Le Lézard
Classified in: Science and technology, Business
Subjects: EARNINGS, Conference Call, Webcast

NETSCOUT Reports Fourth Quarter and Full Fiscal Year 2024 Financial Results


NETSCOUT SYSTEMS, INC. (NASDAQ: NTCT), a leading provider of performance management, cybersecurity, and DDoS protection solutions, today announced financial results for its fourth quarter and full fiscal year ended March 31, 2024.

Remarks by Anil Singhal, NETSCOUT's President & Chief Executive Officer:

"Strong Cybersecurity revenue growth continued to be a highlight for NETSCOUT as customers prioritized cybersecurity spending amid heightened geopolitical tensions and the expanding cyber threat landscape. During Q4 and for the full fiscal year 2024, NETSCOUT achieved solid double digit revenue growth in our Cybersecurity offering area across both the enterprise and service provider customer verticals. This strength was more than offset by the constrained customer spending environment affecting our Service Assurance offerings, primarily related to our domestic service provider customers. While our full fiscal year 2024 GAAP operating performance included non-cash goodwill impairment charges that led to a net loss per share for the fiscal year, our diligent cost containment actions and flexible cost structure contributed to non-GAAP earnings per share growth year over year.

"As we look forward to fiscal year 2025, we are encouraged by the momentum in our Cybersecurity offerings. Additionally, there is recognition of lingering headwinds in the domestic service provider vertical of our Service Assurance offering. This will likely create a top-line offset resulting in a flat to slightly down revenue scenario for fiscal year 2025. Considering these dynamics, we have begun to take further actions that will enhance our focus on Cybersecurity. We also plan to continue to align our cost structure with the current demand environment as we seek to execute on our strategic priorities, preserve earnings for shareholders, and position NETSCOUT for long-term success."

Q4 FY24 Financial Results

Total revenue (GAAP and non-GAAP) for the fourth quarter of fiscal year 2024 was $203.4 million, compared with $208.1 million (GAAP and non-GAAP) in the fourth quarter of fiscal year 2023. A reconciliation of all GAAP and non-GAAP results are included in the financial tables below.

Product revenue (GAAP and non-GAAP) for the fourth quarter of fiscal year 2024 was $89.4 million, or approximately 44% of total revenue in the period. This compares with product revenue (GAAP and non-GAAP) of $91.3 million in the fourth quarter of fiscal year 2023, which was approximately 44% of total revenue in the period.

Service revenue (GAAP and non-GAAP) for the fourth quarter of fiscal year 2024 was $114.0 million, or approximately 56% of total revenue in the period. This compares with service revenue (GAAP and non-GAAP) of $116.8 million in the fourth quarter of fiscal year 2023, which was approximately 56% of total revenue for the period.

NETSCOUT's loss from operations (GAAP) was $37.0 million in the fourth quarter of fiscal year 2024, which includes a non-cash goodwill impairment charge of $50.2 million. This compares with income from operations (GAAP) of $1.6 million in the fourth quarter of fiscal year 2023. The Company's operating margin (GAAP) was negative 18.2% in the fourth quarter of fiscal year 2024, versus 0.8% in the same period of fiscal year 2023. Non-GAAP income from operations was $39.0 million with a non-GAAP operating margin of 19.2% in the fourth quarter of fiscal year 2024. This compares to non-GAAP income from operations of $32.7 million and a non-GAAP operating margin of 15.7% in the fourth quarter of fiscal year 2023. Non-GAAP EBITDA from operations in the fourth quarter of fiscal year 2024 was $42.9 million, or 21.1% of non-GAAP quarterly revenue for the period. This compares to non-GAAP EBITDA from operations of $38.0 million in the fourth quarter of fiscal year 2023, or 18.3% of non-GAAP quarterly revenue for the period.

Net loss (GAAP) for the fourth quarter of fiscal year 2024 was $32.4 million, or $0.46 per share (diluted), which includes the non-cash goodwill impairment charge mentioned above, versus a net loss (GAAP) of $3.2 million, or $0.05 per share (diluted), for the fourth quarter of fiscal year 2023. On a non-GAAP basis, net income for the fourth quarter of fiscal year 2024 was $39.8 million, or $0.55 per share (diluted), compared with $27.2 million, or $0.38 per share (diluted), for the fourth quarter of fiscal year 2023.

