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,
2024.
Remarks by Anil Singhal, NETSCOUT’s President & Chief
Executive Officer:
“We delivered Q2 fiscal year 2025 revenue and earnings results
in line with our expectations and continued to position NETSCOUT to
win in the market. During the quarter, we released several product
enhancements aligned with key technology trends that help address
our customers’ cybersecurity and service assurance needs, including
our AI-ready data solution. We had a strong turnout and interest at
our recent annual ENGAGE Technology and User Summit that we
attribute to our customers’ enthusiasm for our current and upcoming
portfolio of solutions.”
“Looking ahead, we remain focused on executing against our full
fiscal year 2025 expectations as we navigate the opportunities and
challenges of the current market environment. Our priorities remain
enhancing our cybersecurity offerings to meet growing customer
needs given the expanding cyber threat landscape and continuing to
prudently manage 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.”
Q2 FY25 Financial Results
Total revenue (GAAP and non-GAAP) for the second quarter of
fiscal year 2025 was $191.1 million, compared with $196.8 million
(GAAP and non-GAAP) in the second 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 second quarter of
fiscal year 2025 was $81.0 million, or approximately 42% of total
revenue in the period. This compares with product revenue (GAAP and
non-GAAP) of $80.5 million in the second quarter of fiscal year
2024, which was approximately 41% of total revenue in the
period.
Service revenue (GAAP and non-GAAP) for the second quarter of
fiscal year 2025 was $110.1 million, or approximately 58% 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
2024, which was approximately 59% of total revenue for the
period.
NETSCOUT’s income from operations (GAAP) was $14.1 million in
the second quarter of fiscal year 2025, which included a
restructuring charge of $2.4 million. This compares with income
from operations (GAAP) of $26.3 million in the second quarter of
fiscal year 2024. The Company’s operating margin (GAAP) was 7.4% in
the second quarter of the fiscal year, versus 13.4% in the same
period of fiscal year 2024. Non-GAAP income from operations was
$44.1 million with a non-GAAP operating margin of 23.1% in the
second quarter of fiscal year 2025. This compares to non-GAAP
income from operations of $55.2 million and a non-GAAP operating
margin of 28.0% in the second quarter of fiscal year 2024. Non-GAAP
EBITDA from operations in the second quarter of fiscal year 2025
was $47.5 million, or 24.9% of non-GAAP quarterly revenue for the
period. This compares to non-GAAP EBITDA from operations of $59.9
million in the second quarter of fiscal year 2024, or 30.5% of
non-GAAP quarterly revenue for the period.
Net income (GAAP) for the second quarter of fiscal year 2025 was
$9.0 million, or $0.13 per share (diluted), which included the
restructuring charge mentioned above and an unrealized loss on a
foreign investment, versus a net income (GAAP) of $21.5 million, or
$0.29 per share (diluted), for the second quarter of fiscal year
2024. On a non-GAAP basis, net income for the second quarter of
fiscal year 2025 was $33.6 million, or $0.47 per share (diluted),
which includes the unrealized loss on a foreign investment
mentioned above. This compares with $44.5 million, or $0.61 per
share (diluted), for the second quarter of fiscal year 2024.
As of September 30, 2024, cash, cash equivalents, short and
long-term marketable securities and investments were $401.9
million, compared with $424.1 million as of March 31, 2024. During
the second quarter of fiscal year 2025, NETSCOUT repurchased a
total of 14,305 shares of its common stock at an average price of
$18.00 per share for an aggregate purchase price of approximately
$0.3 million. At the end of the second quarter, NETSCOUT had $75.0
million outstanding on its revolving credit facility. On October 4,
2024, NETSCOUT leveraged the favorable financing market environment
to amend and extend its revolving credit facility. The amended
revolving credit facility reduces the facility size from $800
million to $600 million and extends the maturity from July 2026 to
October 2029, maintaining financial flexibility and lowering
financing costs.
First-Half FY25 Financial Results
- For the first half of fiscal year 2025, total revenue (GAAP and
non-GAAP) was $365.7 million, versus total revenue (GAAP and
non-GAAP) of $407.9 million in the first half of fiscal year 2024.
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 2025 was $142.2 million, compared with $175.2 million
in the first half of fiscal year 2024.
- Service revenue (GAAP and non-GAAP) for the first half of
fiscal year 2025 was $223.5 million, compared with $232.7 million
in the first half of fiscal year 2024.
