NETSCOUT SYSTEMS, INC. (NASDAQ: NTCT), a leading provider of
enterprise performance management, carrier service assurance,
cybersecurity, and DDoS protection, today announced financial
results for its first quarter ended June 30, 2024.
Remarks by Anil Singhal, NETSCOUT’s President & Chief
Executive Officer:
“We delivered Q1 fiscal year 2025 revenue at the high end of our
outlook as we continue to position NETSCOUT to win in the market.
We were also pleased to extend a multi-year enterprise license
agreement with a leading North American Tier-1 service provider
during the first quarter.
“Looking ahead, our priorities remain to enhance our
cybersecurity offerings to meet customer needs given the expanding
cyber threat landscape and continuing to focus on prudently
managing costs. Longer term, we are committed to leveraging our
‘Visibility Without Borders’ platform to help customers address the
performance, availability, and security challenges of the complex
digital world.”
Q1 FY25 Financial Results
Total revenue (GAAP and non-GAAP) for the first quarter of
fiscal year 2025 was $174.6 million, compared with $211.1 million
(GAAP and non-GAAP) in the first quarter of fiscal year 2024. A
reconciliation of all GAAP and non-GAAP results are included in the
financial tables below.
Product revenue (GAAP and non-GAAP) for the first quarter of
fiscal year 2025 was $61.2 million, or approximately 35% of total
revenue in the period. This compares with product revenue (GAAP and
non-GAAP) of $94.7 million in the first quarter of fiscal year
2024, which was approximately 45% of total revenue in the
period.
Service revenue (GAAP and non-GAAP) for the first quarter of
fiscal year 2025 was $113.4 million, or approximately 65% of total
revenue in the period. This compares with service revenue (GAAP and
non-GAAP) of $116.5 million in the first quarter of fiscal year
2024, which was approximately 55% of total revenue for the
period.
NETSCOUT’s loss from operations (GAAP) was $463.3 million in the
first quarter of fiscal year 2025, which includes a non-cash
goodwill impairment charge of $427.0 million and a restructuring
charge of $16.6 million. This compares with a loss from operations
(GAAP) of $4.7 million in the first quarter of fiscal year 2024.
The Company’s operating margin (GAAP) was negative 265.4% in the
first quarter of the fiscal year, versus negative 2.2% in the same
period of fiscal year 2024. Non-GAAP income from operations was
$14.0 million with a non-GAAP operating margin of 8.0% in the first
quarter of fiscal year 2025. This compares to non-GAAP income from
operations of $29.6 million and a non-GAAP operating margin of
14.0% in the first quarter of fiscal year 2024. Non-GAAP EBITDA
from operations in the first quarter of fiscal year 2025 was $17.8
million, or 10.2% of non-GAAP quarterly revenue for the period.
This compares to non-GAAP EBITDA from operations of $34.6 million
in the first quarter of fiscal year 2024, or 16.4% of non-GAAP
quarterly revenue for the period.
Net loss (GAAP) for the first quarter of fiscal year 2025 was
$443.4 million, or $6.20 per share (diluted), which includes the
non-cash goodwill impairment and restructuring charges mentioned
above, versus a net loss (GAAP) of $4.2 million, or $(0.06) per
share (diluted), for the first quarter of fiscal year 2024. On a
non-GAAP basis, net income for the first quarter of fiscal year
2025 was $20.6 million, or $0.28 per share (diluted), which
includes an unrealized gain on a foreign investment. This compares
with $22.7 million, or $0.31 per share (diluted), for the first
quarter of fiscal year 2024.
As of June 30, 2024, cash, cash equivalents, short and long-term
marketable securities and investments were $407.2 million, compared
with $424.1 million as of March 31, 2024. During the first quarter
of fiscal year 2025, NETSCOUT repurchased a total of 1,347,900
shares of its common stock at an average price of $18.55 per share
for an aggregate purchase price of approximately $25.0 million. The
Company repaid $25 million of its revolving debt balance in the
first quarter and the outstanding debt balance under its revolving
credit facility was $75.0 million as of June 30, 2024. The
Company’s $800 million revolving credit facility will expire in
July 2026.
Financial Outlook
The Company’s GAAP net loss per share for fiscal year 2025 has
been updated to reflect a non-cash goodwill impairment and a
restructuring charge related to the Company’s Voluntary Separation
Program (VSP). The fiscal year 2025 outlook for revenue and
non-GAAP net income per share remains unchanged from previous
guidance. The Company’s outlook for fiscal year 2025 is as
follows:
- Revenue (GAAP and non-GAAP) expectations remain in the range of
$800 million to $830 million.
- GAAP net loss per share (diluted) is now expected to be in the
range of ($5.28) to ($5.03), primarily attributable to goodwill
impairment and restructuring charges taken in the first quarter of
fiscal year 2025, as well as restructuring charges anticipated for
the second quarter of fiscal year 2025. This compares to the
previous GAAP net income per share range of $0.58 to $0.82.
