NETSCOUT Reports Third Quarter Fiscal Year 2025 Financial Results
WESTFORD, Mass.–(BUSINESS WIRE)–
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 third quarter ended December 31, 2024.
Remarks by Anil Singhal, NETSCOUT’s President & Chief Executive Officer:
“Our Q3 fiscal year 2025 revenue and earnings results exceeded our expectations with strong performance across both our Cybersecurity and Service Assurance product lines. These results include certain customer orders received in our Q3 that were anticipated to be received in our Q4, as customers leveraged their calendar year-end budgets. The contribution of these early orders enhanced our Q3 performance, providing greater visibility and reinforcing our confidence in achieving our full fiscal year 2025 financial objectives.
Looking ahead, as we enter the final quarter of our fiscal year 2025, we are narrowing our fiscal 2025 outlook ranges while maintaining the midpoints from previous guidance for revenue and non-GAAP net income per share. We remain focused on executing effectively as we position the Company for fiscal year 2026 and beyond. At the same time, we continue to leverage the strength of our ‘Visibility Without Borders’ platform to enable customers to address the performance, availability, and security challenges inherent in today’s complex digital landscape.”
Q3 FY25 Financial Results
Total revenue (GAAP and non-GAAP) for the third quarter of fiscal year 2025 was $252.0 million, compared with $218.1 million (GAAP and non-GAAP) in the third quarter of fiscal year 2024. A reconciliation of all GAAP and non-GAAP results is included in the financial tables below.
Product revenue (GAAP and non-GAAP) for the third quarter of fiscal year 2025 was $128.2 million, or approximately 51% of total revenue in the period. This compares with product revenue (GAAP and non-GAAP) of $95.8 million in the third quarter of fiscal year 2024, which was approximately 44% of total revenue in the period. As of December 31, 2024, NETSCOUT had a product backlog consisting of fulfillable orders of approximately $30 million. This compares with approximately $5 million of fulfillable orders as of December 31, 2023.
Service revenue (GAAP and non-GAAP) for the third quarter of fiscal year 2025 was $123.8 million, or approximately 49% of total revenue in the period. This compares with service revenue (GAAP and non-GAAP) of $122.2 million in the third quarter of fiscal year 2024, which was approximately 56% of total revenue for the period.
NETSCOUT’s GAAP income from operations was $61.7 million in the third quarter of fiscal year 2025, which included a restructuring charge of $0.9 million. This compares with a GAAP loss from operations of $134.4 million in the third quarter of fiscal year 2024, which included a non-cash goodwill impairment charge of $167.1 million. The Company’s GAAP operating margin was 24.5% in the third quarter of the fiscal year, versus (61.7)% in the same period of fiscal year 2024. Non-GAAP income from operations was $89.7 million with a non-GAAP operating margin of 35.6% in the third quarter of fiscal year 2025. This compares to non-GAAP income from operations of $63.2 million and a non-GAAP operating margin of 29.0% in the third quarter of fiscal year 2024. Non-GAAP EBITDA from operations in the third quarter of fiscal year 2025 was $92.8 million, or 36.8% of quarterly revenue for the period. This compares to non-GAAP EBITDA from operations of $67.6 million in the third quarter of fiscal year 2024, or 31.0% of quarterly revenue for the period.
GAAP Net income for the third quarter of fiscal year 2025 was $48.8 million, or $0.67 per share (diluted), which included the restructuring charge mentioned above and an unrealized loss on a foreign investment, versus a GAAP net loss of $132.6 million, or $(1.87) per share (diluted), for the third quarter of fiscal year 2024, which included the previously mentioned non-cash goodwill impairment charge. On a non-GAAP basis, net income for the third quarter of fiscal year 2025 was $68.3 million, or $0.94 per share (diluted), which includes the unrealized loss on a foreign investment mentioned above. This compares with $52.0 million, or $0.73 per share (diluted), for the third quarter of fiscal year 2024.
As of December 31, 2024, cash, cash equivalents, short and long-term marketable securities and investments were $427.9 million, compared with $424.1 million as of March 31, 2024. NETSCOUT did not repurchase any shares of its common stock during the third quarter of fiscal year 2025. On October 4, 2024, NETSCOUT amended and extended its revolving credit facility, reducing the facility size from $800 million to $600 million and extending the maturity from July 2026 to October 2029. At the end of the third quarter, NETSCOUT had $75.0 million outstanding on its revolving credit facility. In the fourth quarter of fiscal year 2025 we intend to fully repay the outstanding $75.0 million dollars of debt.