As of March 31, 2024, cash, cash equivalents, short and long-term marketable securities and investments were $424.1 million, compared with $330.1 million as of December 31, 2023, and $427.9 million as of March 31, 2023. NETSCOUT did not repurchase any shares of its common stock during the fourth quarter of fiscal year 2024. The Company's outstanding debt balance under its revolving credit facility was $100 million as of March 31, 2024. The Company's $800 million revolving credit facility will expire in July 2026.

Full Year FY24 Financial Results

Financial Outlook

The Company's financial outlook for fiscal year 2025 is anticipated to be as follows:

NETSCOUT recently initiated a Voluntary Separation Program (VSP) as part of restructuring efforts for fiscal year 2025, with one-time separation charges currently estimated to be in the range of $18 million to $22 million. These charges are factored into NETSCOUT's GAAP guidance provided above, while anticipated partial-year net benefits for fiscal year 2025 are included in both GAAP and non-GAAP expectations.

Recent Developments and Highlights

Conference Call Instructions:

NETSCOUT will host a conference call to discuss its fourth-quarter and full fiscal year 2024 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 NTCTQ424. 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) 753-5212 for U.S./Canada and (402) 220-2673 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 gain on the divestiture of a business, 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, its increased focus on Cybersecurity, its intention to reduce its cost structure to align it with the current demand environment, its efforts to execute on strategic priorities, preserve earnings for shareholders, and position NETSCOUT for long-term success, 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, 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 USA and/or other countries.

 

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,

 

 

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Revenue:

 

 

 

 

 

 

 

 

 

Product

 

$

89,406

 

 

$

91,274

 

 

$

360,444

 

 

$

450,793

 

 

Service

 

 

114,037

 

 

 

116,819

 

 

 

469,011

 

 

 

463,737

 

 

 

Total revenue

 

 

203,443

 

 

 

208,093

 

 

$

829,455

 

 

 

914,530

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

Product

 

 

16,051

 

 

 

16,901

 

 

 

64,057

 

 

 

94,868

 

 

Service

 

 

34,289

 

 

 

34,040

 

 

 

123,355

 

 

 

128,230

 

 

 

Total cost of revenue

 

 

50,340

 

 

 

50,941

 

 

 

187,412

 

 

 

223,098

 

Gross profit

 

 

153,103

 

 

 

157,152

 

 

 

642,043

 

 

 

691,432

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development

 

 

43,558

 

 

 

46,241

 

 

 

161,213

 

 

 

176,173

 

 

Sales and marketing

 

 

61,909

 

 

 

67,478

 

 

 

270,979

 

 

 

276,913

 

 

General and administrative

 

 

21,911

 

 

 

27,926

 

 

 

95,886

 

 

 

103,510

 

 

Amortization of acquired intangible assets

 

 

12,547

 

 

 

13,890

 

 

 

50,337

 

 

 

55,390

 

 

Restructuring charges

 

 

?

 

 

 

(21

)

 

 

?

 

 

 

1,782

 

 

Goodwill impairment

 

 

50,154

 

 

 

?

 

 

 

217,260

 

 

 

?

 

 

Gain on divestiture of a business

 

 

?

 

 

 

?

 

 

 

(3,806

)

 

 

?

 

 

 

Total operating expenses

 

 

190,079

 

 

 

155,514

 

 

 

791,869

 

 

 

613,768

 

Income (loss) from operations

 

 

(36,976

)

 

 

1,638

 

 

 

(149,826

)

 

 

77,664

 

Interest and other income (expense), net

 

 

4,044

 

 

 

(2,695

)

 

 

5,316

 

 

 

(9,249

)

Income (loss) before income tax expense (benefit)

 

 

(32,932

)

 

 

(1,057

)

 

 

(144,510

)

 

 

68,415

 

Income tax expense (benefit)

 

 

(513

)

 

 

2,164

 

 

 

3,224

 

 

 

8,767

 

Net income (loss)

 

$

(32,419

)

 

$

(3,221

)

 

$

(147,734

)

 

$

59,648

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income (loss) per share

 

$

(0.46

)

 

$

(0.05

)

 

$

(2.07

)

 

$

0.83

 

Diluted net income (loss) per share

 

$

(0.46

)

 

$

(0.05

)

 

$

(2.07

)

 

$

0.82

 

Weighted average common shares outstanding used in computing:

 

 

 

 

 

 

 

 

 

Net income (loss) per share - basic

 

 

71,164

 

 

 

71,066

 

 

 

71,474

 

 

 

71,781

 

 

Net income (loss) per share - diluted

 

 

71,164

 

 

 

71,066

 

 

 

71,474

 

 

 

73,046

 

 

NETSCOUT SYSTEMS, INC.

Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

March 31,

 

March 31,

 

 

2024

 

 

 

2023

 

Assets

 

 

 

Current assets:

 

 

 

Cash, cash equivalents, marketable securities and investments

$

423,133

 

 

$

418,998

 

Accounts receivable and unbilled costs, net

 

192,096

 

 

 

143,855

 

Inventories and deferred costs

 

14,095

 

 

 

17,956

 

Prepaid expenses and other current assets

 

43,170

 

 

 

36,551

 

Total current assets

 

672,494

 

 

 

617,360

 

 

 

 

 

Fixed assets, net

 

26,487

 

 

 

34,735

 

Operating lease right-of-use assets

 

42,486

 

 

 

51,456

 

Goodwill and intangible assets, net

 

1,811,479

 

 

 

2,090,995

 

Long-term marketable securities

 

994

 

 

 

8,940

 

Other assets

 

41,362

 

 

 

17,074

 

Total assets

$

2,595,302

 

 

$

2,820,560

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

14,506

 

 

$

16,473

 

Accrued compensation

 

51,362

 

 

 

83,279

 

Accrued other

 

15,429

 

 

 

30,674

 

Deferred revenue and customer deposits

 

301,806

 

 

 

311,531

 

Current portion of operating lease liabilities

 

11,979

 

 

 

11,650

 

Total current liabilities

 

395,082

 

 

 

453,607

 

 

 

 

 

Other long-term liabilities

 

7,055

 

 

 

7,683

 

Deferred tax liability

 

4,374

 

 

 

24,939

 

Accrued long-term retirement benefits

 

28,413

 

 

 

26,049

 

Long-term deferred revenue and customer deposits

 

130,212

 

 

 

129,814

 

Operating lease liabilities, net of current portion

 

38,101

 

 

 

48,819

 

Long-term debt

 

100,000

 

 

 

100,000

 

Total liabilities

 

703,237

 

 

 

790,911

 

 

 

 

 

Stockholders' equity:

 

 

 

Common stock

 

131

 

 

 

128

 

Additional paid-in capital

 

3,181,366

 

 

 

3,099,698

 

Accumulated other comprehensive income

 

3,572

 

 

 

5,738

 

Treasury stock, at cost

 

(1,615,483

)

 

 

(1,546,128

)

Retained earnings

 

322,479

 

 

 

470,213

 

Total stockholders' equity

 

1,892,065

 

 

 

2,029,649

 

Total liabilities and stockholders' equity

$

2,595,302

 

 

$

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

 

Twelve Months Ended

 

 

March 31,

 

December 31,

 

March 31,

 

 

 

2024

 

 

 

2023

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

GAAP and Non-GAAP Revenue

 

$

203,443

 

 

$

208,093

 

 

$

218,072

 

 

$

829,455

 

 

$

914,530

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit (GAAP)

 

$

153,103

 

 

$

157,152

 

 

$

174,448

 

 

$

642,043

 

 

$

691,432

 

Share-based compensation expense (1)

 

 

2,305

 

 

 

1,940

 

 

 

2,375

 

 

 

10,229

 

 

 

8,415

 

Amortization of acquired intangible assets (2)

 

 

1,637

 

 

 

2,329

 

 

 

1,636

 

 

 

6,549

 

 

 

9,284

 

Acquisition related depreciation expense (3)

 

 

1

 

 

 

6

 

 

 

2

 

 

 

12

 

 

 

22

 

Non-GAAP Gross Profit

 

$

157,046

 

 

$

161,427

 

 

$

178,461

 

 

$

658,833

 

 

$

709,153

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) from Operations (GAAP)

 

$

(36,976

)

 

$

1,638

 

 

$

(134,447

)

 

$

(149,826

)

 

$

77,664

 

GAAP Operating Margin

 

 

(18.2

)%

 

 

0.8

%

 

 

(61.7

)%

 

 

(18.1

)%

 

 

8.5

%

Share-based compensation expense (1)

 

 

16,146

 

 

 

14,761

 

 

 

16,364

 

 

 

70,799

 

 

 

61,986

 

Amortization of acquired intangible assets (2)

 

 

14,184

 

 

 

16,219

 

 

 

14,169

 

 

 

56,886

 

 

 

64,674

 

Restructuring charges

 

 

?

 

 

 

(21

)

 

 

?

 

 

 

?

 

 

 

1,782

 

Goodwill impairment

 

 

50,154

 

 

 

?

 

 

 

167,106

 

 

 

217,260

 

 

 

?

