NETSCOUT Reports Fourth Quarter and Full Fiscal Year 2023 Financial Results
Delivers Strong Fourth Quarter and Full Fiscal Year Performance
“We delivered a strong fourth quarter and full fiscal year 2023 performance,” stated Anil Singhal, NETSCOUT’s president and chief executive officer. “On a full fiscal year-over-year basis, we grew revenue by nearly
For fiscal year 2024, we remain committed to operating the business with a balanced approach to revenue growth and profitability as we manage the dynamic macro-environment. As implied by our fiscal year 2024 outlook, we expect to again grow revenue, further improve our margins, enhance diluted EPS performance, and generate solid free cash flow.
Moving forward, we remain focused on driving toward our long-term business objectives by advancing our strategy to play a mission-critical role for organizations around the globe as ‘Guardians of the Connected World,’” concluded Singhal.
Q4 FY23 Financial Results
Total revenue (GAAP and non-GAAP) for the fourth quarter of fiscal year 2023 was
Product revenue (GAAP and non-GAAP) for the fourth quarter of fiscal year 2023 was
Service revenue (GAAP and non-GAAP) for the fourth quarter of fiscal year 2023 was
NETSCOUT’s income from operations (GAAP) was
Net loss (GAAP) for the fourth quarter of fiscal year 2023 was
As of March 31, 2023, cash, cash equivalents, and short- and long-term marketable securities were
Full Year FY23 Financial Results
-
Total revenue (GAAP and non-GAAP) for the full fiscal year 2023, was
$914.5 million $855.6 million -
Product revenue (GAAP and non-GAAP) for fiscal year 2023 was
$450.8 million $410.1 million -
Service revenue (GAAP and non-GAAP) for the fiscal year 2023 was
$463.7 million $445.5 million -
NETSCOUT’s income from operations (GAAP) for fiscal year 2023 was
$77.7 million $48.6 million 8.5% , versus5.7% in fiscal year 2022. The Company’s non-GAAP EBITDA from operations for fiscal year 2023 was$227.8 million 24.9% of non-GAAP total revenue, compared with non-GAAP EBITDA from operations of$202.4 million 23.7% of non-GAAP total revenue for fiscal year 2022. The Company’s non-GAAP income from operations for the fiscal year 2023 was$206.8 million 22.6% , compared with non-GAAP income from operations of$180.0 million 21.0% for fiscal year 2022. -
For fiscal year 2023, NETSCOUT’s net income (GAAP) was
$59.6 million $0.82 $35.9 million $0.48 $159.6 million $2.18 $138.4 million $1.84 -
During fiscal year 2023, NETSCOUT repurchased approximately 4.6 million shares of its common stock for an aggregate of approximately
$150 million
Financial Outlook
The Company’s financial outlook for fiscal year 2024 is anticipated to be as follows:
-
Revenue (GAAP and non-GAAP) in the range of
$915 million $945 million -
GAAP net income per share (diluted) in the range of
$0.86 $0.98 $2.20 $2.32 - A reconciliation between GAAP and non-GAAP numbers for NETSCOUT’s fiscal year 2024 outlook is included in the financial tables below.
Recent Developments and Highlights
-
In late April 2023, NETSCOUT revealed the findings of a commissioned Forrester Consulting Total Economic Impact™ Study that evaluated the cost savings and business benefits for organizations deploying NETSCOUT nGenius® Enterprise Performance Management to monitor real-time application performance and end-user experience. Based on a financial assessment and interviews with decision-makers that had implemented the solution, Forrester found that, over three years, nGenius Enterprise Performance Management provided the organizations surveyed several benefits, including: an overall return on investment (ROI) of
234% ,$1.9 million 80% reduction in hours spent on incident management by IT operations teams, a7.5% increase in revenue productivity for customer-facing agents, and a payback period of less than six months. - In early April 2023, NETSCOUT announced the findings from its 5th Anniversary DDoS Threat Intelligence Report that highlights a new era of multi-vector attacks using application-layer and botnet-based, direct-path attacks. The publication indicated that attack frequency has increased tenfold since NETSCOUT’s first report in 2005.
