Your Paranoia Means Big Business for This Company

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BJDF1E Social security card surrounded by barbed wire. Barbed; Wire; Identity; Theft; In; Studio; Information; No; People; Studi
Alamy
There's never been a better time than now to be in the business of catering to folks worried about someone swiping their identities. Between the data security breach at Target (TGT) during the holidays, which exposed millions of shoppers to potential transaction info theft, to the more recent Heartbleed exploit, with its serious ramifications, consumers are painful aware that they can never be too careful.

It's against this backdrop that LifeLock (LOCK) posted robust growth in its latest quarter on Wednesday afternoon. Revenue climbed 31 percent to $107.6 million, well above the guidance it had offered up in February, calling for $105 million to $106 million in revenue. LifeLock's bottom line wasn't as impressive, serving up an adjusted loss of 1 cent a share, but that deficit was better than the loss it was forecasting back in February.

More importantly, customers keep on coming. LifeLock closed out the quarter with 3.22 million subscribers, paying an average of $10.81 a month for the service that monitors a member's identity for potential violations. LifeLock has experienced sequential growth in revenue and subscribers for what is now 36 consecutive quarters.

Picking the Lock

LifeLock doesn't prevent all instances of identity theft. As a monitoring platform, its role is to provide early detection of breaches that can be addressed before things get worse. When incidents do happen, LifeLock is there with a recovery team and an insurance policy to cover losses that can't be recouped.

There will be probably never be a service that can cut your identity theft risk to anywhere near zero, and that's true of LifeLock as well as rival Intersections' (INTX) Identity Guard platform. However, that hasn't stopped negative critiques and lawsuits accusing it of being incomplete.

LifeLock can only blame itself. Its original ads featured CEO Todd Davis boldly revealing his Social Security number as a way of demonstrating how strong his faith was in his product. The ads may have led some to believe that LifeLock provided ironclad protection -- in fact, the marketing stunt resulted in numerous cases of data thieves swiping Davis' identity.

The Data is in the Details

LifeLock went public at $9 a share two years ago, and the stock has gone on to beat the market since then. It wasn't a winner right away, spending most of its first few months of trading below its IPO price. It didn't break into the double digits until February of last year. However, after so many quarters of sequential growth, a skeptical market came around to embrace LifeLock.

It's not just that its subscriber tally is going up. Folks are paying more for protection. The $10.81 a month average is 10 percent higher than it was a year ago, largely the result of more subscribers upgrading or signing up to the newer LifeLock Ultimate plan, where customers pay $25 a month for enhanced monitoring protection.

It's not perfect. It's not cheap. But it is attracting customers. LifeLock is pointing out that the first quarter was its second-most successful quarter in terms of gross new members in the company's history.

LifeLock is also raising its outlook for all of 2014 after the better than expected start to the year. It sees $460 million to $468 million in revenue, up from February's forecast calling for $455 million to $465 million in revenue. Despite the small loss during the first quarter LifeLock expects adjusted earnings per share to clock in 44 cents to 48 cents, just above its earlier range of 42 cents to 47 cents. LifeLock's adjusted EBITDA and free cash flow ranges are also moving higher since initiating coverage in February.

LifeLock shares may not be a great value on an adjusted earnings basis, but there is something to be said about a company that has had a run of nine years in a row where revenue and subscriber count kept consistently inching higher every three months.

It's a shame that we live in a time when ID theft monitoring is a growing service, but someone outside of the hacker ought to profit from it.

Motley Fool contributor Rick Munarriz owns shares of LifeLock. The Motley Fool recommends LifeLock. Try any of our newsletter services free for 30 days. ‚Äč

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18 Comments

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progressivehoax

Stoopid Liberal Democrats will fall for anything. LMFAO

May 05 2014 at 7:42 AM Report abuse -1 rate up rate down Reply
Mitch

Buy gold and lifelock. The paranoid nuts who listen to Rush and Sean. What a bunch of chumps.

May 04 2014 at 3:34 PM Report abuse rate up rate down Reply
levmebe69

Paranoia? This is a real problem .Everyone should be very "worried" about the abuse by our government alone.

