Defining the Future of Cybersecurity August 2016 The New
Defining the Future of CybersecurityAugust 2016
The New
FORWARD LOOKING STATEMENTSThis presentation contains statements which may be considered forward-looking within the meaning of the U.S. federal securities laws, including statements regarding our projected financial and business results, the expected benefits to Symantec, its customers, stockholders and investors from completing the acquisition of Blue Coat, Inc. (“Blue Coat”), including without limitation expected growth, cross-sell and upsell opportunities, earnings accretion and cost savings, statements regarding the share repurchase program and cost reduction efforts, statements regarding Symantec’s planned capital return program, and statements regarding leadership changes in connection with the acquisition and investments and the potential benefits to be derived therefrom.
These statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from results expressed or implied in this presentation. Such risk factors include those related to: the potential impact on the businesses of Blue Coat and Symantec due to uncertainties in connection with the acquisition; the retention of employees of Blue Coat and the ability of Symantec to successfully integrate Blue Coat and to achieve expected benefits; general economic conditions; fluctuations and volatility in Symantec’s stock price; the ability of Symantec to successfully execute strategic plans; the ability to maintain customer and partner relationships; fluctuations in tax rates and currency exchange rates; the timing and market acceptance of new product releases and upgrades; and the successful development of new products,and the degree to which these products and businesses gain market acceptance. Actual results may differ materially from thosecontained in the forward-looking statements in this press release. Symantec assumes no obligation, and do not intend, to update these forward-looking statements as a result of future events or developments. Additional information concerning these and other risks factors is contained in the Risk Factors section of Symantec’s Form 10-K for the year ended April 1, 2016.
Any information regarding pre-release of Symantec offerings, future updates or other planned modifications is subject to ongoingevaluation by Symantec and therefore subject to change. This information is provided without warranty of any kind, express orimplied. Customers who purchase Symantec offerings should make their purchase decision based upon features that are currentlyavailable.
We assume no obligation to update any forward‐looking information contained in this presentation.
Threat Landscape Is More Challenging Than Ever
Targeted Attacks on the Rise
Large enterprises have a 38% change of being
targeted for spear phishing
Average attackgoes undetected
for170 days
Just 31% of breaches are found
by the victim organization – the rest are found by a
third party, law enforcement, etc.
Data Is The New Perimeter
With 65% of workloads in the cloud (Amazon Web Services,
Salesforce, Box, Office 365), more of your data is at risk
Data is increasingly accessed from
outside the firewall
Consumers Need Reassurance They Are Safe Online
Online customers don’t know if they can
trust e-commerce websites
Don’t have visibility into attacks on brand
Never Have Enough Time or Resources
Organizations don’t know how they are doing or where to
focus – 96% of alerts never reviewed
Hard to hire the right security talent
182Mweb attacks blocked last
year
Discovered
430 millionnew unique pieces
of malware last year
12,000+Cloud
applications discovered and
protected
Innovation for the Cloud Generation:Protecting Against Advanced Threats – Global Intelligence Network
175MConsumer and
Enterprise endpoints protected
9 global threat response centers with
3000 Researchers and Engineers
2 Billionemails scanned per
day
1 Billionpreviously unseen
web requests scanned daily
Cloud Global
Intelligence Sourced
From:
100Msocial
engineering scams blocked
last year
1Bmalicious emails
stopped last year
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Defining the Future of Cyber Security
Executing Strategy Focused on Cloud Generation Security
Return to Sustainable Organic Top-line Growth with Significantly Improved Profitability
$550 million in Cost Efficiencies and Synergies by the End of Fiscal 2018
Continue to Efficiently Allocate Shareholder Capital
Protecting Consumers, Businesses and Governments
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THREATPROTECTIONSOLUTIONS
INFORMATIONPROTECTIONSOLUTIONS
SOC / CYBERSECURITYSERVICES
i
WEBSITE SECURITYCONSUMERSECURITY
Enterprise SecurityConsumer Security
• Best-in-industry protection against
viruses, malware, phishing and
ransomware
• Stay ahead of advanced threats
• Secure sensitive information and critical
documents – on premise or in the cloud
• Raise the bar with our integrated services
• Promote customer confidence with superior
encryption and code signing
Symantec Enterprise Security Product Strategy
7
Symantec Enterprise Security Group Product Portfolio
Adds scale leader at critical Web
(SWG) control point
Provides additional platform to up-sell
combined portfolio of add on services
Endpoint Protection
Datacenter Protection
Secure Email Gateway
ATP (Endpoint & Email)
Content & Malware Analysis
Threat protection
Secure Web Gateway
SSL Visibility
ATP (Network)
Content & Malware Analysis
+
DLP (Cloud & On premise)
Encryption & Key Management
Managed PKI Service
VIP Access Manager
Information protection
Cloud Access Security Broker (CASB)
Encryption & Tokenization
+
Risk Analysis
Threat Intelligence
Managed Security Services
Incident Response
Security Simulation
Analytics and SOC services
Network Visibility & Forensics
Threat Intelligence
+
Fortifies leading position in DLP
Extends protection to information held in cloud applications Positions
Shield to capture cloud growth
Global web/network intelligence
enriches real time threat intel, enables
richer analytics, and provides deeper
integration for secure outcomes
Sy
ma
nte
cB
lue
Co
at
A Portfolio to Deliver Cloud Generation SecurityPositioned for a Continued Future of Industry Leadership
Endpoint
Security
Data Leakage
PreventionServer
Security
User
Authentication
SecurityATP
Network
Forensics
Web
Security
Cloud
Security
Encrypted Traffic
Management
Cloud Generation Security
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Protection from
Advanced Threats
Securing a Mobile
Workforce
Ensuring Safe
Cloud Usage
Cloud Generation Security
Headquarters
Data Center
Regional
Office
Users
Innovation for the Cloud Generation:Protection from Advanced Threats
PROTECTION FROM ADVANCED THREATS
PROTECT AND MANAGE ENDPOINTS AND DEVICES
• Proactively block known and unknown threats with machine learning.
