Symantec Exec Insights: Enterprise Subs, Consumers
Enterprise Subscription Metric
Brent Thill – UBS: Two quick questions. One, just on the enterprise subscription metric you gave. You noted stronger growth there versus licensing. How should we expect that trend over the next year? And then secondly, if you could just walk through; clearly, the Storage business came in a little bit lower than your expectation, and the margin was down about 1,000 basis points year-on-year. Can you give us a sense of where you think the margin should restabilize back on the Storage side?
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James Beer – EVP and CFO: Well, in terms of the enterprise subscription growth rate, I talked about 30% up year-over-year. That is seeing the rolling up benefits of the VeriSign acquisition. So, the SSL business obviously a large portion of that total enterprise subscription amount. So, as the quarters go by, I would expect that to normalize more in line with the true organic blended rate of the SSL business with the higher organic growth rates of the other of our subscription services businesses. So, I would expect it to come down somewhat over time. In terms of the margin around the Storage Management side of the business, I would certainly expect the backup performance to be improving in coming quarters. We talked in our remarks about something of a pause around Backup Exec process; the release of that new offering. We also have a new version of NetBackup into the marketplace. And so, as those license-oriented sales rise, I would expect margins to rise as well. Thus is what we recorded in the March quarter.
Brad Zelnick – Macquarie: Enrique, clearly, there are a lot of good things happening at Symantec, but investors have spoken to over the past week are trying to better understand your comments that the Company met its internal plan in Q4 despite having missed your combined guidance for revenue and deferred revenue. Could you help us better understand what metrics you’re managing to internally and how they deviate from reported revenue and deferred revenue that we see in your financials?
Enrique Salem – President and CEO: The metric we use is – we look at total enterprise bookings – for the quarter it was the number that I’m referring to Brad, and when you look at that blend, where you end up with is, we are looking at the combination of what gets – what’s in revenue, what’s in deferred revenue, and as we book longer term deals – so, for example, our cloud-based services, we look at the total contract value or commitment over a three-year period. So for example we give credit for somebody who closes a three year dot cloud deal and that’s three years worth of credit. And so it’s important to note that some of the bookings are not going to show up in revenue and deferred revenue. They are actually going to show up in years two and three. That’s also the case for MSS and a couple of our other businesses. So it’s the total activity because what we’re trying to do is get customers to commit to our longer subscription – or to longer subscriptions with us, and that’s been our practice over the years.
Brad Zelnick – Macquarie: And if I could follow up James how did Consumer bookings in the fourth quarter measure up against what you’d expected when you originally gave fourth quarter guidance? And can you maybe compare your Consumer bookings result versus enterprise bookings in terms of how much each deviated from plan?
James Beer – EVP and CFO: Well the enterprise bookings are obviously going to be very much back-end loaded right towards the last week or two of the quarter. And those enterprise bookings drive the volatility that we saw, the lower enterprise revenue that we saw driven by that mix shift away from traditional license to more subscription activity that we’ve been talking about. Now the Consumer side of the business has obviously a very different profile in terms of the way the bookings build during the quarter. It’s a much more linear approach throughout the quarter. So the Consumer business came in close to where we would have expected it to be. The enterprise business actually (beats) on the bookings but those bookings translated through into fewer recognized revenue dollars in period.