Nine-Months FY25 Financial Results
- Total revenue (GAAP and non-GAAP) for the first nine months of fiscal year 2025, was $617.7 million, versus total revenue (GAAP and non-GAAP) of $626.0 million in the first nine months 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 nine months of fiscal year 2025 was $270.4 million, compared with $271.0 million in the first nine months of fiscal year 2024.
- Service revenue (GAAP and non-GAAP) for the first nine months of fiscal year 2025 was $347.3 million, compared with $355.0 million in the first nine months of fiscal year 2024.
- NETSCOUT’s GAAP loss from operations for the first nine months of fiscal year 2025 was $387.5 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 $19.9 million. This compared with a GAAP loss from operations of $112.9 million in the first nine months of fiscal year 2024, which included a non-cash goodwill impairment charge of $167.1 million. The Company’s GAAP operating margin for the first nine months of fiscal year 2025 was (62.7)%, versus (18.0)% in the first nine months of fiscal year 2024. The Company’s non-GAAP EBITDA from operations for the first nine months of fiscal year 2025 was $158.2 million, or 25.6% of total revenue, versus non-GAAP EBITDA from operations of $162.2 million, or 25.9% of total revenue, in the first nine months of fiscal year 2024. The Company’s non-GAAP income from operations for the first nine months of fiscal year 2025 was $147.8 million with a non-GAAP operating margin of 23.9%, compared with non-GAAP income from operations of $148.0 million and a non-GAAP operating margin of 23.6% for the first nine months of fiscal year 2024.
- For the first nine months of fiscal year 2025, NETSCOUT’s GAAP net loss was $385.5 million, or ($5.39) per share (diluted), which includes the non-cash goodwill impairment and restructuring charges mentioned above. This compared with a GAAP net loss of $115.3 million, or $(1.61) per share (diluted), in the first nine months of fiscal year 2024, which included the previously mentioned non-cash goodwill impairment charge. Non-GAAP net income for the first nine months of fiscal year 2025 was $122.4 million, or $1.70 per share (diluted), compared with non-GAAP net income of $119.3 million, or $1.65 per share (diluted), for the first nine months 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 charges related to the Company’s Voluntary Separation Program (VSP) and recent termination agreements with certain employees. NETSCOUT is narrowing the ranges for its fiscal year 2025 outlook while maintaining the midpoints from previous guidance for revenue and non-GAAP net income per share. The Company’s outlook for fiscal year 2025 is as follows:
- Revenue (GAAP and non-GAAP) is now expected to be in the range of $810 million to $820 million compared to the previous range of $800 million to $830 million, which maintains the mid-point.
- GAAP net loss per share (diluted) is now expected to be in the range of ($5.21) to ($5.10), primarily attributable to goodwill impairment and restructuring charges taken in the first nine months of fiscal year 2025, as well as restructuring charges anticipated for the fourth quarter of fiscal year 2025. This compares to the previous GAAP net loss per share range of ($5.22) to ($5.01). Non-GAAP net income per share (diluted) is now expected to be in the range of $2.15 to $2.25 compared to the previous range of $2.10 to $2.30, which maintains the mid-point.
- 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 142 employees, which represents approximately 6.2% of its workforce as of March 31, 2024. As a result of the related workforce reduction, during the three months and nine months ended December 31, 2024, the Company recorded restructuring charges totaling $0.6 million and $19.6 million, respectively. All one-time termination benefits are expected to be paid in full by the end of the fiscal year ending March 31, 2025.
In addition, during the third quarter of fiscal year 2025, the Company entered into agreements designed to ensure an orderly transition of responsibilities and maintain continuity. These agreements provide termination benefits totaling approximately $2.0 million to certain employees who continue to render services to the Company. These benefits will be paid through the end of fiscal year ending March 31, 2027. As a result, the Company recorded restructuring charges of $0.3 million during the three months and nine months ended December 31, 2024. The Company estimates restructuring charges related to the transition agreements for fiscal year 2025 will amount to approximately $1 million.
