Prepared remarks
Good afternoon, everyone, thank you for joining us. My name is Tamia, and I will be your conference operator today. This call is being recorded. At this time, I would like to pass the call over to Jason Starr, Head of Investor Relations, for opening remarks.
Thank you, Tamia. Good afternoon. Welcome to Gen's First Quarter Fiscal Year 2025 Earnings Call. Joining me today are Vincent Pilette, CEO; and Natalie Derse, CFO. As a reminder, there will be a replay of this call posted on the Investor Relations website, along with our slides and press release. I'd like to remind everyone that during this call, all references to the financial metrics are non-GAAP, and all growth rates are year-over-year unless otherwise stated. A reconciliation of non-GAAP to GAAP measures is included in our press release and our earnings presentation, both of which are available on our IR website at investor.gendigital.com. We encourage investors to monitor this website as we routinely post investor-oriented information such as news and events and financial filings. Today's call contains statements regarding our business, financial performance, and operations, including the impact of our business and industry that may be considered forward-looking statements, and such statements involve risks and uncertainties that may cause actual results to differ materially from our current expectations.
Those statements are based on current beliefs, assumptions and expectations as of today's date, August 1, 2024. We undertake no obligation to update these statements as a result of new information or future events. For more information, please refer to the cautionary statements in our press release and the risk factors in our filings with the SEC, particularly our most recent reports on Form 10-K and Form 10-Q. And now I'll turn the call over to Vincent.
Thanks, Jason, and welcome, everyone, to our Q1 earnings call. We have started fiscal '25 on a good note with our operating KPIs supporting our long-term aspirations. We grew cyber safety bookings 4% in constant currency and reached a record direct customer count of 39.3 million, up 1.1 million year-over-year. Additionally, ARPU is up sequentially and year-over-year in constant currency and retention reached 78%, a Gen record supported by record level in LifeLock and Avast. Our consistent focus on execution resulted in another double-digit growth quarter for earnings per share at $0.53 in Q1, up 15% in constant currency. I'm proud of our team for delivering these results and for our continued focus on evolving cyber safety for consumers in a very dynamic threat landscape. Before Natalie walks you through the details of our results, I would like first to remind everyone about our strategic opportunity and the steady progress we are making to achieve our cyber safety mission.
Whether it is a biometric payment at the retail store or our personal performance data combined with recommendation algorithms to buy sportswear, it seems like not a day goes by where we don't do something digitally without sharing more personal information. While these experiences can be convenient, our growing digital life leads to the proliferation of sensitive personal information, which is difficult to properly safeguard as it is increasingly out of our control. We depend on our banks, governments, mobile providers, and retailers to protect our data. And yet, as we can all see by the ever-increasing number of data breaches in all industries, it is tremendously hard for them to do. In just the first half of 2024, we have seen more than 2,000 reported breaches per month across the globe. And those are just the reported breaches, not to mention the many that occur across very small businesses, local doctor offices, schools, and shops that also get access to our sensitive personal data.
Recent global breaches highlighted the growing threat of cyber attacks, which are often targeted at exploiting human vulnerabilities. In the aftermath of such events, there is a surge in impersonation scams, suspicious emails, and text messages designed to trick people into sharing personal information. The rapid development of generative AI has made it easier for criminals to create more personalized and believable scams, including deepfake clones. The potential scope of these threats is broadening, resulting in significant economic and reputational damages. It is clear to anyone paying attention that these threats are creating a dynamic threat landscape making consumers worldwide more vulnerable than ever to real threats to their privacy, identity, and financial assets. Even those who are careful and vigilant struggle to control where their personal data lives and have little visibility into how governments, companies, and small businesses protect their data, identities, and reputations, which I believe are among the most valuable assets.
