Delivers Q2 Financial Performance In-Line
with Preliminary Results Released October 16th
NETSCOUT SYSTEMS, INC. (NASDAQ: NTCT), a leading provider of
enterprise performance management, carrier service assurance,
cybersecurity, and DDoS protection solutions, today announced
financial results for its second quarter ended September 30,
2023.
Remarks by Anil Singhal, NETSCOUT’s President and Chief
Executive Officer:
“As previously announced in our October 16th preliminary results
press release, our revenue in the second quarter was impacted by a
recent slowing in order conversion related to industry and economic
headwinds that began late in the quarter and that we expect to
persist into the second half of fiscal year 2024. In response to
these dynamics, we initiated several actions to manage
discretionary costs, which more than offset the bottom-line impact
in the second fiscal quarter and should reduce the negative impact
to our full fiscal year earnings per share outlook without
compromising our longer-term objectives.
“Looking ahead, we are committed to delivering results in-line
with our updated outlook as we continue to execute on our strategic
priorities and position NETSCOUT to deliver long-term stakeholder
value. Despite the near-term headwinds, we believe the long-term
demand trends driving our business remain intact as enterprises and
service providers continue to require cybersecurity and service
assurance solutions that deliver actionable visibility at scale.
With our industry leading ‘Visibility Without Borders’ platform,
strong customer relationships, and solid financial profile, we
remain well-positioned to play a critical role in enabling our
customers to tackle the performance, availability, and security
challenges of the increasingly complex connected digital
world.”
Q2 FY24 Financial Results
Total revenue (GAAP and non-GAAP) for the second quarter of
fiscal year 2024 was $196.8 million, compared with $228.1 million
(GAAP and non-GAAP) in the second 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 second quarter of
fiscal year 2024 was $80.5 million, or approximately 41% of total
revenue in the period. This compares with product revenue (GAAP and
non-GAAP) of $111.8 million in the second quarter of fiscal year
2023, which was approximately 49% of total revenue in the
period.
Service revenue (GAAP and non-GAAP) for the second quarter of
fiscal year 2024 was $116.3 million, or approximately 59% of total
revenue in the period. This compares with service revenue (GAAP and
non-GAAP) of $116.3 million in the second quarter of fiscal year
2023, which was approximately 51% of total revenue for the
period.
NETSCOUT’s income from operations (GAAP) was $26.3 million in
the second quarter of fiscal year 2024, compared with income from
operations (GAAP) of $21.4 million in the same period of fiscal
year 2023. The Company’s operating margin (GAAP) was 13.4% in the
second quarter of fiscal year 2024, versus 9.4% in the same period
of fiscal year 2023. Non-GAAP income from operations was $55.2
million with a non-GAAP operating margin of 28.0% in the second
quarter of fiscal year 2024. This compares to non-GAAP income from
operations of $54.0 million and a non-GAAP operating margin of
23.7% in the second quarter of fiscal year 2023. Non-GAAP EBITDA
from operations in the second quarter of fiscal year 2024 was $59.9
million, or 30.5% of non-GAAP quarterly revenue for the period.
This compares to non-GAAP EBITDA from operations of $59.1 million
in the second quarter of fiscal year 2023, which was 25.9% of
non-GAAP quarterly revenue for the period.
Net income (GAAP) for the second quarter of fiscal year 2024 was
$21.5 million, or $0.29 per share (diluted), versus net income
(GAAP) of $17.4 million, or $0.24 per share (diluted), for the
second quarter of fiscal year 2023. On a non-GAAP basis, net income
for the second quarter of fiscal year 2024 was $44.5 million, or
$0.61 per share (diluted), compared with $41.3 million, or $0.57
per share (diluted), for the second quarter of fiscal year
2023.
As of September 30, 2023, cash, cash equivalents, short-term and
long-term marketable securities, and investments, were $332.6
million, compared with $427.9 million as of March 31, 2023. During
the second quarter of fiscal year 2024, NETSCOUT repurchased a
total of approximately 1.1 million shares of its common stock at an
average price of $27.90 per share for an aggregate purchase price
of approximately $31.2 million. The Company’s outstanding debt
balance under its revolving credit facility was $100 million as of
September 30, 2023. The Company’s $800 million revolving credit
facility will expire in July 2026.
First-Half FY24 Financial Results
- For the first half of fiscal year 2024, total revenue (GAAP and
non-GAAP) was $407.9 million, versus total revenue (GAAP and
non-GAAP) of $436.9 million in the first half of fiscal year 2023.