SECURE DATACENTER ENVIRONMENTS
• Protect servers, data repositories, and ensure compliance across physical,
virtual and cloud-based workloads
PROTECT WEB & EMAIL
• Inbound and outbound web and email security, with protection against
targeted attacks, spear phishing, advanced malware, spam and bulk mail
MANAGING ENCRYPTION RESPONSIBLY
• Leveraging policy to responsibly decrypt and feed security controls for visibility
DISCOVER AND REMEDIATE• Leverage combined intelligence to automatically remediate impacted assets
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Headquarters
Data Center
Regional
Office
Users
Mobile/BYOD/IoT Endpoints
SECURING A MOBILE WORKFORCE
FOLLOW AND PROTECT USERS
• Symantec Intelligent Endpoint + Blue
Coat Cloud Gateway protect users
anywhere they go
GAIN CONTROL AND VISIBILITY
• Leverage cloud-based gateway to
perform endpoint protection for non-
traditional devices
Innovation for the Cloud Generation: Securing a Mobile Workforce
Mobile/BYOD/IoT Endpoints
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Headquarters
Data Center
Regional
Office
Users
ENSURING SAFE CLOUD USAGE
PROTECT INFORMATION
• Inspect and classify sensitive content
• Protect content before it leaves organizational control
• Encrypt and tokenize content as it interacts with cloud applications and devices
MANAGE CLOUD APPLICATION USAGE
• Consolidate security control and visibility over sanctioned cloud applications
• Gain visibility into shadow IT computing usage
Innovation for the Cloud Generation: Ensuring Safe Cloud Usage
SSL
Mobile/BYOD/IoT Endpoints
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Headquarters
Data Center
Regional
Office
Traditional
Security Stack
Expanding Use of Encryption Creates Blind Spots
Traditional Security Stack Has Lost Significant Visibility As Resources Go
Direct-to-Net
Cloud Applications Causing Organizations to Lose Control Over
Their Resources
Rapidly Growing Landscape of Unprotected Devices
Users
Cloud Applications And Services
The Cloud Generation Security ChallengeA Shifting Expanse of Blind Spots
Go-To-Market Opportunity
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Symantec + Blue Coat
Fortune 500
Fortune 2000
Beyond Fortune 2000
Scale Cloud Delivery across Symantec customer base Increase wallet share among the top 1000 customers Cross-sell Blue Coat web security beyond Fortune 1000 Highly complimentary Fortune 500 customer relationships
370,000+ customers 15,000+ customers
The Blue Coat Evolution
Strategic, Operational, Financial
Product Lines:
› Web Gateway
› Performance
Financial Performance:
› Revenue: $487mm
› Non-GAAP Operating Margin: ~20%
(circa FY’11)
Ticker: NASDAQ: BCSI
(Today)
Go To Market: Refocused partner ecosystem and direct sales force (+50%
since FY’12 to ~600 headcount)
Notable Tuck-In Acquisitions: Solera, Norman Shark, Netronome, Perspecsys, Elastica
Financial Performance:
• FY16 Adjusted Net Revenue: $755mm
Security Platform Comprised of:
• Web Gateway
• Cloud Delivered Gateway
• Content Analysis System
• Performance
• Incident Response & Analytics
• Web Application Firewall
• Encrypted Traffic Management
• Advanced Threat Prevention
• CASB
• Cloud Data ProtectionProduct Lines:
• Web Gateway
• Performance
Financial Performance:
• Revenue: $487mm
Note: Financials presented are Non-GAAP 15
Track Record of Achievement (April 30 FYE, $mm)
16
$275 $320
$368$436
$643$755
FY15 FY16
Product Service & Subscription
Adjusted Operating Income
Adjusted Net Revenue Adjusted EBITDA
Cash Flows3
Note: Financials presented are Non-GAAP unless noted otherwise below1 Includes litigation costs, retention costs, debt fees and debt extinguishment & refinancing costs2 Includes litigation costs, retention costs and debt fees3 Represents GAAP cash flow from operations4 Represents GAAP interest expense
17%growth
$170 $163
$178$202
FY15 FY16
$187 $179
$196$223
FY15 FY16
$8
$103Interest expense4
$95
$135
FY15 FY16
Adjustments1
Adjustments2
$39
$44$9
$66
Significantly Enhanced Financial Model
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Return to Growth:
Business Mix:
Profitability: Substantial improvement in
Enterprise Security profitability