- In late February 2023, NETSCOUT announced that it continues to advance the performance management market with the enhancement of its nGenius® Enterprise Performance Management solution that offers support for more than 1,000 voice, video, and business data applications out of the box. The Company further enhanced this capability through the integration of nGeniusONE® and F5 technologies to automatically configure monitoring for custom applications. The solution helps customers eliminate blind spots at the packet level for better application performance and security assurance.
-
In early February 2023, NETSCOUT announced that it has extended its leadership position in DDoS protection by expanding its Arbor Cloud attack mitigation scrubbing centers to 15 worldwide with a dedicated capacity of 15 terabits per second (Tbps). In addition, NETSCOUT added a new presence in
Dubai , which allows regional enterprises and ISPs to mitigate DDoS attacks more quickly and efficiently by reducing latency. As part of NETSCOUT’s Adaptive DDoS Defense solution, Arbor Cloud delivers a cloud-based, automated, or on-demand managed DDoS attack mitigation service that provides comprehensive protection against modern day, complex multi-vector DDoS attacks. -
In January 2023, NETSCOUT released new research highlighting the ongoing importance of unified communication and collaboration (UC&C) platforms to the post-pandemic future of hybrid work. In its third annual survey of 300 IT decision-makers at organizations with over
$1 billion 69% ) increased the number of UC&C tools used, with75% expected to support more platforms over the next 12 months. The need to take advantage of new features and functions (89% ) or better support employee collaboration (67% ) was cited most often in driving these decisions. A majority (60% ) of respondents said collaboration platforms, applications, and tools are critical to their organization’s current work environment, compared with49% last year – a more than20% increase year-over-year.
Conference Call Instructions:
NETSCOUT will host a conference call to discuss its fourth-quarter and full fiscal year 2023 financial results today at 8:30 a.m. ET. This call will be webcast live through NETSCOUT’s website at https://ir.netscout.com/investors/overview/default.aspx. Alternatively, investors can listen to the call by dialing (785) 424-1677. The conference call ID is NTCTQ423. A replay of the call will be available after 12:00 p.m. ET today, for approximately one week. The number for the replay is (800) 753-0348 for
Use of Non-GAAP Financial Information:
To supplement the financial measures presented in NETSCOUT's press release in accordance with accounting principles generally accepted in
These non-GAAP measures are not in accordance with GAAP, should not be considered an alternative for measures prepared in accordance with GAAP (gross profit, operating margin, net income, and diluted net income per share), and may have limitations because they do not reflect all NETSCOUT’s results of operations as determined in accordance with GAAP. These non-GAAP measures should only be used to evaluate NETSCOUT’s results of operations in conjunction with the corresponding GAAP measures. The presentation of non-GAAP information is not meant to be considered superior to, in isolation from, or as a substitute for results prepared in accordance with GAAP. NETSCOUT believes these non-GAAP financial measures will enhance the reader’s overall understanding of NETSCOUT’s current financial performance and NETSCOUT's prospects for the future by providing a higher degree of transparency for certain financial measures and providing a level of disclosure that helps investors understand how the Company plans and measures its own business. NETSCOUT believes that providing these non-GAAP measures affords investors a view of NETSCOUT’s operating results that may be more easily compared to peer companies and also enables investors to consider NETSCOUT’s operating results on both a GAAP and non-GAAP basis during and following the integration period of NETSCOUT’s acquisitions. Presenting the GAAP measures on their own, without the supplemental non-GAAP disclosures, might not be indicative of NETSCOUT’s core operating results. Furthermore, NETSCOUT believes that the presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures provides useful information to management and investors regarding present and future business trends relating to its financial condition and results of operations.
NETSCOUT management regularly uses supplemental non-GAAP financial measures internally to understand, manage and evaluate its business and to make operating decisions. These non-GAAP measures are among the primary factors that management uses in planning and forecasting.
About NETSCOUT SYSTEMS, INC.
NETSCOUT SYSTEMS, INC. (NASDAQ: NTCT) protects the connected world from cyberattacks and performance and availability disruptions through the company’s unique visibility platform and solutions powered by its pioneering deep packet inspection at scale technology. NETSCOUT serves the world’s largest enterprises, service providers, and public sector organizations. Learn more at www.netscout.com or follow @NETSCOUT on LinkedIn, Twitter, or Facebook.
