Avast plc 2019 Half year results - 14 August 2019

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Avast plc 2019 Half year results - 14 August 2019
Avast plc
2019 Half year results

    14 August 2019
Avast plc 2019 Half year results - 14 August 2019
Disclaimer

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                                                                                                                                                               2
Avast plc 2019 Half year results - 14 August 2019
Agenda

1   H1 Highlights & Business Overview: Ondrej Vlcek, CEO

2   H1 Financial Results & 2019 Guidance: Phil Marshall, CFO

3   Q&A

                                                               3
1   HY Highlights:
    Ondrej Vlcek, CEO

                        4
H1 Strategic Themes

•   Our growing penetration levels and cross-sell success powered by our platform model and global user base

•   Desktop remains the main distribution channel for our products, yet a greater percentage of desktop growth is
    driven by mobile enabled products

•   Our commitment to technology leadership is clear in the investments we make and product awards received

•   Innovation underpins long term growth and is supported by a new industry-renowned CTO and additions to
    our AI team

•   Strategic milestones reached with the release of our Avast Omni product direct to US consumers and the first
    carrier IoT partnership with Wind Tre in Italy

•   Jumpshot strategic partnership provides an immediate cash return and accelerates future growth
    opportunities

                                                                                                               5
CEO Priorities

•   World-class customer experience: continue to evolve the customer-centric approach that underpins the
    success of our global platform model and our ability to cross-sell additional consumer solutions across the
    entire customer journey

•   Enthuse and drive an even greater sense of purpose and core values, actively supporting innovation and
    entrepreneurial culture across the company

•   Ensure appropriate capital allocation, enabling investment that supports our long-term growth aspirations

•   Deliver long term financial performance

                                                                                                                6
H1 Financial & Operating Highlights
•       Half year performance in line with company guidance

•       Strong overall results with:

             •        +12.5% billings growth(1) and +9.2% revenue growth(1) driven by our Consumer Desktop business

             •        Adjusted EBITDA margin 55.4%(2)

             •        Unlevered Free Cash Flow $230m, +20.0%, supporting further deleveraging

             •        Adjusted Net Income $148.2m, up +13.8%, adjusted fully diluted EPS +7.2% at $0.15 per share

•       Desktop operating KPIs performed strongly, including customers up +1.8% to 12.41m from 12.19m at 2018
        year-end, supported by continued growth from target countries

•       Expansion of the consumer product portfolio, including the launch of Avast Omni (IoT)

•       2019 interim dividend of 4.4 cents per share (1/3 of 40% of 2018 levered Free Cash Flow)

•       Performance underpins a strong full year outlook, now at the upper end of guidance of high single digit revenue
        growth

Notes:
(1) Growth figures excluding discontinued business, disposal of the Managed Workplace business (SMB) and impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates
(2) Including 1pt impact from IFRS 16 adoption from January 1, 2019                                                                                                                      7
Good Growth Across All Financial KPI’s

                                +12.5%                                                                              +9.2%                                                                         +20.0%

              Billings excluding FX(1)                                                         Revenue excluding FX(1)                                                        Unlevered Free Cash Flow

                        +9.2% at actual rates (2)                                                         +8.3% at actual rates (2)                                           Total UFCF $230.4m vs.$192.2m HY18
                      Led by consumer desktop                                                           Led by consumer desktop

                              $236.5m                                                                           $148.2m                                                                            $0.15

                            Adj. EBITDA                                                                  Adj. Net Income                                                                   Adj. Diluted EPS
                             vs. $222.1m HY18                                                                  vs. $130.2m HY18                                                                   vs. $0.14 HY18

              36bps margin expansion to 55.4%(3)                                                245bps margin expansion to 34.7%                                                              +7.2% at actual rates
                          +6.5% at actual rates                                                            +13.8% at actual rates