May 04 2014 at 8:32 AM Report abuse -1 rate up rate down Reply
alfredschrader

The real problem is the NSA. Why ? They routinely collect your data then someone inside the NSA makes off with it to another country - Edward Snowden case in point.
How do you know that Snowden doesn't have your SSi number and bank/credit card data right now ?
You don't.
Last year the NSA spent 52 billion dollars spying. We can't even buy a rocket engine to launch a satellite because the NSA spent it all. Spying on you needs to end.

May 04 2014 at 8:27 AM Report abuse rate up rate down Reply
Iselin007

The hackers will get the info one way or the other. I suppose all the retail breaches happened because they didn't have life lock?

May 03 2014 at 9:51 PM Report abuse rate up rate down Reply
Iselin007

Many tech companies promise yet too many can't deliver. At many companies the main business is selling extended warranties ect.

The Companies often claim they can keep you computer running."Not". Best Buy gets you to test your computer then when they find a failed component suddenly they tell you they don't do repairs!
If you got some bad hardware or a corrupt software it's going to cost big bucks.

May 03 2014 at 9:31 PM Report abuse rate up rate down Reply
bakeland

Nothing beats a CREDIT FREEZE of all three of the reporting bureaus.

In a lot of state, it's FREE.

It cost $10 each time for each bureau, where the bank and credit lobby has a strong influence over the state legislature.

But, don't expect privacy on social media. I don't participate. THE ONLY SECRET IS THE ONE THAT YOU ONLY KNOW.

May 03 2014 at 9:29 PM Report abuse rate up rate down Reply
jacks_sam

Too bad Rick didn't mention the latest investigations into their deceptive advertising and their policy of not telling people of threats even that is what people are paying for. Too bad he didn't mention the huge insider selling since the investigation started 5 months ago. Better do some research on this one and especially on the management team before buying.

May 03 2014 at 7:42 PM Report abuse rate up rate down Reply
klw4919

Leave it to AOL and its ideological but considerably more authoritarian twin HP, (where you have to register so that your opinions can be checked to make sure they are sufficiently "civil" and "accountable" (a nice police state tactic) to always develop the Marxist/Leninist angle to any news story.The dreaded PROFIT.
Paranoia is baseless, ungrounded fear. It is a psychosis. People who fear that their identities will be stolen are not mentally ill. Providing a service that makes them safer is not "capitalizing" on their paranoia, anymore than a psychiatrist might be capitalizing on your paranoia. I think some of you might consider seeing one incidentally. Probably many of have a relative who is one. Maybe you could get a good deal.
It's so interesting to see how the left is able to make everything they don't agree with some kind of mental disorder. How very Soviet!.
You journalism students have had your brains so thoroughly washed ( in some cases I'm sure only a rinse was required) that you don't have any real ideas of your own. I'm sure many of you red diaper babies had left wing parents who did a pretty good job of it before you ever left home. Now you are just like a tree full of parrots, imitating only each other. How sad.

May 03 2014 at 2:32 PM Report abuse rate up rate down Reply
2 replies to klw4919's comment
SweetfeetBaby

This is today's sad excuse for journalism, and it's pervasive.
What percentage of today's internet "journalists" would you guess actually graduated or even attended journalism school? I would say it's very low, as they daily break all the fairness and objectivity rules I was taught years ago, & usually for political purpose. Are responsible editors nowhere to be found?
Fairness and objectivity haven't changed since then. "Journalism" most certainly has.

May 03 2014 at 3:50 PM Report abuse rate up rate down Reply
1 reply to SweetfeetBaby's comment
Mitch

Journalism has been the victim of the race to the bottom mentality. One used to be able to make a living as a local reporter, but those days are gone. No one is willing to pay for news. Free news, or ad supported news, is worth exactly what you pay for it.

May 04 2014 at 3:39 PM Report abuse rate up rate down
Mitch

And you are only parrotin Savage and Limbaugh. Those guys make big bucks pimping Lifelock and gold.

May 04 2014 at 3:36 PM Report abuse rate up rate down Reply
am0714

Nothing new here, the mafia did it first and the Bush administration followed suit and scared the crap out of us to get reelected, or should I say elected.

May 03 2014 at 11:30 AM Report abuse rate up rate down Reply
2 replies to am0714's comment
rademps

Elected.

May 03 2014 at 3:13 PM Report abuse +1 rate up rate down Reply
SweetfeetBaby

And what did B. Obama do? Just think back and count the lies.

May 03 2014 at 3:52 PM Report abuse -2 rate up rate down Reply