I strongly believe that it is not a question of if your personal data will be compromised, if it hasn't occurred already, but when. That is why the team at Gen has met protecting your data and your digital identity as our life's work. It is our never-ending mission that we deliver through constant innovation. Today, we already have the most comprehensive product portfolio that meets consumer needs for security, identity, privacy, and reputation. Our flagship cyber safety membership offerings, Norton 360, Avast One, and Avira Prime, continue to gain traction and regularly receive industry recognition and awards for the way we protect against the merits of cyber threats. We don't just stop at delivering industry-leading technology to consumers. We know that providing our customers with best-in-class services sets us apart from our competitors. Solutions like LifeLock and ReputationDefender deliver personal live service to help protect and restore your identity and reputation in the event you become a victim.
By focusing on the customer journeys with us, both products have achieved top ratings, with LifeLock recognized as the best identity theft service in the marketplace and ReputationDefender with a near-perfect rating for reputation management. As the leader of the industry, we are constantly investing in innovation to counter potential threats and provide our customers with the best possible cyber safety protection. Yesterday, we launched Norton Ultra VPN, which offers more comprehensive online protection with three different plans catering to individuals, couples, and families. Not only does Ultra VPN provide the best online privacy, dark web monitoring, VPN protocol support, and worldwide content access, but it also offers protection against scams, viruses, malware, and ransomware, as well as a password manager and parental control. We believe it is the best and the next generation of VPN solutions, offering a modern and personalized approach to cyber safety and adds another entry door into total comprehensive cyber safety.
We're excited to bring Norton Ultra VPN to consumers. Not only is this a great product that meets customer needs, but it also represents the promise of all the hard integration work we put into bringing both companies' technology together under a new common architecture. Norton Ultra VPN is built on the new Gen stack, which helps us not only with the innovations and features we delivered but also with the speed with which we were able to bring it to market. In the future, as we take those capabilities and combine them with our ever-expanding AI tools, we currently see what we can deliver in terms of customer experience and ease of use. Over time, that will result in improved customer loyalty and greater engagement, leading to more value-added cross-sell and upsells. The last point I want to touch on today is that while most everyone has heard about cybercrime and cybersecurity, most people are not fully aware of the very real risk they are exposed to and often not adequately protected from.
At Gen, we are hard at work every day communicating, educating, and earning the trust of consumers around the world. Although we have a host of industry-leading brands that enable us to serve the needs of hundreds of millions of diverse customers across over 150 countries, we feel it is also our responsibility to constantly educate and inform people about cyber risks and their impact through initiatives such as our recent campaign. This campaign uses art and psychology to demonstrate the emotional impact of cybercrime and helps people take the right steps to proactively protect themselves online. This quarter, we also launched our personal data exposure scan by LifeLock, which is a comprehensive scan of millions of data points online, combined with our privacy monitoring and dark web algorithms. By simply entering an email address, individuals can obtain a free report card detailing all their supposedly private information that may actually be publicly available.
These tools are free to everyone and give consumers visibility to their digital footprint so they can better protect themselves. All these types of cyber safety awareness initiatives are beginning to pay off as we grew cyber safety bookings and revenue by 4% in Q1. We had strong momentum in the identity and privacy business lines with bookings up 6%, supported by double-digit new customer acquisition in that segment and accelerating privacy cross-sell growth. This success reflects the increasing consumer awareness of identity risks from recently reported breaches. Although the identity market remains mostly U.S.-based today, we continue to make steady traction in our efforts to expand identity protection globally, introducing Norton 360 Advance to eight markets in Europe, providing customers additional identity protection services such as dark web monitoring, social media monitoring, stolen wallet assistant, and ID restoration.
Despite the importance of comprehensive cyber safety, most consumers mistakenly believe it won't happen to them or still think that their digital lives are safe, essentially choosing to self-insure. Unfortunately, two-thirds of cyber safety customers have only basic security or just device security. But in today's user-centric, cloud-based digital world, information and identity risk transcend personal devices. We believe comprehensive cyber safety is paramount and yet still massively underpenetrated. With our technology portfolio, focus on innovation, trusted brands, and channel expansion, we are well-positioned to drive its adoption. This is a never-ending mission. In summary, we are pleased with our Q1 results and promising start to fiscal 2025. We are confident that our customer centricity, innovation, and disciplined execution will enable us to deliver on our goals not only for this year, but also on our plan to accelerate long-term profitable revenue growth to further increase shareholder value. With that, let me pass it on to Natalie to review our performance in detail.