Notes:
(1) Growth figures excluding the impact of the discontinued business, disposal of the Managed Workplace (SMB) and impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates
(2) Excluding discontinued business and the impact of the Managed Workplace disposal (SMB)                                                                                                                            8
(3) 2019 includes the impact of IFRS16 adoption (1pt)
Continued Strength in Consumer Desktop
                                                                         Consumer Direct Desktop
EoP customers(1)                                  half year growth (4)
($m)

                                                                          12.41             • Customer growth of 1.8% for H1, adding 223k
                            12.19
                                                                                              new customers since the end of 2018
                         2018 YE                                         2019 H1
                                                                                            • Continuing increase in penetration rates and
ARPC(2)
                                                                                              further customer expansion globally
($)

                                                                                            • Continuation of growth in ARPC driven by VPN
                            49.24                                         50.38               and Utilities products

                                                                                            • APPC up by 2.3% driven by successful cross-sell,
                         2018 YE                                         2019 H1
                                                                                              achieving 1m new licenses, including c.400k on
APPC(3)                                                                                       Anti-Track and Driver Updater in H1’19
(x)

                                                                                            • KPI growth trending in line with guidance of low-

                                                                          1.43
                                                                                              single digit for customers and mid-single digit for
                            1.40
                                                                                              ARPC/APPC

                         2018 YE                                         2019 H1

Notes:
(1) Represents number of customers as at Year End
(2) Average Revenue Per Customer in Consumer Desktop
(3) Average Products Per Customer in Consumer Desktop
                                                                                                                                            9
(4) Growth figures represent 2019 H1 versus 2018 Year End
Strong Consumer Desktop Performance

                     Adj. Billings ($m)                                                        Adj. Revenue ($m)

                                    14.3%(1)                                                                10.5%(1)             • Strong billings growth driven by successful cross-
                                                                                                                                   selling, in particular the mobile enabled products
                                                                                                                                   and continuing expansion of the customer base

                                                                                                                                 • Customer growth from existing large countries
                                                                                                                                   such as USA and France, plus target countries
                                                                                                                                   such as Russia, Japan, Germany and Poland
                                                         340.5
                    308.4                                                                                               307.6
                                                                                             281.0                               • Consumer     Direct   Desktop   revenue    growth
                                                                                                                                   excluding FX ahead of guidance provided at Year
                                                                                                                                   End 2018 and now expected to be low double-
                                                                                                                                   digit growth FY19

                 H1 2018                              H1 2019                             H1 2018                      H1 2019
% of total (2)        74%                                 75%                                  72%                      73%

        Notes:
        (1) Growth figures excluding impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates
        (2) Total group excluding discontinued business, excluding Managed Workplace (SMB) disposal                                                                             10
The Power of The Platform Model & Massive User Base

                                                   All Paid Desktop customers
                                                   originating from our free AV
 Paid Desktop Anti-Virus                                     user base
                                    (1)
customers originating from
  our free AV user base        80%

                                                        81%             (1)

Paid Desktop Non Anti-Virus
                                    (1)
customers originating from
   our free AV user base       82%

Notes:
(1) Avast brand
                                                                                  11
Positive Platform Experience Evident in Cross-Sell Growth

                     52% of Total Desktop Billings                                    Non-AV Growth% (ex FX) by Product

                                          Non                                                Utilities                 26%

                                        Anti-Virus                                           VPN                       36%
                                                                                             Driver Updater            83%
                                        Growth(1)
                                                                                             Anti-Track                380%
                                          34%                                               Total                      34%

                 Growth driven by Utilities and VPN products, supported by new products such as Driver Updater and Anti-Track

Notes:
(1) Growth 2019 H1 versus 2018 H1 across Avast + AVG, excluding FX
                                                                                                                                12
While Best-in-Class Technical Solutions Deliver Stickiness

 Paid Desktop AV                                                                   4+ Years
                                                       1 Year          2-3 Years
  tenure profile

                                                                 (1)         (1)
                                                       22%             28%         50%    (1)

Compared to H1 2018

   Notes:
   (1) Based on percentage of total AV customers (Avast + AVG)
                                                                                                13
Mixed Performance in Consumer Mobile

                    Adj. Billings ($m)                                                        Adj. Revenue ($m)

