1,326
914
Property and equipment, net
55
98
Goodwill
1,018
1,018
Identified intangible assets, net
595
729
Deferred tax assets
398
24
Other long-term assets
92
67
Long-term assets of discontinued
operations
—
2,578
Total assets
$
3,484
$
5,428
Liabilities, redeemable noncontrolling
interests and deficit
Current liabilities:
Accounts payable and other current
liabilities
$
303
$
235
Accrued compensation and benefits
66
179
Accrued marketing
101
118
Income taxes payable
207
14
Long-term debt, current portion
44
44
Deferred revenue
953
823
Payable to Enterprise Business
50
—
Current liabilities of discontinued
operations
—
972
Total current liabilities
1,724
2,385
Long-term debt, net
2,889
3,943
Deferred tax liabilities
17
5
Tax receivable agreement liability, less
current portion
392
—
Other long-term liabilities
136
155
Deferred revenue, less current portion
91
80
Long-term liabilities of discontinued
operations
—
660
Total liabilities
5,249
7,228
Commitments and contingencies (Note
17)
Redeemable noncontrolling interests
5,836
4,840
Equity (deficit):
Class A common stock, $0.001 par value -
1,500,000,000 shares authorized, 179,848,875 shares issued and
outstanding as of September 25, 2021 and 161,267,412 shares issued
and outstanding as of December 26, 2020
—
—
Class B common stock, $0.001 par value -
300,000,000 shares authorized, 255,490,562 shares issued and
outstanding as of September 25, 2021 and 267,065,127 shares issued
and outstanding as of December 26, 2020
—
—
Additional paid-in capital
(7,571
)
(6,477
)
Accumulated deficit
—
(118
)
Accumulated other comprehensive income
(loss)
(30
)
(45
)
Total deficit
(7,601
)
(6,640
)
Total liabilities, redeemable
noncontrolling interests and deficit
$
3,484
$
5,428
MCAFEE CORP.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Nine Months Ended
September 25, 2021
September 26, 2020
Cash flows from operating
activities:
Net income
$
2,592
$
31
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
195
372
Equity-based compensation
85
25
Deferred taxes
(161
)
3
Foreign exchange (gain) loss, net
(29
)
49
Pre-tax gain on divestiture of Enterprise
Business
(2,634
)
—
Tax Receivable Agreement remeasurement
310
—
Other operating activities
31
40
Change in assets and liabilities:
Receivable and payable from/to Enterprise
Business
(36
)
—
Accounts receivable, net
108
94
Deferred costs
(34
)
(29
)
Other assets
(42
)
(10
)
Income taxes payable
193
(2
)
Other current liabilities
24
(10
)
Deferred revenue
(10
)
(26
)
Other liabilities
(54
)
(73
)
Net cash provided by operating
activities
538
464
Cash flows from investing
activities:
Acquisitions, net of cash acquired
—
(5
)
Additions to property and equipment
(19
)
(32
)
Proceeds from divestiture of Enterprise
Business, net of transaction costs (Note 3)
3,880
—
Other investing activities
(4
)
(3
)
Net cash provided by (used in) investing
activities
3,857
(40
)
Cash flows from financing
activities:
Proceeds from the issuance of Member
units
11
2
Payment for long-term debt
(1,027
)
(33
)
Distributions to members of FTW
(1,860
)
(200
)
Payment of dividends
(812
)
—
Payment of tax withholding for shares and
units withheld
(79
)
(4
)
Other financing activities
(3
)
(10
)
Net cash used in financing activities
(3,770
)
(245
)
Effect of exchange rate fluctuations on
cash and cash equivalents
(8
)
2
Change in cash and cash equivalents
617
181
Cash and cash equivalents, beginning of
period
231
167
Cash and cash equivalents, end of
period
$
848
$
348
Supplemental disclosures of noncash
investing and financing activities and cash flow information:
Acquisition of property and equipment
included in current liabilities
$
(4
)
$
(2
)
Distributions to members of FTW included
in liabilities
(45
)
(5
)
Dividends payable included in
liabilities
(21
)
—
Other financing activities included in
liabilities
(8
)
—
Tax withholding for shares and units
withheld included in liabilities
(5
)
—
Proceeds receivable related to divestiture
of Enterprise Business
65
—
Transaction costs payable related to
divestiture of Enterprise Business
(28
)
—
Cash paid during the period for:
Interest, net of cash flow hedges
(148
)
(210
)
Income taxes, net of refunds
(51
)
(35
)
MCAFEE CORP. UNAUDITED NON-GAAP FINANCIAL
MEASURES (in millions)
We have included both financial measures compiled in accordance
with GAAP and certain non-GAAP financial measures, including
adjusted operating income, adjusted operating income margin,
adjusted EBITDA, adjusted EBITDA margin, adjusted net income,
adjusted net income margin, adjusted EPS and unlevered free cash
flow and ratios based on these financial measures.