Thank you, Vincent, and hello, everyone. For today's call, I will walk through our fiscal Q1 2025 results followed by our outlook for Q2 and full year fiscal 2025. I will focus on non-GAAP financials and year-over-year growth rates unless otherwise stated. Before I begin, I want to highlight that, as disclosed in today's presentation and our recent Form 8-K, we made a revision to our historical practice of when we recognize revenue for certain customers, changing from successful bill date to renewal date. The impact of the revision is immaterial; however, for comparative purposes, we have corrected for this in prior periods reported. Please refer to the supplemental information section of today's slide presentation available on our IR website as well as our Q1 Form 10-Q for more details. Now turning to Q1 results. Q1 was another quarter of solid execution with financial results at the midpoint of our guidance and reflects our 20th consecutive quarter of growth.
Q1 bookings were $913 million, up 3% in USD and 4% in constant currency. Cyber safety bookings, which exclude our legacy business lines, also grew 4% year-over-year in constant currency. Total Q1 revenue was $965 million, up 2% in USD and up 3% in constant currency. Cyber safety revenue grew 4% year-over-year in constant currency, driven by our privacy and identity business lines as well as continued cross-sell penetration into the Norton base. In the U.S., we also grew 4% with expanding demand for privacy and identity protection services, attracting new customers through direct and partner channels and scaling cross-sells with our existing customers. We also continued to further penetrate international markets with varying degrees of market maturity as we continue to seed new acquisitions and expand the reach of our cyber safety services. We will continue to execute on all levers at our disposal to drive broad-based growth in a profitable manner.
Direct revenue was $850 million, up 3% in constant currency, supported by improvements across our key performance metrics of direct customers, average revenue per consumer, and retention rate. Let me share some specifics. A key ingredient to our growth strategy is driving net new customers. In Q1, we expanded our customer base for the fourth consecutive quarter, increasing to 39.3 million, up 192,000 sequentially and up 1.1 million year-over-year. We continue to invest in a broad range of marketing channels to reach new audiences, generate more traffic to our sites, while optimizing conversion. We are acquiring new customers with healthy ROIs as we further penetrate international markets with our mobile offerings. Leveraging our brand trust and awareness, combined with our highly-rated award-winning product portfolio, we will continue to push through with our diverse set of acquisition channels to grow our customer base.
On monetization, our monthly direct ARPU was USD 7.23, up $0.01 sequentially and down $0.01 compared to last year's result. However, please note, this result absorbed $0.04 of negative FX headwinds year-over-year and $0.02 sequentially. Operationally, ARPU remained stable to slightly up across our customer cohorts by brand and market. As we grow our customer base, we have demonstrated the ability to further monetize through cross-sells and upsells. With the Norton base, cross-sell penetration has grown from 15% to 20% over the past year. We have leveraged best practices to offer the most suitable complementary products during the right moments of truth that will further protect customers and their growing digital needs. We also continue to refine our upsell playbook to guide our customers toward higher tier memberships with more comprehensive protection and exciting opportunities for growth as we look to the next few years.
The expanded value proposition provided to our customers is also reflected in the retention increases to date. In Q1, our direct retention rate was nearly 78%, improving year-over-year and progressing towards our goal of 80%. As we move through the Gen stack simplification, we see more opportunities to drive higher customer loyalty and increase lifetime value, leveraging better targeting capabilities to create more personalized customer experiences through their journey, in turn activating the growth flywheel as we've previously shared. Turning to our partner business, partner revenue was $101 million in Q1, up 4% year-over-year as reported and up 6% in constant currency. Our employee benefits channel pipeline is robust as organizations increasingly recognize the importance of protecting their workers from the identity and cyber risks they face. We continue to strengthen strategic partnerships with telcos, financial services, and insurance providers to expand our identity offerings, and we are also driving higher penetration of our private browsers and search partnerships.
