First half performance in line with the Board's expectations

LONDON, Aug. 9, 2022 /PRNewswire/ -- Avast plc (LSE: AVST), together with its subsidiaries ('Avast', 'the Group', 'Avast Group', or 'the Company'), a leading global cybersecurity provider, announces its results for the six-months ended 30 June 2022.

In the first half of 2022 the Group delivered mid-single digit organic billings growth¹ with a good level of profitability.

RECOMMENDED MERGER OF AVAST PLC WITH NORTONLIFELOCK INC. ('NORTON')

• On 3 August 2022, the CMA published its provisional findings from its Phase 2 investigation into the Merger and provisionally concluded that the Merger is not expected to give rise to a substantial lessening of competition in the UK. Avast continues to work with Norton and the CMA to enable the CMA's final report to be issued as soon as practicable

FINANCIAL HIGHLIGHTS

• Billings at $483.7m up 0.2% at actual rates, or 6.9% on an organic basis
• Adjusted Revenue² at $472.0m up 0.2% at actual rates, or 2.7% on an organic basis
• Consumer Direct Revenue at $407.1m up 1.4% at actual rates, or 2.7% on an organic basis
• Adjusted EBITDA down 7.6% to $249.7m; Adjusted EBITDA margin³ at 52.9%, down 4.4 ppts, primarily driven by investment into Digital Trust Services ('DTS')
• Strong cash generation, with Unlevered Free Cash Flow of $217.1m (cash conversion⁴ of 83%) and Levered Free Cash Flow of $204.3m
• Adjusted fully diluted earnings per share ('EPS') down 14.1% to $0.17 (versus $0.20 at HY 2021)
• The second interim dividend in respect of 2021 paid in February 2022 of 11.2 cents per share; total dividend for 2021 of 16.0 cents per share. Declared conditional interim dividend in respect of 2022 payable in August 2022 of 4.8 cents per share
• Resilient balance sheet with $378.0m of cash and available liquidity⁵
• Leverage remains low, Net debt / LTM ('last twelve months') Adjusted EBITDA at 1.3x at half year
• On a statutory basis, Revenue down 0.2% due to disposal of Family Safety mobile business in 2021, Operating profit down $(54.2)m from $226.7m to $172.6m driven by higher exceptional costs of $25.3m and higher other costs of $27.8m, fully diluted EPS at $0.13 (versus $0.20 at HY 2021)

OPERATIONAL AND STRATEGIC UPDATES

Consumer Direct KPIs in the half reflect challenging global and competitive environment offset by Avast initiatives

• Average Products Per Customer⁶ increased 1.2% to 1.45
• Average Revenue Per Customer⁷ was up 2.2% to $50.54
• Number of Customers⁸ was down 4.4% to 15.64m

Key product initiatives in the first half of 2022

• Avast One saw the introduction of features that support making Privacy easy (Private Mode, Smart VPN, VPN Kill Switch) and provide advanced Scam Protection (Email Guardian, Scam Protection for Android), as well as Online Safety Score, to drive customer engagement
• SecureLine VPN saw the release of a beta version with the WireGuard VPN protocol, considered by many experts to be the fastest and most secure VPN protocol available
• In terms of privacy, the team is experimenting with intelligent "scan lander" web pages that quickly show users a variety of privacy-related threats they may be vulnerable to
• On SMB, Avast introduced three new product suites: Essential, Premium, and Ultimate Business Security, to simplify the buying experience, and launched USB Protection, a new service that safeguards company data by preventing employees from using unauthorised removable storage devices

Awards

• In a study performed by AV-Comparatives, Avast Secure Browser has been ranked first with a 97% block rate (a two percent increase on the previous test in January)
• Avast Business Antivirus Pro Plus was ranked 'Top Product' by AV-TEST, earning top scores on protection, performance, and usability

In March, Avast announced the withdrawal of the availability of all products from Russia and Belarus and suspended all marketing and sales operations in these countries

Avast completed the acquisition of SecureKey in April, a global provider of digital identity and authentication solutions. SecureKey complements Evernym's self-sovereign identity solutions and together they represent the foundation of Avast's DTS business

Statutory Results:

RECOMMENDED MERGER OF AVAST PLC WITH NORTONLIFELOCK INC.

