NETSCOUT Reports Third Quarter Fiscal Year 2024 Financial Results
- None.
- The company experienced a significant decrease in total revenue in Q3 FY24 compared to Q3 FY23
- The non-cash goodwill impairment charge resulted in a net loss of $132.6 million for Q3 FY24
- The company's cash and marketable securities decreased from $427.9 million to $330.1 million
Insights
NETSCOUT's Q3 FY24 financial results indicate a significant year-over-year decline in total revenue, with a notable decrease in product revenue from 55% to 44% of total revenue. The non-cash goodwill impairment charge of $167.1 million is a key factor in the company's loss from operations, which contrasts sharply with the income reported in the same quarter of the previous fiscal year. This impairment suggests a reassessment of the company's intangible assets' value, potentially due to changes in business prospects or market conditions.
The company's non-GAAP measures, however, paint a more favorable picture, with a smaller decline in non-GAAP income from operations and a maintained non-GAAP operating margin of 29.0%. The emphasis on non-GAAP results, which exclude certain expenses and non-recurring charges, may indicate management's focus on presenting an adjusted earnings perspective that they believe more accurately reflects the company's operational performance.
From an investment standpoint, the updated financial outlook for FY24, with expected revenues at the low end of the target range and a non-GAAP EPS at the higher end, suggests cautious optimism. The company's cost containment actions seem to be mitigating some of the negative impacts on profitability. However, the substantial GAAP loss per share forecasted due to the goodwill impairment charge could raise concerns about the company's valuation and future earnings potential.
NETSCOUT's performance reflects broader market challenges, such as constrained customer spending and elongated sales cycles, particularly impacting the service assurance segment. Despite these challenges, the growth in the cybersecurity business highlights a strategic shift in customer priorities, aligning with industry trends that emphasize security in an increasingly digital and connected landscape.
The company's strategic focus on its 'Visibility Without Borders' platform suggests an attempt to capitalize on the growing demand for comprehensive network visibility and security solutions. As enterprises and service providers adapt to complex digital ecosystems, NETSCOUT's offerings may become more integral to maintaining operational continuity and defending against cyber threats.
Investors might also consider the company's share repurchase activity during Q3 as a sign of confidence in the company's value proposition. The repurchase of shares at an average price of $26.66, totaling approximately $18.8 million, indicates management's belief that the stock is undervalued and represents a good investment for the company's capital.
The reported growth in NETSCOUT's cybersecurity business amidst overall revenue decline is indicative of the resilience of the cybersecurity sector. Enterprises and service providers continue to prioritize cybersecurity investments, which is consistent with the increasing threat landscape and the need for robust defense mechanisms in the digital age.
The focus on 'Visibility Without Borders' suggests that NETSCOUT is strategically positioning itself to offer solutions that cater to the complexities of modern networks, including cloud environments, virtualized infrastructure and IoT devices. This is in line with the industry's shift towards integrated platforms that can provide end-to-end visibility and security.
The company's ability to navigate the current market environment and deliver shareholder value despite headwinds could be a testament to the strength of its cybersecurity offerings and its alignment with essential market needs. However, the long-term success will likely depend on continued innovation and the ability to adapt to the evolving cybersecurity landscape.
Remarks by Anil Singhal, NETSCOUT’s President and Chief Executive Officer:
“We delivered third fiscal quarter revenue ahead of expectations as we benefitted from the timing of calendar year-end customer budget spending. While the market environment remains challenging with constrained customer spending and elongated sales cycles, primarily impacting our service assurance business, our cybersecurity business once again grew year-over-year as enterprise and service provider customers continue to prioritize spending in this area.