- NETSCOUT’s loss from operations (GAAP) for the first half of
fiscal year 2025 was $449.2 million, which includes a non-cash
goodwill impairment charge of $427.0 million taken in the first
quarter of fiscal year 2025 and restructuring charges of $19.0
million. This compared with income from operations (GAAP) of $21.6
million in the first half of fiscal year 2024. The Company’s
operating margin (GAAP) for the first half of fiscal year 2025 was
-122.8%, versus 5.3% in the first half of fiscal year 2024. The
Company’s non-GAAP EBITDA from operations for the first half of
fiscal year 2025 was $65.3 million, or 17.9% of non-GAAP total
revenue, versus non-GAAP EBITDA from operations of $94.6 million,
or 23.2% of non-GAAP total revenue, in the first half of fiscal
year 2024. The Company’s non-GAAP income from operations for the
first half of fiscal year 2025 was $58.1 million with a non-GAAP
operating margin of 15.9%, compared with non-GAAP income from
operations of $84.8 million and a non-GAAP operating margin of
20.8% for the first half of fiscal year 2024.
- For the first half of fiscal year 2025, NETSCOUT’s net loss
(GAAP) was $434.3 million, or ($6.08) per share (diluted), which
includes the non-cash goodwill impairment and restructuring charges
mentioned above. This compared with net income (GAAP) of $17.3
million, or $0.24 per share (diluted), in the first half of fiscal
year 2024. Non-GAAP net income for the first half of fiscal year
2025 was $54.1 million, or $0.75 per share (diluted), compared with
non-GAAP net income of $67.3 million, or $0.92 per share (diluted),
for the first half of fiscal year 2024.
Financial Outlook
The Company’s GAAP net loss per share outlook for fiscal year
2025 has been updated to reflect the latest 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 ($5.22) to ($5.01), primarily attributable to goodwill
impairment and restructuring charges taken in the first half of
fiscal year 2025, as well as restructuring charges anticipated for
the third quarter of fiscal year 2025. This compares to the
previous GAAP net loss per share range of ($5.28) to ($5.03).
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.
As previously announced in the first quarter of fiscal year
2025, NETSCOUT 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 145
employees, which represents approximately 6.3% of its workforce as
of March 31, 2024. In conjunction with the VSP, the Company
recorded a restructuring charge of $19.0 million in the first half
of fiscal year 2025. The Company expects to record an additional
restructuring charge of approximately $0.6 million in the third
quarter of fiscal year 2025 primarily for severance costs
associated with the remaining implementation of the VSP. The
Company expects that these actions will generate net annual
run-rate savings of approximately $25 million, of which $19 million
will be realized in 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 early October 2024, NETSCOUT held its annual technology and
user summit, ENGAGE 2024, in Arlington, TX, where event
registration and attendance increased year over year. At the event,
NETSCOUT showcased its "Visibility Without Borders" platform
demonstrating its cybersecurity and service assurance capabilities,
including new AI-ready data, and hosted a combination of
presentations, panel discussions, and hands-on trainings.
- In early October 2024, NETSCOUT released findings from its
1H2024 DDoS Threat Intelligence Report, citing a dramatic 43%
increase in the number of application-layer attacks and a 30%
increase in volumetric attacks, especially in Europe and the Middle
East. The escalation of attacks involves a range of threat actors,
including hacktivists targeting critical infrastructure in the
banking and financial services, government, and utilities sectors.
These key industries experienced a 55% increase in attacks over the
past four years.
- In late September 2024, NETSCOUT announced enhancements to its
nGenius Enterprise Performance Management solution, which includes
a new notification center that helps streamline and automate alerts
and contextual workflows to identify and resolve problems faster.
Secured Reliable Transport (SRT) was added to support live video
streaming, and additional supervisory control and data acquisition
(SCADA) protocols were added to support international utility
networks.
- In mid-September 2024, NETSCOUT announced updates to its
advanced, scalable deep packet inspection-based Omnis Cyber
Intelligence Network Detection and Response (NDR) platform. The new
MITRE ATT&CK behavioral analytics enable earlier detection of
advanced threats like ransomware, suspicious traffic, or
unauthorized access attempts while improving remediation to help
meet industry and country compliance requirements.
- In mid-August 2024, NETSCOUT introduced its Omnis AI Insights
solution to deliver precise, actionable network telemetry data to
feed customer AI initiatives and enable critical outcomes without
requiring data transformations and adaptations. Omnis AI Insights
benefits include: identifying and correlating observability trends,
streamlining and automating data analysis, uncovering historical
operational patterns, and detecting unforeseen issues and security
risks that could lead to future service outages and data
breaches.
