LifeLock (NYSE: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.
|Revenue||$134 million||$134 million|
|Profit||-$0.06 per share||-$0.06 per share|
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.
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.
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.
Demitrios Kalogeropoulos owns shares of Apple. The Motley Fool recommends Anthem, Apple, and LifeLock. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.