Symantec CEO Clark: Equifax Breach Is Driving A 'New Normal' For Identity Protection, Consumer Business Is 'Strong Growth Engine'
Symantec CEO Greg Clark Wednesday told analysts that the Equifax breach of 145.5 million Americans' personal data has resulted in a significant uptake in identity protection services including the company's LifeLock products.
"We do think there is a new normal for an uptake in identity protection following Equifax," Clark told analysts on the security giant's second-quarter earnings call. "It was very strong at the beginning, but even weeks later it is sustained in a way that is different than some of the other big breaches like Anthem."
Symantec, in fact, has experienced a growth in business as a result of consumers searching for identity protection with the "strength" of the LifeLock brand helping drive identity protection sales growth. "It was a substantial factor," said Clark.
The Equifax credit reporting agency breach, which was disclosed two months ago, impacted one-third of the US population. It is one of the largest breaches in U.S. history with millions of social security numbers, driver's license numbers and credit card numbers stolen from a single company's servers.
The Anthem breach, which took place in 2015, resulted in the data of 80 million customers of the health care provider being compromised. Anthem earlier this year agreed to pay $115 million to settle the class action lawsuits in the wake of the breach.
Symantec's consumer digital safety revenue exceeded expectations for its second fiscal quarter ended Sept. 29. Its consumer digital safety customer count was 21.3 million with a monthly billing of $8.07 per month in the quarter, up from 21.1 million with a monthly billing of $7.87 per month in the preceding quarter.
"The consumer business is fixed," said Clark. "It is a very strong growth engine and we are seeing that even outside of the influence of the Equifax breach that definitely had some very strong tailwinds."
Besides the Equifax breach, the KRACK vulnerability in the Wi-Fi protocol, which came to light last month, is driving "strong momentum" for Symantec's Norton WiFi Privacy VPN product.
"If you were sitting in a Starbucks and some kid had some software and knew how to do it, they could be siphoning off your communications," said Clark. "The spike in the VPN product is also very, very substantial and that product is a strong product. It is a $30 to $50 a year adder, and we are seeing that at very powerful growth rates as well."
Symantec is raising the outlook on the consumer business with projections for mid-single-digit growth rates. That's a dramatic turnaround from a year ago when Symantec's consumer business was experiencing high single digit or even double-digit sales declines.
Symantec's LifeLock product line is helping drive that consumer business rebound. "We are seeing better retentions and we are seeing more uptake (with LifeLock)," said Clark. "We believe that adjusted for acquisition the consumer business is going to grow sustainably and at a strong clip."
Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, No. 119 on the 2017 CRN Solution Provider 500, said the "huge" Equifax breach proves yet again that major corporations are not prepared to stop cyberattacks.
The lack of secure infrastructure at major businesses is hitting consumers hard, said Venero. "This is a recipe for disaster for individuals whose entire life can be compromised by these breaches," he said. "In my opinion, Equifax is liable if an individual's credit or finances is impacted by this breach. Equifax should be held liable. There is a big need for the Symantecs and McAfees of the world to make sure they have a very robust consumer product line to protect consumers at large."
This week, a Seattle woman, Katie Van Fleet, who claims her identity has been stolen 15 times since the Equifax data breach, has filed a class action lawsuit against the credit reporting agency.
Symantec's enterprise security business did not fare as well in the quarter with enterprise security sales of $701 million compared with $610 million in the preceding quarter.
Overall, Symantec reported lower-than-expected earnings of $0.40 a share for the quarter, down from Wall Street's consensus of $0.43 a share, according to Zacks Investment Research.
Sales for the quarter were $1.24 billion, down from the $1.28 billion Wall Street expected, according to Zacks.
Symantec shares were down $2.81 (-8.74%) to $29.35 in after-hours trading.