Scaling our partner business to $0.5 billion in annual revenue is a key component of achieving our overall growth plan, and we are confident in the progress we're making. Rounding out our revenue, our legacy business lines contributed $14 million this quarter, down from $17 million in the prior year. As a reminder, we expect our legacy revenues to continue declining double digits year-over-year and represent less than 2% of our revenue. Turning to profitability, Q1 operating income was $564 million, up 4% year-over-year and up 5% in constant currency, translating to an operating margin of 58.4%. We continue to make disciplined investments in targeted growth opportunities to reach new customers through full funnel marketing efforts and expand our international presence. We're also solidifying our technology capabilities, including the new Gen Stack simplification to quickly adapt to ever-changing cyber threats and drive innovation through new offerings such as Norton Ultra VPN to add to our comprehensive cyber safety product portfolio.
Within our core, we will continue to drive efficiencies and productivity that can be reinvested into additional growth levers. Q1 net income was $335 million, up 11% year-over-year. Diluted EPS was $0.53 for the quarter, up 13% year-over-year and up 15% in constant currency. Interest expense related to our debt was $146 million. Our non-GAAP tax rate remains steady at 22%, and our ending share count was $627 million, down $16 million year-over-year, reflecting the impact of share repurchases. Turning to our balance sheet and cash flow, Q1 ending cash balance was $644 million. We are supported by over $2 billion of total liquidity, consisting of our ending Q1 cash balance and a $1.5 billion revolver. Q1 operating cash flow was $264 million, and free cash flow was $262 million, which included approximately $187 million of cash interest payments this quarter. As a reminder, earlier in Q1, we successfully repriced our existing Term Loan B, removing the credit spread adjustment and lowering the credit spread associated with it from 200 basis points over SOFR to 175 basis points.
As we see every year, we expect Q2 to be the lowest quarter of the year for operating cash flow given the concentration of tax payments that are due. Turning to capital allocation, we remain balanced with our capital deployment and are committed to returning 100% of excess free cash flow to shareholders. We voluntarily repaid $30 million of our term loan B as well as $58 million for our maturity schedule and are now 3.5x net levered. We also deployed $272 million for share repurchases this quarter, the equivalent of 11 million shares, as part of the expanded $3 billion buyback program approved by the Board in May of 2024. Since the start of fiscal year '23, we have remained committed to a balanced capital allocation strategy, paying down $2 billion worth of debt and deploying a total of $1.6 billion of share repurchases over that time period. We paid $82 million to shareholders in the form of our regular quarterly dividend of $0.125 per common share.
For Q2 fiscal 2025, the Board of Directors approved a regular quarterly cash dividend of $0.125 per common share to be paid on September 11, 2024, for all shareholders of record as of the close of business on August 19, 2024. With our strong cash flow generation, we will continue to balance debt paydown and opportunistic share buyback deployment to help achieve our goals of delivering EPS growth of 12% to 15% and driving net leverage below 3x EBITDA by fiscal year 2027. Now turning to our Q2 and fiscal '25 outlook. For Q2, we expect non-GAAP revenue in the range of $965 million to $975 million, translating to 3% to 4% growth in cyber safety, and Q2 non-GAAP EPS to be in the range of $0.53 to $0.55, up 13% to 17%. For fiscal year 2025, we are reaffirming our prior guidance. We expect full year revenue in the range of $3.89 billion to $3.93 billion, translating to 3% to 4% growth in cyber safety expressed in constant currency supported by expected cyber safety bookings growth of 3% to 5%.
