Cyber security firm Avast (AVST) expects growth this year to be at the higher end of the forecast range as consumers continue to pay to protect themselves online. Avast stock jumped as much as 5% in early trading to 502p, before easing off a little to 489.3p by mid-morning.
The shares hit a record 600p in August 2020, having rallied from their 250p listing price in May 2018.
TOP OF FORECAST RANGE
Full year revenue is now expected at the top end of previous guidance for 6% to 8% revenue growth. Consensus forecasts are pitched at $952 million for the year to 31 December 2021, implying 6.7% growth on 2020, with EBITDA (adjusted earnings before interest, tax, depreciation and amortisation) of $533 million guided, up about 7.5%.
Czech Republic-based Avast is one of the world’s biggest providers of online protection to consumers, with more than 435 million people worldwide using its Avast and AVG firewall, anti-hacking, malware and anti-virus toolkits.
About 12.6 million of those users pay for the premium product, according to Megabuyte analysis, and convincing more of its large freemium user base to upgrade to paid-for service represents the company’s core growth opportunity.
In the first quarter of 2021 revenue jumped 10.5% to $237.1 million, while adjusted EBITDA increased 10% to $133.7 million. That implies an adjusted EBITDA margin of 56.4%.
AXING UNDERPERFORMERS
‘The change in guidance comes as a result of the sale of its non-performing business Family Safety Mobile on 16 April, which was a drag on growth,’ analysts at Peel Hunt said.
Peel Hunt already accounts for this sale in its model and admits its forecasts are also at the top end of the range, so ‘in line with the new guidance.’ But the broker sees structural headwinds beginning to materialise, it said in a note on Tuesday.
