Dan Bergstrom: Thank you.
Vincent Pilette: Thank you, Dan.
Operator: Our final question comes from Saket Kalia with Barclays. Your line is now open.
Saket Kalia: Hey, great. Hey, Vincent and hey, Natalie. Thanks for taking my questions. You have nice progress of the year.
Vincent Pilette: Yes. Thanks, Saket.
Saket Kalia: Hey, Natalie, maybe — absolutely. Natalie, maybe just to start with you, I think the guide for fiscal 2025, we said 3% to 5% bookings growth, great to see. I think that implies a little bit of a pickup in bookings growth compared to fiscal 2024. So do you just maybe have a general rule of thumb on how much of that can be driven by subscribers or ARPUs? Is a mix of growth? How do you sort of think about that growth formula for next year?
Natalie Derse: Hi, Saket, good to hear from you. Yes, the bookings of 3% to 5% as we look into 2025, we’re super excited about. But nothing’s really changed from what we talked to you guys about back in November at AID. It’s going to be a mix of our 5 for 5 growth strategy. And those levers are going to be all equally important, but scaling it to a different magnitude as we kick off 2025 and continue down that three-year journey. I’ll just give you a bit of color. So we’re committed to driving the acquisition of new customers in a healthy ROI way. We’ll continue to stay committed to that. Of course, our aspiration is to drive new customer acquisition growth. Quarter in, quarter out, the absolute number of customer acquisition will vary, but we definitely stay steadfast and committed to investing our marketing dollars doing that in a healthy way and doing that very, very diverse geographically and across brands.
And then the other levers that are going to drive the installed base and both in scale and quantity, as well as scale and value is cross-sell and upsell. Cross-sell, I mean being able to close the year in fiscal year 2024 and approaching 20% penetration of cross-sell is something that we’re very, very proud of and is significant progress even over the last two quarters. So you guys should look at those as real, real proof points, measured proof points that we will continue to successfully drive cross-sell and therefore, increase the engagement with our existing customers. Now Pepper-in [ph], our prioritized growth lever in upsell. And what we mean by that is getting more and more of our customers, both new and existing in higher-tiered, higher-valued Norton 360 membership offerings.
And so the mix of those two, of course, is going to drive our bookings. It’s going to, therefore, drive our revenue growth in a scaling manner. And then will, in turn, drive higher rates of retention across the brands. Higher engaged customers, we see notable higher retention rates. And so at the end of the day, I would say the combination of all those things are what we call the flywheel. And let’s not forget the partner business. The partner business drives broader awareness. It’s our competitive differentiator, and it’s a diversification of our acquisition in a scaling revenue contributor, way, and so we will continue to invest behind the diversification of our partner channels with our world-class sales teams and really have all five of those levers come together, you’re going to start to see those all come through in fiscal year 2025.
Yes, at varying pace and magnitude throughout the year, and we will build throughout the year. As you can assume when we talk about retention rates, it’s the annual retention rate of the customers. So as we bring in more and more cross-sells and when we increase our coverage of our membership tier offerings, those are all going to scale throughout the year, which is why you should expect the bookings to scale throughout the year as well.
Saket Kalia: Got it, got it. That’s super helpful. And maybe that’s a good segue into the follow-up for you, Vincent. I think you said we expanded retention rates on the Avast customer base by more than two points since the deal, which has been great to see. How are you may be thinking about that retention rate for next year? And maybe relatedly, is it the same blocking and tackling that’s going to just continue to lift that retention rate, higher as the years go on? Or are there other parts to the playbook around improving that retention rate for Avast.
Vincent Pilette: Yeah. Let me take that one on. So just to ride out a few numbers to put everybody on the same page. When we closed the merger 18 months ago, our aggregated retention rates for the full portfolio was around 75% as we mentioned. You remember at the NortonLifeLock combined business were around 84% and Avast was around 65%, 66%. First, as we discussed, centralized our operations around the center of expertise for process management, same techniques, same set of operations as we drive these retention activities that really start on day one when the customer onboard for the first time all the way to the day 365 when they renew — and we closed Q4 here after 18 months on an aggregated basis, at 77.5% retention, 2.5 points improvements in the merger.
But Avast itself closed at a record retention rate of over 70%, with close to 5 points improvement in 18 months, while Norton and LifeLock combined stayed somewhat flat. All of the brands slightly trending up on customer satisfaction and improving on retention, even though NortonLifeLock combined, it was immaterially perceptible. So I call it flat. We still have a good in my opinion. As you remember, we had said, maybe Avast he 20-point delta we can improve half of it operationally. So we’ve done half in 18 months will now over the next 18 months, drive the other half, at least that’s how we linearly are projecting it. And now the approach is not different. We’re shifting from having centralized the operations, standardize the operations to working on three areas.
The first one is defining the customer journeys within the customer life cycle. Life cycle is you onboard for the first time all the way to when you try to leave, it could be a multiyear view and then you have many different steps in your cybersafety journey, and you have different journeys. We’ve done a lot of work and beefed up our team and our for to buy a very integrated part of the journey into our product. The second one is really what the new Gen stack will enable a will enable us to use a vast amount of data and use our data scientist and AI modeling to improve this, what I call contextual communications, personalized communications. And the second one is really being able to offer a better path between the cross-sell, upsell and the membership side.