The Company expects that these combined actions will generate net annual run-rate savings of approximately $25 million. Approximately $19 million of the annual run-rate savings are expected to be realized in fiscal year 2025, including $6 million in the fourth quarter of fiscal year 2025. The charges and expected savings have been factored into NETSCOUT’s GAAP and non-GAAP outlook for fiscal year 2025.
Recent Developments and Highlights
- In mid-December 2024, NETSCOUT announced updates to its industry-leading Arbor Edge Defense (AED) and Arbor Enterprise Manager (AEM) products as part of its Adaptive DDoS Protection Solution to combat AI-enabled DDoS threats and to protect critical IT infrastructure. NETSCOUT employs artificial intelligence (AI) and machine learning (ML) technology in its ATLAS Threat Intelligence Feed and in a unique set of capabilities for adaptive DDoS protection.
- In mid-November, NETSCOUT announced an expanded partnership with Arelion to strengthen the Internet carrier’s DDoS attack mitigation capabilities. By enhancing its capabilities with NETSCOUT, Arelion improves network security across its #1 ranked global Internet backbone, empowering enterprise customers in more than 125 countries worldwide with resilient, high-performance connectivity services.
- In early November, NETSCOUT announced its customer NRB, a leading IT services provider in Belgium and Europe, was successful in protecting the integrity of local and provincial elections in Belgium from cyberattacks. NRB’s cybersecurity specialists employed NETSCOUT’s Arbor Cloud, a cloud-based managed DDoS protection service, along with Arbor Edge Defense (AED), an on-premises Adaptive DDoS Protection solution, to perform preemptive mitigation in the days before the election. Working collaboratively, the teams planned and implemented an effective strategy to ensure the security and performance of NRB’s infrastructure during the election to protect Belgium’s democratic process.
Conference Call Instructions:
NETSCOUT will host a conference call to discuss its third-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 NTCTQ325. 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) 839-2385 for U.S./Canada and (402) 220-7203 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 expense related to civil judgments, restructuring charges, goodwill impairment charges, and gains on the divestiture of a business. 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 loss on extinguishment of debt and 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 the impact of the early orders has provided it greater visibility and reinforces its confidence in achieving its full fiscal year 2025 financial objectives; that it remains focused on executing effectively as it positions the Company for fiscal year 2026 and beyond; that it continues to leverage the strength of its ‘Visibility Without Borders’ platform to enable customers to address the performance, availability, and security challenges inherent in today’s complex digital landscape; statements regarding charges and benefits resulting from the VSP and transitions program; 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.
©2025 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.
