Avast plc Half Year Results For The Six-Months Ended 30 June 2020
LONDON, Aug. 12, 2020 Avast plc, together with its subsidiaries ('Avast', 'the Group' or 'the Company'), a leading global cybersecurity provider, announces its results for the six-months ended 30 June 2020.
Ondrej Vlcek, Chief Executive of Avast, said:
"Avast has demonstrated its business resilience during the Covid-19 outbreak. Our overall operational and financial performance has been strong, aided by the work-from-home trend that has driven an increase in online consumer activity and product engagement.
"We have prioritised the health and wellbeing of our employees while continuing to provide high levels of user and customer support. The Group donated $25m to science and technology initiatives to help combat Covid19, including $12m to the Covid-19 Therapeutics Accelerator, an initiative of the Bill & Melinda Gates Foundation, and $8m to the Coalition for Epidemic Preparedness Innovations. I am also immensely proud of our people who have worked tirelessly to play valuable roles in local community aid projects worldwide.
"Avast's mission to provide online safety and privacy for all is more relevant than ever. In the half, Avast passed the milestone of 13 million paying customers, up by 640,000. We continue to expand into new markets and extend our reach through new product offerings, such as our innovative privacy solution, BreachGuard. Despite the economic uncertainty, Avast remains well positioned. The business is resilient, strongly cash-generative, and has significant capacity to harness new growth opportunities as they emerge.
"The Group's first half performance underpins a strong full year outlook. We expect FY 2020 organic(1) revenue growth to be at the upper end of the previously stated mid-single digit percentage range."
FINANCIAL HIGHLIGHTS
-- Strong overall performance in line with expectations
-- Adjusted Billings at $469.1m up 2.1% at actual rates, with organic
growth of 9.2%
-- Adjusted Revenue at $433.1m up 1.5% at actual rates, with organic growth
of 6.6%
-- Consumer Direct Desktop Adjusted Revenue at $334.4m, up 8.7% at actual
rates, with organic growth of
-- 9.1%
-- Adjusted EBITDA up 2.1% to $241.4m; Adjusted EBITDA margin(2) at 55.7%,
up 31bps
-- Adjusted fully diluted earnings per share ('EPS') up 11.8% to $0.16
(versus $0.15 at HY 2019)
-- Final dividend in respect of 2019 paid in June 2020 of 10.3 cents per
share; total dividend for the year of 14.7 cents per share, up 8.1%(3.
)Declared interim dividend payable in October 2020 of 4.8 cents per
share, up 9.1%
-- Continued strong cash generation with Unlevered Free Cash Flow up 4.7%
to $241.2m and Levered Free Cash Flow up 10.3% to $220.9m
-- Resilient balance sheet with $191.0m of cash and available liquidity(4).
Net debt / LTM ('last twelve months') Adjusted EBITDA at 1.7x at half
year
-- On a statutory basis, Revenue up from $425.4m to $433.1m, Operating
profit including $22.7m of Covid-19 donations paid (out of total
committed $25.0m) decreased from $161.9m to $134.5m, fully diluted EPS
at $0.08.
OPERATIONAL AND STRATEGIC HIGHLIGHTS
-- The work-from-home trend presented a strong tailwind to the core
Consumer Desktop business, with an upswing in demand across the product
portfolio, including premium AV. Desktop operating KPI's reflected the
strong growth in customer numbers(5), up 5.1% in the six months to
13.26m. APPC(6) increased by 1.7% to 1.48 and ARPC(7), impacted by the
timing of customer growth (Q2) versus revenue materialising in H2, was
up 0.7% to $51.40.
-- Avast's localisation program, which customises the product and customer
experience to suit local preferences, helped drive growth in customer
numbers and penetration. There was marked strength in target countries
worldwide, including Brazil, Mexico and Argentina in LatAm, and Japan in
Asia. This was accompanied by continued gains in traditional markets
such as the US and the UK.
-- The Group's innovative new product, BreachGuard was soft launched in the
US, presenting another building block to the company's privacy offering.
-- Avast expanded the device compatibility of its current and new products.
This resulted in continued growth in multi-device licenses that enable a
seamless journey for customers between desktop and mobile.
-- While impacted by lower digital advertising, Avast Secure Browser's user
activity and search volumes remained strong. Revenues in the Indirect
segment were underpinned by the successful extension in March of the
Chrome distribution contract.
-- The wind down of the Jumpshot business is on schedule, to budget and has
not had a discernible impact on the core business.
-- Avast Free Antivirus was named a Top-Rated Product for 2019 by test-lab
AV Comparatives.
-- Avast plc became a member of the FTSE 100 index on 19 June 2020.