                                                                                                                                  • Double digit growth in direct to consumer due to
                                    (7.6)%(1)                                                               (7.5)%(1)               continuous improvement in conversion rates

                                                                                                                                  • June first mobile Smart Home (IoT) product launched

                                                                                                                                  • Decline in Mobile carrier business primarily due to
                                                                                                                                    carry-over impact of 2017 Sprint account loss

                                                                                                                                  • Multiple new carrier initiatives being developed but

                    43.3                                                                                                            cycles continue to lengthen, which will negatively
                                                         39.4                                41.6
                                                                                                                         38.3       impact FY expectations

                                                                                                                                  • Consumer Direct Mobile revenue growth excluding
                                                                                                                                    FX behind guidance provided at Year End 2018 and
                                                                                                                                    now expected to be mid-single digit decline FY19

                   H1 2018                           H1 2019                             H1 2018                        H1 2019
% of total   (2)     10%                                  9%                                  11%                         9%

       Notes:
       (1) Growth figures excluding impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates
       (2) Total group excluding discontinued business, excluding Managed Workplace (SMB) disposal                                                                                  14
Strong Growth in Consumer Indirect

                   Adj. Billings ($m) (2)                                                 Adj. Revenue ($m) (2)

                                 29.0%(1)                                                                 27.7%(1)
                                                                                                                                                        • Avast Browser’s continuing strong growth more than
                                                                                                                                                          offset the expected decline in Google distribution

                                                                                                                                                        • Jumpshot led growth of the segment through its
                                                                                                                                                          continued expansion program, delivering growth rates
                                                                                                                                                          in-line with historic rates

                                                        50.3                                                                    50.0                    • Consumer Indirect revenue growth excluding FX ahead
                    39.4                                                                    39.6                                                          of guidance provided at Year End 2018 and now
                                                                                                                                                          expected to be double-digit growth FY19

                   H1 2018                          H1 2019                             H1 2018                             H1 2019
% of total   (3)      9%                                11%                                  10%                                 12%

       Notes:
       (1) Growth figures excluding discontinued business and excluding impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates
       (2) Excluding discontinued business
       (3) Total group excluding discontinued business, excluding Managed Workplace (SMB) disposal
                                                                                                                                                                                                               15
SMB Integration Efforts Ongoing

                   Adj. Billings ($m) (2)                                                Adj. Revenue ($m) (2)

                                                                                                         (5.0)%(1)
                                  (0.9)%(1)
                                                                                                                                                     • Managed Workplace (RMM) sold in Q1 to focus on
                                                                                                                                                       core security products

                                                                                                                                                     • Secure Web Gateway (SWG) full launch in March
                                                                                                                                                       2019, sales pipeline developing but longer sales
                                                                                                                                                       cycle than existing core business. Secure Internet
                                                                                           27.4                                                        Gateway (SIG) scheduled for launch later in Q3
                    25.4                                                                                                      25.9
                                                       24.4
                                                                                                                                                       2019

                                                                                                                                                     • SMB revenue decline excluding FX remains in line
                                                                                                                                                       with the guidance provided at Year End 2018 of
                                                                                                                                                       mid-single digit decline FY19

                   H1 2018                         H1 2019                             H1 2018                            H1 2019
% of total   (3)     6%                                  5%                                  7%                                 6%

       Notes:
       (1) Growth figures excluding Managed Workplace (SMB) disposal impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates
       (2) Excluding Managed Workplace disposal
       (3) Total group excluding discontinued business, excluding Managed Workplace (SMB) disposal
                                                                                                                                                                                                   16
Product Solutions Further Enhanced
Product Releases in H1:
 • Released Avast Omni (IoT) internal and external betas (US launch July 29)

 • Expanded AntiTrack offering to AVG, protecting users’ privacy by eliminating data trackers and altering digital footprints

 • Enhanced Avast Cleanup & AVG TuneUp for PC

 • Launched mobile security and parental controls with 3 carriers originating from the Veon relationship

