Avast PLC Full Year Results for the Year Ended 31 December 2019
Avast plc, together with its subsidiaries (‘Avast’, ‘the Group’ or ‘the Company’), a leading global cybersecurity provider, announces its results for the year ended 31 December 2019.
Ondrej Vlcek, Chief Executive of Avast, said:
“I’m pleased to report another year of good performance for Avast in 2019, with results in line with the Board‘s expectations. Group Adjusted Revenue was $873.1m, with organic growth of 9.1%1, driven by double-digit growth in our Consumer Direct Desktop business. We also sustained a high level of profitability with Adjusted EBITDA margin2 at 55.3%.”
“The core of the Avast business and our fundamental strengths remain unchanged. Our focus on cross-sell and upsell, our localisation strategy, and new product releases continue to drive good growth. There is an exciting pipeline of product launches for the year ahead. We continue to expect healthy growth in 2020 and remain confident in the long-term prospects for the business.”
“For the full year 2020 we expect Group mid-single digit organic revenue growth, and a stable EBITDA margin percentage.”
- Strong overall performance in line with expectations
- Adjusted Billings at $911.0m up 5.7% at actual rates, with organic growth of 10.2%
- Adjusted Revenue at $873.1m up 5.6% at actual rates, with organic growth of 9.1%
- Consumer Direct Desktop Adjusted Revenue at $632.9m, up 9.1% at actual rates, with organic growth of 10.7%
- Adjusted EBITDA up 7.9% to $483.0m; Adjusted EBITDA margin at 55.3%, up 119bps
- Adjusted fully diluted earnings per share (‘EPS’) up 14.1% to $0.32 (versus $0.28 at YE 2018)
- Proposed final dividend payable in June 2020 of 10.3 cents per share; total dividend for the year of 14.7 cents per share, up 8.1%3
- Continued strong cash generation with Unlevered Free Cash Flow up 7.9% to $424.6m and Levered Free Cash Flow up 14.0% to $370.4m
- Net debt / LTM (‘last twelve months’) Adjusted EBITDA at 1.8x at year end
- On a statutory basis, Revenue up from $808.3m to $871.1m, Operating profit up from $248.3m to $344.6m, fully diluted EPS at $0.24.
OPERATIONAL AND STRATEGIC HIGHLIGHTS
- Customer retention rates on Consumer Direct Desktop have increased to 67%, driven by lower churn in paid anti-virus and CCleaner products, and APPC growth. Desktop operating KPIs tracked positively, with customers4 up 3.5% to 12.62m, APPC5 up 4.2% to 1.45 and ARPC6 up 3.6% to $51.02
- Strong growth in the Desktop business was driven from the cross-selling of Privacy products such as VPN and AntiTrack, and Performance products such as Cleanup and Driver Updater
- There has been continued expansion of multi-device subscriptions, with Consumer Desktop an important channel for transactions of mobile-enabled products
- Customer numbers and penetration has risen in both established markets such as the US, and new target countries, including an increase in customer numbers by 19% in South East Asia and 13% in Central and Eastern Europe
- Avast announced the termination of the provision of data to Jumpshot from January 2020, aligning our customer offering to the company’s core values of privacy and protection.
|($’m)||FY 2019||FY 2018||Change %||Change % (excluding FX) 7|
|Disposal Managed Workplace (SMB) 8||0.0||10.5||n/a||n/a|
|Adjusted Billings excl. Acquisitions, Disposals and Discontinued business||900.7||836.2||7.7||10.2|
|($’m)||FY 2019||FY 2018||Change %||Change % (excluding FX)|
|Disposal Managed Workplace (SMB)||0.0||10.5||n/a||n/a|
|Adjusted Revenue excl. Acquisitions, Disposals and Discontinued business||862.8||801.0||7.7||9.1|
|($’m)||FY 2019||FY 2018||Change %|
|Adjusted EBITDA Margin %||55.3||54.1||1.2 ppts|
|Adjusted Net Income||322.3||270.8||19.0|
|Net Debt 10||884.5||1,138.2||(22.3)|
|($’m)||FY 2019||FY 2018||Change %11|
|Net Cash Flows from operating activities||399.1||376.0||6.1|
PUBLICATION OF ANNUAL REPORT
The Company published its Annual Report and Accounts 2019. The document is be available to view on the Company website at https://investors.avast.com and is also being submitted to the National Storage Mechanism for inspection at www.morningstar.co.uk/uk/nsm.
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.
Throughout the Full 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 Users who have at least one valid paid Consumer Direct Desktop subscription (or licence) at the end of the period.
5 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.
6 ARPC defined as the Consumer Direct Desktop revenue for the financial period divided by the simple average number of Customers during the same period.
7 Growth rate excluding currency impact calculated by restating 2019 actual to 2018 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.
8 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.
9 As the company is exiting its toolbar-related search distribution business, which had previously been an important contributor to AVG’s revenues (referred to above and throughout the report, with the Group’s browser clean-up business, as ‘Discontinued Business’), the growth figures exclude 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 has not been disposed of but rather it is being continuously scaled down and is considered to be neither a separate major line of business, nor geographical area of operations.
10 The Group applied the IFRS 16 standard as of 1 January 2019 using the modified retrospective approach and did not restate comparative amounts for the year prior to first adoption. Net Debt as of 31 December 2019 includes the balance of IFRS 16 lease liabilities. No lease liabilities are included in the Net Debt as of 31 December 2018. Net Debt as of 31 December 2018 adjusted for opening balance of IFRS 16 lease liabilities would be $1,209.9m.
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