A reconciliation of GAAP and non-GAAP results is included in the
financial tables below.
- Product revenue (GAAP and non-GAAP) for the first half of
fiscal year 2024 was $175.2 million, compared with $210.1 million
in the first half of fiscal year 2023.
- Service revenue (GAAP and non-GAAP) for the first half of
fiscal year 2024 was $232.7 million, compared with $226.8 million
in the first half of fiscal year 2023.
- NETSCOUT’s income from operations (GAAP) for the first half of
fiscal year 2024 was $21.6 million, compared with $12.3 million in
the first half of fiscal year 2023. The Company’s operating margin
(GAAP) for the first half of fiscal year 2024 was 5.3%, versus 2.8%
in the first half of fiscal year 2023. The Company’s non-GAAP
EBITDA from operations for the first half of fiscal year 2024 was
$94.6 million, or 23.2% of non-GAAP total revenue, versus non-GAAP
EBITDA from operations of $88.9 million, or 20.4% of non-GAAP total
revenue, in the first half of fiscal year 2023. The Company’s
non-GAAP income from operations for the first half of fiscal year
2024 was $84.8 million with a non-GAAP operating margin of 20.8%,
compared with non-GAAP income from operations of $78.5 million and
a non-GAAP operating margin of 18.0% for the first half of fiscal
year 2023.
- For the first half of fiscal year 2024, NETSCOUT’s net income
(GAAP) was $17.3 million, or $0.24 per share (diluted), compared
with net income (GAAP) of $10.3 million, or $0.14 per share
(diluted), in the first half of fiscal year 2023. Non-GAAP net
income for the first half of fiscal year 2024 was $67.3 million, or
$0.92 per share (diluted), compared with non-GAAP net income of
$59.4 million, or $0.81 per share (diluted), for the first half of
fiscal year 2023.
Updated Full Fiscal Year 2024 Outlook:
On October 16, 2023, NETSCOUT announced an updated outlook for
its full fiscal year 2024. Consistent with that announcement,
NETSCOUT’s current outlook is as follows:
- Revenue (GAAP and non-GAAP) is anticipated to be in the range
of $840 million to $860 million versus the prior outlook range of
$915 million to $945 million.
- GAAP net income per share (diluted) is anticipated to be in the
range of $0.69 to $0.89 and non-GAAP net income per share (diluted)
is anticipated to be in the range of $2.00 to $2.20, which reflects
approximately 1.1 million shares repurchased during the second
fiscal quarter of fiscal year 2024. This compares with the prior
outlook of GAAP net income per share (diluted) of $0.86 to $0.98
and non-GAAP net income per share (diluted) of $2.20 to $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 early October 2023, NETSCOUT held its annual technology and
user summit, ENGAGE 2023, in Orlando, Florida, where it showcased
its “Visibility Without Borders” platform demonstrating its
cybersecurity and service assurance capabilities along with a
combination of presentations, panel discussions, and hands-on
trainings. Event registration and attendance increased more than
50% year over year.
- In mid-October 2023, NETSCOUT released the findings of a
commissioned 2023 Forrester Consulting Total Economic Impact™ study
that revealed that NETSCOUT’s Arbor DDoS Protection Solution
delivered a 223% return on investment, as well as several other
business benefits. Customers using the solution can effectively
thwart DDoS attacks, minimize downtime, reduce potential SLA
penalties, and offer premium services through intelligent traffic
analysis.
- In mid-October 2023, NETSCOUT announced it achieved Amazon Web
Services (AWS) Security Competency for its advanced NDR product,
Omnis® Cyber Intelligence (OCI), in the category of threat
detection and response.
- In late September 2023, NETSCOUT announced the findings from
its 1H2023 DDoS Threat Intelligence Report which revealed that
cybercriminals launched approximately 7.9 million Distributed
Denial of Service (DDoS) attacks in the first half of 2023,
representing a 31% year-over-year increase. More information on the
semi-annual DDoS Threat Intelligence Report can be found on
NETSCOUT’s interactive website .
- In mid-September 2023, NETSCOUT launched Adaptive DDoS
Protection for its Arbor® Threat Mitigation System (TMS) to
dramatically improve detection of distributed attacks that
dynamically change vectors and target numerous destination IP
addresses at once. Adaptive DDoS Protection analyzes traffic in
real-time and automatically implements threat intelligence-driven
mitigations and countermeasures to block dynamic DDoS attacks as
they evolve.