62% Enterprise Security with $2.7 billion revenue38% Consumer Security with $1.7 billion revenue
Platform for sustainable
growth
Expect Fiscal 2018 EPS of $1.70 to $1.80
Note: Financials presented are Non-GAAP
FY16 1Q17
Consumer Security
Revenue $1,670 $403
% Y/Y (CC) (9%) (8%)
Operating Margin 55% 56%
Enterprise Security
Revenue $1,930 $481
% Y/Y (CC) (2%) (1%)
Operating Margin (5%) 6%
Total Revenue $3,600 $884
% Y/Y (CC) (5%) (4%)
Non-GAAP Operating Margin 28.5% 28.6%
Historical Symantec
SSL 101
Symantec Website Security
An SSL Certificate is:
• A server-based product
• Enables encryption of data in transit
• And provides validation of the certificate holder’s identity
Inspires:
• Assurance of safety and security
• Trust and confidence to transact
Creating:
• Site stickiness
• Business uplift
Website Security Market
Symantec
Offerings
SSLCertificates
Domain Validated
Certificates
Organization Validated Certificates
Extended Validated
Certificates
SSL Discovery and
Certificate Lifecycle Automation
Code signing
OEM
Offerings
Web Application Firewall (WAF)
Distributed denial of service (DDOS)
DifferentiationSymantec is the Leader
90% of Fortune 500 companies are secured by Symantec SSL/TLS
Symantec issues 7 out of every 10 code signing certificates globally
90%
Norton™ Secured Seal is the most recognized trust mark on the Internet
80% of the 500 largest ecommerce sites in North America are secured by Symantec SSL/TLS
96% of the world’s 100 largest financial institutions are secured by Symantec SSL/TLS
80%
7/1096%
Most Comprehensive Offerings and Solutions
Orientation
Fastest Performance in
Industry with Scale
World Class and Secure Service
Availability
Best Root
Ubiquity
Global Support
Symantec Website Security
Symantec Website Security: ENCRYPTION EVERYWHERE
Focus on our unique scale & operational viability, our breadth of offerings enabling unparalleled partner upsell opportunities, and customized marketing support to drive
partner growth
Shift the internet to encryption by default… move from
today’s meager 3% encryption to 100%
Shifting to upsell modelAccelerate market share expansion for SSL/TLS
certificates
Rapidly Expand Volume
Drive Double Digit Growth
Secure the World’s Traffic
Norton Growth Drivers
Benefit from
modest PC
security
market growth
Increasing
threat activity
drives
new users
Additional
services –
WiFi protection and
Identity Theft
Protection
Well-positioned
for growth in the
Consumer IoT
market
Norton Well-Positioned in the Consumer Security Market
Unrivaled Protection
• 63M devices, 4M SMBs, 11M mobile devices protected
• 2.4T attacks blocked, 600M searches protected each year
Leveraging Intelligence of Combined Enterprise &
Consumer Network
• 175M endpoints, 57M attack sensors, 157 countries
Premium Brand
• 99% aided awareness in US
• Best-in-class unaided awareness in all top markets
Technology Leadership
• Most awards for performance and innovation
• 37x PCMag Editors’ Choice winner
$5.1B
Total Market Size
CY15 CY18
CAGR
+2.4%
WW Consumer Security Norton Competitive Advantage
$5.4B
Source: IDC and Company data
Norton Security - Award Winning Protection
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Intrusion Prevention Browser Protection
Smart Firewall
Antivirus Engine AutoProtect Malheur
Domain/IP Reputation File Reputation
SONARBehavioral Signatures
Boot to a clean OSPower Eraser
Proactive Exploit Prevention
File
SystemHardening
Network
Reputation
Behavioral
Repair
Layered Security Approach
PC Magazine Editors Choice
#1 of 18 Products(up from #12 in 2014)
PC, Mac & Mobile Protection Leadership,
Mobile Innovation Award
Ranked #1 in Key Magazine Reviews
Topping Third Party Reviews
AAA rating each quarter
Capital Structure and Financing
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$billion Post-Closing
Cash $5.6
Existing debt 2.75
New debt 2.80
Convertible debt 1.75
Net debt $1.7
Amounts in $MM except % Coupon Maturity Principal Balance ($)
Revolver L+150 5/2021 0
Term Loan A-1 L+150 5/2019 1,000
2017 Notes 2.75% 6/2017 600
2020 Notes 4.20% 9/2020 750
2021 Convertible Note (SLP) 2.50% 4/2021 500
2022 Notes 3.95% 6/2022 400
Term Loan A-2 L+150 8/2019 800
Term Loan A-3 L+150 8/2019 200
Term Loan A-5 L+175 8/2021 1,800