Adjusted Operating Income, Adjusted Operating Income Margin,
Adjusted EBITDA and Adjusted EBITDA Margin
The following table presents a reconciliation of our adjusted
operating income and adjusted EBITDA to our net income for the
periods presented:
Three Months Ended
Nine Months Ended
(in millions)
September 25,
2021
September 26,
2020
September 25,
2021
September 26,
2020
Net income
$
2,390
$
—
$
2,592
$
31
Add: Amortization
35
62
134
188
Add: Equity-based compensation
17
5
50
21
Add: Cash in lieu of equity awards(1)
—
—
—
1
Add: Acquisition and integration
costs(2)
—
2
1
5
Add: Restructuring and transition
charges(3)
27
—
35
1
Add: Management fees(4)
—
2
—
6
Add: Transformation(5)
5
7
6
16
Add: Executive severance(6)
1
—
1
3
Add: Interest expense
61
72
170
222
Add: Foreign exchange loss (gain),
net(7)
(14
)
43
(29
)
49
Add: Provision for income tax expense
(benefit)
(166
)
5
(159
)
—
Add: TRA adjustment(8)
298
—
306
—
Less: Income from TSA(9)
(7
)
—
(7
)
—
Add: Other (income) expense, net(10)
1
1
2
—
Less: Income from discontinued operations,
net of taxes
(2,420
)
(39
)
(2,467
)
(75
)
Adjusted operating income
228
160
635
468
Add: Depreciation
6
5
18
17
Less: Other expense
—
(1
)
—
(1
)
Adjusted EBITDA
$
234
$
164
$
653
$
484
Net revenue
$
491
$
395
$
1,400
$
1,132
Net income margin
486.8
%
—
185.1
%
2.7
%
Adjusted operating income margin
46.4
%
40.5
%
45.4
%
41.3
%
Adjusted EBITDA margin
47.7
%
41.5
%
46.6
%
42.8
%
See Appendix A for an explanation of non-GAAP measures and other
items.
