McAfee announces financial results for Q2

McAfee announced its financial results for the three months ended June 26, 2021.

“We are very pleased with our team’s execution this quarter,” said Peter Leav, McAfee’s President and Chief Executive Officer. “Not only did McAfee deliver another solid quarter with revenue, DTC subscribers, profitability and cash flow from operations growing double-digits, but did so while simultaneously closing the transaction to sell the Enterprise Business.

“Our continued commitment to secure our customers’ online footprint helped us to drive 22% year-over-year consumer revenue growth while we added 556,000 net new direct-to-consumer subscribers in Q2. We look forward to continuing our journey as a pure-play consumer business.”

On July 27th, 2021, McAfee announced the completion of the sale of certain assets together with certain liabilities of our Enterprise business segment (substantially all of our “Enterprise Business”). For presentation purposes related to this announcement, the related assets, liabilities and financial results of the Enterprise Business were classified as discontinued operations in our condensed consolidated financial statements and are thus excluded from continuing operations for all periods presented. Moving forward McAfee will operate as one reportable segment.

Q2 fiscal 2021 financial highlights from continuing operations

  • Net revenue was $467 million, reflecting a 22% growth year-over-year
  • Net Income of $108 million or a net income margin of 23%, as compared to $22 million or a net income margin of 6% in the year ago period
  • Adjusted EBITDA of $218 million or a 47% adjusted EBITDA margin, inclusive of approximately $21 million stranded costs

Q2 fiscal 2021 financial highlights from continuing and discontinued operations

  • McAfee’s combined net cash provided by operating activities was $189 million for the quarter, up 62% year-over-year
  • McAfee’s combined unlevered free cash flow was $233 million for the quarter, up 29% year-over-year

Business highlights

  • Completed the sale of its Enterprise Business for $4 billion in cash, announced the record date of 5:00 p.m. Eastern Time on August 13, 2021 for the one-time special dividend of $4.50 per share on the Company’s Class A common stock and are currently in the process of paying down $1 billion in debt
  • Added 556,000 net new subscribers closing the quarter at 19.4 million Core DTC subscribers, compared to 16.6 million in the same period last year
  • Signed a multi-year extended agreement with Samsung to deliver best-in-class consumer security solutions to Samsung device users

Commenting on the Company’s financial results, Venkat Bhamidipati, McAfee’s Executive Vice President and Chief Financial Officer added, “Continued strong demand across all channels and all geographies for our holistic consumer security offerings in the quarter, coupled with our focus on operational discipline, resulted in 38% year-over-year growth in Adjusted EBITDA from continuing operations and 29% year-over-year growth in total Company unlevered free cashflow generation.”

Financial outlook

McAfee provides the following expected financial guidance for continuing operations for the third quarter ending September 25, 2021:

  • Net revenue of $461 million to $467 million
  • Total adjusted EBITDA of $169 million to $175 million which includes $35 million to $40 million of stranded costs

For the full year ending December 25, 2021, McAfee expects the following for continuing operations:

  • Net revenue of $1,840 million to $1,850 million
  • Total adjusted EBITDA of $765 million to $775 million which includes $120 million to $125 million of stranded costs
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