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NETSCOUT SYSTEMS, INC. |
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|
Condensed Consolidated Statements of Operations |
||||||||||||||||
|
(In thousands, except per share data) |
||||||||||||||||
|
(Unaudited) |
||||||||||||||||
|
|
|
|
|
|
||||||||||||
|
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
December 31, |
|
December 31, |
||||||||||||
|
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
Revenue: |
|
|
|
|
|
|
|
|
||||||||
|
Product |
|
$ |
128,175 |
|
|
$ |
95,832 |
|
|
$ |
270,377 |
|
|
$ |
271,038 |
|
|
Service |
|
|
123,844 |
|
|
|
122,240 |
|
|
|
347,315 |
|
|
|
354,974 |
|
|
Total revenue |
|
|
252,019 |
|
|
|
218,072 |
|
|
$ |
617,692 |
|
|
|
626,012 |
|
|
Cost of revenue: |
|
|
|
|
|
|
|
|
||||||||
|
Product |
|
|
16,362 |
|
|
|
15,251 |
|
|
|
41,806 |
|
|
|
48,006 |
|
|
Service |
|
|
30,250 |
|
|
|
28,373 |
|
|
|
91,232 |
|
|
|
89,066 |
|
|
Total cost of revenue |
|
|
46,612 |
|
|
|
43,624 |
|
|
|
133,038 |
|
|
|
137,072 |
|
|
Gross profit |
|
|
205,407 |
|
|
|
174,448 |
|
|
|
484,654 |
|
|
|
488,940 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
||||||||
|
Research and development |
|
|
37,753 |
|
|
|
37,023 |
|
|
|
116,127 |
|
|
|
117,655 |
|
|
Sales and marketing |
|
|
69,933 |
|
|
|
69,124 |
|
|
|
201,489 |
|
|
|
209,070 |
|
|
General and administrative |
|
|
23,484 |
|
|
|
23,109 |
|
|
|
72,807 |
|
|
|
73,975 |
|
|
Amortization of acquired intangible assets |
|
|
11,601 |
|
|
|
12,533 |
|
|
|
34,857 |
|
|
|
37,790 |
|
|
Restructuring charges |
|
|
923 |
|
|
|
— |
|
|
|
19,895 |
|
|
|
— |
|
|
Goodwill impairment |
|
|
— |
|
|
|
167,106 |
|
|
|
426,967 |
|
|
|
167,106 |
|
|
Gain on divestiture of a business |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,806 |
) |
|
Total operating expenses |
|
|
143,694 |
|
|
|
308,895 |
|
|
|
872,142 |
|
|
|
601,790 |
|
|
Income (loss) from operations |
|
|
61,713 |
|
|
|
(134,447 |
) |
|
|
(387,488 |
) |
|
|
(112,850 |
) |
|
Interest and other income (expense), net |
|
|
(4,338 |
) |
|
|
729 |
|
|
|
3,493 |
|
|
|
1,272 |
|
|
Income (loss) before income tax expense (benefit) |
|
|
57,375 |
|
|
|
(133,718 |
) |
|
|
(383,995 |
) |
|
|
(111,578 |
) |
|
Income tax expense (benefit) |
|
|
8,565 |
|
|
|
(1,141 |
) |
|
|
1,544 |
|
|
|
3,737 |
|
|
Net income (loss) |
|
$ |
48,810 |
|
|
$ |
(132,577 |
) |
|
$ |
(385,539 |
) |
|
$ |
(115,315 |
) |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Basic net income (loss) per share |
|
$ |
0.68 |
|
|
$ |
(1.87 |
) |
|
$ |
(5.39 |
) |
|
$ |
(1.61 |
) |
|
Diluted net income (loss) per share |
|
$ |
0.67 |
|
|
$ |
(1.87 |
) |
|
$ |
(5.39 |
) |
|
$ |
(1.61 |
) |
|
Weighted average common shares outstanding used in computing: |
|
|
|
|
|
|
|
|
||||||||
|
Net income (loss) per share – basic |
|
|
71,737 |
|
|
|
71,077 |
|
|
|
71,551 |
|
|
|
71,577 |
|
|
Net income (loss) per share – diluted |
|
|
72,569 |
|
|
|
71,077 |
|
|
|
71,551 |
|
|
|
71,577 |
|
|
NETSCOUT SYSTEMS, INC. |
|||||||
|
Consolidated Balance Sheets |
|||||||
|
(In thousands) |
|||||||
|
(Unaudited) |
|||||||
|
|
December 31, |
|
March 31, |
||||
|
|
|
2024 |
|
|
|
2024 |
|
|
Assets |
|
|
|
||||
|
Current assets: |
|
|
|
||||
|
