8-K
Netscout Systems Inc (NTCT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): October 29, 2020
NETSCOUT SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
| 000-26251 | 04-2837575 |
|---|---|
| (Commission File Number) | (IRS Employer Identification No.) |
| 310 Littleton Road<br><br> <br>Westford, Massachusetts | 01886 |
| --- | --- |
| (Address of principal executive offices) | (Zip Code) |
(978) 614-4000
(Registrant’s telephone number, including area code)
Not Applicable
(Former Name or Former Address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock | NTCT | Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
The following information and the Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
On October 29, 2020, NetScout Systems, Inc. (the “Company”) issued a press release regarding its financial results for the second quarter of fiscal year 2021 ended September 30, 2020, its expectations of future performance and its intention to hold a conference call regarding these topics. The Company's press release is furnished as Exhibit 99.1 to this report.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
The Company hereby furnishes the following exhibit:
| Exhibit<br><br> <br>Number | Description |
|---|---|
| 99.1 | Press release dated<br> October 29, 2020. |
| 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| NETSCOUT SYSTEMS, INC. | |
|---|---|
| By: | /s/ Jean Bua |
| Jean Bua | |
| Executive Vice President and<br><br> <br>Chief Financial Officer |
Date: October 29, 2020
Exhibit 99.1
NETSCOUT Reports Second Quarter Fiscal Year 2021 Financial Results
Company Delivers Solid EPS Growth
WESTFORD, Mass.--(BUSINESS WIRE)--October 29, 2020--NETSCOUT SYSTEMS, INC. (NASDAQ: NTCT), a leading provider of service assurance, security, and business analytics, today announced financial results for its second quarter fiscal year 2021 ended September 30, 2020.
“We delivered solid earnings per share growth in the second quarter of fiscal year 2021, compared with the same period last year,” stated Anil Singhal, NETSCOUT’s president and chief executive officer. “We are pleased with our ability to serve our customers’ visibility and security needs while ensuring the safety and productivity of our team as we executed our strategy and delivered stable results in this tough and uncharted COVID-19 environment.”
Singhal continued, “Our business and operations have proven to be largely resilient as we navigate the global pandemic and macroeconomic uncertainty. This is due to our relevant solutions, trusted brand, strong customer relationships, dedicated team, and solid financial profile. That said, we are not immune from the impacts of the COVID-19 global pandemic and resulting challenging macro-economic environment that is causing elongated purchasing cycles and we expect our fiscal year financial results to be affected given these uncertainties. However, with long-term market trends in our favor, such as, digital transformation, cloud migration, increased cyber threats, and 5G networks, NETSCOUT is well-positioned as “Guardians of the Connected World” when we emerge from this global crisis.”
Q2 FY21 Financial Results
Total revenue (GAAP and non-GAAP) for the second quarter of fiscal year 2021 was $205.3 million, compared with $216.4 million (GAAP) and $216.5 million (non-GAAP) in the same quarter one year ago. A reconciliation of GAAP and non-GAAP results is included in the attached financial tables.
Product revenue (GAAP and non-GAAP) for the second quarter of fiscal year 2021 was $92.0 million, which was approximately 45% of total revenue. This compares with second-quarter fiscal year 2020 product revenue (GAAP and non-GAAP) of $102.8 million, which was approximately 47% of total revenue.
Service revenue (GAAP and non-GAAP) for the second quarter of fiscal year 2021 was $113.4 million, or approximately 55% of total revenue versus service revenue (GAAP) of $113.6 million and (non-GAAP) of $113.7 million, or approximately 53% of total revenue, for the same quarter one year ago.
NETSCOUT’s income from operations (GAAP) was $3.8 million in the second quarter of fiscal year 2021, compared with a loss from operations (GAAP) of $7.3 million in the comparable quarter one year ago. Second-quarter fiscal year 2021 non-GAAP EBITDA from operations was $46.8 million, or 22.8% of non-GAAP quarterly revenue, which compares with $38.5 million, or 17.8% of non-GAAP quarterly revenue in the second quarter of fiscal year 2020. The Company’s second-quarter fiscal year 2021 (GAAP) operating margin was 1.8% versus -3.4% in the prior fiscal year’s same period. Second-quarter fiscal year 2021 non-GAAP income from operations was $39.8 million with a non-GAAP operating margin of 19.4%. This compares with second-quarter fiscal year 2020 non-GAAP income from operations of $31.6 million and a non-GAAP operating margin of 14.6%.
