Gen Digital Q2 Earnings Surpass Expectations, Revenues Rise Y/Y

Gen Digital Inc. GEN reported second-quarter fiscal 2026 results, wherein both revenues and earnings beat the Zacks Consensus Estimate. Gen Digital reported non-GAAP earnings of 62 cents per share, which beat the Zacks Consensus Estimate by 1.64%. The figure improved 14.8% year over year.

In the trailing four quarters, GEN’s earnings surpassed the Zacks Consensus Estimate thrice, while matching once, delivering an average surprise of 2.55%.

Gen Digital’s first-quarter non-GAAP revenues came in at $1.22 billion, which rose 25.3% year over year and beat the Zacks Consensus Estimate by 2.3%. The strong revenue growth was due to escalating AI-powered scams, ransomware, and impersonation threats fueling demand for Gen Digital’s AI-driven cyber safety solutions, including Genie Scam Protection.

GEN’s Q2 in Details

Gen Digital’s Cyber Safety revenues amounted to $814 million in the fiscal second quarter, up 3% year over year. Revenues of its Trust-Based Solutions segment increased 119% to $406 million. Direct Customer revenues rose 17% year over year to $1.01 billion, and Partner revenues improved 88% to $210 million.

Gen Digital Inc. Price, Consensus and EPS Surprise

Gen Digital Inc. price-consensus-eps-surprise-chart | Gen Digital Inc. Quote

The quarterly bookings advanced 27% year over year to $1.22 billion. Gen Digital’s average direct customer count increased to 77 million, up from 67 million in the year-ago quarter and 76 million in the previous quarter.

The non-GAAP gross profit grew 22% year over year to $1.021 billion in the second quarter. However, the gross margin contracted 240 basis points (bps) to 83.7%.

Non-GAAP operating expenses increased to $398 million, up 46% year over year. As a percentage of revenues, non-GAAP operating expenses were 32.6%, up 5 points year over year.

The non-GAAP operating income in the second quarter of fiscal 2026 totaled $623 million, up 10% year over year. The non-GAAP operating margin was 51.1%, down 710 bps year over year.

Gen Digital’s Balance Sheet & Cash Flow

Gen Digital exited the second quarter with cash and cash equivalents of $701 million, down from $828 million in the previous quarter. The long-term debt was $8.421 billion, down from $8.963 billion in the prior quarter.

In the second quarter of fiscal 2026, the company generated operating cash flow of $116 million and free cash flow of $107 million. Gen Digital paid out $77 million in dividends during the quarter and repaid $169 million of debt, with no share repurchases in the period.

Gen Digital Revises Guidance for 2026

For the third quarter of fiscal 2026, Gen Digital anticipates revenues between $1.22 billion and $1.24 billion. The company projects non-GAAP earnings between 62 cents and 64 cents in the fiscal third quarter.

For fiscal 2026, Gen Digital now projects revenues in the band of $4.92-$4.97 billion, up from the previously guided range of $4.8-$4.9 billion. It now anticipates earnings per share between $2.51 and $2.56 compared with the earlier guidance of $2.49-$2.56.

Zacks Rank & Stocks to Consider

Currently, GEN carries a Zacks Rank #3 (Hold).

Reddit Inc. RDDT, Credo Technology Group CRDO and Amphenol APH are some better-ranked stocks that investors can consider in the Zacks Computer and Technology sector. Impinj, Credo Technology Group and Amphenol sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Reddit Inc.’s full-year 2025 earnings is pegged at $2.01 per share, revised upward by 6.9% over the past seven days and suggests a year-over-year increase of 160.4%. Reddit shares have soared 14.9% year to date.

The Zacks Consensus Estimate for Credo Technology Group’s fiscal 2026 earnings has been revised upward by a cent over the past 30 days to $2.04 per share, calling for an increase of 191.4% year over year. Credo Technology Group shares have rallied 144.3% year to date.

The Zacks Consensus Estimate for Amphenol’s full-year 2025 earnings has been revised upward to $3.22 per share from $3.03 per share over the past 30 days, implying 70.4% year-over-year growth. Amphenol shares have risen 96.8% year to date.

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This article originally published on Zacks Investment Research (zacks.com).

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