Gen Digital Q1 2026: MoneyLion Buy Fuels Revenue, Squeezes Profits

In the world of cybersecurity, Gen Digital Inc. (formerly NortonLifeLock) is a household name, known for its Norton and Avast brands. But the company is evolving. In its latest quarterly report (10-Q) for the period ending July 4, 2025, a major strategic pivot is evident. Let's dig into the numbers to see how Gen Digital is performing as it expands beyond its traditional cybersecurity roots.

A Tale of Two Segments: Growth Fueled by Acquisition

At first glance, Gen Digital's performance is impressive. Net revenues for the quarter surged 30% to $1.26 billion, up from $965 million in the same period last year. This growth wasn't just organic; it was supercharged by the company's recent acquisition of financial wellness company MoneyLion on April 17, 2025.

The impact of this acquisition is clearest when looking at the company's two main business segments:

• Cyber Safety Platform: This is Gen Digital's core business, including its well-known antivirus and identity protection products. It saw healthy growth, with revenues rising from $780 million to $869 million.
• Trust-Based Solutions: This segment, which now includes MoneyLion's financial products, more than doubled its revenue, jumping from $185 million to $388 million. This dramatic increase shows the immediate top-line contribution of the new acquisition.

To better visualize how the company's revenue flows through its operations to its bottom line, the following chart breaks down the income statement for the quarter.

The Cost of Expansion: A Squeeze on Profits

While revenue soared, the bottom line tells a different story. Net income for the quarter actually decreased to $135 million, a significant drop from the $181 million reported in the prior-year quarter. So, where did the money go?

Two main factors drove this decline:

1. Higher Operating Costs: Integrating a major company like MoneyLion is expensive. Total operating expenses shot up 52% to $544 million. Key increases included a 62% jump in Sales and Marketing expenses and a 42% rise in General and Administrative costs, largely reflecting the expanded operations.
2. A Bigger Tax Bill: The most significant hit to profitability came from taxes. The company's income tax expense climbed to $165 million from just $95 million a year ago. This caused its effective tax rate to balloon from 34% to a hefty 55% for the quarter.

To fund the MoneyLion acquisition, which had a net price tag of about $970 million, Gen Digital took on additional debt, including a new $750 million term loan. This brings its total debt to nearly $9.0 billion, a figure that management and investors will need to monitor closely, especially with its exposure to variable interest rates.

The Road Ahead

Gen Digital's first quarter of fiscal 2026 showcases a company in a bold transition. The acquisition of MoneyLion has successfully diversified its revenue streams and expanded its footprint in the Americas, which now accounts for 70% of its revenue.

However, the path of integration is rarely smooth. The immediate pressure on net income from higher costs and taxes highlights the challenges ahead. The key test for Gen Digital will be its ability to absorb MoneyLion, realize the expected synergies, and manage its substantial debt load. For investors, the question is whether this strategic gamble on blending cybersecurity with financial wellness will ultimately create a more resilient and profitable company in the long run.