“Looking ahead, we expect to deliver full fiscal year 2024 revenue at the low-end of our previously disclosed target range as we continue to navigate the current market environment. From a bottom-line standpoint, our GAAP results for the fiscal year will include a third quarter non-cash goodwill impairment charge. Our non-GAAP EPS performance is expected to be at the higher end of our previously disclosed range due to benefits from our ongoing cost containment actions. Strategically, we remain focused on leveraging our industry leading ‘Visibility Without Borders’ platform to help customers tackle the performance, availability, and security challenges of the increasingly complex connected digital world while delivering shareholder value.”
Q3 FY24 Financial Results
Total revenue (GAAP and non-GAAP) for the third quarter of fiscal year 2024 was
Product revenue (GAAP and non-GAAP) for the third quarter of fiscal year 2024 was
Service revenue (GAAP and non-GAAP) for the third quarter of fiscal year 2024 was
NETSCOUT’s third quarter of fiscal 2024 loss from operations (GAAP) was
Net loss (GAAP) for the third quarter of fiscal year 2024 was
As of December 31, 2023, cash, cash equivalents, short- and long-term marketable securities, and investments were
Nine-Months FY24 Financial Results
-
Total revenue (GAAP and non-GAAP) for the first nine months of fiscal year 2024, was
$626.0 million $706.4 million -
Product revenue (GAAP and non-GAAP) for the first nine months of fiscal year 2024 was
$271.0 million $359.5 million -
Service revenue (GAAP and non-GAAP) for the first nine months of fiscal year 2024 was
$355.0 million $346.9 million -
NETSCOUT’s loss from operations (GAAP) for the first nine months of fiscal year 2024 was
$112.9 million $167.1 million $76.0 million 18.0% , versus10.8% in the first nine months of fiscal year 2023. The Company’s non-GAAP income from operations for the first nine months of fiscal year 2024 was$148.0 million 23.6% , compared with non-GAAP income from operations of$174.1 million 24.6% for the first nine months of fiscal year 2023. The Company’s non-GAAP EBITDA from operations for the first nine months of fiscal year 2024 was$162.2 million 25.9% of non-GAAP total revenue, versus non-GAAP EBITDA from operations of$189.8 million 26.9% of non-GAAP total revenue, in the first nine months of fiscal year 2023. -
For the first nine months of fiscal year 2024, NETSCOUT’s net loss (GAAP) was
$115.3 million $1.61 $167.1 million $62.9 million $0.86 $119.3 million $1.65 $132.4 million $1.81
Financial Outlook
Upon review of its year-to-date performance and the future timing and delivery of orders, NETSCOUT has updated its financial outlook for fiscal year 2024 as follows:
-
Revenue (GAAP and non-GAAP) is now expected to be approximately
$840 million $840 million $860 million -
GAAP loss per share is now expected to be in the range of (
$1.29 $1.24 $0.69 $0.89 $2.15 $2.20 $2.00 $2.20 -
NETSCOUT now expects the effective tax rate for fiscal year 2024 to be closer to the lower end of the outlook range of
20% to22% . It also now expects approximately 72 million to 73 million diluted shares outstanding at the end of fiscal year 2024, which includes the benefit of its recent share repurchase program. This compares with the prior estimated range of 73 million to 74 million diluted shares outstanding. - A reconciliation between GAAP and non-GAAP numbers for NETSCOUT’s fiscal year 2024 outlook is included in the financial tables below.
Conference Call Instructions:
NETSCOUT will host a conference call to discuss its third-quarter fiscal year 2024 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 (203) 518-9708. The conference call ID is NTCTQ324. 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) 839-2383 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, income from operations, operating margin, net income, and diluted net income per share), and may have limitations because they do not reflect all of 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 disruptions through advanced network detection and response and pervasive network visibility. Powered by our pioneering deep packet inspection at scale, we serve 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 financial results, its financial outlook for the full fiscal year 2024, its focus on leveraging its industry leading ‘Visibility Without Borders’ platform to help customers tackle the performance, availability, and security challenges of the increasingly complex connected digital world while delivering shareholder value, and statements relating to the potential benefit of a 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; 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, 2023, 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.