 • Launched our first partner (IoT) integrated router solution with Wind Tre Italy (including both security and family functionality)

 • Launched Avast Family Space (beta version) for Android and iOS in Canada

                                                                                                                                    17
2   FY Financial Results:
    Phil Marshall, CFO

                            18
Billings and Revenue
Adj. Billings ($m)

                                                                                                                                                                                                        Change %
                                                                                                           H1 2019                       H1 2018                      Change $            Change %
                                                                                                                                                                                                     (excluding FX) (1)

Billings                                                                                                      459.6                         430.2                          29.4             6.8            10.1

Discontinued Business                                                                                           5.0                            9.0                         (4.0)           (44.2)          (43.1)

Disposal Managed Workplace (SMB)                                                                                0.0                            4.7                         (4.7)            n/a             n/a

Billings excl. Discontinued Business and
                                                                                                              454.6                         416.5                          38.1             9.2            12.5
Disposals

Adj. Revenue ($m)

                                                                                                                                                                                                        Change %
                                                                                                            H1 2019                       H1 2018                      Change $           Change %
                                                                                                                                                                                                     (excluding FX) (1)
Revenue                                                                                                        426.8                         403.3                          23.5             5.8            6.8

Discontinued Business                                                                                            5.0                           9.0                          (4.0)           (44.1)         (43.1)

Disposal Managed Workplace (SMB)                                                                                 0.0                           4.7                          (4.7)            n/a            n/a
Revenue excl. Discontinued Business and
                                                                                                               421.7                         389.6                          32.2             8.3            9.2
Disposals

 Notes:
 (1) Growth figures excluding discontinued business, disposal of the Managed Workplace business (SMB) and impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates
                                                                                                                                                                                                                    19
Billings Growth Acceleration From Desktop & Indirect

  Growth %
                                        +14.3%                                  (7.6)%                                    +29.0%                                  (0.9)%                           +12.5%
excluding FX (1)

                                                                                                                                                                                                   $38.1m
                                       $32.1m

                                                                                                                         $10.9m

                                                                                                                                                                 $(1.0)m
                                                                               $(3.9)m

                                Consumer Direct                         Consumer Direct                         Consumer Indirect                                   SMB                             Group
                                                                                                                                                        (ex.Managed Workplace               (ex.Discontinued Business
                                   Desktop                                  Mobile                            (ex.Discontinued Business)
                                                                                                                                                               Disposal)                          and Disposals)

   Segment
                                           75%                                     9%                                        11%                                     5%                             100%
  % of total (2)

   Notes:
   (1) Growth figures excluding discontinued business, disposal of the Managed Workplace business (SMB) and impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates
   (2) Total group excluding discontinued business and Managed Workplace disposal, numbers rounded to the nearest whole number                                                                                          20
Revenue Growth Underpinned by Core Strength in Desktop

  Growth %
                                        +10.5%                                  (7.5)%                                    +27.7%                                     (5.0)%                         +9.2%
excluding FX (1)

                                                                                                                                                                                                    $32.2m
                                         $26.6m

                                                                                                                          $10.4m

                                                                                                                                                                  $(1.5)m
                                                                                 $(3.3)m

                                Consumer Direct                         Consumer Direct                          Consumer Indirect                                  SMB                             Group
                                                                                                                                                        (ex.Managed Workplace               (ex.Discontinued Business
                                   Desktop                                  Mobile                            (ex.Discontinued Business)
                                                                                                                                                               Disposal)                          and Disposals)

   Segment
                                           73%                                      9%                                       12%                                      6%                            100%
  % of total (2)

   Notes:
   (1) Growth figures excluding discontinued business, disposal of the Managed Workplace business (SMB) and impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates
   (2) Total group excluding discontinued business and Managed Workplace disposal, numbers rounded to the nearest whole number                                                                                          21
Increasing Deferred Revenue Balance Supporting Future Growth

                                    Adj. Deferred Revenue ($m)