2021 Convertible Note (SLP/Bain) 2.00% 8/2021 1,250
Total / Wtd. Avg. 2.53% 7,300
Debt Schedule
Use of Non-GAAP Financial Information
Our results of operations have undergone significant change due to the impact of litigation accruals, discontinued operations including the gain on the sale of Veritas, stock-based compensation, restructuring, transition and separation matters, charges related to the amortization of intangible assets, and certain other income and expense items that management considers unrelated to the Company’s core operations. The results of operations of Blue Coat have undergone significant change due to the impact of purchase accounting on revenue from prior acquisitions, stock-based compensation, restructuring, transition and integration matters, charges related to the amortization of intangible assets, and certain other income and expense items that management considers unrelated to the Company’s core operations. To help our readers understand our past financial performance and our future results, we supplement the financial results that we provide in accordance with generally accepted accounting principles, or GAAP, with non-GAAP financial measures. The method we use to produce non-GAAP results is not computed according to GAAP and may differ from the methods used by other companies. Non-GAAP financial measures are supplemental, should not be considered a substitute for financial information presented in accordance with GAAP and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management team uses these non-GAAP financial measures in assessing Symantec’s operating results, as well as when planning, forecasting and analyzing future periods. Investors are encouraged to review the reconciliation of our non-GAAP financial measures to the comparable GAAP results, which is attached to our press release and which can be found, along with other financial information, on the investor relations page of our website at: http://www.symantec.com/invest.
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26
GAAP RESULTS RECONCILED TO NON-GAAP RESULTS (1)
(Dollars in thousands, unaudited)
Year Ended Year Ended
April 30, 2016 April 30, 2015
Non-GAAP EBITDA
GAAP net loss $ (289,081) $ (15,430)
Plus:
Impact of purchase accounting on net revenue 157,037 11,601
Amortization of intangible assets and purchased technology 165,326 77,006
Acquisition write-up of acquired inventory sold 29,210 -
Depreciation expense 20,438 18,440
Stock-based compensation expense 22,565 2,696
Restructuring and other charges 2,857 1,130
Acquisition fair value adjustments to earn-outs (970) -
Acquisition transaction costs 30,417 1,223
Acquisition integration, transition and other 3,537 5,008
Financial sponsor fees 5,839 3,545
Interest expense, net 103,228 66,396
Income tax provision (benefit) (71,139) 15,104
Adjusted EBITDA $ 179,264 $ 186,719
Adjusted EBITDA % of non-GAAP revenue 24% 29%
(1) For more information about the non-GAAP metrics in this presentation, please see the Appendix to the Press Release that can be found on the investor relations page of our website at: http://www.symantec.com/invest.
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GAAP RESULTS RECONCILED TO NON-GAAP RESULTS (1)
Fiscal Year Ended April 1, 2016 (2)
(Dollars in millions, unaudited)
Non-GAAP pro forma net revenues
GAAP Adj (3) Non-GAAP
Symantec Enterprise Security net revenues $ 1,930 $ - $ 1,930
Blue Coat net revenues 598 157 755
Total pro forma combined Enterprise Security net revenues 2,528 157 2,685
Consumer Security net revenues 1,670 - 1,670
Total pro forma combined net revenues $ 4,198 $ 157 $ 4,355
Enterprise Security as % of total pro forma combined net revenues 60% 2% 62%
(1)For more information about the non-GAAP metrics in this presentation, please see the Appendix to the Press Release that
can be found on the investor relations page of our website at: http://www.symantec.com/invest.
(2) Blue Coat's fiscal year end is within 93 days of Symantec's fiscal year end, therefore Blue Coat's net revenues from its fiscalyear ended April 30, 2016 is combined with Symantec net revenues from its fiscal year ended April 1, 2016.
(3) Adjustment for impact of purchase accounting on net revenues.