Safe Harbor
Certain information provided in this press release includes forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Examples of forward-looking statements include statements regarding our future financial performance or position, results of operations, business strategy, plans and objectives of management for future operations, and other statements that are not historical fact. You can identify forward-looking statements by their use of forward-looking words such as “may,” “will,” “anticipate,” “expect,” “believe,” “estimate,” “intend,” “plan,” “should,” “seek,” or other comparable terms. Investors are cautioned that such forward-looking statements in this press release including, without limitation, statements regarding NETSCOUT’s outlook for fiscal year 2024, that NETSCOUT remains committed to operating the business with a balanced approach to revenue growth and profitability as it manages the dynamic macro-environment, that it expects to again grow revenue, further improve margins, enhance diluted EPS performance, and generate solid free cash flow in fiscal year 2024, that moving forward, it remains focused on driving toward its long-term business objectives by advancing its strategy to play a mission-critical role for organizations around the globe as “Guardians of the Connected World,” as well as statements relating to the potential benefit of an market for the Company’s products and regarding product releases, updates, and functionality all constitute forward looking statements that involve risks and uncertainties. Actual results could differ materially from the forward-looking statements due to known and unknown risks, uncertainties, assumptions, and other factors. Such factors include, but are not limited to, macroeconomic factors and slowdowns or downturns in economic conditions generally and in the market for advanced network, service assurance and cybersecurity solutions specifically; the volatile foreign exchange environment; liquidity concerns at, and failures of, banks and other financial institutions; the Company’s relationships with strategic partners and resellers; dependence upon broad-based acceptance of the Company’s network performance management solutions; the presence of competitors with greater financial resources than the Company has, and their strategic response to the Company’s products; the Company’s ability to retain key executives and employees; the Company’s ability to realize the anticipated savings from recent restructuring actions and other expense management programs; lower than expected demand for the Company’s products and services; the impacts of epidemics or pandemics such as COVID-19; and the timing and magnitude of stock buyback activity based on market conditions, corporate considerations, debt agreements, and regulatory requirements. The risks included above are not exhaustive. We caution readers not to place undue reliance on any forward-looking statements included in this press release which speak only as to the date of this press release. We undertake no responsibility to update or revise any forward-looking statements, except as required by law. For a more detailed description of the risk factors associated with the Company, please refer to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2022, filed with the Securities and Exchange Commission. NETSCOUT assumes no obligation to update any forward-looking information contained in this press release or with respect to the announcements described herein.
