Gen Digital's Q3 Earnings Beat Estimates as AI-Driven Security Demand Surges

Gen Digital Inc. reported third-quarter fiscal 2026 results that exceeded analyst expectations, posting adjusted earnings per share of $0.64 and revenue of $1.24 billion according to earnings reports. The company's revenue jumped 26% year-over-year, reflecting strong demand for its digital protection services. This marks the third consecutive quarter in which Gen Digital has raised its annual revenue forecast.

The company now expects full-year revenue to range between $4.955 billion and $4.975 billion, up from its previous forecast of $4.92 billion to $4.97 billion. Adjusted earnings per share are projected to fall between $2.54 and $2.56, matching the analyst consensus of $2.54. Vincent Pilette, Gen Digital's CEO, attributed the growth to AI-driven transformations in both consumer behavior and threat landscapes.

Gen Digital also announced a quarterly cash dividend of $0.125 per share, payable on March 11, 2026. The company's financial performance was further bolstered by strong bookings and free cash flow growth.

Why Did This Happen?

Gen Digital's Q3 performance was driven by strong demand for its digital security services, particularly as the rise of artificial intelligence introduces new threats. The company has launched several AI-powered products, including Trust Hub and Norton Neo, designed to address evolving digital risks.

The increased demand for cybersecurity services has been fueled by a surge in high-profile data breaches and the growing sophistication of cyberattacks. Gen Digital's strategic investments in AI solutions and its recent acquisition of MoneyLion have enabled it to expand its offerings into financial wellness, further differentiating its platform.

How Did Markets React?

Shares of Gen Digital rose 7% in after-hours trading following the earnings announcement. The stock closed at $22.45 on Thursday, though it remains down 12.88% over the past three months. The market response reflects investor confidence in the company's ability to leverage AI and expand its cybersecurity footprint.

The company's updated guidance for fiscal 2026 revenue and EPS aligns closely with analyst expectations, which suggests that the market views the company's strategic direction as credible.

What Are Analysts Watching Next?

Investors and analysts are closely watching Gen Digital's ability to sustain its growth momentum into 2026. While the company has raised its revenue forecast three times this year, its full-year guidance still falls short of the analyst consensus of $5.176 billion.

A key area of interest is the company's integration of the MoneyLion acquisition and the performance of its AI-driven security products. If Gen Digital can continue to expand its user base and improve retention rates, it may be able to exceed expectations in the coming quarters.

Another factor is the competitive landscape in the cybersecurity sector. As more companies develop AI-powered security solutions, Gen Digital must continue to innovate and differentiate its offerings to maintain its market position.

Gen Digital's ability to maintain strong gross profit margins and deliver consistent cash flow will also be closely monitored. While the company reported a 79% gross profit margin in the previous quarter, operating income growth of just 6% suggests that margin pressures remain a challenge.