 

Acquisition related depreciation expense (3)

 

 

11

 

 

 

58

 

 

 

12

 

 

 

119

 

 

 

241

 

Gain on divestiture of a business

 

 

?

 

 

 

?

 

 

 

?

 

 

 

(3,806

)

 

 

?

 

Legal (benefit) expense related to civil judgments (4)

 

 

(4,510

)

 

 

50

 

 

 

45

 

 

 

(4,380

)

 

 

476

 

Non-GAAP Income from Operations

 

$

39,009

 

 

$

32,705

 

 

$

63,249

 

 

$

187,052

 

 

$

206,823

 

Non-GAAP Operating Margin

 

 

19.2

%

 

 

15.7

%

 

 

29.0

%

 

 

22.6

%

 

 

22.6

%

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) (GAAP)

 

$

(32,419

)

 

$

(3,221

)

 

$

(132,577

)

 

$

(147,734

)

 

$

59,648

 

Share-based compensation expense (1)

 

 

16,146

 

 

 

14,761

 

 

 

16,364

 

 

 

70,799

 

 

 

61,986

 

Amortization of acquired intangible assets (2)

 

 

14,184

 

 

 

16,219

 

 

 

14,169

 

 

 

56,886

 

 

 

64,674

 

Restructuring charges

 

 

?

 

 

 

(21

)

 

 

?

 

 

 

?

 

 

 

1,782

 

Goodwill impairment

 

 

50,154

 

 

 

?

 

 

 

167,106

 

 

 

217,260

 

 

 

?

 

Acquisition related depreciation expense (3)

 

 

11

 

 

 

58

 

 

 

12

 

 

 

119

 

 

 

241

 

Gain on divestiture of a business

 

 

?

 

 

 

?

 

 

 

?

 

 

 

(3,806

)

 

 

?

 

Legal (benefit) expense related to civil judgments (4)

 

 

(4,510

)

 

 

50

 

 

 

45

 

 

 

(4,380

)

 

 

476

 

Change in fair value of derivative instrument (5)

 

 

?

 

 

 

1,380

 

 

 

?

 

 

 

(206

)

 

 

1,380

 

Income tax adjustments (6)

 

 

(3,743

)

 

 

(2,041

)

 

 

(13,085

)

 

 

(29,828

)

 

 

(30,626

)

Non-GAAP Net Income

 

$

39,823

 

 

$

27,185

 

 

$

52,034

 

 

$

159,110

 

 

$

159,561

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Net Income (Loss) Per Share (GAAP)

 

$

(0.46

)

 

$

(0.05

)

 

$

(1.87

)

 

$

(2.07

)

 

$

0.82

 

Share impact of non-GAAP adjustments identified above

 

 

1.01

 

 

 

0.43

 

 

 

2.60

 

 

 

4.27

 

 

 

1.36

 

Non-GAAP Diluted Net Income Per Share

 

$

0.55

 

 

$

0.38

 

 

$

0.73

 

 

$

2.20

 

 

$

2.18

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing non-GAAP diluted net income per share

 

 

72,345

 

 

 

72,491

 

 

 

71,638

 

 

 

72,294

 

 

 

73,046

 

 

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,

 

 

 

 

 

2024

 

 

 

2023

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Share-based compensation expense included in these amounts is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product revenue

 

$

303

 

 

$

260

 

 

$

306

 

 

$

1,330

 

 

$

1,129

 

 

 

Cost of service revenue

 

 

2,002

 

 

 

1,680

 

 

 

2,069

 

 

 

8,899

 

 

 

7,286

 

 

 

Research and development

 

 

4,409

 

 

 

3,870

 

 

 

4,498

 

 

 

19,281

 

 

 

17,055

 

 

 

Sales and marketing

 

 

5,736

 

 

 

5,374

 

 

 

5,680

 

 

 

25,375

 

 

 

22,612

 

 

 

General and administrative

 

 

3,696

 

 

 

3,577

 

 

 

3,811

 

 

 

15,914

 

 

 

13,904

 

 

 

Total share-based compensation expense

 

$

16,146

 

 

$

14,761

 

 

$

16,364

 

 

$

70,799

 

 

$

61,986

 

(2)

Amortization expense related to acquired software and product technology, tradenames, customer relationships included in these amounts is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product revenue

 

$

1,637

 

 

$

2,329

 

 

$

1,636

 

 

$

6,549

 

 

$

9,284

 

 

 

Operating expenses

 

 

12,547

 

 

 

13,890

 

 

 

12,533

 

 

 

50,337

 

 

 

55,390

 

 

 

Total amortization expense

 

$

14,184

 

 

$

16,219

 

 

$

14,169

 

 

$

56,886

 

 

$

64,674

 

(3)

Acquisition related depreciation expense included in these amounts is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product revenue

 

$

1

 

 

$

3

 

 

$

2

 

 

$

8

 

 

$

12

 

 

 

Cost of service revenue

 

 

?