Conference Call
Instructions:
NETSCOUT will host a conference call to discuss its
second-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 NTCTQ225. 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) 839-2457 for U.S./Canada
and (402) 220-7217 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, its position to
win in the market, its increased focus on cybersecurity and
AI-related initiatives, 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
Six Months Ended
September 30,
September 30,
2024
2023
2024
2023
Revenue:
Product
$
81,033
$
80,545
$
142,202
$
175,206
Service
110,075
116,257
223,471
232,734
Total revenue
191,108
196,802
$
365,673
407,940
Cost of revenue:
Product
13,440
16,093
25,444
32,755
Service
28,617
26,959
60,982
60,693
Total cost of revenue
42,057
43,052
86,426
93,448
Gross profit
149,051
153,750
279,247
314,492
Operating expenses:
Research and development
35,909
35,112
78,374
80,632
Sales and marketing
61,226
60,950
131,556
139,946
General and administrative
23,742
22,652
49,323
50,866
Amortization of acquired intangible
assets
11,642
12,550
23,256
25,257
Restructuring charges
2,409
—
18,972
—
Goodwill impairment
—
—
426,967
—
Gain on divestiture of a business
—
(3,806
)
—
(3,806
)
Total operating expenses
134,928
127,458
728,448
292,895
Income (loss) from operations
14,123
26,292
(449,201
)
21,597
Interest and other income (expense),
net
(1,797
)
1,182
7,831
543
Income (loss) before income tax expense
(benefit)
12,326
27,474
(441,370
)
22,140
Income tax expense (benefit)
3,299
6,012
(7,021
)
4,878
Net income (loss)
$
9,027
$
21,462
$
(434,349
)
$
17,262
Basic net income (loss) per share
$
0.13
$
0.30
$
(6.08
)
$
0.24
Diluted net income (loss) per share
$
0.13
$
0.29
$
(6.08
)
$
0.24
Weighted average common shares outstanding
used in computing:
Net income (loss) per share - basic
71,447
72,112
71,457
71,828
Net income (loss) per share - diluted
71,837
72,797
71,457
72,838
NETSCOUT SYSTEMS, INC.
Consolidated Balance
Sheets
(In thousands)
(Unaudited)
September 30,
March 31,
2024
2024
Assets
Current assets:
Cash, cash equivalents, marketable
securities and investments
$
400,867
$
423,133
Accounts receivable and unbilled costs,
net
118,632
192,096
Inventories and deferred costs
16,388
14,095
Prepaid expenses and other current
assets
47,826
43,170
Total current assets
583,713
672,494
Fixed assets, net
23,244
26,487
Operating lease right-of-use assets
38,498
42,486
Goodwill and intangible assets, net
1,358,960
1,811,479
Long-term marketable securities
1,009
994
Other assets
65,248
41,362
Total assets
$
2,070,672
$
2,595,302
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable
$
13,911
$
14,506
Accrued compensation
41,485
51,362
Accrued other
15,956
15,429
Deferred revenue and customer deposits
263,874
301,806
Current portion of operating lease
liabilities
11,876
11,979
Total current liabilities
347,102
395,082
Other long-term liabilities
6,622
7,055
Deferred tax liability
3,955
4,374
Accrued long-term retirement benefits
29,253
28,413
Long-term deferred revenue and customer
deposits
115,825
130,212
Operating lease liabilities, net of
current portion
33,527
38,101
Long-term debt
75,000
100,000
Total liabilities
611,284
703,237
Stockholders' equity:
Common stock
133
131
Additional paid-in capital
3,221,213
3,181,366
Accumulated other comprehensive income
4,151
3,572
Treasury stock, at cost
(1,654,239
)
(1,615,483
)
(Accumulated deficit) Retained
earnings
(111,870
)
322,479
Total stockholders' equity
1,459,388
1,892,065
Total liabilities and stockholders'
equity
$
2,070,672
$
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
Six Months Ended
September 30,
June 30,
September 30,
2024
2023
2024
2024
2023
Revenue
$
191,108
$
196,802
$
174,565
$
365,673
$
407,940
Gross Profit (GAAP)
$
149,051
$
153,750
$
130,196
$
279,247
$
314,492
Share-based compensation expense (1)
2,200
2,638
3,320
5,520
5,549
Amortization of acquired intangible assets
(2)
996
1,638
995
1,991
3,276
Acquisition related depreciation expense
(3)
2
4
2
4
9
Non-GAAP Gross Profit
$
152,249
$
158,030
$
134,513
$
286,762
$
323,326
Income (Loss) from Operations (GAAP)
$
14,123
$
26,292
$
(463,324
)
$
(449,201
)
$
21,597
GAAP Operating Margin
7.4
%
13.4
%
(265.4
)%
(122.8
)%
5.3
%
Share-based compensation expense (1)
14,886
18,445
21,198
36,084
38,289