- In early September 2023, NETSCOUT introduced RAN Analytics for
Carrier Aggregation, a new solution that offers unique insights
into carrier aggregation patterns to help mobile operators achieve
superior performance and a better subscriber experience with
high-speed LTE and 5G deployments.
- In early September 2023, NetScout divested the Test Lab
Automation portion of its Test Optimization business to Spirent for
financial consideration of approximately $8 million in order to
place the business with a better aligned owner. This business was
immaterial to NETSCOUT’s overall financial profile and was not
strategic to the Company’s core offerings.
- In August 2023, NETSCOUT announced the publication of its 2023
Environmental, Social, and Governance (ESG) Report highlighting
NETSCOUT’s progress on its ESG pillars: sustainable products;
sustainable operations; diversity, equity, and inclusion; and
bridging the digital divide, as well as its continued focus on
cybersecurity solutions for its customers to meet business
resiliency goals. The report also includes voluntary disclosures of
measurements aligned with relevant sector standards from the
Sustainability Accounting Standards Board (SASB) and Task Force on
Climate-related Financial Disclosures (TCFD) framework.
Conference Call Date and
Instructions:
NETSCOUT will host a corresponding conference call and live
webcast to discuss its second quarter 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)
518-9814. The conference call ID is NTCTQ224. 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) 839-2459 for U.S./Canada
callers and (402) 220-7218 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 (EBITDA) from operations. Non-GAAP gross profit
removes expenses related to the amortization of acquired intangible
assets, share based compensation, and acquisition-related
depreciation. Non-GAAP income from operations includes the
aforementioned adjustments and also removes gain on the divestiture
of a business, restructuring charges and legal expenses related to
civil judgements. 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 the 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, 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 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 for the full fiscal year 2024, that
a slowing in order conversion is related to industry and economic
headwinds that began late in the second quarter and is expected to
persist into the second half of fiscal year 2024, that it is
committed to delivering results in-line with its updated outlook as
it continues to execute on its strategic priorities and position
NETSCOUT to deliver long-term stakeholder value, that despite the
near-term headwinds, that NETSCOUT believes that the long-term
demand trends driving its business remain intact as enterprise and
service providers continue to require cybersecurity and service
assurance solutions that deliver actionable visibility at scale,
that with its industry leading ‘Visibility Without Borders’
platform, strong customer relationships, and solid financial
profile, it remains well-positioned to play a critical role in
enabling its customers to tackle the performance, availability, and
security challenges of the increasingly complex connected digital
world, 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; 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, 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.
©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 USA and/or other countries.
NETSCOUT SYSTEMS, INC. Condensed Consolidated Statements
of Operations (In thousands, except per share data)
(Unaudited) Three Months Ended Six Months
Ended September 30, September 30,
2023
2022
2023
2022
Revenue: Product
$
80,545
$
111,816
$
175,206
$
210,067
Service
116,257
116,265
232,734
226,826
Total revenue
196,802
228,081
407,940
436,893
Cost of revenue: Product
16,093
25,881
32,755
52,686
Service
26,959
31,760
60,693
62,669
Total cost of revenue
43,052
57,641
93,448
115,355
Gross profit
153,750
170,440
314,492
321,538
Operating expenses: Research and development
35,112
43,917
80,632
87,374
Sales and marketing
60,950
