Fitch Ratings has adjusted the outlook on Gen Digital Inc. to stable from negative and affirmed the company's Long-Term Issuer Default Rating (IDR) at BB+. The action follows the rating agency's assessment that Gen Digital's leverage profile is likely to improve and remain within a sensitivity range that Fitch views as consistent with the current rating.
Alongside the IDR affirmation, Fitch left Gen Digital's first lien senior secured term loans and secured revolver rated at BBB- with a Recovery Rating of RR1. The firm's senior unsecured notes were affirmed at BB+ with a Recovery Rating of RR4.
Central to the outlook revision is Fitch's expectation that Gen Digital's EBITDA leverage will stay below 3.5x throughout the rating horizon. The agency projects leverage will decline to 3.3x in fiscal 2026, a level below its prior forecast and comfortably inside the predefined sensitivity band of 2.5x to 3.5x that informs the rating.
Fitch's view is informed by the company's recent actions and operating performance. In the first nine months of fiscal 2026, Gen Digital made voluntary debt repayments while registering EBITDA growth. The agency also anticipates the company will produce strong pre-dividend free cash flow margins in the mid-20% range, which would leave additional capacity to accelerate deleveraging if management chooses.
The rating report highlights several strengths in Gen Digital's business profile: a leading market position in consumer security, well-known brands, and high profitability. Fitch expects EBITDA margins to remain in the low-50% range and forecasts free cash flow generation in the low- to mid-20% area.
Revenue characteristics support the credit view. The company's top line is largely recurring and subscription-based, anchored by roughly 78 million paid customers across the Norton, Avast, LifeLock and MoneyLion brands. Fitch notes customer retention at 78%, which it describes as healthy; the agency also observes this retention rate is lower than many enterprise-focused software peers, reflecting Gen Digital's consumer-oriented mix.
Fitch incorporated the recently completed acquisition of MoneyLion into its assessment. The transaction broadens Gen Digital's product set beyond consumer security into digital banking, consumer lending and marketplace offerings. MoneyLion contributed more than 18 million customers to the combined company, bringing the total installed base to over 500 million users.
On growth, Fitch expects MoneyLion to continue expanding at a high double-digit pace and to provide incremental revenue to Gen Digital. Overall revenue is projected by the agency to grow by double digits in fiscal 2026, followed by a transition to mid-single-digit growth in subsequent years.
The rating action notes market competition as an ongoing consideration. In consumer security, Gen Digital faces competition from brands including McAfee, Bitdefender and Microsoft Defender. MoneyLion competes in crowded financial services markets against both incumbent banks and fintech firms such as PayPal and Block.
Key metrics and projections cited by Fitch:
- IDR: BB+ (affirmed)
- First lien senior secured term loans and secured revolver: BBB- (RR1)
- Senior unsecured notes: BB+ (RR4)
- Projected EBITDA leverage: below 3.5x over the rating horizon; 3.3x in fiscal 2026
- EBITDA margins: expected in the low-50% range
- Free cash flow margins: expected in the low- to mid-20% range; pre-dividend FCF mid-20% range
- Paid customers: ~78 million; customer retention: 78%
- MoneyLion customers added: >18 million; combined installed base: >500 million users
Fitch's revision to stable reflects a combination of financial and operational factors the agency judges likely to keep credit metrics aligned with the affirmed rating. The assessment underscores the importance of continued deleveraging and sustainable cash flow generation to maintain the rating over time.