Cash, cash equivalents, marketable securities and investments |
$ |
426,897 |
|
|
$ |
423,133 |
|
|
Accounts receivable and unbilled costs, net |
|
214,585 |
|
|
|
192,096 |
|
|
Inventories and deferred costs |
|
14,414 |
|
|
|
14,095 |
|
|
Prepaid expenses and other current assets |
|
36,261 |
|
|
|
43,170 |
|
|
Total current assets |
|
692,157 |
|
|
|
672,494 |
|
|
|
|
|
|
||||
|
Fixed assets, net |
|
22,054 |
|
|
|
26,487 |
|
|
Operating lease right-of-use assets |
|
36,582 |
|
|
|
42,486 |
|
|
Goodwill and intangible assets, net |
|
1,349,138 |
|
|
|
1,811,479 |
|
|
Long-term marketable securities |
|
1,015 |
|
|
|
994 |
|
|
Other assets |
|
73,799 |
|
|
|
41,362 |
|
|
Total assets |
$ |
2,174,745 |
|
|
$ |
2,595,302 |
|
|
|
|
|
|
||||
|
Liabilities and Stockholders’ Equity |
|
|
|
||||
|
Current liabilities: |
|
|
|
||||
|
Accounts payable |
$ |
13,693 |
|
|
$ |
14,506 |
|
|
Accrued compensation |
|
54,657 |
|
|
|
51,362 |
|
|
Accrued other |
|
17,679 |
|
|
|
15,429 |
|
|
Deferred revenue and customer deposits |
|
284,783 |
|
|
|
301,806 |
|
|
Current portion of operating lease liabilities |
|
10,959 |
|
|
|
11,979 |
|
|
Total current liabilities |
|
381,771 |
|
|
|
395,082 |
|
|
|
|
|
|
||||
|
Other long-term liabilities |
|
7,525 |
|
|
|
7,055 |
|
|
Deferred tax liability |
|
3,652 |
|
|
|
4,374 |
|
|
Accrued long-term retirement benefits |
|
27,346 |
|
|
|
28,413 |
|
|
Long-term deferred revenue and customer deposits |
|
127,070 |
|
|
|
130,212 |
|
|
Operating lease liabilities, net of current portion |
|
31,798 |
|
|
|
38,101 |
|
|
Long-term debt |
|
75,000 |
|
|
|
100,000 |
|
|
Total liabilities |
|
654,162 |
|
|
|
703,237 |
|
|
|
|
|
|
||||
|
Stockholders’ equity: |
|
|
|
||||
|
Common stock |
|
133 |
|
|
|
131 |
|
|
Additional paid-in capital |
|
3,234,959 |
|
|
|
3,181,366 |
|
|
Accumulated other comprehensive income |
|
3,120 |
|
|
|
3,572 |
|
|
Treasury stock, at cost |
|
(1,654,569 |
) |
|
|
(1,615,483 |
) |
|
(Accumulated deficit) Retained earnings |
|
(63,060 |
) |
|
|
322,479 |
|
|
Total stockholders’ equity |
|
1,520,583 |
|
|
|
1,892,065 |
|
|
Total liabilities and stockholders’ equity |
$ |
2,174,745 |
|
|
$ |
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 |
|
Nine Months Ended |
||||||||||||||
|
|
|
December 31, |
|
September 30, |
|
December 31, |
||||||||||||||
|
|
|
2024 |
|
2023 |
|
2024 |
|
2024 |
|
2023 |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Revenue |
|
$ |
252,019 |
|
|
$ |
218,072 |
|
|
$ |
191,108 |
|
|
$ |
617,692 |
|
|
$ |
626,012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Gross Profit (GAAP) |
|
$ |
205,407 |
|
|
$ |
174,448 |
|
|
$ |
149,051 |
|
|
$ |
484,654 |
|
|
$ |
488,940 |
|
|
Share-based compensation expense (1) |
|
|
2,196 |
|
|
|
2,375 |
|
|
|
2,200 |
|
|
|
7,716 |
|
|
|
7,924 |
|
|
Amortization of acquired intangible assets (2) |
|
|
994 |
|
|
|
1,636 |
|
|
|
996 |
|
|
|
2,985 |
|
|
|
4,912 |
|
|
Acquisition related depreciation expense (3) |
|
|
1 |
|
|
|
2 |
|
|
|
2 |
|
|
|
5 |
|
|
|
11 |
|
|
Non-GAAP Gross Profit |
|
$ |
208,598 |
|
|
$ |
178,461 |
|
|
$ |
152,249 |
|
|
$ |
495,360 |
|
|
$ |
501,787 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Income (Loss) from Operations (GAAP) |
|
$ |
61,713 |
|
|
$ |
(134,447 |
) |
|
$ |
14,123 |
|