66,118
139,946
142,441
General and administrative
22,652
25,261
50,866
50,051
Amortization of acquired intangible assets
12,550
13,801
25,257
27,682
Gain on divestiture of a business
(3,806
)
-
(3,806
)
-
Restructuring charges
-
(60
)
-
1,714
Total operating expenses
127,458
149,037
292,895
309,262
Income from operations
26,292
21,403
21,597
12,276
Interest and other income (expense), net
1,182
(2,024
)
543
(3,382
)
Income before income tax expense (benefit)
27,474
19,379
22,140
8,894
Income tax expense (benefit)
6,012
1,996
4,878
(1,357
)
Net income
$
21,462
$
17,383
$
17,262
$
10,251
Basic net income per share
$
0.30
$
0.24
$
0.24
$
0.14
Diluted net income per share
$
0.29
$
0.24
$
0.24
$
0.14
Weighted average common shares outstanding used in computing: Net
income per share - basic
72,112
71,856
71,828
72,152
Net income per share - diluted
72,797
72,891
72,838
73,494
NETSCOUT SYSTEMS, INC. Consolidated Balance Sheets
(In thousands) (Unaudited) September
30, March 31,
2023
2023
Assets Current assets: Cash, cash equivalents,
marketable securities and investments
$
328,596
$
418,998
Accounts receivable and unbilled costs, net
152,603
143,855
Inventories and deferred costs
15,909
17,956
Prepaid expenses and other current assets
43,413
36,551
Total current assets
540,521
617,360
Fixed assets, net
30,637
34,735
Operating lease right-of-use assets
47,000
51,456
Goodwill and intangible assets, net
2,058,449
2,090,995
Long-term marketable securities
3,959
8,940
Other assets
17,145
17,074
Total assets
$
2,697,711
$
2,820,560
Liabilities and Stockholders' Equity Current
liabilities: Accounts payable
$
15,569
$
16,473
Accrued compensation
36,935
83,279
Accrued other
19,941
30,674
Deferred revenue and customer deposits
275,008
311,531
Current portion of operating lease liabilities
11,671
11,650
Total current liabilities
359,124
453,607
Other long-term liabilities
7,371
7,683
Deferred tax liability
3,224
24,939
Accrued long-term retirement benefits
25,363
26,049
Long-term deferred revenue and customer deposits
119,305
129,814
Operating lease liabilities, net of current portion
43,654
48,819
Long-term debt
100,000
100,000
Total liabilities
658,041
790,911
Stockholders' equity: Common stock
130
128
Additional paid-in capital
3,142,712
3,099,698
Accumulated other comprehensive income
5,379
5,738
Treasury stock, at cost
(1,596,026
)
(1,546,128
)
Retained earnings
487,475
470,213
Total stockholders' equity
2,039,670
2,029,649
Total liabilities and stockholders' equity
$
2,697,711
$
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
Six Months Ended September 30, June 30,
September 30,
2023
2022
2023
2023
2022
GAAP and Non-GAAP Revenue
$
196,802
$
228,081
$
211,138
$
407,940
$
436,893
Gross Profit (GAAP)
$
153,750
$
170,440
$
160,742
$
314,492
$
321,538
Share-based compensation expense (1)
2,638
2,395
2,911
5,549
4,432
Amortization of acquired intangible assets (2)
1,638
2,312
1,638
3,276
4,640
Acquisition related depreciation expense (3)
4
4
5
9
11
Non-GAAP Gross Profit
$
158,030
$
175,151
$
165,296
$
323,326
$
330,621
Income (Loss) from Operations (GAAP)
$
26,292
$
21,403
$
(4,695
)
$
21,597
$
12,276
GAAP Operating Margin
13.4
%
9.4
%
-2.2
%
5.3
%
2.8
%
Share-based compensation expense (1)
18,445
16,501
19,844
38,289
32,082
Amortization of acquired intangible assets (2)
14,188
16,113
14,345
28,533
32,322
Restructuring charges
-
(60
)
-
-
1,714
Acquisition related depreciation expense (3)
37
59
59
96
124
Gain on divestiture of a business
(3,806
)
-
-
(3,806
)
-
Legal expenses related to civil judgments (4)
44
-
41
85
-
Non-GAAP Income from Operations
$
55,200
$
54,016
$
29,594
$
84,794
$
78,518
Non-GAAP Operating Margin
28.0
%
23.7
%
14.0
%
20.8
%
18.0
%
Net Income (Loss) (GAAP)
$
21,462
$
17,383
$
(4,200
)
$
17,262
$
10,251
Share-based compensation expense (1)
18,445
16,501
19,844
38,289
32,082
Amortization of acquired intangible assets (2)
14,188
16,113
14,345
28,533
32,322
Restructuring charges
-
(60
)
-
-
1,714
Gain on divestiture of a business
(3,806
)
-
-
(3,806
)
-
Acquisition related depreciation expense (3)
37
59
59
96
124
Legal expenses related to civil judgments (4)
44
-
41
85
-