Net loss (GAAP) for the second quarter of fiscal year 2021 was $3.7 million, or $0.05 per share (diluted) versus net loss (GAAP) of $17.5 million, or $0.23 per share (diluted), for the second quarter of fiscal year 2020. On a non-GAAP basis, net income for the second quarter of fiscal year 2021 was $28.2 million, or $0.38 per share (diluted), which compares with $21.4 million, or $0.28 per share (diluted), for the second quarter of fiscal year 2020.
As of September 30, 2020, cash and cash equivalents, and short and long-term marketable securities were $427.8 million, compared with $426.5 million as of June 30, 2020, and $389.1 million as of March 31, 2020. In addition, NETSCOUT has $450.0 million outstanding on its $1.0 billion credit facility.
First-Half FY21 Financial Results
- For the first half of fiscal year 2021, total revenue (GAAP and non-GAAP) was $389.2 million versus total revenue (GAAP) of $402.4 million and total revenue (non-GAAP) of $402.5 million for the comparable six-month period of fiscal year 2020. A reconciliation of GAAP and non-GAAP results is included in the attached financial tables.
- Product revenue (GAAP and non-GAAP) for the first six months of fiscal year 2021 was $163.7 million, compared with $178.5 million in the same period one year ago.
- First-half fiscal year 2021 service revenue (GAAP and non-GAAP) was $225.5 million versus $224.0 million in the same period last year.
- NETSCOUT’s loss from operations (GAAP) during the first six months of fiscal year 2021 was $10.7 million, compared with a loss from operations of $31.7 million for the comparable six-month period of fiscal year 2020. The Company’s first-half fiscal year 2021 (GAAP) operating margin was -2.8% versus -7.9% in the comparable period of fiscal year 2020. During the first two quarters of fiscal year 2021, the Company’s non-GAAP EBITDA from operations was $73.4 million, or 18.9% of non-GAAP total revenue versus non-GAAP EBITDA from operations of $57.4 million, or 14.3% of non-GAAP total revenue, in the first six months of fiscal year 2020. The Company’s non-GAAP income from operations for the first half of fiscal year 2021 was $60.5 million with a non-GAAP operating margin of 15.5%, compared with non-GAAP income from operations for the same period of fiscal year 2020 of $43.7 million and a non-GAAP operating margin of 10.9%.
- For the first six months of fiscal year 2021, NETSCOUT’s net loss (GAAP) was $21.1 million, or $0.29 per share (diluted) compared with a net loss of $46.8 million, or $0.61 per share (diluted) in the same six-month period one year ago. Non-GAAP net income for the first half of fiscal year 2021 was $40.5 million, or $0.55 per share (diluted)versus non-GAAP net income for the same period of fiscal year 2020 of $27.0 million, or $0.35 per share (diluted).
Outlook:
For fiscal year 2021, NETSCOUT expects revenue (GAAP and non-GAAP) to decline in the mid-to -upper single digits, on a percentage basis, compared with fiscal year 2020. This outlook is due to the COVID-19 global pandemic and resulting challenging macro-economic environment causing elongated purchasing cycles. NETSCOUT will continue to prudently manage its cost structure and expects to deliver improved annual GAAP earnings per share and expects non-GAAP earnings per share to be in-line with our non-GAAP fiscal year 2020 earnings per share number.