©2023 NETSCOUT SYSTEMS, INC. All rights reserved. NETSCOUT and the NETSCOUT logo are registered trademarks or trademarks of NETSCOUT SYSTEMS, INC. and/or its subsidiaries and/or affiliates in the
| NETSCOUT SYSTEMS, INC. | ||||||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||
| March 31, | March 31, | |||||||||||||||||
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
||||
| Revenue: | ||||||||||||||||||
| Product | $ |
91,274 |
|
$ |
82,132 |
|
$ |
450,793 |
|
$ |
410,121 |
|
||||||
| Service |
|
116,819 |
|
|
109,059 |
|
|
463,737 |
|
|
445,454 |
|
||||||
| Total revenue |
|
208,093 |
|
|
191,191 |
|
|
914,530 |
|
|
855,575 |
|
||||||
| Cost of revenue: | ||||||||||||||||||
| Product |
|
16,901 |
|
|
16,887 |
|
|
94,868 |
|
|
90,730 |
|
||||||
| Service |
|
34,040 |
|
|
30,775 |
|
|
128,230 |
|
|
123,456 |
|
||||||
| Total cost of revenue |
|
50,941 |
|
|
47,662 |
|
|
223,098 |
|
|
214,186 |
|
||||||
| Gross profit |
|
157,152 |
|
|
143,529 |
|
|
691,432 |
|
|
641,389 |
|
||||||
| Operating expenses: | ||||||||||||||||||
| Research and development |
|
46,241 |
|
|
42,191 |
|
|
176,173 |
|
|
171,131 |
|
||||||
| Sales and marketing |
|
67,478 |
|
|
67,000 |
|
|
276,913 |
|
|
264,191 |
|
||||||
| General and administrative |
|
27,926 |
|
|
27,811 |
|
|
103,510 |
|
|
97,692 |
|
||||||
| Amortization of acquired intangible assets |
|
13,890 |
|
|
14,846 |
|
|
55,390 |
|
|
59,741 |
|
||||||
| Restructuring charges |
|
(21 |
) |
|
- |
|
|
1,782 |
|
|
- |
|
||||||
| Total operating expenses |
|
155,514 |
|
|
151,848 |
|
|
613,768 |
|
|
592,755 |
|
||||||
| Income (loss) from operations |
|
1,638 |
|
|
(8,319 |
) |
|
77,664 |
|
|
48,634 |
|
||||||
| Interest and other expense, net |
|
(2,695 |
) |
|
(1,163 |
) |
|
(9,249 |
) |
|
(5,742 |
) |
||||||
| Income (loss) before income tax expense |
|
(1,057 |
) |
|
(9,482 |
) |
|
68,415 |
|
|
42,892 |
|
||||||
| Income tax expense (benefit) |
|
2,164 |
|
|
(1,076 |
) |
|
8,767 |
|
|
7,018 |
|
||||||
| Net income (loss) | $ |
(3,221 |
) |
$ |
(8,406 |
) |
$ |
59,648 |
|
$ |
35,874 |
|
||||||
| Basic net income (loss) per share | $ |
(0.05 |
) |
$ |
(0.11 |
) |
$ |
0.83 |
|
$ |
0.48 |
|
||||||
| Diluted net income (loss) per share | $ |
(0.05 |
) |
$ |
(0.11 |
) |
$ |
0.82 |
|
$ |
0.48 |
|
||||||
| Weighted average common shares outstanding used in computing: | ||||||||||||||||||
| Net income (loss) per share - basic |
|
71,066 |
|
|
73,932 |
|
|
71,781 |
|
|
74,019 |
|
||||||
| Net income (loss) per share - diluted |
|
71,066 |
|
|
73,932 |
|
|
73,046 |
|
|
75,084 |
|
||||||
| NETSCOUT SYSTEMS, INC. | |||||||
| Consolidated Balance Sheets | |||||||
| (In thousands) | |||||||
| March 31, | March 31, | ||||||
|
2023 |
|
|
2022 |
|
||
| Assets | |||||||
| Current assets: | |||||||
| Cash, cash equivalents and marketable securities | $ |
418,998 |
|
$ |
703,198 |
|
|
| Accounts receivable and unbilled costs, net |
|
143,855 |
|
|
148,245 |
|
|
| Inventories and deferred costs |
|
17,956 |
|
|
28,220 |
|
|
| Prepaid expenses and other current assets |
|
36,551 |
|
|
42,276 |
|
|
| Total current assets |
|
617,360 |
|
|
921,939 |
|
|
| Fixed assets, net |
|
34,735 |
|
|
41,337 |
|
|
| Operating lease right-of-use assets |
|
51,456 |
|
|
54,996 |
|
|
| Goodwill and intangible assets, net |
|
2,090,995 |
|
|
2,156,575 |
|
|
| Long-term marketable securities |
|
8,940 |
|
|
- |
|
|
| Other assets |
|
17,074 |
|
|
19,862 |
|
|
| Total assets | $ |
2,820,560 |
|
$ |
3,194,709 |
|
|