Adjusted Net Income, Adjusted Net Income Margin, and Adjusted
EPS
The following table presents a reconciliation of our adjusted
net income to our net income for the periods presented:
Three Months Ended
Nine Months Ended
(in millions except per share
amounts)
September 25,
2021
September 26,
2020
September 25,
2021
September 26,
2020
Net income
$
2,390
$
—
$
2,592
$
31
Add: Amortization of debt discount and
issuance costs
13
4
21
13
Add: Amortization
35
62
134
188
Add: Equity-based compensation
17
5
50
21
Add: Cash in lieu of equity awards(1)
—
—
—
1
Add: Acquisition and integration
costs(2)
—
2
1
5
Add: Restructuring and transition
charges(3)
27
—
35
1
Add: Management fees(4)
—
2
—
6
Add: Transformation(5)
5
7
6
16
Add: Executive severance(6)
1
—
1
3
Add: Foreign exchange loss (gain),
net(7)
(14
)
43
(29
)
49
Add: Provision for income taxes
(benefit)
(166
)
5
(159
)
—
Add: TRA adjustment(8)
298
—
306
—
Less: Income from TSA(9)
(7
)
—
(7
)
—
Add: Other (income) expense, net(10)
1
1
2
—
Less: Income from discontinued operations,
net of taxes
(2,420
)
(39
)
(2,467
)
(75
)
Adjusted income before taxes
180
92
486
259
Adjusted provision for income
taxes(11)
40
20
107
57
Adjusted net income
$
140
$
72
$
379
$
202
Net revenue
$
491
$
395
$
1,400
$
1,132
Net income margin
486.8
%
—
185.1
%
2.7
%
Adjusted net income margin
28.5
%
18.2
%
27.1
%
17.8
%
Net loss per share, diluted
$
(0.54
)
Adjusted EPS
$
0.31
Weighted average shares outstanding,
basic
170.3
Impact on dilution:
Equity awards(a)
12.9
Assumed conversion of LLC Units and vested
MIUs
269.4
Weighted average shares outstanding,
diluted(12)
452.6
(a)
Diluted GAAP and non-GAAP impact from
equity awards are the same, except in periods in which there is a
GAAP loss from continuing operations. We do not present dilution
for equity awards in periods in which there is a loss from
continuing operations. However, if there is non-GAAP net income, we
present dilution for non-GAAP weighted-average shares outstanding
in an amount equal to the dilution that would have been presented
had there been GAAP income from continuing operations for the
period.
See Appendix A for an explanation of non-GAAP measures and other
items.
Unlevered Free Cash Flow
The following table presents a reconciliation of our unlevered
free cash flow to our net cash provided by operating activities for
the periods presented:
Nine Months Ended
(in millions)
September 25, 2021
September 26, 2020
Net cash provided by operating
activities
$
538
$
464
Add: Interest payments
148
210
Less: Capital expenditures(1)
(23
)
(35
)
Unlevered free cash flow
$
663
$
639
Net cash provided by (used in) investing
activities
$
3,857
$
(40
)
Net cash used in financing activities
$
(3,770
)
$
(245
)
(1)
Capital expenditures includes payments for
property and equipment and capitalized labor costs incurred in
connection with certain software development activities.
MCAFEE CORP. APPENDIX A EXPLANATION OF
NON-GAAP MEASURES AND OTHER ITEMS
Adjusted Operating Income, Adjusted Operating Income Margin,
Adjusted EBITDA and Adjusted EBITDA Margin
We define adjusted operating income as net income (loss),
excluding the impact of amortization of intangible assets,
equity-based compensation expense, interest expense, foreign
exchange (gain) loss, net, Tax Receivable Agreement (“TRA”)
adjustment, income from Transition Services Agreement (“TSA”),
other income (expense), net, provision for income tax expense,
income (loss) from discontinued operations, net of taxes, and other
costs that we do not believe are reflective of our ongoing
operations. Adjusted operating income margin is calculated as
adjusted operating income divided by net revenue. We define
adjusted EBITDA as adjusted operating income, excluding the impact
of depreciation expense plus certain other non-operating costs.
Adjusted EBITDA margin is calculated as adjusted EBITDA divided by
net revenue.
Adjusted Net Income, and Adjusted Net Income Margin
Adjusted net income assumes all net income (loss) is
attributable to McAfee Corp., which assumes the full exchange of
all outstanding LLC Units for shares of Class A common stock of
McAfee Corp., and is adjusted for the impact of amortization of
intangible assets, amortization of debt issuance costs,
equity-based compensation expense, foreign exchange loss (gain),
net, Tax Receivable Agreement (“TRA”) adjustment, income from
Transition Services Agreement (“TSA”), income (loss) from
discontinued operations, net of taxes, and other costs that we do
not believe are reflective of our ongoing operations. The adjusted
provision for income taxes represents the tax effect on net income,
adjusted for all of the listed adjustments, assuming that all
consolidated net income was subject to corporate taxation for all
periods presented. We have an assumed an annual effective tax rate
of 22%, which represents our long term expected corporate tax rate
excluding discrete and non-recurring tax items. This amount has
been recast for periods reported previously.