Change in fair value of derivative instrument (5)
-
-
(206
)
(206
)
-
Income tax adjustments (6)
(5,829
)
(8,691
)
(7,171
)
(13,000
)
(17,136
)
Non-GAAP Net Income
$
44,541
$
41,305
$
22,712
$
67,253
$
59,357
Diluted Net Income (Loss) Per Share (GAAP)
$
0.29
$
0.24
$
(0.06
)
$
0.24
$
0.14
Share impact of non-GAAP adjustments identified above
0.32
0.33
0.37
0.68
0.67
Non-GAAP Diluted Net Income Per Share
$
0.61
$
0.57
$
0.31
$
0.92
$
0.81
Shares used in computing non-GAAP diluted net income per
share
72,797
72,891
72,995
72,838
73,494
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
Six Months Ended September 30, June 30,
September 30,
2023
2022
2023
2023
2022
(1)
Share-based compensation expense included in these amounts is as
follows: Cost of product revenue
$
349
$
315
$
372
$
721
$
607
Cost of service revenue
2,289
2,080
2,539
4,828
3,825
Research and development
4,988
4,580
5,386
10,374
9,011
Sales and marketing
6,675
6,043
7,284
13,959
11,793
General and administrative
4,144
3,483
4,263
8,407
6,846
Total share-based compensation expense
$
18,445
$
16,501
$
19,844
$
38,289
$
32,082
(2)
Amortization expense related to acquired software and product
technology, tradenames, customer relationships included in these
amounts is as follows: Cost of product revenue
$
1,638
$
2,312
$
1,638
$
3,276
$
4,640
Operating expenses
12,550
13,801
12,707
25,257
27,682
Total amortization expense
$
14,188
$
16,113
$
14,345
$
28,533
$
32,322
(3)
Acquisition related depreciation expense included in these amounts
is as follows: Cost of product revenue
$
2
$
2
$
3
$
5
$
6
Cost of service revenue
2
2
2
4
5
Research and development
25
42
42
66
87
Sales and marketing
6
8
8
14
17
General and administrative
2
5
4
7
9
Total acquisition related depreciation expense
$
37
$
59
$
59
$
96
$
124
(4)
Legal expenses related to civil judgments included in this amount
is as follows: General and administrative
$
44
$
-
$
41
$
85
$
-
Total legal judgments expense
$
44
$
-
$
41
$
85
$
-
(5)
Change in fair value of derivative instrument included in this
amount is as follows: Interest and other (income) expense, net
$
-
$
-
$
(206
)
$
(206
)
$
-
Total change in fair value of derivative instrument
$
-
$
-
$
(206
)
$
(206
)
$
-
(6)
Total income tax adjustment included in this amount is as follows:
Tax effect of non-GAAP adjustments above
$
(5,829
)
$
(8,691
)
$
(7,171
)
$
(13,000
)
$
(17,136
)
Total income tax adjustments
$
(5,829
)
$
(8,691
)
$
(7,171
)
$
(13,000
)
$
(17,136
)
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
Six Months Ended September 30, June 30,
September 30,
2023
2022
2023
2023
2022
Income (loss) from operations (GAAP)
$
26,292
$
21,403
$
(4,695
)
$
21,597
$
12,276
Previous adjustments to determine non-GAAP income from operations
28,908
32,613
34,289
63,197
66,242
Non-GAAP Income from operations
55,200
54,016
29,594
84,794
78,518
Depreciation excluding acquisition related-depreciation
expense
4,749
5,090
5,032
9,781
10,401
Non-GAAP EBITDA from operations
$
59,949
$
59,106
$
34,626
$
94,575
$
88,919
Non-GAAP EBITDA from operations as a % of revenue
30.5
%
25.9
%
16.4
%
23.2
%
20.4
%
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
~$840 million to ~$860 million
FY'23 FY'24
GAAP net income
$
59.6
~$51 million to ~$66 million Amortization of intangible assets
$
64.7
~$57 million Share-based compensation expenses
$
62.0
~$69 million Business development & integration expenses*
$
0.2
~Less than $1 million Gain on divestiture of a business
$
-
~($3.8 million) 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
~$122 million Related impact of adjustments on income tax
$
(30.7
)
(~$26 million) Non-GAAP net income
$
159.6
~$147 million to ~$162 million GAAP net income per share
(diluted)
$
0.82
~$0.69 to ~$0.89 Non-GAAP net income per share (diluted)
$
2.18
~$2.00 to ~$2.20 Average weighted shares outstanding
(diluted GAAP)
73.0
~73 million to ~74 million Average weighted shares outstanding
(diluted Non-GAAP)
73.0
~73 million to ~74 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/20231102524328/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
Netscout Systems (NASDAQ:NTCT)
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