Conference Call Instructions:
NETSCOUT will host a conference call to discuss its second-quarter fiscal year 2021 financial results 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, people can listen to the call by dialing (785) 424-1667. The conference call ID is NTCTQ221. A replay of the call will be available after 12:00 p.m. ET on October 29, 2020 for approximately one week. The number for the replay is (800) 283-8486 for U.S./Canada and (402) 220-0869 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 revenue, non-GAAP gross profit, non-GAAP income from operations, non-GAAP net income, non-GAAP net income per share (diluted) and non-GAAP earnings before interest and other expense, income taxes, depreciation and amortization (EBITDA) from operations. Non-GAAP revenue eliminates the GAAP effects of acquisitions by adding back revenue related to deferred revenue revaluation. Non-GAAP gross profit includes the aforementioned revenue adjustments and also 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 business development and integration expense, compensation for post-combination services, legal expenses related to a civil judgment, restructuring charges, and costs related to new accounting standard implementation, and adds back transitional service agreement income. Non-GAAP net income includes the foregoing adjustments related to non-GAAP income from operations, net of related income tax effects while removing transitional service agreement income and changes in contingent consideration. 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 (revenue, gross profit, 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) assures digital business services against disruptions in availability, performance, and security. Our market and technology leadership stems from combining our patented smart data technology with smart analytics. We provide real-time, pervasive visibility, and insights customers need to accelerate and secure their digital transformation. Our approach transforms the way organizations plan, deliver, integrate, test, and deploy services and applications. Our nGenius service assurance solutions provide real-time, contextual analysis of service, network, and application performance. Arbor security solutions protect against DDoS attacks that threaten availability and advanced threats that infiltrate networks to steal critical business assets. To learn more about improving service, network, and application performance in physical or virtual data centers, or in the cloud, and how NETSCOUT’s performance and security solutions, powered by service intelligence can help you move forward with confidence, visit www.netscout.com or follow @NETSCOUT and @ArborNetworks on Twitter, Facebook, or LinkedIn.
Safe Harbor
Forward-looking statements in this release are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934 and other federal securities laws. Investors are cautioned that statements in this press release, which are not strictly historical statements, including ,without limitation, statements regarding NetScout’s revenue and earnings per share financial performance for fiscal year 2021, NetScout’s ability to continue to navigate the global pandemic and macroeconomic uncertainty, that NetScout’s business and operations have proven to be largely resilient due to our relevant solutions, trusted brand, strong customer relationships, dedicated team, and solid financial profile, that market trends such as, digital transformation, cloud migration, increased cyber threats, and 5G networks, position NetScout well, as “Guardians of the Connected World”, when we emerge from the global pandemic, constitute forward looking statements that involve risks and uncertainties. Actual results could differ materially from the forward-looking statements due to impacts known and unknown risk, uncertainties, assumptions, and other factors. Such factors include impacts from the COVID-19 pandemic, 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; 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 we have, and their strategic response to our products; our ability to retain key executives and employees; the Company’s ability to realize the anticipated savings from 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. 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, 2020 and the Company’s subsequent Quarterly Report on Form 10-Q, both of which are on file 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.