Adjusted net income margin is calculated as adjusted net income
divided by net revenue. Adjusted net income and adjusted net income
margin have limitations as analytical tools, and you should not
consider it in isolation or as a substitute for analysis of our
results as reported under GAAP.
Adjustments for Adjusted Operating Income, Adjusted EBITDA,
Adjusted Net Income, and Adjusted EPS
Below is additional information for the adjustments for adjusted
operating income, adjusted EBITDA, and adjusted net income:
(1)
As a result of the purchase from Intel of
a majority interest in FTW in April 2017, cash awards were provided
to certain employees who held Intel equity awards in lieu of equity
in FTW. As these rollover awards reflect one-time grants to former
employees of Intel in connection with these transactions, we
believe this expense is not reflective of our ongoing results.
(2)
Represents both direct and incremental
costs in connection with business acquisitions, including
acquisition consideration structured as cash retention, third party
professional fees, and other integration costs.
(3)
Represents both direct and incremental
costs to execute strategic restructuring events, including
third-party professional fees and services, severance, and facility
restructuring costs. Also inclusive of transition charges including
legal, advisory, consulting and other costs directly incurred due
to the divestiture of the Enterprise Business, including
incremental costs associated with data disentanglement and
acceleration of data migration to the cloud, that were incurred
subsequent to the sale in support of the Transition Services
Agreement.
(4)
Represents management fees paid to certain
affiliates of TPG, Thoma Bravo, and Intel pursuant to the
Management Services Agreement.
(5)
Represents costs incurred for our public
offerings along with other transformational initiatives including
data center and facilities rationalization.
(6)
Represents severance for executive
terminations not associated with a strategic restructuring
event.
(7)
Represents Foreign exchange gain (loss),
net as shown on the condensed consolidated statement of operations.
This amount is attributable to realized and unrealized gains or
losses on non-U.S. Dollar denominated balances and is primarily due
to unrealized gains or losses associated with our 1st Lien Euro
Term Loan.
(8)
Represents the impact on net income of
adjustments to liabilities under our Tax Receivable Agreement.
(9)
Represents income earned under the
Transition Services Agreement.
(10)
Represents other income or expense not
associated with our core operations and it is recorded within Other
income (expense), net on the consolidated statements of
operations.
(11)
Prior to our IPO, our structure was that
of a pass through entity for U.S. federal income tax purposes with
certain U.S. and foreign subsidiaries subject to income tax in
their respective jurisdictions. Subsequent to the IPO, McAfee Corp.
is taxed as a corporation and pays corporate federal, state, and
local taxes on income allocated to it from FTW. This amount has
been recast for periods reported previously. The adjusted provision
for income taxes now represents the tax effect on net income,
adjusted for all of the listed adjustments, assuming that all
consolidated net income was subject to corporate taxation for all
periods presented. We have assumed rate of 22% which represents our
long term expected corporate tax rate excluding discrete and
non-recurring tax items.
(12)
Represents weighted average shares
outstanding and includes the dilutive impact of our outstanding
equity awards and assumed conversion of our LLC units and MIUs not
owned by the Corporation.
Unlevered Free Cash Flow
We define unlevered free cash flow as net cash provided by
operating activities add interest payments less capital
expenditures. We consider unlevered free cash flow to be a
liquidity measure that provides useful information to management
and investors about the amount of cash generated by the business
that can be used for strategic opportunities, including investing
in our business, making strategic acquisitions, and strengthening
the balance sheet.
Source: McAfee
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211108005455/en/
Investor Contact: Eduardo Fleites investor@mcafee.com
Media Contact: media@mcafee.com
McAfee (NASDAQ:MCFE)
Graphique Historique de l'Action
De Mai 2024 à Juin 2024
McAfee (NASDAQ:MCFE)
Graphique Historique de l'Action
De Juin 2023 à Juin 2024