|
$ |
(387,488 |
) |
|
$ |
(112,850 |
) |
|
GAAP Operating Margin |
|
|
24.5 |
% |
|
|
(61.7 |
)% |
|
|
7.4 |
% |
|
|
(62.7 |
)% |
|
|
(18.0 |
)% |
|
Share-based compensation expense (1) |
|
|
14,502 |
|
|
|
16,364 |
|
|
|
14,886 |
|
|
|
50,586 |
|
|
|
54,653 |
|
|
Amortization of acquired intangible assets (2) |
|
|
12,595 |
|
|
|
14,169 |
|
|
|
12,638 |
|
|
|
37,842 |
|
|
|
42,702 |
|
|
Restructuring charges |
|
|
923 |
|
|
|
— |
|
|
|
2,409 |
|
|
|
19,895 |
|
|
|
— |
|
|
Goodwill impairment |
|
|
— |
|
|
|
167,106 |
|
|
|
— |
|
|
|
426,967 |
|
|
|
167,106 |
|
|
Acquisition related depreciation expense (3) |
|
|
13 |
|
|
|
12 |
|
|
|
11 |
|
|
|
36 |
|
|
|
108 |
|
|
Gain on divestiture of a business |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,806 |
) |
|
Legal expense related to civil judgments (4) |
|
|
— |
|
|
|
45 |
|
|
|
— |
|
|
|
— |
|
|
|
130 |
|
|
Non-GAAP Income from Operations |
|
$ |
89,746 |
|
|
$ |
63,249 |
|
|
$ |
44,067 |
|
|
$ |
147,838 |
|
|
$ |
148,043 |
|
|
Non-GAAP Operating Margin |
|
|
35.6 |
% |
|
|
29.0 |
% |
|
|
23.1 |
% |
|
|
23.9 |
% |
|
|
23.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Net Income (Loss) (GAAP) |
|
$ |
48,810 |
|
|
$ |
(132,577 |
) |
|
$ |
9,027 |
|
|
$ |
(385,539 |
) |
|
$ |
(115,315 |
) |
|
Share-based compensation expense (1) |
|
|
14,502 |
|
|
|
16,364 |
|
|
|
14,886 |
|
|
|
50,586 |
|
|
|
54,653 |
|
|
Amortization of acquired intangible assets (2) |
|
|
12,595 |
|
|
|
14,169 |
|
|
|
12,638 |
|
|
|
37,842 |
|
|
|
42,702 |
|
|
Restructuring charges |
|
|
923 |
|
|
|
— |
|
|
|
2,409 |
|
|
|
19,895 |
|
|
|
— |
|
|
Goodwill impairment |
|
|
— |
|
|
|
167,106 |
|
|
|
— |
|
|
|
426,967 |
|
|
|
167,106 |
|
|
Acquisition related depreciation expense (3) |
|
|
13 |
|
|
|
12 |
|
|
|
11 |
|
|
|
36 |
|
|
|
108 |
|
|
Gain on divestiture of a business |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,806 |
) |
|
Legal expense related to civil judgments (4) |
|
|
— |
|
|
|
45 |
|
|
|
— |
|
|
|
— |
|
|
|
130 |
|
|
Loss on extinguishment of debt (5) |
|
|
1,134 |
|
|
|
— |
|
|
|
— |
|
|
|
1,134 |
|
|
|
— |
|
|
Change in fair value of derivative instrument (6) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(206 |
) |
|
Income tax adjustments (7) |
|
|
(9,695 |
) |
|
|
(13,085 |
) |
|
|
(5,409 |
) |
|
|
(28,499 |
) |
|
|
(26,085 |
) |
|
Non-GAAP Net Income |
|
$ |
68,282 |
|
|
$ |
52,034 |
|
|
$ |
33,562 |
|
|
$ |
122,422 |
|
|
$ |
119,287 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Diluted Net Income (Loss) Per Share (GAAP) |
|
$ |
0.67 |
|
|
$ |
(1.87 |
) |
|
$ |
0.13 |
|
|
$ |
(5.39 |
) |
|
$ |
(1.61 |
) |
|
Share impact of non-GAAP adjustments identified above |
|
|
0.27 |
|
|
|
2.60 |
|
|
|
0.34 |
|
|
|
7.09 |
|
|
|
3.26 |
|
|
Non-GAAP Diluted Net Income Per Share |
|
$ |
0.94 |
|
|
$ |
0.73 |
|
|
$ |
0.47 |
|
|
$ |
1.70 |
|
|
$ |
1.65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Shares used in computing non-GAAP diluted net income per share |
|
|
72,569 |
|
|
|
71,638 |
|
|
|
71,837 |
|
|
|
72,084 |
|
|
|
72,355 |
|
|
NETSCOUT SYSTEMS, INC. |
||||||||||||||||||||||
|
Reconciliation of Current GAAP to Current and Historical Non-GAAP Financial Measures – Continued |
||||||||||||||||||||||
|
(In thousands) |
||||||||||||||||||||||