 

 

 

3

 

 

 

?

 

 

 

4

 

 

 

10

 

 

 

Research and development

 

 

8

 

 

 

41

 

 

 

8

 

 

 

82

 

 

 

170

 

 

 

Sales and marketing

 

 

2

 

 

 

7

 

 

 

2

 

 

 

18

 

 

 

32

 

 

 

General and administrative

 

 

?

 

 

 

4

 

 

 

?

 

 

 

7

 

 

 

17

 

 

 

Total acquisition related depreciation expense

 

$

11

 

 

$

58

 

 

$

12

 

 

$

119

 

 

$

241

 

(4)

Legal (benefit) expense related to civil judgments included in this amount is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

$

(4,510

)

 

$

50

 

 

$

45

 

 

$

(4,380

)

 

$

476

 

 

 

Total legal judgments expense

 

$

(4,510

)

 

$

50

 

 

$

45

 

 

$

(4,380

)

 

$

476

 

(5)

Change in fair value of derivative instrument included in this amount is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other (income) expense, net

 

$

?

 

 

$

1,380

 

 

$

?

 

 

$

(206

)

 

$

1,380

 

 

 

Total change in fair value of derivative instrument

 

$

?

 

 

$

1,380

 

 

$

?

 

 

$

(206

)

 

$

1,380

 

(6)

Total income tax adjustment included in this amount is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Tax effect of non-GAAP adjustments above

 

$

(3,743

)

 

$

(2,041

)

 

$

(13,085

)

 

$

(29,828

)

 

$

(30,626

)

 

 

Total income tax adjustments

 

$

(3,743

)

 

$

(2,041

)

 

$

(13,085

)

 

$

(29,828

)

 

$

(30,626

)

 

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,

 

 

 

2024

 

 

 

2023

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations (GAAP)

 

$

(36,976

)

 

$

1,638

 

 

$

(134,447

)

 

$

(149,826

)

 

$

77,664

 

Previous adjustments to determine non-GAAP income from operations

 

 

75,985

 

 

 

31,067

 

 

 

197,696

 

 

 

336,878

 

 

 

129,159

 

Non-GAAP Income from operations

 

$

39,009

 

 

$

32,705

 

 

$

63,249

 

 

$

187,052

 

 

$

206,823

 

Depreciation excluding acquisition related-depreciation expense

 

 

3,863

 

 

 

5,339

 

 

 

4,337

 

 

 

17,981

 

 

 

21,003

 

Non-GAAP EBITDA from operations

 

$

42,872

 

 

$

38,044

 

 

$

67,586

 

 

$

205,033

 

 

$

227,826

 

Non-GAAP EBITDA from operations as a % of revenue

 

 

21.1

%

 

 

18.3

%

 

 

31.0

%

 

 

24.7

%

 

 

24.9

%

 

 

 

 

 

 

 

 

 

 

 

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

 

GAAP & Non-GAAP revenue

$

829.5

 

 

~ $800 million to ~$830 million

 

 

 

 

 

 

 

FY'24

 

FY'25

 

GAAP net income (loss)

$

(147.7

)

 

~$43 million to ~$61 million

 

Amortization of intangible assets

$

56.9

 

 

~$50 million

 

Share-based compensation expenses

$

70.8

 

 

~$70 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

 

 

?

 

Total adjustments

$

336.7

 

 

~$140 million to ~$145 million

 

Related impact of adjustments on income tax

$

(29.8

)

 

(~$28 million) to (~$27 million)

 

Non-GAAP net income

$

159.1

 

 

~$155 million to ~$170 million

 

 

 

 

 

 

GAAP net income (loss) per share (diluted)

$

(2.07

)

 

~$0.58 to ~$0.82

 

Non-GAAP net income per share (diluted)

$

2.20

 

 

~$2.10 to ~$2.30

 

 

 

 

 

 

Average weighted shares outstanding (diluted GAAP)

 

71.5

 

 

~74 million

 

Average weighted shares outstanding (diluted Non-GAAP)

 

72.3

 

 

~74 million

 

*Business development & integration expenses include acquisition-related depreciation expense

 

**Figures in table may not total due to rounding

 

 

 

 

 


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