Avast (LON:AVST), together with its subsidiaries, a leading global cybersecurity provider, issued the following scheduled trading update for the third quarter of its current financial year, comprising the period from 1 July 2019 to 30 September 2019.
Financial Summary
| ($’m) | Q3 2019 | Q3 2018 | Change % | Change % (excluding FX) 1 |
| Adjusted Revenue | 220.3 | 209.8 | 5.0 | 6.6 |
| Adjusted Revenue excl. Discontinued Business and sale of Managed Workplace 2,3 | 218.3 | 203.4 | 7.3 | 9.0 |
| ($’m) | 9M 2019 | 9M 2018 | Change % | Change % (excluding FX) |
| Adjusted Revenue | 647.1 | 613.1 | 5.5 | 6.7 |
| Adjusted Revenue excl. Discontinued Business and sale of Managed Workplace | 640.1 | 593.0 | 7.9 | 9.1 |
For the third quarter, Adjusted Revenue rose by 9.0% excluding FX, Discontinued Business and the sale of Managed Workplace, and 7.3% in actual rates, to $218.3m. For the year to date, Adjusted Revenue rose by 9.1% excluding FX, Discontinued Business and the sale of Managed Workplace, and 7.9% in actual rates, to $640.1m.
As expected, Adjusted Billings growth in the third quarter was similar to the 9.0% Adjusted Revenue growth, and consequently was above Adjusted Revenue growth for the year to date.
For the third quarter, Adjusted EBITDA increased 8.7% to $121.9m, For the year to date, Adjusted EBITDA increased 6.6% to $358.5m, resulting in an Adjusted EBITDA margin year to date of 55.4%4.
At 30 September 2019, net debt / LTM (“last twelve months”) Adjusted EBITDA per the banking covenant was 1.9x and net debt / Adjusted Cash EBITDA was 1.8x5. Alongside continued strong organic cash flow, proceeds from the strategic partnership transaction with Ascential helped accelerate the programme of deleveraging.
Outlook
The Group reaffirms its FY 2019 outlook for Adjusted Revenue to be at the upper end of high single digit growth, excluding FX, Discontinued Business and the sale of Managed Workplace, and broadly flat Adjusted EBITDA margin% (pre-IFRS 16 adoption).
Avast intends to report Full Year results to 31 December 2019 on Wednesday 26 February 2020.
Notes
1 Growth rate excluding currency impact calculated by restating Q3 2019 actual to Q3 2018 FX rates. Deferred revenue is translated to USD at date of invoice and is therefore excluded when calculating the impact of FX on revenue
2 As the company is exiting its toolbar-related search distribution business, which had previously been an important contributor to AVG’s revenues (referred to above, with the Group’s browser clean-up business, as “Discontinued Business”), the growth figures exclude Discontinued Business, which the Group expects to be negligible by the end of 2019
3 To reflect the underlying organic growth performance, growth figures exclude the impact of the Managed Workplace disposal made at the end of January 2019, through the exclusion of Managed Workplace results in February to September 2018
4 The impact on Adjusted EBITDA and Cash EBITDA following the adoption of IFRS 16 on 1 January 2019 is $6.5m (favorable impact on EBITDA margin% by 1% point for 9M 2019).
5 The impact of IFRS 16 on Net debt (lease liabilities) is a $69.6m increase. Leverage ratios excluding the impact of IFRS 16 would be 1.8x on Adjusted EBITDA and 1.7x on Adjusted Cash EBITDA.
Ondrej Vlcek, Chief Executive of Avast, said:
“I’m pleased to report that Avast has delivered good growth in the third quarter, consistent with our expectations at the time of the Half Year Results in August. We continue to successfully execute our growth strategy, underpinned by our platform distribution model and our global installed base of more than 435m users.”
