LifeLock (LOCK) this evening posted first-quarter earnings results that were right in line with Wall Street's expectations. The identity-theft protection provider met analyst forecasts on both the top and bottom lines. Yet the stock jumped higher in early trading following the announcement, probably because of management's aggressive full-year sales guidance.
| Metric | Expected | Actual |
|---|---|---|
| Revenue | $134 million | $134 million |
| Profit | -$0.06 per share | -$0.06 per share |
Sources: Yahoo! Finance and LifeLock financial filing.
Record gross member additions
Sales bounced higher by 25% as LifeLock attracted 421,000 new subscribers to its protection services. Total membership is now just slightly below 4 million users. The company is riding a wave of favorable publicity from what seems like an unending stream of high-profile hacker attacks. LifeLock's results were boosted by shopper concern around Target's data breach this time last year. And in 2015's comparable period, news surrounding Anthem's recently compromised databases provided a similar bounce.
"Against a backdrop of continued data breaches, we produced the best quarter of gross member additions in the history of the company," said CEO Todd Davis. Those new subscribers helped power a 27% jump in LifeLock's consumer business even as the enterprise unit shrank slightly.
LifeLock posted an encouraging uptick in retention, with the renewal rate climbing to 87.8% from 87.5% a year ago. Average revenue per user, or ARPU, climbed higher as well, thanks to the success of new product offerings that cost as much as $30 per month. Yes, the majority of LifeLock's customers choose cheaper protection options, but ARPU still rose from $10.81 to $11.38 this quarter.
Higher loss
However, that climbing revenue profile isn't generating consistent profits -- at least not yet. In fact, the company's net loss more than doubled to $9 million.
Rising expenses, particularly marketing costs, were the main reason a 25% sales increase didn't lead to a profitable quarter. Instead, the company remained in growth mode and prioritized branding, which makes sense given that data-breach issues and identity-theft risks are hot topics right now.
Robust guidance
Management issued solid guidance for the coming quarter and for the full year. LifeLock should book $143 million of revenue in the next three months, the company said, which would be a 23% boost over the prior year.
And for all of 2015, LifeLock sees sales hitting $587 million. That forecast was a shade higher than Wall Street's target of $584 million and also represents better than a 20% annual sales gain. The stock was up 4% following the announcement.