©2024 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 |
|
Nine Months Ended |
||||||||||||||
December 31, |
|
December 31, |
||||||||||||||
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||||
| Revenue: | ||||||||||||||||
| Product | $ |
95,832 |
|
$ |
149,452 |
|
$ |
271,038 |
|
$ |
359,519 |
|
||||
| Service |
|
122,240 |
|
|
120,092 |
|
|
354,974 |
|
|
346,918 |
|
||||
| Total revenue |
|
218,072 |
|
|
269,544 |
|
|
626,012 |
|
|
706,437 |
|
||||
| Cost of revenue: | ||||||||||||||||
| Product |
|
15,251 |
|
|
25,281 |
|
|
48,006 |
|
|
77,967 |
|
||||
| Service |
|
28,373 |
|
|
31,521 |
|
|
89,066 |
|
|
94,190 |
|
||||
| Total cost of revenue |
|
43,624 |
|
|
56,802 |
|
|
137,072 |
|
|
172,157 |
|
||||
| Gross profit |
|
174,448 |
|
|
212,742 |
|
|
488,940 |
|
|
534,280 |
|
||||
| Operating expenses: | ||||||||||||||||
| Research and development |
|
37,023 |
|
|
42,558 |
|
|
117,655 |
|
|
129,932 |
|
||||
| Sales and marketing |
|
69,124 |
|
|
66,994 |
|
|
209,070 |
|
|
209,435 |
|
||||
| General and administrative |
|
23,109 |
|
|
25,533 |
|
|
73,975 |
|
|
75,584 |
|
||||
| Amortization of acquired intangible assets |
|
12,533 |
|
|
13,818 |
|
|
37,790 |
|
|
41,500 |
|
||||
| Goodwill impairment |
|
167,106 |
|
|
- |
|
|
167,106 |
|
|
- |
|
||||
| Gain on divestiture of a business |
|
- |
|
|
- |
|
|
(3,806 |
) |
|
- |
|
||||
| Restructuring charges |
|
- |
|
|
89 |
|
|
- |
|
|
1,803 |
|
||||
| Total operating expenses |
|
308,895 |
|
|
148,992 |
|
|
601,790 |
|
|
458,254 |
|
||||
| Income (loss) from operations |
|
(134,447 |
) |
|
63,750 |
|
|
(112,850 |
) |
|
76,026 |
|
||||
| Interest and other income (expense), net |
|
729 |
|
|
(3,172 |
) |
|
1,272 |
|
|
(6,554 |
) |
||||
| Income (loss) before income tax expense (benefit) |
|
(133,718 |
) |
|
60,578 |
|
|
(111,578 |
) |
|
69,472 |
|
||||
| Income tax expense (benefit) |
|
(1,141 |
) |
|
7,960 |
|
|
3,737 |
|
|
6,603 |
|
||||
| Net income (loss) | $ |
(132,577 |
) |
$ |
52,618 |
|
$ |
(115,315 |
) |
$ |
62,869 |
|
||||
| Basic net income (loss) per share | $ |
(1.87 |
) |
$ |
0.73 |
|
$ |
(1.61 |
) |
$ |
0.87 |
|
||||
| Diluted net income (loss) per share | $ |
(1.87 |
) |
$ |
0.72 |
|
$ |
(1.61 |
) |
$ |
0.86 |
|
||||
| Weighted average common shares outstanding used in computing: | ||||||||||||||||
| Net income (loss) per share - basic |
|
71,077 |
|
|
71,744 |
|
|
71,577 |
|
|
72,015 |
|
||||
| Net income (loss) per share - diluted |
|
71,077 |
|
|
73,049 |
|
|
71,577 |
|
|
73,271 |
|
||||
| NETSCOUT SYSTEMS, INC. | |||||||
| Consolidated Balance Sheets | |||||||
| (In thousands) | |||||||
December 31, |
|
March 31, |
|||||
2023 |
|
2023 |
|||||
(unaudited) |
|
|
|||||