©2020 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, | |||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||
| Revenue: | ||||||||||||||
| Product | $ | 91,979 | $ | 102,775 | $ | 163,672 | $ | 178,494 | ||||||
| Service | 113,360 | 113,646 | 225,482 | 223,951 | ||||||||||
| Total revenue | 205,339 | 216,421 | 389,154 | 402,445 | ||||||||||
| Cost of revenue: | ||||||||||||||
| Product | 26,977 | 29,368 | 48,129 | 56,303 | ||||||||||
| Service | 31,923 | 29,764 | 63,751 | 57,572 | ||||||||||
| Total cost of revenue | 58,900 | 59,132 | 111,880 | 113,875 | ||||||||||
| Gross profit | 146,439 | 157,289 | 277,274 | 288,570 | ||||||||||
| Operating expenses: | ||||||||||||||
| Research and development | 46,455 | 50,058 | 91,836 | 93,785 | ||||||||||
| Sales and marketing | 60,300 | 73,067 | 119,734 | 146,592 | ||||||||||
| General and administrative | 20,573 | 25,177 | 45,726 | 47,388 | ||||||||||
| Amortization of acquired intangible assets | 15,363 | 16,132 | 30,624 | 32,275 | ||||||||||
| Restructuring charges | (31 | ) | 150 | 62 | 273 | |||||||||
| Total operating expenses | 142,660 | 164,584 | 287,982 | 320,313 | ||||||||||
| Income (loss) from operations | 3,779 | (7,295 | ) | (10,708 | ) | (31,743 | ) | |||||||
| Interest and other expense, net | (3,394 | ) | (3,616 | ) | (8,174 | ) | (8,015 | ) | ||||||
| Income (loss) before income tax expense | 385 | (10,911 | ) | (18,882 | ) | (39,758 | ) | |||||||
| Income tax expense | 4,071 | 6,561 | 2,224 | 7,057 | ||||||||||
| Net loss | $ | (3,686 | ) | $ | (17,472 | ) | $ | (21,106 | ) | $ | (46,815 | ) | ||
| Basic net loss per share | $ | (0.05 | ) | $ | (0.23 | ) | $ | (0.29 | ) | $ | (0.61 | ) | ||
| Diluted net loss per share | $ | (0.05 | ) | $ | (0.23 | ) | $ | (0.29 | ) | $ | (0.61 | ) | ||
| Weighted average common shares outstanding used in computing: | ||||||||||||||
| Net loss per share - basic | 73,058 | 75,687 | 72,682 | 76,490 | ||||||||||
| Net loss per share - diluted | 73,058 | 75,687 | 72,682 | 76,490 |
| NETSCOUT SYSTEMS, INC. | ||||||
|---|---|---|---|---|---|---|
| Consolidated Balance Sheets | ||||||
| (In thousands) | ||||||
| September 30, | March 31, | |||||
| 2020 | 2020 | |||||
| (Unaudited) | ||||||
| Assets | ||||||
| Current assets: | ||||||
| Cash, cash equivalents and marketable securities | $ | 427,846 | $ | 386,458 | ||
| Accounts receivable and unbilled costs, net | 169,687 | 213,514 | ||||
| Inventories | 26,223 | 22,227 | ||||
| Prepaid expenses and other current assets | 45,652 | 37,544 | ||||
| Total current assets | 669,408 | 659,743 | ||||
| Fixed assets, net | 53,168 | 57,715 | ||||
| Goodwill and intangible assets, net | 2,270,378 | 2,307,859 | ||||
| Long-term marketable securities | - | 2,613 | ||||
| Operating lease right-of-use assets | 65,562 | 68,583 | ||||
| Other assets | 19,035 | 23,990 | ||||
| Total assets | $ | 3,077,551 | $ | 3,120,503 | ||
| Liabilities and Stockholders' Equity | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 18,083 | $ | 20,004 | ||
| Accrued compensation | 61,842 | 75,632 | ||||
| Accrued other | 34,717 | 22,743 | ||||
| Current portion of operating lease liabilities | 11,325 | 10,337 | ||||
| Deferred revenue and customer deposits | 236,240 | 270,281 | ||||
| Total current liabilities | 362,207 | 398,997 | ||||
| Other long-term liabilities | 14,646 | 10,039 | ||||
| Deferred tax liability | 108,716 | 114,394 | ||||
| Accrued long-term retirement benefits | 36,408 | 34,256 | ||||
| Long-term deferred revenue | 99,581 | 104,240 | ||||
| Operating lease liabilities, net of current portion | 66,673 | 70,658 | ||||
| Long-term debt | 450,000 | 450,000 | ||||
| Total liabilities | 1,138,231 | 1,182,584 | ||||
| Stockholders' equity: | ||||||
| Common stock | 123 | 122 | ||||
| Additional paid-in capital | 2,924,757 | 2,891,553 | ||||