                                                                                   471
                                                                                                                                                                    • Subscription billings paid upfront and recognised
                                                           10.2%
                                                                                                           > 1 year                                                       equally over the length of the subscription period.
                                            428                                     54                     12%
                                                                                                                                                                          Deferred revenue represents the balance still to be

                                             49                                                                                                                           recognised as revenue in future periods

                                                                                                                                                                    • Growing deferred revenue balance (up +10.2%)
                                                                                                                                                                          supporting attractive future revenue growth

                                                                                                                                                                    • Good future revenue visibility through $417m of
                                                                                   417                     ≤1 year
                                                                                                                                                                          deferred revenue to be recognised within the next
                                           379                                                             88%
                                                                                                                                                                          12 months

                                       H1 2018                                H1 2019

Notes:
Adjusted deferred revenue represents the balance of deferred revenue excluding the effects of the fair value revaluation of the acquiree’s pre-acquisition deferred revenues and the impact of gross-up adjustment
                                                                                                                                                                                                                        22
Consistent Revenue Performance

                                                                          Adj. Quarterly Revenue Performance ($m) (2)

                                                               9.1%(1)                                                                                                              9.3%(1)

                                                                                  209.1                                                                                                        212.7
                                              192.7                                                                                                                196.9

                                           Q1 2018                             Q1 2019                                                                          Q2 2018                       Q2 2019

      % H1 Total                                51%                                50%                                                                               49%                       50%

Notes:
(1) Growth figures excluding discontinued business, excluding Managed Workplace (SMB) disposal and excluding impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates
(2) Excluding discontinued business and Managed Workplace disposal                                                                                                                                      23
Best in Class Margin Performance
Adj. EBITDA ($m)

                                                                 H1

Segments                                          2019          Margin %           2018            Margin %        Margin variance

Consumer (excl. Discontinued Business)             288            72.7%             270              74.4%              (176)bps

SMB                                                 12            46.6%             13               42.0%              469bps

Discontinued Business                               5            100.0%              9              100.0%                0bps

Overhead                                           (68)             n/a            (70)               n/a                 n/a

Group                                              237            55.4%             222              55.1%               36bps

•   Consumer margin, while remaining strong, slightly lower due to carry-over of H2’18 and continued H1’19 investments
•   SMB focus remains on pricing & efficiencies, offsetting volume softness
•   Margin rate benefitting from IFRS16 adoption (101bps), otherwise slight decline in first half of the year per company guidance.
    Outlook for FY Group EBITDA margin remains broadly flat ex-IFRS16 adoption

                                                                                                                                      24
High Margin Remains
Adj. EBITDA ($m)

                                                 H1

                            EBITDA      Margin %                              Comment

H1 2018 Actual               222         55.1%

Revenue growth                33         322bps       Strong revenue growth led by desktop and indirect

Discontinued Business        (4)        (40)bps       Decline as expected

                                                      Negative FX impact on revenue outweighed by positive
FX impact                     2          102bps
                                                      impact on costs
                                                      Carry over impact of medium-term strategic investments
Investment / Other           (20)       (450)bps
                                                      across the business

H1 2019 Actual pre IFRS16    233         54.4%

                                                      Standard applied from January 1, impact in line with
IFRS16                        4          101bps
                                                      previous guidance

H1 2019 Actual               237         55.4%

                                                                                                               25
Strong Cash Flow Generation

($m)
                                                                                                                H1 2019                    H1 2018
Adj. EBITDA                                                                                                         237                     222      A•   Capex heavily H2 weighted,
                                                                                                                                                          now see FY c.3% of revenue
Adj. EBITDA to Adj. Cash EBITDA(1)                                                                                   32                      24
                                                                                                                                                     B•   Decrease in cash tax driven by
Adj. Cash EBITDA                                                                                                    268                     246
                                                                                                                                                          CZK tax payment timing in H1
 A     Capex                                                                                                         (3)                     (5)          2018 versus H1 2019

