McAfee Corp. (MCFE) Tops Q4 EPS by 7c, Revenues Beat; Offers 1Q Revenue Guidance Above Consensus

February 23, 2021 4:33 PM EST
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McAfee Corp. (NASDAQ: MCFE) reported Q4 EPS of $0.38, $0.07 better than the analyst estimate of $0.31. Revenue for the quarter came in at $777 million versus the consensus estimate of $738.87 million.

Fourth Quarter and Full Year Fiscal 2020 Financial Highlights

Revenue:

  • Consumer revenue for the fourth quarter was $426 million, reflecting 23% growth year-over-year and was $1.6 billion, up 20% for the full year FY20.
  • Enterprise revenue for the fourth quarter was $351 million, up 5% year-over-year and was $1.3 billion, up 1% for the full year FY20.

Unlevered Free Cash Flow:

  • Net cash provided by operating activities was $760 million in the year ended December 26, 2020, up 53% compared to $496 million in the year ended December 28, 2019.
  • Unlevered Free Cash Flow was $982 million for the year ended December 26, 2020, up more than 37% versus the prior year.

Consumer KPIs:

  • The market leading growth in McAfee’s Consumer business is being driven by accelerating business fundamentals, with 18% year-over-year growth in Core DTC subscribers.
  • McAfee ended the fourth quarter with 18.0 million Core DTC subscribers, adding approximately 2.8 million net new subscribers compared to the fourth quarter of 2019 and 668,000 net new subscribers during the past quarter alone.
  • 13th consecutive quarter of positive quarter over quarter and year over year Core DTC subscriber growth.
  • Consumer trailing twelve-month dollar retention rate was 100% for the fourth quarter, versus 97% in the comparable period last year.

Recent Business Highlights

  • Announced a five year extension with Asus for consumer security services across their product portfolio.
  • Signed a three year agreement with LG to pre-install a 30-day free trial of McAfee consumer security on LG devices.
  • Renewed an agreement with Costco to continue to offer consumer security products on PCs purchased through Costco.com.
  • Expanded worldwide relationship with Ingram Micro Inc. to now provide access to McAfee enterprise products and solutions across Ingram Micro's global distribution network, including its regional Cloud Marketplaces and Centers of Excellence.
  • Formed an enterprise agreement with ECS, a top-rated managed service provider and leader in cybersecurity, cloud, AI and ServiceNow delivery, where ECS will now offer managed threat detection and response capabilities through McAfee MVISION EDR.
  • Introduced the availability of MVISION Extended Detection and Response (XDR) with inclusion of cloud and network telemetry, unifying and optimizing threat detection and response beyond endpoints.

“McAfee achieved significant increases in revenue, subscribers, profitability and cash flow to close out the year. We secure our customers’ ever increasing digital footprint as people are living more of their lives online. This accelerating transformation combined with our market leading capabilities drove 23% revenue growth in our consumer business, 14% growth in total net revenue, and strong growth in adjusted EBITDA in Q4. I am very pleased with our team’s execution, which is a testament to the dedication of McAfee employees worldwide,” said Peter Leav, McAfee’s President and Chief Executive Officer.

Commenting on the company’s financial results, Venkat Bhamidipati, McAfee’s CFO added, “Across the business, results exceeded expectations driven by strong execution and increased demand for our security offerings. In our Consumer segment, we delivered high-teens subscriber growth as we saw robust demand in the large, critical, and growing personal protection market. In our Enterprise segment, we grew quarterly revenue by 5% year-over-year and increased profitability by focusing on core enterprise and government customers while prioritizing our investment spending and rationalizing costs.”

GUIDANCE:

McAfee Corp. sees Q1 2021 revenue of $725-735 million, versus the consensus of $724.42 million.

McAfee provides the following expected financial guidance for the quarter ending March 27, 2021:

  • Net Revenue of $725 million to $735 million
  • Total Adjusted EBITDA of $275 million to $285 million(1)

For earnings history and earnings-related data on McAfee Corp. (MCFE) click here.



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