| Liabilities and Stockholders' Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ |
16,473 |
|
$ |
21,959 |
|
|
| Accrued compensation |
|
83,279 |
|
|
75,788 |
|
|
| Accrued other |
|
30,674 |
|
|
36,417 |
|
|
| Deferred revenue and customer deposits |
|
311,531 |
|
|
330,585 |
|
|
| Current portion of operating lease liabilities |
|
11,650 |
|
|
11,411 |
|
|
| Total current liabilities |
|
453,607 |
|
|
476,160 |
|
|
| Other long-term liabilities |
|
7,683 |
|
|
7,470 |
|
|
| Deferred tax liability |
|
24,939 |
|
|
78,899 |
|
|
| Accrued long-term retirement benefits |
|
26,049 |
|
|
34,737 |
|
|
| Long-term deferred revenue and customer deposits |
|
129,814 |
|
|
133,121 |
|
|
| Operating lease liabilities, net of current portion |
|
48,819 |
|
|
53,927 |
|
|
| Long-term debt |
|
100,000 |
|
|
350,000 |
|
|
| Total liabilities |
|
790,911 |
|
|
1,134,314 |
|
|
| Stockholders' equity: | |||||||
| Common stock |
|
128 |
|
|
126 |
|
|
| Additional paid-in capital |
|
3,099,698 |
|
|
3,023,403 |
|
|
| Accumulated other comprehensive income |
|
5,738 |
|
|
141 |
|
|
| Treasury stock, at cost |
|
(1,546,128 |
) |
|
(1,373,840 |
) |
|
| Retained earnings |
|
470,213 |
|
|
410,565 |
|
|
| Total stockholders' equity |
|
2,029,649 |
|
|
2,060,395 |
|
|
| Total liabilities and stockholders' equity | $ |
2,820,560 |
|
$ |
3,194,709 |
|
|
| NETSCOUT SYSTEMS, INC. | ||||||||||||||||||||||
| Reconciliation of Current GAAP to Current and Historical Non-GAAP Financial Measures | ||||||||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||
| Three Months Ended | Three Months Ended |
Twelve Months Ended | ||||||||||||||||||||
| March 31, | December 31, | March 31, | ||||||||||||||||||||
|
2023 |
|
|
|
2022 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
||||
| GAAP and Non-GAAP Revenue | $ |
208,093 |
|
$ |
191,191 |
|
$ |
269,544 |
|
$ |
914,530 |
|
$ |
855,575 |
|
|||||||
| Gross Profit (GAAP) | $ |
157,152 |
|
$ |
143,529 |
|
$ |
212,742 |
|
$ |
691,432 |
|
$ |
641,389 |
|
|||||||
| Share-based compensation expense (1) |
|
1,940 |
|
|
1,411 |
|
|
2,043 |
|
|
8,415 |
|
|
7,042 |
|
|||||||
| Amortization of acquired intangible assets (2) |
|
2,329 |
|
|
3,331 |
|
|
2,315 |
|
|
9,284 |
|
|
13,385 |
|
|||||||
| Acquisition related depreciation expense (5) |
|
6 |
|
|
6 |
|
|
5 |
|
|
22 |
|
|
24 |
|
|||||||
| Non-GAAP Gross Profit | $ |
161,427 |
|
$ |
148,277 |
|
$ |
217,105 |
|
$ |
709,153 |
|
$ |
661,840 |
|
|||||||
| Income from Operations (GAAP) | $ |
1,638 |
|
$ |
(8,319 |
) |
$ |
63,750 |
|
$ |
77,664 |
|
$ |
48,634 |
|
|||||||
| Share-based compensation expense (1) |
|
14,761 |
|
|
12,693 |
|
|
15,143 |
|
|
61,986 |
|
|
56,074 |
|
|||||||
| Amortization of acquired intangible assets (2) |
|
16,219 |
|
|
18,177 |
|
|
16,133 |
|
|
64,674 |
|
|
73,126 |
|
|||||||
| Business development and integration expense (3) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(5 |
) |
|||||||
| Compensation for post-combination services (4) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
2 |
|
|||||||
| Restructuring charges |
|
(21 |
) |
|
- |
|
|
89 |
|
|
1,782 |
|
|
- |
|
|||||||
| Acquisition related depreciation expense (5) |
|
58 |
|
|
65 |
|
|
59 |
|
|
241 |
|
|
254 |
|
|||||||
| Transitional service agreement expense (6) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
814 |
|
|||||||
| Legal expenses related to civil judgments (7) |
|
50 |
|
|
1,100 |
|
|
426 |
|
|
476 |
|
|
1,100 |
|
|||||||
| Non-GAAP Income from Operations | $ |
32,705 |
|
$ |
23,716 |
|
$ |
95,600 |
|
$ |