| Assets | |||||||
| Current assets: | |||||||
| Cash, cash equivalents, marketable securities and investments | $ |
329,112 |
|
$ |
418,998 |
|
|
| Accounts receivable and unbilled costs, net |
|
221,574 |
|
|
143,855 |
|
|
| Inventories and deferred costs |
|
15,342 |
|
|
17,956 |
|
|
| Prepaid expenses and other current assets |
|
43,290 |
|
|
36,551 |
|
|
| Total current assets |
|
609,318 |
|
|
617,360 |
|
|
| Fixed assets, net |
|
27,955 |
|
|
34,735 |
|
|
| Operating lease right-of-use assets |
|
44,977 |
|
|
51,456 |
|
|
| Goodwill and intangible assets, net |
|
1,875,440 |
|
|
2,090,995 |
|
|
| Long-term marketable securities |
|
1,010 |
|
|
8,940 |
|
|
| Other assets |
|
31,099 |
|
|
17,074 |
|
|
| Total assets | $ |
2,589,799 |
|
$ |
2,820,560 |
|
|
| Liabilities and Stockholders' Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ |
15,132 |
|
$ |
16,473 |
|
|
| Accrued compensation |
|
42,283 |
|
|
83,279 |
|
|
| Accrued other |
|
19,448 |
|
|
30,674 |
|
|
| Deferred revenue and customer deposits |
|
293,410 |
|
|
311,531 |
|
|
| Current portion of operating lease liabilities |
|
11,979 |
|
|
11,650 |
|
|
| Total current liabilities |
|
382,252 |
|
|
453,607 |
|
|
| Other long-term liabilities |
|
7,312 |
|
|
7,683 |
|
|
| Deferred tax liability |
|
4,505 |
|
|
24,939 |
|
|
| Accrued long-term retirement benefits |
|
26,310 |
|
|
26,049 |
|
|
| Long-term deferred revenue and customer deposits |
|
124,619 |
|
|
129,814 |
|
|
| Operating lease liabilities, net of current portion |
|
40,898 |
|
|
48,819 |
|
|
| Long-term debt |
|
100,000 |
|
|
100,000 |
|
|
| Total liabilities |
|
685,896 |
|
|
790,911 |
|
|
| Stockholders' equity: | |||||||
| Common stock |
|
131 |
|
|
128 |
|
|
| Additional paid-in capital |
|
3,158,283 |
|
|
3,099,698 |
|
|
| Accumulated other comprehensive income |
|
5,870 |
|
|
5,738 |
|
|
| Treasury stock, at cost |
|
(1,615,279 |
) |
|
(1,546,128 |
) |
|
| Retained earnings |
|
354,898 |
|
|
470,213 |
|
|
| Total stockholders' equity |
|
1,903,903 |
|
|
2,029,649 |
|
|
| Total liabilities and stockholders' equity | $ |
2,589,799 |
|
$ |
2,820,560 |
|
|
| 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 |
|
Nine Months Ended |
|||||||||||||||
December 31, |
|
September 30, |
|
December 31, |
|||||||||||||||
2023 |
|
2022 |
|
2023 |
|
2023 |
|
2022 |
|||||||||||
| GAAP and Non-GAAP Revenue | $ |
218,072 |
|
$ |
269,544 |
|
$ |
196,802 |
|
$ |
626,012 |
|
$ |
706,437 |
|
||||
| Gross Profit (GAAP) | $ |
174,448 |
|
$ |
212,742 |
|
$ |
153,750 |
|
$ |
488,940 |
|
$ |
534,280 |
|
||||
| Share-based compensation expense (1) |
|
2,375 |
|
|
2,043 |
|
|
2,638 |
|
|
7,924 |
|
|
6,475 |
|
||||
