DLP, Backup Drive Symantec's 'Strongest' Q1

Strong sales of backup and recovery, data loss prevention and managed security services drove Symantec to record revenues and rising profits for the first fiscal quarter of 2012, which CEO Enrique Salem hailed as the ’strongest June quarter in Symantec’s history.’

Symantec reported revenue at $1.65 billion, increasing 15 percent year-over-year from the $1.43 billion reached during the first fiscal quarter of 2010. The Mountain View, Calif.-based security giant reported that net income totaled $172 million, compared with $161 million in the year-ago period.

Looking ahead, Symantec executives anticipate that the company will reach between $1.66 billion and $1.67 billion in revenue for its second fiscal quarter of 2012, representing an increase of 12 or 13 percent.

During an earnings call Wednesday, Salem attributed the first quarter’s solid growth to increased license revenues in backup, DLP, managed security services and consumer, while the authentication business ’exceeded expectations,’ he said.

’These products are the biggest drivers of new licenses for the company,’ he said.

Some of the biggest gains during Symantec’s first fiscal quarter of 2012 were in the security and compliance business sales, which comprised 28 percent of the company’s total revenue, increasing 31 percent from the first quarter of 2011. Security and compliance growth rates were also augmented by moving managed security services from the services segment into the security and compliance unit, executives said.

’The lack of in-house security expertise and infrastructure is driving increased demand for outsourced security services,’ Salem said.

In addition, Symantec's security growth was bolstered by authentication and SSL business from last year’s VeriSign acquisition, reaching $74 million in revenue and exceeding previous expectations of $70 million.

During a question and answer session on the earnings call, Salem said that Symantec benefitted from the fallout in the wake of the March RSA breach, as customers called upon the company for alternative authentication and identity management solutions.

’Customers are concerned about the attacks, and that is driving people coming to us,’ Salem said.

Salem pointed to the recent launch of Symantec Endpoint Protection 12, and Symantec Endpoint Protection Small Business Edition 12, equipped with behavioral and reputation technologies, which are anticipated to drive endpoint security growth across all markets.

Meanwhile, Symantec’s storage and server management segment -- the largest portion of Symantec’s business -- totaled 36 percent of the company’s business, rising 14 percent from Q1 of last year.

The storage growth was driven by double-digit sales of its enterprise data recovery software Net Backup, and the stabilization of its storage management business, Salem said.

’Effective backup and recovery continues to be a high priority,’ Salem said. ’We’re beating our competition worldwide and gaining share in the backup and deduplication market.’

In addition, the company experienced incremental revenue growth of $3 million generated from the recent $390 million acquisition of eDiscovery vendor Clearwell Systems, finalized in June. Symantec plans to eventually incorporate eDiscovery technologies into its Enterprise Vault offering as part of a comprehensive enterprising archiving solution.

’I absolutely expect customers will do more with a broader set of Symantec’s products,’ Salem said.

Next: Symantec Grows SMB Business

Salem said that the company was also working hard to further drive SMB growth, propelled by its growing SaaS business and changes in the SMB division’s organizational structure.

’Clearly we are starting to see progress. That is a lot of work that we’ve got to do to enable our partners and drive demand,’ he said. ’There’s a lot of work that we’re doing to drive better results.’

Also during the call, Salem noted that the company was benefitting from recent acquisition and subsequent leadership turnover at competing security firm McAfee, now a part of Intel Corp.

’Clearly we have a distracted competitor. That’s a benefit to us,’ Salem said. ’My expectation is that it will be a benefit to our security business that will continue for some time.’