206,823 |
|
$ |
179,999 |
|
|||||||
| Net Income (GAAP) | $ |
(3,221 |
) |
$ |
(8,406 |
) |
$ |
52,618 |
|
$ |
59,648 |
|
$ |
35,874 |
|
|||||||
| Share-based compensation expense (1) |
|
14,761 |
|
|
12,693 |
|
|
15,143 |
|
|
61,986 |
|
|
56,074 |
|
|||||||
| Amortization of acquired intangible assets (2) |
|
16,219 |
|
|
18,177 |
|
|
16,133 |
|
|
64,674 |
|
|
73,126 |
|
|||||||
| Business development and integration expense (3) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(5 |
) |
|||||||
| Compensation for post-combination services (4) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
2 |
|
|||||||
| Restructuring charges |
|
(21 |
) |
|
- |
|
|
89 |
|
|
1,782 |
|
|
- |
|
|||||||
| Acquisition related depreciation expense (5) |
|
58 |
|
|
65 |
|
|
59 |
|
|
241 |
|
|
254 |
|
|||||||
| Legal expenses related to civil judgments (7) |
|
50 |
|
|
1,100 |
|
|
426 |
|
|
476 |
|
|
1,100 |
|
|||||||
| Loss on extinguishment of debt (8) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
596 |
|
|||||||
| Change in fair value of contingent consideration (9) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(837 |
) |
|||||||
| Change in fair value of derivative instrument (10) |
|
1,380 |
|
|
- |
|
|
- |
|
|
1,380 |
|
|
- |
|
|||||||
| Income tax adjustments (11) |
|
(2,041 |
) |
|
(1,994 |
) |
|
(11,449 |
) |
|
(30,626 |
) |
|
(27,796 |
) |
|||||||
| Non-GAAP Net Income | $ |
27,185 |
|
$ |
21,635 |
|
$ |
73,019 |
|
$ |
159,561 |
|
$ |
138,388 |
|
|||||||
| Diluted Net Income Per Share (GAAP) | $ |
(0.05 |
) |
$ |
(0.11 |
) |
$ |
0.72 |
|
$ |
0.82 |
|
$ |
0.48 |
|
|||||||
| Share impact of non-GAAP adjustments identified above |
|
0.43 |
|
|
0.40 |
|
|
0.28 |
|
|
1.36 |
|
|
1.36 |
|
|||||||
| Non-GAAP Diluted Net Income Per Share | $ |
0.38 |
|
$ |
0.29 |
|
$ |
1.00 |
|
$ |
2.18 |
|
$ |
1.84 |
|
|||||||
| Shares used in computing non-GAAP diluted net income per share |
|
72,491 |
|
|
75,427 |
|
|
73,049 |
|
|
73,046 |
|
|
75,084 |
|
|||||||
| NETSCOUT SYSTEMS, INC. | ||||||||||||||||||||||
| Reconciliation of Current GAAP to Current and Historical Non-GAAP Financial Measures - Continued | ||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||
Three Months Ended |
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||||||||
March 31, |
|
December 31, |
|
March 31, |
||||||||||||||||||
|
2023 |
|
|
|
2022 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
||||
(1) |
Share-based compensation expense included in these amounts | |||||||||||||||||||||
|
is as follows: | |||||||||||||||||||||
|
Cost of product revenue | $ |
260 |
|
$ |
213 |
|
$ |
262 |
|
$ |
1,129 |
|
$ |
1,022 |
|
||||||
|
Cost of service revenue |
|
1,680 |
|
|
1,198 |
|
|
1,781 |
|
|
7,286 |
|
|
6,020 |
|
||||||
|
Research and development |
|
3,870 |
|
|
3,215 |
|
|
4,174 |
|
|
17,055 |
|
|
15,505 |
|
||||||
|
Sales and marketing |
|
5,374 |
|
|
4,301 |
|
|
5,445 |
|
|
22,612 |
|
|
19,684 |
|
||||||
|
General and administrative |
|
3,577 |
|
|
3,766 |
|
|
3,481 |
|
|
13,904 |
|
|
13,843 |
|
||||||
|
Total share-based compensation expense | $ |
14,761 |
|
$ |
12,693 |
|
$ |
15,143 |
|
$ |
61,986 |
|
$ |
56,074 |
|
||||||
|
||||||||||||||||||||||
(2) |
Amortization expense related to acquired software and product | |||||||||||||||||||||
|
technology, tradenames, customer relationships included in these | |||||||||||||||||||||
|
amounts is as follows: | |||||||||||||||||||||
|
Cost of product revenue | $ |
2,329 |
|
$ |
3,331 |
|
$ |
2,315 |
|
$ |
9,284 |
|
$ |
13,385 |
|
||||||