|
(Unaudited) |
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
Three Months Ended |
|
Three Months Ended |
|
Nine Months Ended |
|||||||||||||||
|
|
|
|
December 31, |
|
September 30, |
|
December 31, |
|||||||||||||||
|
|
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
(1) |
Share-based compensation expense included in these amounts is as follows: |
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
Cost of product revenue |
|
$ |
287 |
|
|
$ |
306 |
|
|
$ |
295 |
|
|
$ |
1,013 |
|
|
$ |
1,027 |
|
|
|
|
Cost of service revenue |
|
|
1,909 |
|
|
|
2,069 |
|
|
|
1,905 |
|
|
|
6,703 |
|
|
|
6,897 |
|
|
|
|
Research and development |
|
|
4,074 |
|
|
|
4,498 |
|
|
|
3,934 |
|
|
|
13,894 |
|
|
|
14,872 |
|
|
|
|
Sales and marketing |
|
|
5,071 |
|
|
|
5,680 |
|
|
|
5,275 |
|
|
|
17,850 |
|
|
|
19,639 |
|
|
|
|
General and administrative |
|
|
3,161 |
|
|
|
3,811 |
|
|
|
3,477 |
|
|
|
11,126 |
|
|
|
12,218 |
|
|
|
|
Total share-based compensation expense |
|
$ |
14,502 |
|
|
$ |
16,364 |
|
|
$ |
14,886 |
|
|
$ |
50,586 |
|
|
$ |
54,653 |
|
|
|
(2) |
Amortization expense related to acquired software and product technology, tradenames, customer relationships included in these amounts is as follows: |
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
Cost of product revenue |
|
$ |
994 |
|
|
$ |
1,636 |
|
|
$ |
996 |
|
|
$ |
2,985 |
|
|
$ |
4,912 |
|
|
|
|
Operating expenses |
|
|
11,601 |
|
|
|
12,533 |
|
|
|
11,642 |
|
|
|
34,857 |
|
|
|
37,790 |
|
|
|
|
Total amortization expense |
|
$ |
12,595 |
|
|
$ |
14,169 |
|
|
$ |
12,638 |
|
|
$ |
37,842 |
|
|
$ |
42,702 |
|
|
|
(3) |
Acquisition related depreciation expense included in these amounts is as follows: |
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
Cost of product revenue |
|
$ |
1 |
|
|
$ |
2 |
|
|
$ |
2 |
|
|
$ |
5 |
|
|
$ |
7 |
|
|
|
|
Cost of service revenue |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4 |
|
|
|
|
Research and development |
|
|
8 |
|
|
|
8 |
|
|
|
7 |
|
|
|
23 |
|
|
|
74 |
|
|
|
|
Sales and marketing |
|
|
3 |
|
|
|
2 |
|
|
|
2 |
|
|
|
7 |
|
|
|
16 |
|
|
|
|
General and administrative |
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
7 |
|
|
|
|
Total acquisition related depreciation expense |
|
$ |
13 |
|
|
$ |
12 |
|
|
$ |
11 |
|
|
$ |
36 |
|
|
$ |
108 |
|
|
|
(4) |
Legal expense (benefit) related to civil judgments included in this amount is as follows: |
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
General and administrative |
|
$ |
— |
|
|
$ |
45 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
130 |
|
|
|
|
Total legal judgments expense |
|
$ |
— |
|
|
$ |
45 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
130 |
|
|
|
(5) |
Loss on extinguishment of debt included in this amount is as follows: |
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
Interest and other (income) expense, net |
|
$ |
1,134 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,134 |
|
|
$ |
— |
|
|
|
|
Total loss on extinguishment of debt |
|
$ |
1,134 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,134 |
|
|
$ |
— |
|
|
|
(6) |
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 |
) |
|
|
(7) |
Total income tax adjustment included in this amount is as follows: |