Non-GAAP net income per share (diluted) expectations remain in the
range of $2.10 to $2.30.
- A reconciliation between GAAP and non-GAAP numbers for
NETSCOUT’s fiscal year 2025 outlook is included in the financial
tables below.
NETSCOUT recently initiated a Voluntary Separation Program (VSP)
as part of its restructuring efforts for fiscal year 2025. The VSP
is expected to result in a net reduction of approximately 150
employees, which represents approximately 6.5% of its workforce as
of March 31, 2024. In conjunction with the VSP, the Company
recorded a restructuring charge of $16.6 million in the first
quarter and expects to record an additional restructuring charge in
the range of $3 million to $5 million in the second quarter of
fiscal year 2025 primarily for severance costs associated with the
implementation of the VSP. The Company expects that these actions
will generate net annual run-rate savings of approximately $25
million to $27 million, of which $18 million to $19 million will be
realized in the remainder of fiscal year 2025. The charges are
factored into NETSCOUT's GAAP guidance provided above, and
anticipated partial-year net benefits for fiscal year 2025 are
included in both GAAP and non-GAAP expectations.
Recent Developments and Highlights
- In mid-July 2024, NETSCOUT introduced its new suite of Business
Edge Observability products, including the nGenius Edge Sensor and
Remote InfiniStreamNG solutions to deliver IT observability for
remote locations at the digital edge. As the prevalence and
importance of mission-critical applications and services expand at
remote sites, such as retail stores, manufacturing facilities,
banks, utility companies, hospitals, and government offices,
proactive, deep-dive observability is more critical in reducing
business risk.
- In late-June 2024, NETSCOUT announced it expanded its Arbor
Cloud DDoS attack mitigation network to 16 scrubbing centers
worldwide with the recent addition of a new Toronto facility. This
network offers ISPs and enterprise customers more than 15 terabits
per second (Tbps) of dedicated attack capacity. This lower latency
scrubbing center allows for faster diversion of attack traffic for
mitigation and redirection to Canadian destinations benefiting
Canadian businesses and organizations. In addition,
Canadian-originated and destined traffic and data remain within
Canadian borders to help organizations comply with privacy and data
sovereignty regulations at provincial and national levels.
- In mid-June 2024, NETSCOUT announced the extension of its
long-term partnership with Vodafone to enhance the performance of
Vodafone’s networks for customers. The multi-year agreement
leverages NETSCOUT InfinistreamNG to provide real-time, end-to-end
visibility monitoring solutions across Vodafone’s physical and
virtual network environment, including 5G Standalone. It gives
Vodafone pinpoint visibility of all the component parts of its
networks, enabling it to analyze the flow and performance of
anonymized and aggregated packet data to enhance the customer
experience.
- During the first quarter of fiscal year 2025, NETSCOUT extended
a multi-year enterprise license agreement which includes 5G related
solutions with a leading Tier-1 North American service
provider.
Conference Call
Instructions:
NETSCOUT will host a conference call to discuss its
first-quarter fiscal year 2025 financial results and financial
outlook 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 NTCTQ125. 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) 695-2122 for U.S./Canada
and (402) 530-9027 for international callers.
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 the United States (GAAP), NETSCOUT also reports the
following non-GAAP measures: non-GAAP gross profit, non-GAAP income
from operations, non-GAAP operating margin, non-GAAP net income,
non-GAAP diluted net income per share, and non-GAAP earnings before
interest and other expense, income taxes, depreciation, and
amortization (Non-GAAP EBITDA) from operations. Non-GAAP gross
profit removes expenses related to the amortization of acquired
intangible assets, share-based compensation expense, and
acquisition-related depreciation expense. Non-GAAP income from
operations includes the aforementioned adjustments and also removes
the legal (benefit) expense related to civil judgments,
restructuring charges and goodwill impairment charges. Non-GAAP
operating margin includes the foregoing adjustments related to
non-GAAP income from operations. Non-GAAP net income includes the
foregoing adjustments related to non-GAAP income from operations,
and also removes change in fair value of derivative instruments,
net of related income tax effects. Non-GAAP diluted net income per
share includes the foregoing adjustments related to non-GAAP net
income. Non-GAAP EBITDA from operations includes the aforementioned
items related to non-GAAP income from operations and also removes
non-acquisition related depreciation expense. Investors are
encouraged to review the related GAAP financial measures and the
reconciliation of these non-GAAP financial measures to their most
directly comparable GAAP financial measures included in the
attached tables within this press release.