 B     Cash Tax(2)                                                                                                  (25)                    (49)     C•   H1    2018    WC       positively
                                                                                                                                                          impacted by IPO payables paid
 C     Change in Working Capital(3)                                                                                 (10)                     (0)
                                                                                                                                                          only in H2 2018
Unlevered Free Cash Flow                                                                                            230                     192
                                                                                                                                                     D•   Lower interest resulting from
Cash Conversion(4)                                                                                                  86%                      78%          $500m loan repayment since
                                                                                                                                                          IPO (including $200m primary)
 D Cash Interest and Lease Repayments                                                                               (30)                    (38)
                                                                                                                                                          and a further 25bps margin
Levered Free Cash Flow                                                                                              200                     154           step down in H1 2019

  Notes:
  (1)   Change in deferred revenue and deferred COGS as well as reversal of COGS deferral adjustments.
  (2)   Cash tax excludes $(49.4)m Dutch exit tax treated as an exceptional item.
  (3)   Change in working capital excludes change in deferred revenue and deferred COGS as these are already included in Adj.Cash EBITDA                                           26
  (4)   Cash Conversion defined as Unlevered Free Cash Flow / Adj. Cash EBITDA
Subscription Model Facilitates Continued De-leveraging

                                   Net Debt ($m)(1)                                                   Adj. EBITDA Leverage(1,2)

                                                   (9)%                                                                          (0.1)x
                                                                                                                                                                                         • Gross debt including lease liabilities
                                                                                                                                                                                               $1.24Bn & Net debt $1.10Bn

                                                                                                                                                                                         • USD debt tranche ($448m) fully hedged
                                                                                                                                                                                               at 2.75% for 3 month USD LIBOR

                                                                                                                                                                                         • $84m dividend and $49m Dutch IP tax
                              1,210                                                                           2.5x
                                                                    1,105                                                                           2.4x                                       payment made in H1 2019

                                                                                                                                                                                         • Net debt leverage per banking covenant
                                                                                                                                                                                               2.4x (versus 2.5x at Dec-18(3) and 3.0x
                                                                                                                                                                                               at Jun-18(3))

                            Dec-18                                 Jun-19                                  Dec-18                                 Jun-19

Notes:
(1) Net debt as of 31 Dec 2018 was restated for comparative purposes for opening balances of IFRS 16 adjustment $(71.7)m of lease liabilities. Balance of lease liabilities as of 30 Jun 2019 is $(68.6)m
(2) Leverage calculated as x Adj. LTM EBITDA
(3) Leverage per banking covenant as of 31 Dec 2018 and 30 Jun 2018 didn’t include impact of IFRS16.
                                                                                                                                                                                                                               27
2019 Guidance

                                                                                                             Full Year Guidance

                                                                                                                                   2019 current guidance (1)           2019 prior guidance (1)

Adj. Revenue Growth                                                                                         Upper End of High-single digit increase                  High-single digit increase

Desktop Adj. Revenue Growth                                                                                                       Low-double digit increase          High-single digit increase
• EoP Customers                                                                                                                     Low-single digit increase        Low-single digit increase
• APPC (Average Product Per Customer)                                                                                                Mid-single digit increase        Mid-single digit increase
• ARPC (Average Revenue Per Customer)                                                                                                Mid-single digit increase        Mid-single digit increase

Mobile Adj. Revenue Growth                                                                                                          Mid-single digit decline                        Broadly flat

Indirect Adj. Revenue Growth                                                                                                           Double digit increase         High-single digit increase

SMB Adj. Revenue Growth                                                                                                                Mid-single digit decline         Mid-single digit decline

Adj. EBITDA margin %                                                                                                                  Broadly flat (ex IFRS16)        Broadly flat (ex IFRS16)
                                                                                                                                 c.40% levered free cash-flow     c.40% levered free cash-flow
Dividend Distribution
                                                                                                                                  Interim payable in October(2)        Interim payable in Q3(2)

 Notes:
 (1)   Growth figures excluding discontinued business, impact of FX, and the recent disposal of the Managed Workplace business
 (2)   Interim dividend = 1/3 of previous year levered free cash flow
                                                                                                                                                                                          28
Summary