| Amortization of acquired intangible assets (2) |
|
1,636 |
|
|
2,315 |
|
|
1,638 |
|
|
4,912 |
|
|
6,955 |
|
||||
| Acquisition related depreciation expense (3) |
|
2 |
|
|
5 |
|
|
4 |
|
|
11 |
|
|
16 |
|
||||
| Non-GAAP Gross Profit | $ |
178,461 |
|
$ |
217,105 |
|
$ |
158,030 |
|
$ |
501,787 |
|
$ |
547,726 |
|
||||
| Income (Loss) from Operations (GAAP) | $ |
(134,447 |
) |
$ |
63,750 |
|
$ |
26,292 |
|
$ |
(112,850 |
) |
$ |
76,026 |
|
||||
| GAAP Operating Margin |
|
-61.7 |
% |
|
23.7 |
% |
|
13.4 |
% |
|
-18.0 |
% |
|
10.8 |
% |
||||
| Share-based compensation expense (1) |
|
16,364 |
|
|
15,143 |
|
|
18,445 |
|
|
54,653 |
|
|
47,225 |
|
||||
| Amortization of acquired intangible assets (2) |
|
14,169 |
|
|
16,133 |
|
|
14,188 |
|
|
42,702 |
|
|
48,455 |
|
||||
| Restructuring charges |
|
- |
|
|
89 |
|
|
- |
|
|
- |
|
|
1,803 |
|
||||
| Goodwill impairment |
|
167,106 |
|
|
- |
|
|
- |
|
|
167,106 |
|
|
- |
|
||||
| Acquisition related depreciation expense (3) |
|
12 |
|
|
59 |
|
|
37 |
|
|
108 |
|
|
183 |
|
||||
| Gain on divestiture of a business |
|
- |
|
|
- |
|
|
(3,806 |
) |
|
(3,806 |
) |
|
- |
|
||||
| Legal expenses related to civil judgments (4) |
|
45 |
|
|
426 |
|
|
44 |
|
|
130 |
|
|
426 |
|
||||
| Non-GAAP Income from Operations | $ |
63,249 |
|
$ |
95,600 |
|
$ |
55,200 |
|
$ |
148,043 |
|
$ |
174,118 |
|
||||
| Non-GAAP Operating Margin |
|
29.0 |
% |
|
35.5 |
% |
|
28.0 |
% |
|
23.6 |
% |
|
24.6 |
% |
||||
| Net Income (Loss) (GAAP) | $ |
(132,577 |
) |
$ |
52,618 |
|
$ |
21,462 |
|
$ |
(115,315 |
) |
$ |
62,869 |
|
||||
| Share-based compensation expense (1) |
|
16,364 |
|
|
15,143 |
|
|
18,445 |
|
|
54,653 |
|
|
47,225 |
|
||||
| Amortization of acquired intangible assets (2) |
|
14,169 |
|
|
16,133 |
|
|
14,188 |
|
|
42,702 |
|
|
48,455 |
|
||||
| Restructuring charges |
|
- |
|
|
89 |
|
|
- |
|
|
- |
|
|
1,803 |
|
||||
| Gain on divestiture of a business |
|
- |
|
|
- |
|
|
(3,806 |
) |
|
(3,806 |
) |
|
- |
|
||||
| Goodwill impairment |
|
167,106 |
|
|
- |
|
|
- |
|
|
167,106 |
|
|
- |
|
||||
| Acquisition related depreciation expense (3) |
|
12 |
|
|
59 |
|
|
37 |
|
|
108 |
|
|
183 |
|
||||
| Legal expenses related to civil judgments (4) |
|
45 |
|
|
426 |
|
|
44 |
|
|
130 |
|
|
426 |
|
||||
| Change in fair value of derivative instrument (5) |
|
- |
|
|
- |
|
|
- |
|
|
(206 |
) |
|
- |
|
||||
| Income tax adjustments (6) |
|
(13,085 |
) |
|
(11,449 |
) |
|
(5,829 |
) |
|
(26,085 |
) |
|
(28,585 |
) |
||||
| Non-GAAP Net Income | $ |
52,034 |
|
$ |
73,019 |
|
$ |
44,541 |
|
$ |
119,287 |
|
$ |
132,376 |
|
||||
| Diluted Net Income (Loss) Per Share (GAAP) | $ |
(1.87 |
) |
$ |
0.72 |
|
$ |
0.29 |
|
$ |
(1.61 |
) |
$ |
0.86 |
|
||||