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 financial
results, its financial outlook and expectations, that it is
positioning NETSCOUT to win in the market, its increased focus on
cybersecurity, its intention to prudently manage costs, its
commitment to leveraging its “Visibility without Borders” platform
to help customers address the performance, availability, and
security challenges of the complex connected world, statements
regarding charges and benefits resulting from the VSP, 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 networks, 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, 2024, 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 USA and/or other countries.
NETSCOUT SYSTEMS, INC.
Condensed Consolidated
Statements of Operations
(In thousands, except per
share data)
(Unaudited)
Three Months Ended
June 30,
2024
2023
Revenue:
Product
$
61,169
$
94,661
Service
113,396
116,477
Total revenue
174,565
211,138
Cost of revenue:
Product
12,004
16,662
Service
32,365
33,734
Total cost of revenue
44,369
50,396
Gross profit
130,196
160,742
Operating expenses:
Research and development
42,465
45,520
Sales and marketing
70,330
78,996
General and administrative
25,581
28,214
Amortization of acquired intangible
assets
11,614
12,707
Restructuring charges
16,563
—
Goodwill impairment
426,967
—
Total operating expenses
593,520
165,437
Loss from operations
(463,324
)
(4,695
)
Interest and other income (expense),
net
9,628
(639
)
Loss before income tax benefit
(453,696
)
(5,334
)
Income tax benefit
(10,320
)
(1,134
)
Net loss
$
(443,376
)
$
(4,200
)
Basic net loss per share
$
(6.20
)
$
(0.06
)
Diluted net loss per share
$
(6.20
)
$
(0.06
)
Weighted average common shares outstanding
used in computing:
Net loss per share - basic
71,467
71,540
Net loss per share - diluted
71,467
71,540
NETSCOUT SYSTEMS, INC.
Consolidated Balance
Sheets
(In thousands)
(Unaudited)
June 30,
March 31,
2024
2024
Assets
Current assets:
Cash, cash equivalents, marketable
securities and investments
$
406,167
$
423,133
Accounts receivable and unbilled costs,
net
129,270
192,096
Inventories and deferred costs
14,994
14,095
Prepaid expenses and other current
assets
39,619
43,170
Total current assets
590,050
672,494
Fixed assets, net
24,903
26,487
Operating lease right-of-use assets
39,911
42,486
Goodwill and intangible assets, net
1,372,005
1,811,479
Long-term marketable securities
1,003
994
Other assets
57,544
41,362
Total assets
$
2,085,416
$
2,595,302
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable
$
15,938
$
14,506
Accrued compensation
63,059
51,362
Accrued other
13,163
15,429
Deferred revenue and customer deposits
279,185
301,806
Current portion of operating lease
liabilities
11,859
11,979
Total current liabilities
383,204
395,082
Other long-term liabilities
6,897
7,055
Deferred tax liability
4,326
4,374
Accrued long-term retirement benefits
28,124
28,413
Long-term deferred revenue and customer
deposits
120,638
130,212
Operating lease liabilities, net of
current portion
35,231
38,101
Long-term debt
75,000
100,000
Total liabilities
653,420
703,237
Stockholders' equity:
Common stock
133
131
Additional paid-in capital
3,201,998
3,181,366
Accumulated other comprehensive income
3,404
3,572
Treasury stock, at cost
(1,652,642
)
(1,615,483
)
(Accumulated deficit) Retained
earnings
(120,897
)
322,479
Total stockholders' equity
1,431,996
1,892,065
Total liabilities and stockholders'
equity
$
2,085,416
$
2,595,302
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
June 30,
March 31,
2024
2023
2024
Revenue
$
174,565
$
211,138
$
203,443
Gross Profit (GAAP)
$
130,196
$
160,742
$
153,103
Share-based compensation expense (1)
3,320
2,911
2,305
Amortization of acquired intangible assets
(2)
995
1,638
1,637
Acquisition related depreciation expense
(3)
2
5
1
Non-GAAP Gross Profit
$
134,513
$
165,296
$
157,046
Loss from Operations (GAAP)
$
(463,324
)
$
(4,695
)
$
(36,976
)
GAAP Operating Margin
(265.4
)%
(2.2
)%
(18.2
)%
Share-based compensation expense (1)
21,198
19,844
16,146
Amortization of acquired intangible assets
(2)
12,609
14,345
14,184
Restructuring charges
16,563
—
—
Goodwill impairment
426,967
—
50,154
Acquisition related depreciation expense
(3)
12
59
11
Legal expense (benefit) related to civil
judgments (4)
—
41
(4,510
)
Non-GAAP Income from Operations
$
14,025
$
29,594
$