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
Tax effect of non-GAAP adjustments above |
|
$ |
(9,695 |
) |
|
$ |
(13,085 |
) |
|
$ |
(5,409 |
) |
|
$ |
(28,499 |
) |
|
$ |
(26,085 |
) |
|
|
|
Total income tax adjustments |
|
$ |
(9,695 |
) |
|
$ |
(13,085 |
) |
|
$ |
(5,409 |
) |
|
$ |
(28,499 |
) |
|
$ |
(26,085 |
) |
|
|
NETSCOUT SYSTEMS, INC. |
||||||||||||||||||||
|
Reconciliation of Current GAAP to Current and Historical Non-GAAP Financial Measures – |
||||||||||||||||||||
|
Non-GAAP EBITDA from Operations |
||||||||||||||||||||
|
(In thousands) |
||||||||||||||||||||
|
(Unaudited) |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
Three Months Ended |
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||
|
|
|
December 31, |
|
September 30, |
|
December 31, |
||||||||||||||
|
|
|
2024 |
|
2023 |
|
2024 |
|
2024 |
|
2023 |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Income (Loss) from operations (GAAP) |
|
$ |
61,713 |
|
|
$ |
(134,447 |
) |
|
$ |
14,123 |
|
|
$ |
(387,488 |
) |
|
$ |
(112,850 |
) |
|
Income (loss) from operations (GAAP) as a % of revenue |
|
|
24.5 |
% |
|
|
(61.7 |
)% |
|
|
7.4 |
% |
|
|
(62.7 |
)% |
|
|
(18.0 |
)% |
|
Previous adjustments to determine non-GAAP income from operations |
|
|
28,033 |
|
|
|
197,696 |
|
|
|
29,944 |
|
|
|
535,326 |
|
|
|
260,893 |
|
|
Non-GAAP Income from operations |
|
$ |
89,746 |
|
|
$ |
63,249 |
|
|
$ |
44,067 |
|
|
$ |
147,838 |
|
|
$ |
148,043 |
|
|
Depreciation excluding acquisition related-depreciation expense |
|
|
3,077 |
|
|
|
4,337 |
|
|
|
3,451 |
|
|
|
10,312 |
|
|
|
14,118 |
|
|
Non-GAAP EBITDA from operations |
|
$ |
92,823 |
|
|
$ |
67,586 |
|
|
$ |
47,518 |
|
|
$ |
158,150 |
|
|
$ |
162,161 |
|
|
Non-GAAP EBITDA from operations as a % of revenue |
|
|
36.8 |
% |
|
|
31.0 |
% |
|
|
24.9 |
% |
|
|
25.6 |
% |
|
|
25.9 |
% |
|
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 |
|
||
|
Revenue |
$ |
829.5 |
|
|
~ $810 million to ~$820 million |
|
|
|
|
|
|
|
||
|
|
FY’24 |
|
FY’25 |
|
||
|
GAAP net income (loss) |
$ |
(147.7 |
) |
|
(~$373 million) to (~$366 million) |
|
|
Amortization of intangible assets |
$ |
56.9 |
|
|
~$51 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 |
$ |
— |
|
|
~$21 million to ~$22 million |
|
|
Loss on Debt Extinguishment |
$ |
— |
|
|
~$1 million |
|
|
Goodwill impairment |
$ |
217.3 |
|
|
~$427 million |
|
|
Total adjustments |
$ |
336.7 |
|
|
~$564 million to ~$565 million |
|
|
Related impact of adjustments on income tax |
$ |
(29.8 |
) |
|
(~$35 million) |
|
|
Non-GAAP net income |
$ |
159.1 |
|
|
~$156 million to ~$163 million |
|
|
|
|
|
|
|
||
|
GAAP net income (loss) per share (diluted) |
$ |
(2.07 |
) |
|
(~$5.21) to (~$5.10) |
|
|
Non-GAAP net income per share (diluted) |
$ |
2.20 |
|
|
~$2.15 to ~$2.25 |
|
|
|
|
|
|
|
||
|
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/20250130346747/en/
Investors
Tony Piazza
Deputy CFO
978-614-4000
[email protected]
Media
Chris Lucas
AVP, Marketing & Corporate Communications
978-614-4124
[email protected]
KEYWORDS: Massachusetts United States North America
INDUSTRY KEYWORDS: Telecommunications Software Networks Internet Hardware Technology Other Technology Security
MEDIA:
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