We expect non-GAAP EPS to be in the range of $2.17 to $2.23 per share, representing an annual increase of 12% to 15% in constant currency. Please note that we expect continued FX headwinds to impact our reported revenue, primarily from the Japanese yen, which has depreciated over the last year. In summary, our Q1 results keep us on target for our 2025 plan, and we remain well positioned to achieve our longer-term goals. Our key performance indicators continue to trend in the right direction. We are executing our plan and our strategic growth framework provides us guide points along the journey. We look forward to reporting on our progress over the year. As always, thank you for your time today. I will now turn the call back to the operator to take your questions.
Questions and answers
The first question comes from Dan Bergstrom with RBC.
It’s Dan Bergstrom for Matt Hedberg. It was encouraging to see the improvement in retention this quarter. What initiatives are currently effective for you in terms of retention? Is there a way to view retention in light of the merger, perhaps identifying easy wins that could lead to incremental gains, or is it more of a consistent effort towards reaching the 80% target?
Yes. Thanks for your question. This is Vincent, and I'll take that answer. Just as a context for those who were not here 18 months ago when we merged with Avast, our retention rate on an aggregated basis for all the brands and the new Gen company was around 75%. We identified about 5 points overall improvement that would drive all the way to our target 80% retention rate for Jen. A big portion of that improvement was for Avast itself, which was around a 65% retention rate. We said we could bring that business to a 75% retention rate overall. Initially, yes, we had a few low-hanging fruit, as you remember. Norton LifeLock combined was at a retention rate closer to 85%. We had a lot of good practices around the customer journey, breaking it down by the different experiences that customers would have trying to achieve the best optimal output. We applied those expertise and practices to the entire portfolio and improved for the first 2 points from 75% to 77%.
We anticipated that the remaining improvement would be over the next few quarters, maybe the next couple of years, as we roll out the new Gen stack. So this quarter, we reached 78% with an Avast record retention rate of 72% and also improved the LifeLock retention rate to a record level. Here, you see two dynamics at play. The first is the rollout of the new Gen stack, which is more aligned to a high-engagement suite with in-app communications. That engagement and the ability to demonstrate value to customers have led to the improved retention rate. The second component is the work we've done and continue to do in breaking down the customer journey through our cyber safety cycles and providing the right value at the right time utilizing some of the AI and data analytics that we have built. We will continue to drive these two initiatives forward: the new Gen stack migration toward a suite approach, along with the buildup of new features and AI-enabled communications.
That's very impressive. And then you called out cross-sell a number of times in the prepared remarks, and it is one of those five drivers through Investor Day. How should we think about cross-sell in the context of maybe what you've accomplished so far using, let's say, Avast as a template this time? What could still be done here on Norton and LifeLock from a cross-sell perspective?
Yes. As we discussed six to eight months ago, one of the five drivers was to increase cross-sell, which essentially means moving customers who entered cyber safety from a point product to a broader comprehensive range of cyber safety, privacy, and some identity features. This quarter, we saw a strong cross-sell growth. Prior to this, our focus was on taking the products from the Avast portfolio—which were more point products—and cross-selling into the Norton base while leveraging their best practices to deliver the right messages at the right time. We have seen a trend of moving towards a more comprehensive cyber safety solution or a focus on privacy and identity. You'll continue to see us develop in this direction. There is certainly more room to grow in Norton, where we've made progress, but it's a multi-year roadmap, as you know. We have a lot of opportunities for upsell as well, which signifies migration towards the overall suite. Today, we're slightly above 40% in the total portfolio, and I believe we can reach the levels we attained with the Norton LifeLock portfolio, which was over 60%. Both cross-sell and upsell have made progress, particularly in identity and privacy, where our focus is. This cross-sell plus upsell is a significant opportunity moving forward.
The next question comes from Peter Levine with Evercore.
Natalie, just the first one for you is as you think about the guidance for the remainder of the year—what assumptions are baked into that? And then how do you think about the health of the consumer? Any color that you can give us around kind of what you're seeing from your pipeline in terms of just the overall health of the consumer into fiscal '25 versus where you were, call it, 6 to 12 months last year?
