TIDMAVST
RNS Number : 8069J
Avast PLC
16 April 2020
16 April 2020
First Quarter Trading and Covid-19 Update
Avast plc, together with its subsidiaries ('Avast' or 'the
Group'), a leading global cybersecurity provider, issues the
following scheduled trading update for the first quarter of its
current financial year, comprising the period from 1 January 2020
to 31 March 2020.
Summary
-- Management has identified four priorities in light of the
Covid-19 outbreak:
- Protecting employee health and wellbeing;
- Providing continued high levels of user and customer support
and engagement;
- Maintaining financial strength and discipline, with the
liquidity position and capital structure well positioned
for an extended period of uncertainty; and
- Positioning the business for long-term success with continued
investment in future growth
-- Group revenue performance in Q1 in line with expectations.
Install, uninstall and retention rates continued to trend
positively
-- Current FY2020 revenue guidance remains in place
In the light of the escalation in the Covid-19 outbreak, the
Group's focus has been on ensuring the health and safety of its
employees, together with supporting customers and partners. Avast
offices worldwide were closed as a preventative measure on 16
March. Employees are fully equipped to work from home, and Avast's
products and services remain unaffected, helping keep people safe
and private online.
Current trading and outlook
For the first quarter, Adjusted Revenue of $214.6m was up 6.5%
on an organic basis(1) , and 1.3% at actual rates. Adjusted EBITDA
increased 3.1% to $121.2m, resulting in an Adjusted EBITDA
margin(2) of 56.5%.
Change %
Change (excluding
($'m) Q1 2020 Q1 2019 % FX) (3)
-------------------------------------------------------------------------- -------- -------- ------- -------------
Adjusted Revenue 214.6 211.8 1.3 1.5
Adjusted Revenue excl. Acquisitions, Disposals and Discontinued
Business(4,5) 213.1 200.4 6.4 6.5
-------------------------------------------------------------------------- -------- -------- ------- -------------
Due to an increase in working from home, there has been an
improvement in Desktop conversion rates and billings through the
latter part of the first quarter. Conversely, lower advertising
spend by certain sectors has impacted the performance of both Avast
Secure Browser and mobile advertising in the Indirect channel.
There have also been weaker trends in SMB and the mobile carrier
business, due to disruption to these partner channels. Due to the
relative strength and size of the Desktop channel, the net effect
has been positive on billings, with billings growth slightly ahead
of revenue at the Group level. With the situation evolving quickly,
and the duration of the Covid-19 crisis unpredictable, it is
difficult to quantify the impact in the months ahead. We therefore
maintain previous guidance for FY2020 of mid-single digit organic
revenue growth, while continuing to closely monitor market
conditions and the impact of the pandemic on our key markets.
Costs are being managed tightly, reflected in the slightly
higher first quarter margin, however the Group currently still
expects Adjusted EBITDA margin to be broadly flat for the full
year.
Post-period end
In early April, Avast extended the right to distribute Google
Chrome offers to users of Avast and AVG anti-virus, and CCleaner
through to March 31, 2021.
Balance sheet and liquidity
Avast has a strong and liquid balance sheet. At 31 March 2020,
the Group's net debt / LTM ("last twelve months") Adjusted EBITDA
per the banking covenant was 1.7x, in line with our expectations.
The Group's term loan facilities total $1,004.0m, maturing in
September 2023.
Annual debt service costs, comprising loan repayment and annual
interest expense obligations, total approximately $90m. The Group
has minimal working capital requirements, and capex requirements
remain low at approximately 2% of revenue. As such, the Board fully
expects the company to operate well within its covenants.
While continuing to manage cash and resources prudently, the
Group continues to invest in capabilities and skills for the
long-term, including recruitment in critical roles.
Dividend and AGM
The business model benefits from recurring subscription revenue
and generates significant levels of cash. At quarter-end, the Group
had $262.6m in cash on the balance sheet, having already returned
the net amount of $71m to Ascential in January. Liquidity is
further supported by the availability of an undrawn $40m Revolving
Credit Facility, maturing in September 2022.
The board currently retains its recommendation for the payment
of a final 2019 dividend of 10.3 cents per share, the equivalent of
$105m in total. The scheduled ex-dividend date is 21 May 2020 and
the scheduled payment date is 25 June 2020.
The company's AGM is scheduled for 21 May 2020. Webcast
facilities will be provided to enable shareholders to follow
proceedings. Further details are provided in the separate RNS
issued today ('Publication of Notice of 2020 Annual General
Meeting') and on the Company website at
https://investors.avast.com.
Conclusion
As a leading cybersecurity business, Avast has an important role
to play in protecting individuals and communities online at a time
of increased reliance on digital communications. With a flexible
online sales and distribution model, and a strong balance sheet,
the Group is well positioned to navigate this period. Nevertheless,
the management team continues to closely monitor the impact of this
unprecedented event on the business.
The company's next scheduled update to the market will be the
Half Year Report for the six months to 30 June 2020 on Wednesday 12
August 2020.
ENQUIRIES
Investors and analysts: Peter Russell, Director of IR
IR@avast.com
Media: Stephanie Kane, VP PR and Corporate Communications
mediarelations@avast.com
Lulu Bridges / Jos Simson
Tavistock
Tel: 020 7920 3150
Notes:
(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 excluding currency impact calculated by
restating 2020 actual to 2019 FX rates. Deferred revenue is
translated to USD at date of invoice and is therefore excluded when
calculating the impact of FX on revenue.
(4) As the company is exiting its toolbar-related search
distribution business, which had previously been an important
contributor to AVG's revenues and, separately, on 30 January 2020,
the Group decided to wind down the operation of its subsidiary
Jumpshot Inc. (all together, including the Group's browser clean-up
business, referred to above as "Discontinued Business"), the growth
figures exclude Discontinued Business, which is negligible in
2020.
(5) To reflect the underlying organic growth performance,
figures exclude the impact of the Managed Workplace disposal made
at the end of January 2019.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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