 •       2019 H1 performance in line with company guidance

 •       Key initiatives continuing to progress well reflected in adding 223,000 new desktop customers in 2019 H1

 •       The strength of our platform model evident in the further expansion of average products per customer from
         1.40 to 1.43

 •       Investment on technology and product development remains a priority, further launches expected in H2

 •       Strategic milestone reached with launch of Omni (Smart Home IoT) & first integrated carrier launch

 •       Highly cash generative business model supporting further deleveraging in 2019 H1

 •       Record deferred revenue balance with $471m underpinning revised 2019 revenue guidance

 •       Outlook for 2019 remains positive with revenue moved to upper end of high single digit revenue growth(1)

Notes:
(1) Growth figures excluding discontinued business, disposal of the Managed Workplace business (SMB) and impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates
                                                                                                                                                                                         29
Appendix
Jumpshot Strategic Partnership(1) Unlocking Value

                        Company overview                                                                                          Rationale                                                                          Deal summary
                High         growth           digital        consumer                                         Ascential’s detailed digital sales                                                           Creation of Strategic Partnership
                analytics business with revenue                                                               performance data complements                                                                 between Avast plc (majority owner
                largely from subscriptions                                                                    our         broad            consumer                digital                                 of Jumpshot) and Ascential plc
                                                                                                              engagement information
                Unique            and         rare         information                                                                                                                                     Initial 35% investment ($61m) in
                source           of      de-identified              online                                    A       market           leading           information                                       the company moving to 51%
                consumer behavior data, across                                                                source           for      in-depth            consumer                                       based on certain financial criteria
                more            than            180           countries,                                      engagement that will enhance
                                                                                                                                                                                                           Opportunity for new joint products
                processing over 5 billion records a                                                           product development
                                                                                                                                                                                                           to be developed over 24 months
                day
                                                                                                              Unlock shareholder value now and
                                                                                                                                                                                                           Long term partnership, leveraging
                Based in San Francisco, Czech                                                                 in the future with accelerated
                                                                                                                                                                                                           Ascential’s    global    distribution
                Republic, New York and London                                                                 growth/scale
                                                                                                                                                                                                           footprint and complementary data-
                                                                                                                                                                                                           sets

Notes:
1) Closing is currently expected on or around 31 August 2019. The closing is conditional on receipt of approval from German antitrust authorities, the entry by Avast, Jumpshot and Ascential into a shareholders'
agreement relating to Jumpshot , and the entry by Jumpshot and Ascential into a data license agreement.                                                                                                                                    31
Key Financial Assumptions
                                                                                                          Full Year Guidance

                                                                                                                                 2019 current guidance    2019 prior guidance (1)

Depreciation & Amortisation                                                                                                       c. 2% of Adj. Revenue    c. 2% of Adj. Revenue

Capital Expenditure                                                                                                              c. 3% of Adj. Revenue    c. 2-3% of Adj. Revenue

Finance Cost and Lease Repayments (2)                                                                                             $65m P&L / $55m CF        $70m P&L / $63m CF

Effective Tax Rate                                                                                                                                20%                       20%

Cash Tax                                                                                                                            P&L tax less $10m            P&L tax + $10m

Net Working Capital (3)                                                                                                                   $15m outflow              $15m outflow

Number of shares
• Basic weighted average number of shares                                                                                                        970m                      954m
• Number of shares used in computing dilutive EPS                                                                                              1,015m                    1,013m

Exceptional Items
• Dutch exit tax
                                                                                                                                    $0m P&L / $49m CF        $0m P&L / $49m CF
• Debt fees
                                                                                                                                     $0m P&L / $0m CF         $0m P&L / $0m CF
• Acquisition, integration and business transactions costs
                                                                                                                                     $5m P&L / $5m CF         $0m P&L / $0m CF
• Share-based expense
                                                                                                                                           $19m P&L                  $16m P&L
• Amortisation of acquired intangibles
                                                                                                                                            $87m P&L                 $87m P&L