|
Operating expenses |
|
13,890 |
|
|
14,846 |
|
|
13,818 |
|
|
55,390 |
|
|
59,741 |
|
||||||
|
Total amortization expense | $ |
16,219 |
|
$ |
18,177 |
|
$ |
16,133 |
|
$ |
64,674 |
|
$ |
73,126 |
|
||||||
|
||||||||||||||||||||||
(3) |
Business development and integration expense included in | |||||||||||||||||||||
|
these amounts is as follows: | |||||||||||||||||||||
|
General and administrative | $ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
(5 |
) |
||||||
|
Total business development and integration expense | $ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
(5 |
) |
||||||
|
||||||||||||||||||||||
(4) |
Compensation for post-combination services included in these | |||||||||||||||||||||
|
amounts is as follows: | |||||||||||||||||||||
|
Research and development | $ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
2 |
|
||||||
|
Total compensation for post-combination services | $ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
2 |
|
||||||
|
||||||||||||||||||||||
(5) |
Acquisition related depreciation expense included in these | |||||||||||||||||||||
|
amounts is as follows: | |||||||||||||||||||||
|
Cost of product revenue | $ |
3 |
|
$ |
3 |
|
$ |
3 |
|
$ |
12 |
|
$ |
14 |
|
||||||
|
Cost of service revenue |
|
3 |
|
|
3 |
|
|
2 |
|
|
10 |
|
|
10 |
|
||||||
|
Research and development |
|
41 |
|
|
46 |
|
|
42 |
|
|
170 |
|
|
178 |
|
||||||
|
Sales and marketing |
|
7 |
|
|
9 |
|
|
8 |
|
|
32 |
|
|
35 |
|
||||||
|
General and administrative |
|
4 |
|
|
4 |
|
|
4 |
|
|
17 |
|
|
17 |
|
||||||
|
Total acquisition related depreciation expense | $ |
58 |
|
$ |
65 |
|
$ |
59 |
|
$ |
241 |
|
$ |
254 |
|
||||||
|
||||||||||||||||||||||
(6) |
Transitional service agreement (income) expense included in | |||||||||||||||||||||
|
these amounts is as follows: | |||||||||||||||||||||
|
Research and development | $ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
90 |
|
||||||
|
Sales and marketing |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
130 |
|
||||||
|
General and administrative |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
594 |
|
||||||
|
Other (income) expense, net |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(814 |
) |
||||||
|
Total transitional service agreement (income) expense | $ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
||||||
|
||||||||||||||||||||||
(7) |
Legal expenses related to civil judgments included in this amount is | |||||||||||||||||||||
|
as follows: | |||||||||||||||||||||
|
General and administrative | $ |
50 |
|
$ |
1,100 |
|
$ |
426 |
|
$ |
476 |
|
$ |
1,100 |
|
||||||
|
Total legal judgments expense | $ |
50 |
|
$ |
1,100 |
|
$ |
426 |
|
$ |
476 |
|
$ |
1,100 |
|
||||||
|
||||||||||||||||||||||
(8) |
Loss on extinguishment of debt included in this amount is | |||||||||||||||||||||
|
as follows: | |||||||||||||||||||||
|
Interest and other (income) expense, net | $ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
596 |
|
||||||
|
Total loss on extinguishment of debt | $ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
596 |
|
||||||
|
||||||||||||||||||||||
(9) |
Change in fair value of contingent consideration included in | |||||||||||||||||||||
|
this amount is as follows: | |||||||||||||||||||||
|
Interest and other (income) expense, net | $ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
(837 |
) |
||||||
|
Total change in fair value of contingent consideration | $ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
(837 |
) |
||||||
|