($'m)
H1 2020
H1 2019 Change % Change %
(excluding FX) 8
---
Adjusted Billings 469.1 459.6 2.1 4.5
Acquisitions 0.1 0.0
n/a
n/a
Disposal Managed Workplace (SMB) 9 0.0 1.0
n/a
a
Discontinued Business10 2.4 21.5 (88.8) (88.7)
---
Adjusted Billings excl. Acquisitions, Disposals and Discontinued 466.7 437.2 6.7 9.2
business
---
($'m)
H1 2020
H1 2019 Change % Change %
(excluding FX)
---
Adjusted Revenue 433.1 426.8 1.5 1.9
Acquisitions 0.1 0.0
n/a
n/a
Disposal Managed Workplace (SMB) 0.0 1.0
n/a
n/a
Discontinued Business 3.3 21.1 (84.4) (84.3)
---
Adjusted Revenue excl. Acquisitions, Disposals and Discontinued 429.7 404.7 6.2 6.6
business
---
($'m)
H1 2020
H1 2019 Change %
---
Adjusted EBITDA 241.4 236.5 2.1
Adjusted EBITDA Margin % 55.7 55.4
0.3 ppts
Adjusted Net Income 169.8 148.2 14.6
Net Debt 817.0 1,104.6 (26.0)
---
Statutory Results:
---
($'m)
H1 2020
H1 2019 Change %
---
Revenue 433.1 425.4 1.8
Operating profit 134.5 161.9 (16.9)
Net Income 86.5 112.6 (23.2)
Net Cash Flows from operating activities 225.8 176.5 27.9
---
COVID-19 IMPACT AND BUSINESS RESILIENCE
-- The health and wellbeing of the Group's employees is our priority. Avast
offices worldwide were closed as a preventative measure on 16 March.
While some offices reopened in June in line with local risk levels, the
Executive Team took the decision in early August to close all offices
until January 2021, at which date the situation will be reassessed.
Keeping offices closed and embracing remote work for a longer period
means less risk for employees. Avast recognises the strain the pandemic
has had, and continues to have, on its employees and is working hard to
ensure that they the support they need wherever they are. This includes
a program of remote work training with self-care help, private GP
services and performance management coaching.
-- During Covid-19, Avast's services have remained unaffected, with minimal
disruption to operations. The Group has not furloughed any employees or
made use of any government support programs, and there are no plans to
do so. Continued investment in people resulted in a rise in headcount in
the first half of the year, with a digital on-boarding experience
created for new joiners.
-- Avast has set up a Future of Work task force, comprised of 60 employees,
to consider the company's future work structures and facilities use.
-- The Board's assessment of the principal risks affecting the business has
been extended to cover the risks associated with the impact of Covid-19.
These risks have been developed in light of Covid-19 Scenario Planning
undertaken by the Board. Avast's recurring and subscription-based
revenues, and strong liquidity position gives the business a resilient
operational and financial position. However, the impact of the pandemic
remains uncertain, and the Board continues to closely monitor
developments in order to adapt and respond accordingly. -- In
recognition of the responsibility Avast has to the communities in which
it operates, Avast's drive to keep people safe and its belief in the
role of technology in achieving this, Avast is donating $25 million to
science and technology initiatives to help combat Covid-19, offering
critical financial and practical support to the global scientific and
technology community. This includes $12m to the Covid-19 Therapeutics
Accelerator, an initiative of the Bill & Melinda Gates Foundation, and
$8m to the Coalition for Epidemic Preparedness Innovations. An
additional $5 million has been earmarked for further science programs
such as Folding@home's supercomputing program that seeks to find a cure
for the virus. The $25m donation is treated as an exceptional item in
the P&L.
PRESENTATION OF RESULTS
Management will hold a live webcast presentation and conference call for analysts and investors at 9:00 AM BST today (12 August 2020). Please register to participate on the Company website at https://investors.avast.com. A Q&A facility will be available for conference call participants.
ENQUIRIES
Investors and analysts:
Peter Russell, Director of IR
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. It excludes current period billings and revenue of acquisitions until the first anniversary of their consolidation.
(2 )Adjusted EBITDA margin percentage is defined as Adjusted EBITDA divided by Adjusted Revenue.
(3 )Growth rate calculated on an annualized basis. In June 2019 the Group paid dividend of 8.6 cents per share in respect of the period 15 May 2018 to 31 December 2018 (13.6 cents per share on an annualized basis). (4) Total available liquidity includes cash and cash equivalents balance as at 30 June 2020 of $151m and revolving credit facility of $40m (not drawn at 30 June 2020).
(5 )Users who have at least one valid paid Consumer Direct Desktop subscription (or licence) at the end of the period.
(6 )APPC defined as the Consumer Direct Desktop simple average valid licences or subscriptions for the financial period presented divided by the simple average number of Customers during the same period.
(7 )ARPC defined as the Consumer Direct Desktop revenue for the financial period divided by the simple average number of Customers during the same period.
(8 )Growth rate excluding currency impact calculated by restating 2020 actual to 2019 FX rates (see "Principal exchange rates applied "). Deferred revenue is translated to USD at date of invoice and is therefore excluded when calculating the impact of FX on revenue.
(9 )On 1 February 2019 Avast plc sold the non-core asset of Managed Workplace, its remote monitoring and management product, to Barracuda Networks, Inc. ('Barracuda'). Managed Workplace was Avast's solution in the Remote Monitoring and Management ('RMM') space, which is sold to Managed Service Providers ('MSPs'). This business was not core to our SMB strategy, which focuses on securing the workplace. Barracuda, which has a large existing MSP base but did not offer an RMM solution, provides a better long-term solution for this business. In addition, Barracuda has signed a reseller agreement with Avast under which it now resells Avast's business security solutions to MSPs. In the year ended 31 December 2018 the asset generated low teen revenue (USD million) with a materially lower margin profile than the Group.
(10 )In January 2020 Avast decided to terminate the provision of anonymized data to its data analytics business, Jumpshot, having concluded that the business was not consistent long term with the Group's privacy priorities as a global cybersecurity company. As the company is also exiting its toolbar-related search distribution business (which had previously been an important contributor to AVG's revenues) and the browser clean-up business, the growth figures exclude all of these (referred to above and throughout the report as "Discontinued Business"), which the Group expects to be negligible by the end of 2020. 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.
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SOURCE Avast