 Notes:
 (1)   Original guidance excluded the impact of IFRS 16: $8.5m lease repayments, $2.3m interest expense
 (2)
 (3)
       Finance costs include interest costs and amortization of arrangement fees.
       Excludes change in deferred revenue and deferred COGS; includes only change in accounts receivable and accounts payable
                                                                                                                                                                            32
Implementation of IFRS 16 Leases
     Impact of the initial recognition as of 1 January 2019 ($m)
                                                                                                                                                   1 January 2019
      Right-of-use assets                                                                                                                               69.7
      Prepayments / Accrued leased payments                                                                                                             2.0
      Lease liabilities                                                                                                                                (71.7)
      Adjusted EBITDA leverage per banking covenant                                                                                                     0.1x

     Impact on the consolidated P&L in H1 2019 ($m)
                                                                                                                             IAS 17   Adjustment      IFRS 16
      Operating costs / Adjusted EBITDA                                                                                      (4.3)       4.3             -
      Depreciation                                                                                                             -         (3.8)         (3.8)
      Interest expense                                                                                                         -         (1.2)         (1.2)
      Net profit before tax                                                                                                  (4.3)       (0.7)         (5.0)

      On 13 January 2016, IASB issued a new standard that sets out the principles for the recognition, measurement,
      presentation and disclosure of leases. The standard provides a single lessee accounting model, requiring lessees to
      recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has low
      value. The standard applies to annual reporting periods beginning on or after 1 January 2019. The Group applied the
      standard as of 1 January 2019 using the modified retrospective approach and did not restate comparative amounts for the
      year prior to first adoption
Notes:
IFRS 16 initial recognition impact calculated based on exchange rates declared by Czech National Bank on 31 December 2018.
                                                                                                                                                                    33
Exceptional Items

     Exceptional items, share-based compensation and amortization of acquisition intangibles ($m)

                                                                                                                                                                                       H1 2019   H1 2018

      Share-based compensation(1)                                                                                                                                                       (12)       (4)

      Amortization of acquisition intangibles                                                                                                                                           (49)      (65)

      Acquisition and restructuring costs                                                                                                                                                (2)       (4)

      IPO costs(2)                                                                                                                                                                        -       (19)

      Exceptional operating costs                                                                                                                                                        (2)      (23)

      Net gain on disposal of business operation                                                                                                                                         18         -

      Unrealized FX gain/loss on EUR tranche of bank loan                                                                                                                                 4        17

      Tax impact of IP transfer                                                                                                                                                          (3)       94

      Tax impact of adjusting items(3)                                                                                                                                                    9        24

      Exceptional finance and tax income/(expense)                                                                                                                                       10       135

Notes:
(1) H1 2019 includes $(1.5)m employer’s cost on share based payments exercise
(2) Costs as per income statement excluded additional $4.0m IPO expenditures recorded directly to equity. Additional $4.1m IPO costs were recognized in the income statement in 2017
(3) Consists of tax impact of disposal of business operation, tax impact of FX gain/loss on intercompany loans and other adjusting items
                                                                                                                                                                                                           34
Foreign Exchange Rates Trend (X-rates to US Dollar)

                           H1 2019
                Currency             YoY %
                           average

                AUD         0.71     (8.1)%

                BRL         0.26     (11.4)%

                CAD         0.75     (4.6)%

                CZK         0.04     (7.3)%

                EUR         1.13     (6.5)%

                GBP         1.30     (5.7)%

                                                      35
Adjusted Profit and Loss
($m)                    H1 2019   H1 2018
Revenue                  426.8     403.3
Cost of revenues         (54.2)    (52.8)
Adjusted Gross profit    372.6     350.5
Gross profit %          87.3%     86.9%

Operating costs         (136.0)   (128.4)
EBITDA                   236.5     222.1
EBITDA %                55.4%     55.1%

D&A                      (10.8)    (7.7)
Operating profit         225.7     214.4

Finance costs            (39.8)    (51.7)
PBT                      186.0     162.7

Income tax               (37.7)    (32.5)
Net Income               148.2     130.2
Net Income %            34.7%     32.3%

                                            36
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