Yes. Thanks for the question. The guidance is very much in line with the plans we have articulated for you guys. The five for five is the structural growth framework, not that every one of those levers hits the same order of magnitude in the same quarters or years. But that is our strategic framework, and our business is aligned to that. In terms of consumer health, there have been a lot of movements and headlines lately, but what I can tell you is what I see within our business. We are growing customers, both from a gross adds perspective; we have just seen our highest Q1 gross adds in four years. From a cancellation perspective, we've seen the lowest number of cancels in the last three years. Whether that's consumer health or the awareness of the ever-increasing cyber safety threats we face, combined with our trusted brands, we see health and growth from a customer count perspective. In terms of ARPU, setting aside FX, we are consistently growing ARPU quarter-over-quarter, and we have seen increases in retention rates in the past year across our brands. So, from our measures of customers in those three key performance indicators, I see great health in our customer base.
And then if I can jump to the product side. Last quarter, we talked about the ask, I think it was asked on silver, the membership offering, and you talked about the newer Gen Stack initiative. Can you maybe just give us an update on how that's trending?
Yes. Regarding the rollout of the new Gen stack, we started at the end of the fiscal year. So far, we've had very positive results, and we rolled out to a few more countries. We are cautious, monitoring NPS after the first rollout, measuring engagement, and comparing that to prior experiences. It will take the full year to roll out the new Gen stack, and I can confidently say we are tracking well on that timeline. Overall, the feedback has been pretty positive.
The following comes from Tomer Zilberman with Bank of America Merrill Lynch.
Maybe just two quick questions for me. So this quarter, your sequential direct customer adds came in pretty strong, and you also talked about cross-sell penetration now nearing the target with your guidance—or excuse me, with your performance falling in line with your guidance. My question is, how did the difference between existing customers and new customers play into your expectations? Three months ago, was it in line? Or did you see one of the two performing better than expected?
Yes, I would say it's a balance across the metrics, and we've got different teams aligned to different segments of that five-to-five strategic growth framework. Regarding the performance of new versus existing customers, we are working hard to free up as much capacity for investment for growth as we can. We've made a commitment to invest in marketing that goes to the top of the funnel, so we are not surprised by the growth in customer count on a sequential basis. From a gross adds perspective, it's the highest we’ve seen in several years. From a retention perspective and ARPU perspective, the levers of cross-sell—we are just getting started, honestly. We're very proud of the performance that our teams have driven in cross-sell penetration of the Norton base, moving from 15% to 20% in the past year. We feel we have a long way to go, especially because we are selling into an expanding customer base with a growing product portfolio.
Got it. So maybe as a follow-up, moving to ARPU and some of the FX headwinds. What sort of hedging activities are you putting in place to protect against the weakening yen?
I don't hedge against the yen from a currency rate perspective. We fix a rate at the beginning, and that's why we report USD versus constant currency.
The next question comes from Saket Kalia with Barclays.
Vincent, Natalie, I joined late, so apologies if some of these have been asked, but Vincent, maybe just to start with you on just another part of the business. I think we get into the benefits enrollment season next quarter, and I know that last year, there was a little bit of lumpiness there. Can you just talk a little bit about how that pipeline looks? And maybe anything that you think about doing differently this time versus last year?
Yes, absolutely, Saket. And no worries about joining late. The good news is we're recording the call, and we provided a lot of good information on where we stand with our business overall. We feel positive. You may have heard that our partner business—which comprises 10% of our overall business—grew 6% in constant currency this quarter. It's made up of categories that encompass telcos, employee benefits strategic relationships, and retail. Both telcos and employee benefits will continue to grow in double digits within that partnership revenue. We signed a set of new accounts ahead of the enrollment period for employee benefits, typically around October to February. We've continued to invest in building up our overall coverage across companies working through brokers. We maintain a very healthy funnel, so we plan to close as many deals as we can. However, estimating which deals will factor into the full annual guidance is challenging. That being said, we definitely have a very healthy funnel to cover the forecast for the year.