Amortization of acquired intangible assets
(2)
12,638
14,188
12,609
25,247
28,533
Restructuring charges
2,409
—
16,563
18,972
—
Goodwill impairment
—
—
426,967
426,967
—
Acquisition related depreciation expense
(3)
11
37
12
23
96
Gain on divestiture of a business
—
(3,806
)
—
—
(3,806
)
Legal expense related to civil judgments
(4)
—
44
—
—
85
Non-GAAP Income from Operations
$
44,067
$
55,200
$
14,025
$
58,092
$
84,794
Non-GAAP Operating Margin
23.1
%
28.0
%
8.0
%
15.9
%
20.8
%
Net Income (Loss) (GAAP)
$
9,027
$
21,462
$
(443,376
)
$
(434,349
)
$
17,262
Share-based compensation expense (1)
14,886
18,445
21,198
36,084
38,289
Amortization of acquired intangible assets
(2)
12,638
14,188
12,609
25,247
28,533
Restructuring charges
2,409
—
16,563
18,972
—
Goodwill impairment
—
—
426,967
426,967
—
Acquisition related depreciation expense
(3)
11
37
12
23
96
Gain on divestiture of a business
—
(3,806
)
—
—
(3,806
)
Legal expense related to civil judgments
(4)
—
44
—
—
85
Change in fair value of derivative
instrument (5)
—
—
—
—
(206
)
Income tax adjustments (6)
(5,409
)
(5,829
)
(13,395
)
(18,804
)
(13,000
)
Non-GAAP Net Income
$
33,562
$
44,541
$
20,578
$
54,140
$
67,253
Diluted Net Income (Loss) Per Share
(GAAP)
$
0.13
$
0.29
$
(6.20
)
$
(6.08
)
$
0.24
Share impact of non-GAAP adjustments
identified above
0.34
0.32
6.48
6.83
0.68
Non-GAAP Diluted Net Income Per Share
$
0.47
$
0.61
$
0.28
$
0.75
$
0.92
Shares used in computing non-GAAP diluted
net income per share
71,837
72,797
72,793
72,197
72,838
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,
2024
2023
2024
2024
2023
(1)
Share-based compensation expense included
in these amounts is as follows:
Cost of product revenue
$
295
$
349
$
431
$
726
$
721
Cost of service revenue
1,905
2,289
2,889
4,794
4,828
Research and development
3,934
4,988
5,886
9,820
10,374
Sales and marketing
5,275
6,675
7,504
12,779
13,959
General and administrative
3,477
4,144
4,488
7,965
8,407
Total share-based compensation expense
$
14,886
$
18,445
$
21,198
$
36,084
$
38,289
(2)
Amortization expense related to acquired
software and product technology, tradenames, customer relationships
included in these amounts is as follows:
Cost of product revenue
$
996
$
1,638
$
995
$
1,991
$
3,276
Operating expenses
11,642
12,550
11,614
23,256
25,257
Total amortization expense
$
12,638
$
14,188
$
12,609
$
25,247
$
28,533
(3)
Acquisition related depreciation expense
included in these amounts is as follows:
Cost of product revenue
$
2
$
2
$
2
$
4
$
5
Cost of service revenue
—
2
—
—
4
Research and development
7
25
8
15
66
Sales and marketing
2
6
2
4
14
General and administrative
—
2
—
—
7
Total acquisition related depreciation
expense
$
11
$
37
$
12
$
23
$
96
(4)
Legal expense (benefit) related to civil
judgments included in this amount is as follows:
General and administrative
$
—
$
44
$
—
$
—
$
85
Total legal judgments expense
$
—
$
44
$
—
$
—
$
85
(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
$
(5,409
)
$
(5,829
)
$
(13,395
)
$
(18,804
)
$
(13,000
)
Total income tax adjustments
$
(5,409
)
$
(5,829
)
$
(13,395
)
$
(18,804
)
$
(13,000
)
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,
2024
2023
2024
2024
2023
Income (Loss) from operations (GAAP)
$
14,123
$
26,292
$
(463,324
)
$
(449,201
)
$
21,597
Previous adjustments to determine non-GAAP
income from operations
29,944
28,908
477,349
507,293
63,197
Non-GAAP Income from operations
$
44,067
$
55,200
$
14,025
$
58,092
$
84,794
Depreciation excluding acquisition
related-depreciation expense
3,451
4,749
3,784
7,235
9,781
Non-GAAP EBITDA from operations
$
47,518
$
59,949
$
17,809
$
65,327
$
94,575
Non-GAAP EBITDA from operations as a % of
revenue
24.9
%
30.5
%
10.2
%
17.9
%
23.2
%
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
)
(~$374 million) to (~$359
million)
Amortization of intangible assets
$
56.9
~$50 million
Share-based compensation expenses
$
70.8
~$64 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
$
—
~$19 million to ~$20 million
Goodwill impairment
$
217.3
~$427 million
Total adjustments
$
336.7
~$561 million to ~$562
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
)
(~$5.22) to (~$5.01)
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/20241024718090/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)
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