| Share impact of non-GAAP adjustments identified above |
|
2.60 |
|
|
0.28 |
|
|
0.32 |
|
|
3.26 |
|
|
0.95 |
|
||||
| Non-GAAP Diluted Net Income Per Share | $ |
0.73 |
|
$ |
1.00 |
|
$ |
0.61 |
|
$ |
1.65 |
|
$ |
1.81 |
|
||||
| Shares used in computing non-GAAP diluted net income per share |
|
71,638 |
|
|
73,049 |
|
|
72,797 |
|
|
72,355 |
|
|
73,271 |
|
||||
| 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 |
|
Nine Months Ended |
||||||||||||||||
December 31, |
|
September 30, |
|
December 31, |
||||||||||||||||
2023 |
2022 |
2023 |
2023 |
2022 |
||||||||||||||||
(1) |
Share-based compensation expense included in these amounts is as follows: | |||||||||||||||||||
| Cost of product revenue | $ |
306 |
|
$ |
262 |
|
$ |
349 |
|
$ |
1,027 |
|
$ |
869 |
|
|||||
| Cost of service revenue |
|
2,069 |
|
|
1,781 |
|
|
2,289 |
|
|
6,897 |
|
|
5,606 |
|
|||||
| Research and development |
|
4,498 |
|
|
4,174 |
|
|
4,988 |
|
|
14,872 |
|
|
13,185 |
|
|||||
| Sales and marketing |
|
5,680 |
|
|
5,445 |
|
|
6,675 |
|
|
19,639 |
|
|
17,238 |
|
|||||
| General and administrative |
|
3,811 |
|
|
3,481 |
|
|
4,144 |
|
|
12,218 |
|
|
10,327 |
|
|||||
| Total share-based compensation expense | $ |
16,364 |
|
$ |
15,143 |
|
$ |
18,445 |
|
$ |
54,653 |
|
$ |
47,225 |
|
|||||
(2) |
Amortization expense related to acquired software and product technology, tradenames, customer relationships included in these amounts is as follows: | |||||||||||||||||||
| Cost of product revenue | $ |
1,636 |
|
$ |
2,315 |
|
$ |
1,638 |
|
$ |
4,912 |
|
$ |
6,955 |
|
|||||
| Operating expenses |
|
12,533 |
|
|
13,818 |
|
|
12,550 |
|
|
37,790 |
|
|
41,500 |
|
|||||
| Total amortization expense | $ |
14,169 |
|
$ |
16,133 |
|
$ |
14,188 |
|
$ |
42,702 |
|
$ |
48,455 |
|
|||||
(3) |
Acquisition related depreciation expense included in these amounts is as follows: | |||||||||||||||||||
| Cost of product revenue | $ |
2 |
|
$ |
3 |
|
$ |
2 |
|
$ |
7 |
|
$ |
9 |
|
|||||
| Cost of service revenue |
|
- |
|
|
2 |
|
|
2 |
|
|
4 |
|
|
7 |
|
|||||
| Research and development |
|
8 |
|
|
42 |
|
|
25 |
|
|
74 |
|
|
129 |
|
|||||
| Sales and marketing |
|
2 |
|
|
8 |
|
|
6 |
|
|
16 |
|
|
25 |
|
|||||
| General and administrative |
|
- |
|
|
4 |
|
|
2 |
|
|
7 |
|
|
13 |
|
|||||
| Total acquisition related depreciation expense | $ |
12 |
|
$ |
59 |
|
$ |
37 |
|
$ |
108 |
|
$ |
183 |
|
|||||
(4) |
Legal expenses related to civil judgments included in this amount is as follows: | |||||||||||||||||||
| General and administrative | $ |
45 |
|
$ |
426 |
|
$ |
44 |
|
$ |
130 |
|
$ |
426 |
|
|||||
| Total legal judgments expense | $ |
45 |
|
$ |
426 |
|
$ |
44 |
|
$ |
130 |
|
$ |
426 |
|
|||||
(5) |
