GENGen Digital

You attribute the increase in revenue to a $406 million increase in sales of your consumer security products and a $117 million increase in sales of your identity and protection products, which was offset by $113 million of foreign exchange headwinds. Please revise here to provide a quantified discussion of the impact of the Avast acquisition on your net revenues.

Rest of the question

In this regard, avoid using vague terms such as "primarily," as you have done on page 28, in favor specific quantification to more clearly describe the organic versus inorganic revenue growth. Similarly, revise to include a discussion of Avast's impact on your performance metrics such as direct customer count, ARPU and annual retention rate. For example, the decrease in your annual retention rate from 84% in fiscal 2022 to 76% in fiscal 2023 appears to be impacted by the Avast acquisition. Refer to Item 303(b) of Regulation S-K.

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We note that annual retention rate is defined as the number of direct customers who have more than one-year tenure as of the end of the most recently completed fiscal period divided by the total number of direct customers as of the end of the period one year ago. Please revise to clarify whether you compare the customer base as of a year ago to the same customers in the current period.

Rest of the question

If not, explain further how this measure represents retention of existing customers.

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We note your disclosure that revenue from e-commerce partners is recognized on a gross basis before the deduction of partner incentive and fees. Please revise to disclose the nature of these arrangements, clarify whether you have direct billing arrangements with the end consumer, and describe the basis for your accounting treatment conclusion, if material.

Rest of the question

In your response, tell us the amount of e-commerce revenue for each period presented, including subsequent interim periods, and clarify whether ecommerce revenue is included in direct or partner revenue as disclosed in MD&A. Refer to ASC 606-10-50-12.

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Please provide us with your customer retention rates for each quarter of the last two fiscal years and the current interim periods. Also, tell us your consideration to include this information in your Form 10-Q filings. In this regard, we note you present quarterly retention information in your investor presentations along with a discussion of changes in such metric since the Avast acquisition.

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We note that you highlight the non-GAAP year-over-year information in a different style (i.e. bullet points) than you do the GAAP information, which appears to place undue prominence on your non-GAAP measures. In addition, you discuss non-GAAP operating income in your highlights without discussing GAAP operating income with equal or greater prominence. Please revise.

Rest of the question

Refer to Question 102.10(a) of the Non-GAAP Compliance and Disclosure Interpretations.

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