||||||||||||||||||||||
(10) |
Change in fair value of derivative instrument included in | |||||||||||||||||||||
|
this amount is as follows: | |||||||||||||||||||||
|
Interest and other (income) expense, net | $ |
1,380 |
|
$ |
- |
|
$ |
- |
|
$ |
1,380 |
|
$ |
- |
|
||||||
|
Total change in fair value of contingent consideration | $ |
1,380 |
|
$ |
- |
|
$ |
- |
|
$ |
1,380 |
|
$ |
- |
|
||||||
|
||||||||||||||||||||||
(11) |
Total income tax adjustment included in this | |||||||||||||||||||||
| amount is as follows: | ||||||||||||||||||||||
| Tax effect of non-GAAP adjustments above | $ |
(2,041 |
) |
$ |
(1,994 |
) |
$ |
(11,449 |
) |
$ |
(30,626 |
) |
$ |
(27,796 |
) |
|||||||
| Total income tax adjustments | $ |
(2,041 |
) |
$ |
(1,994 |
) |
$ |
(11,449 |
) |
$ |
(30,626 |
) |
$ |
(27,796 |
) |
|||||||
| NETSCOUT SYSTEMS, INC. | ||||||||||||||||||
| Reconciliation of Current GAAP to Current and Historical Non-GAAP Financial Measures - | ||||||||||||||||||
| Non-GAAP EBITDA from Operations | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
Three Months Ended |
|
Three Months Ended |
Twelve Months Ended |
|||||||||||||||
March 31, |
|
December 31, |
|
March 31, |
||||||||||||||
2023 |
|
|
2022 |
|
|
2022 |
|
2023 |
|
2022 |
||||||||
| Income from operations (GAAP) | $ |
1,638 |
$ |
(8,319 |
) |
$ |
63,750 |
$ |
77,664 |
$ |
48,634 |
|||||||
| Previous adjustments to determine non-GAAP income from operations |
|
31,067 |
|
32,035 |
|
|
31,850 |
|
129,159 |
|
131,365 |
|||||||
| Non-GAAP Income from operations |
|
32,705 |
|
23,716 |
|
|
95,600 |
|
206,823 |
|
179,999 |
|||||||
| Depreciation excluding acquisition related |
|
5,339 |
|
5,495 |
|
|
5,263 |
|
21,003 |
|
22,404 |
|||||||
| Non-GAAP EBITDA from operations | $ |
38,044 |
$ |
29,211 |
|
$ |
100,863 |
$ |
227,826 |
$ |
202,403 |
|||||||
| NETSCOUT SYSTEMS, INC. | |||||
| Reconciliation of GAAP Financial Outlook to Non-GAAP Financial Outlook | |||||
| (Unaudited) | |||||
| (In millions, except net income per share - diluted) | |||||
| FY'23 | FY'24 |
||||
| GAAP & Non-GAAP revenue | $ |
914.5 |
|
|
|
|
|||||
| FY'23 | FY'24 |
||||
| GAAP net income | $ |
59.6 |
|
|
|
| Amortization of intangible assets | $ |
64.7 |
|
|
|
| Share-based compensation expenses | $ |
62.0 |
|
|
|
| Business development & integration expenses* | $ |
0.2 |
|
~Less than |
|
| Change in fair value of derivative instrument | $ |
1.4 |
|
- |
|
| Legal expenses related to civil judgments | $ |
0.5 |
|
- |
|
| Restructuring charges | $ |
1.8 |
|
- |
|
| Total adjustments | $ |
130.6 |
|
|
|
| Related impact of adjustments on income tax | $ |
(30.7 |
) |
( |
|
| Non-GAAP net income | $ |
159.6 |
|
|
|
|
|||||
| GAAP net income per share (diluted) | $ |
0.82 |
|
|
|
| Non-GAAP net income per share (diluted) | $ |
2.18 |
|
|
|
|
|||||
| Average weighted shares outstanding (diluted GAAP) |
|
73.0 |
|
~74 million to ~75 million |
|
| Average weighted shares outstanding (diluted Non-GAAP) |
|
73.0 |
|
~74 million to ~75 million |
|
| *Business development & integration expenses include change in value of contingent consideration, and acquisition-related depreciation expense | |||||
| **Figures in table may not total due to rounding | |||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20230504005161/en/
Investors
Anthony Piazza
Senior Vice President, Corporate Finance
978-614-4286
IR@netscout.com
Media
Maribel Lopez
Manager, Marketing & Corporate Communications
781-362-4330
Maribel.Lopez@netscout.com
Source: NETSCOUT SYSTEMS, INC.