On 10 August 2021, the Boards of NortonLifeLock, Inc. ("Norton") and the Company reached agreement on the terms of a recommended merger of the Company with Norton, in the form of a recommended offer by Nitro Bidco Limited, a wholly owned subsidiary of Norton, for the entire issued and to be issued ordinary share capital of the Company (the "Merger"). It is intended that the Merger will be affected by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act 2006. Further details relating to the offer by Norton is set out in the announcement made by Norton on 11 August 2021 pursuant to Rule 2.7 of the City Code on Takeovers and Mergers ("Code") and the scheme document published by the Company on 28 October 2021.

On 3 August 2022, the UK's Competition and Markets Authority (the "CMA") published its provisional findings that the Merger was not expected to give rise to a substantial lessening of competition in the UK and   Norton and Avast published their response to the CMA's findings. As stated in that announcement, Norton intends to continue to work with the CMA and with Avast to enable the CMA's final report to be issued as soon as practicable. The statutory deadline for publication of the CMA's final report is 8 September 2022 (unless extended).

PUBLICATION

A copy of the half year report will shortly be available on the Company website at https://investors.avast.com.

ENQUIRIES

Investors and analysts:
Paul Carter and Anca Timpescu, Investor Relations
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 including discontinued sales in Russia and Belarus. It excludes current period billings and revenue of acquisitions until the first anniversary of their consolidation.
² Adjusted Revenue represents the Group's reported revenue adjusted for the Deferred Revenue Haircut Reversal. Under IFRS 3, Business Combinations, an acquirer must recognise assets acquired and liabilities assumed at fair value as of the acquisition date. The process of determining the fair value of deferred revenues acquired often results in a significant downward adjustment to the target's book value of deferred revenues. The reversal of the downward adjustment to the book value of deferred revenues of companies the Group has acquired during the periods under review is referred to as the "Deferred Revenue Haircut Reversal".
³ Adjusted EBITDA margin percentage is defined as Adjusted EBITDA divided by Adjusted Revenue.
⁴ Cash conversion is defined as Unlevered Free Cash Flow divided by Adjusted Cash EBITDA.
⁵ Total available liquidity includes cash and cash equivalents balance as at 30 June 2022 of $338.0m and revolving credit facility of $40m (not drawn at 30 June 2022).
⁶ APPC defined as the Consumer Direct simple average valid licences or subscriptions for the period of the last twelve months divided by the simple average number of Customers during the same period.
⁷ ARPC defined as the Consumer Direct revenue for the period of the last twelve months divided by the simple average number of Customers during the same period.
⁸ Users who have at least one valid paid Consumer Direct subscription (or licence) at the end of the period.
⁹ Growth rate excluding currency impact calculated by restating 2022 actual to 2021 FX rates (see "Principal exchange rates applied"). Deferred revenue is translated to USD at the date of invoice and is therefore excluded when calculating the impact of FX on revenue.
¹⁰ Growth figures exclude Discontinued Business, which includes toolbar-related search distribution business and the browser clean-up, which had previously been an important contributor to AVG's revenues, and the Google Chrome Distribution business. Together these businesses are referred to above as "Discontinued Business". 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. In H1 2022 the Group suspended its activities in Russia and Belarus in response to the military conflict in Ukraine. These sales, which do not represent a discontinued operation as defined by IFRS 5, are also excluded from the growth figures. These sales didn't represent a separate segment or operation of the Group.
¹¹ On April 16, 2021 the Group sold a portfolio of mobile parental controls services including location features, content filtering and screen time management to Smith Micro Software Inc ('Family Safety mobile business'). Billings and revenue until close of the transaction have been excluded in the calculation of organic growth from the baseline.

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SOURCE Avast Software, Inc.