39,009
Non-GAAP Operating Margin
8.0
%
14.0
%
19.2
%
Net Loss (GAAP)
$
(443,376
)
$
(4,200
)
$
(32,419
)
Share-based compensation expense (1)
21,198
19,844
16,146
Amortization of acquired intangible assets
(2)
12,609
14,345
14,184
Restructuring charges
16,563
—
—
Goodwill impairment
426,967
—
50,154
Acquisition related depreciation expense
(3)
12
59
11
Legal expense (benefit) related to civil
judgments (4)
—
41
(4,510
)
Change in fair value of derivative
instrument (5)
—
(206
)
—
Income tax adjustments (6)
(13,395
)
(7,171
)
(3,743
)
Non-GAAP Net Income
$
20,578
$
22,712
$
39,823
Diluted Net Loss Per Share (GAAP)
$
(6.20
)
$
(0.06
)
$
(0.46
)
Share impact of non-GAAP adjustments
identified above
6.48
0.37
1.01
Non-GAAP Diluted Net Income Per Share
$
0.28
$
0.31
$
0.55
Shares used in computing non-GAAP diluted
net income per share
72,793
72,995
72,345
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
June 30,
March 31,
2024
2023
2024
(1)
Share-based compensation expense included
in these amounts is as follows:
Cost of product revenue
$
431
$
372
$
303
Cost of service revenue
2,889
2,539
2,002
Research and development
5,886
5,386
4,409
Sales and marketing
7,504
7,284
5,736
General and administrative
4,488
4,263
3,696
Total share-based compensation expense
$
21,198
$
19,844
$
16,146
(2)
Amortization expense related to acquired
software and product technology, tradenames, customer relationships
included in these amounts is as follows:
Cost of product revenue
$
995
$
1,638
$
1,637
Operating expenses
11,614
12,707
12,547
Total amortization expense
$
12,609
$
14,345
$
14,184
(3)
Acquisition related depreciation expense
included in these amounts is as follows:
Cost of product revenue
$
2
$
3
$
1
Cost of service revenue
—
2
—
Research and development
8
42
8
Sales and marketing
2
8
2
General and administrative
—
4
—
Total acquisition related depreciation
expense
$
12
$
59
$
11
(4)
Legal expense (benefit) related to civil
judgments included in this amount is as follows:
General and administrative
$
—
$
41
$
(4,510
)
Total legal judgments expense
$
—
$
41
$
(4,510
)
(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
$
(13,395
)
$
(7,171
)
$
(3,743
)
Total income tax adjustments
$
(13,395
)
$
(7,171
)
$
(3,743
)
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
June 30,
March 31,
2024
2023
2024
Loss from operations (GAAP)
$
(463,324
)
$
(4,695
)
$
(36,976
)
Previous adjustments to determine non-GAAP
income from operations
477,349
34,289
75,985
Non-GAAP Income from operations
$
14,025
$
29,594
$
39,009
Depreciation excluding acquisition
related-depreciation expense
3,784
5,032
3,863
Non-GAAP EBITDA from operations
$
17,809
$
34,626
$
42,872
Non-GAAP EBITDA from operations as a % of
revenue
10.2
%
16.4
%
21.1
%
NETSCOUT SYSTEMS, INC.
Reconciliation of GAAP
Financial Outlook to Non-GAAP Financial Outlook
(Unaudited)
(In millions, except net
income per share - diluted)
FY'24
FY'25
Revenue
$
829.5
~ $800 million to ~$830
million
FY'24
FY'25
GAAP net income (loss)
$
(147.7
)
(~$380 million) to (~$362
million)
Amortization of intangible assets
$
56.9
~$50 million
Share-based compensation expenses
$
70.8
~$68 million
Business development & integration
expenses*
$
0.1
~Less than $1 million
Gain on divestiture of a business
$
(3.8
)
—
Change in fair value of derivative
instrument
$
(0.2
)
—
Legal (benefit) expense related to civil
judgments
$
(4.4
)
—
Restructuring charges
$
—
~$18 million to ~$22 million
Goodwill impairment
$
217.3
~$427 million
Total adjustments
$
336.7
~$564 million to ~$567
million
Related impact of adjustments on income
tax
$
(29.8
)
(~$34 million)
Non-GAAP net income
$
159.1
~$153 million to ~$168
million
GAAP net income (loss) per share
(diluted)
$
(2.07
)
(~$5.28) to (~$5.03)
Non-GAAP net income per share
(diluted)
$
2.20
~$2.10 to ~$2.30
Average weighted shares outstanding
(diluted GAAP)
71.5
~72 million
Average weighted shares outstanding
(diluted Non-GAAP)
72.3
~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/20240725387214/en/
Investors Tony Piazza Deputy CFO 978-614-4000
IR@netscout.com
Media Chris Lucas AVP, Marketing & Corporate Communications
978-614-4124 Chris.Lucas@netscout.com
Netscout Systems (NASDAQ:NTCT)
Gráfica de Acción Histórica
De Jun 2024 a Jul 2024
Netscout Systems (NASDAQ:NTCT)
Gráfica de Acción Histórica
De Jul 2023 a Jul 2024