Change in fair value of derivative instrument included in this amount is as follows: | |||||||||||||||||||
| Interest and other (income) expense, net | $ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
(206 |
) |
$ |
- |
|
|||||
| Total change in fair value of derivative instrument | $ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
(206 |
) |
$ |
- |
|
|||||
(6) |
Total income tax adjustment included in this amount is as follows: | |||||||||||||||||||
| Tax effect of non-GAAP adjustments above | $ |
(13,085 |
) |
$ |
(11,449 |
) |
$ |
(5,829 |
) |
$ |
(26,085 |
) |
$ |
(28,585 |
) |
|||||
| Total income tax adjustments | $ |
(13,085 |
) |
$ |
(11,449 |
) |
$ |
(5,829 |
) |
$ |
(26,085 |
) |
$ |
(28,585 |
) |
|||||
| 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 |
Nine Months Ended |
||||||||||||||||
December 31, |
|
September 30, |
|
December 31, |
|||||||||||||||
2023 |
|
2022 |
|
2023 |
|
2023 |
|
2022 |
|||||||||||
| Income (loss) from operations (GAAP) | $ |
(134,447 |
) |
$ |
63,750 |
|
$ |
26,292 |
|
$ |
(112,850 |
) |
$ |
76,026 |
|
||||
| Previous adjustments to determine non-GAAP income from operations |
|
197,696 |
|
|
31,850 |
|
|
28,908 |
|
|
260,893 |
|
|
98,092 |
|
||||
| Non-GAAP Income from operations |
|
63,249 |
|
|
95,600 |
|
|
55,200 |
|
|
148,043 |
|
|
174,118 |
|
||||
| Depreciation excluding acquisition related-depreciation expense |
|
4,337 |
|
|
5,263 |
|
|
4,749 |
|
|
14,118 |
|
|
15,664 |
|
||||
| Non-GAAP EBITDA from operations | $ |
67,586 |
|
$ |
100,863 |
|
$ |
59,949 |
|
$ |
162,161 |
|
$ |
189,782 |
|
||||
| Non-GAAP EBITDA from operations as a % of revenue |
|
31.0 |
% |
|
37.4 |
% |
|
30.5 |
% |
|
25.9 |
% |
|
26.9 |
% |
||||
| 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 |
|
| Gain on divestiture of a business | $ |
- |
|
~( |
|
| Change in fair value of derivative instrument | $ |
1.4 |
|
~Less than |
|
| Legal expenses related to civil judgments | $ |
0.5 |
|
- |
|
| New accounting standard implementation | $ |
0.0 |
|
- |
|
| Restructuring charges | $ |
1.8 |
|
- |
|
| Goodwill impairment | $ |
- |
|
||
| 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 |
|
~71 million to ~72 million | |
| Average weighted shares outstanding (diluted Non-GAAP) |
|
73.0 |
|
~ 72 million to ~73 million | |
| *Business development & integration expenses include 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/20240125507242/en/
Investors
Sean K. F. Hannan
Head of Investor Relations
978-614-4374
IR@netscout.com
Media
Chris Lucas
AVP, Marketing & Corporate Communications
978-614-4124
Chris.Lucas@netscout.com
Source: NETSCOUT SYSTEMS, INC
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