Got it. That's very helpful. Natalie, maybe for my follow-up for you. Listen, the operating margin also speaks for itself. My question was just maybe on the gross margin. The last couple of quarters, it's just, I don't know, maybe like 100 basis points lower than it's been from the prior few quarters. So maybe the question is, can you talk to just any investments that are going into cost of sales? Or anything that we should consider regarding the difference between gross margin and OpEx going forward?
Saket, thanks for the question. Yes, it's definitely appropriate to call out the high margins we operate under, both in terms of gross margin and operating margin. Operating margin has improved seven points over the last three years and five points over the last two years. This is a disciplined approach and reflects a very high margin; we are committed to that. However, we also stated that as we navigate the business forward, we will reserve the right to invest in growth areas that we believe are healthy and will support our five for five growth strategy, since everyone wants to see an accelerating rate of growth on the top-line. Gross margin this quarter is at 86.3%, flat quarter-over-quarter but down year-over-year. I would ask that you adjust your perspective and look back at the previous years, noting that our gross margin has remained stable. The only fluctuations have been due to P&L geography of our investments. We will continue to prioritize profitable, healthy ROI marketing investments to drive the top of the funnel, which can impact gross margin variability. I encourage you to take the long view on our gross margin health, which has consistently been in the 86% to 87% range. I also want to highlight the operating margin health and stability we've delivered over the past few years.
The final question comes from Hamza Fodderwala with Morgan Stanley.
This is John on for Hamza. Great results in a very tough environment. Vincent, just for you, can you talk about how—you mentioned Gen AI in the prepared remarks—but can you just touch a little deeper into what's driving growth there in terms of maybe brand awareness across different geographies? And just what the opportunity overall looks like?
Yes. Definitely, we've seen a strong double-digit growth in data breaches and data getting into the hands of the hacking community. We've seen a surge of increased scams using social engineering techniques to combine data breaches with private information available on the web, making scams more relatable and personal. As you know, we've decided to use AI to combat AI, and we launched Norton Genie to detect those scams more effectively. We now have over 1 million downloads of that Norton Genie app, and for the second half of the year, we are migrating to integrate basic anti-scam AI-supported features into multiple product sets. You will see more and more shifts towards using AI for detecting AI-generated scams.
Got it. That's very helpful. And just for my follow-up for Natalie. Net adds were obviously very strong again this quarter. Can you just talk a little bit about the contribution across different geographies? And maybe any color on how you're thinking about net adds tracking throughout the year if you have any visibility?
Sure. I would say it's pretty broad-based. We look at it both online and mobile, by geography, and across brands. When we look at the multi-year trends, we are headed in the right direction. It's pretty broad-based, considering our global expansion efforts. In terms of the types of customers we're acquiring, they come in all shapes and sizes, so we must balance our model accordingly. Our focus is on ensuring that customer acquisitions come with favorable economics, pointing to health and sustainability. The short answer is yes; we have seen growth across every pivot—be it geography, brand, or consumer engagement. Looking ahead, while I do not provide guidance on customer count each quarter, I want to emphasize our commitment to capacity for investment in growth. We are here to accelerate growth in this business, which requires a focus on top of the funnel net new acquisition. Gross adds are important, and we will also focus on retaining our customers and ensuring they receive world-class service and protection through our technology and value creation.
There are no further questions at this time. I would now like to turn the call back to Vincent Pilette for closing remarks.
Thank you, operator. As the leading company in consumer cyber safety, we have a bold vision to provide digital freedom for everyone. The threat landscape is more dynamic than ever, and our investments in technology, AI, and product innovation are key to our success and future opportunities. We have a compelling AI-enabled product roadmap focused on security, financial safety, personal data control, and verification. Our go-to-market strategy is effective, and we have a long track record of serving our customers. We are well positioned to expand the adoption of cyber safety globally with our trusted brands and omnichannel expertise. Thank you for your interest and support.
This concludes the conference call. Thank you for your participation. You may now disconnect your lines.