| Accumulated other comprehensive loss | (1,258 | ) | (3,160 | ) | ||
| Treasury stock, at cost | (1,318,535 | ) | (1,305,935 | ) | ||
| Retained earnings | 334,233 | 355,339 | ||||
| Total stockholders' equity | 1,939,320 | 1,937,919 | ||||
| Total liabilities and stockholders' equity | $ | 3,077,551 | $ | 3,120,503 |
| 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, | |||||||||||||
| 2020 | 2019 | 2020 | 2020 | 2019 | |||||||||||
| Revenue (GAAP) | $ | 205,339 | $ | 216,421 | $ | 183,815 | $ | 389,154 | $ | 402,445 | |||||
| Service deferred revenue fair value adjustment | 1 | 48 | 2 | 3 | 96 | ||||||||||
| Non-GAAP Revenue | $ | 205,340 | $ | 216,469 | $ | 183,817 | $ | 389,157 | $ | 402,541 | |||||
| Gross Profit (GAAP) | $ | 146,439 | $ | 157,289 | $ | 130,835 | $ | 277,274 | $ | 288,570 | |||||
| Service deferred revenue fair value adjustment | 1 | 48 | 2 | 3 | 96 | ||||||||||
| Share-based compensation expense (1) | 2,154 | 2,187 | 1,595 | 3,749 | 3,921 | ||||||||||
| Amortization of acquired intangible assets (2) | 4,765 | 6,225 | 4,735 | 9,500 | 12,455 | ||||||||||
| Acquisition related depreciation expense (6) | 5 | 6 | 6 | 11 | 19 | ||||||||||
| Non-GAAP Gross Profit | $ | 153,364 | $ | 165,755 | $ | 137,173 | $ | 290,537 | $ | 305,061 | |||||
| Income (loss) from Operations (GAAP) | $ | 3,779 | $ | (7,295 | ) | $ | (14,487 | ) | $ | (10,708 | ) | $ | (31,743 | ) | |
| Service deferred revenue fair value adjustment | 1 | 48 | 2 | 3 | 96 | ||||||||||
| Share-based compensation expense (1) | 15,736 | 15,857 | 12,096 | 27,832 | 28,600 | ||||||||||
| Amortization of acquired intangible assets (2) | 20,128 | 22,357 | 19,996 | 40,124 | 44,730 | ||||||||||
| Business development and integration expense (3) | - | 39 | 16 | 16 | 18 | ||||||||||
| New standard implementation expense (4) | - | - | - | - | 9 | ||||||||||
| Compensation for post-combination services (5) | 63 | 135 | 64 | 127 | 328 | ||||||||||
| Restructuring charges | (31 | ) | 150 | 93 | 62 | 273 | |||||||||
| Acquisition related depreciation expense (6) | 60 | 69 | 61 | 121 | 190 | ||||||||||
| Transitional service agreement income (7) | 101 | 275 | - | 101 | 1,184 | ||||||||||
| Legal judgments expense (8) | - | - | 2,804 | 2,804 | - | ||||||||||
| Non-GAAP Income from Operations | $ | 39,837 | $ | 31,635 | $ | 20,645 | $ | 60,482 | $ | 43,685 | |||||
| Net Loss (GAAP) | $ | (3,686 | ) | $ | (17,472 | ) | $ | (17,420 | ) | $ | (21,106 | ) | $ | (46,815 | ) |
| Service deferred revenue fair value adjustment | 1 | 48 | 2 | 3 | 96 | ||||||||||
| Share-based compensation expense (1) | 15,736 | 15,857 | 12,096 | 27,832 | 28,600 | ||||||||||
| Amortization of acquired intangible assets (2) | 20,128 | 22,357 | 19,996 | 40,124 | 44,730 | ||||||||||
| Business development and integration expense (3) | - | 39 | 16 | 16 | 18 | ||||||||||
| New standard implementation expense (4) | - | - | - | - | 9 | ||||||||||
| Compensation for post-combination services (5) | 63 | 135 | 64 | 127 | 328 | ||||||||||
| Restructuring charges | (31 | ) | 150 | 93 | 62 | 273 | |||||||||
| Acquisition related depreciation expense (6) | 60 | 69 | 61 | 121 | 190 | ||||||||||
| Change in contingent consideration | - | (6 | ) | - | - | 517 | |||||||||
| Legal judgments expense (8) | - | - | 2,804 | 2,804 | - | ||||||||||
| Income tax adjustments (9) | (4,027 | ) | 181 | (5,496 | ) | (9,523 | ) | (994 | ) | ||||||
| Non-GAAP Net Income | $ | 28,244 | $ | 21,358 | $ | 12,216 | $ | 40,460 | $ | 26,952 | |||||
| Diluted Net Loss Per Share (GAAP) | $ | (0.05 | ) | $ | (0.23 | ) | $ | (0.24 | ) | $ | (0.29 | ) | $ | (0.61 | ) |
| Share impact of non-GAAP adjustments identified above | 0.43 | 0.51 | 0.41 | 0.84 | 0.96 | ||||||||||
| Non-GAAP Diluted Net Income Per Share | $ | 0.38 | $ | 0.28 | $ | 0.17 | $ | 0.55 | $ | 0.35 | |||||
| Shares used in computing non-GAAP diluted net income per share | 73,594 | 76,310 | 73,454 | 73,521 | 77,387 |
| 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, | ||||||||||||||||
| 2020 | 2019 | 2020 | 2020 | 2019 | ||||||||||||||
| (1 | ) | Share-based compensation expense included in these amounts | ||||||||||||||||
| is as follows: | ||||||||||||||||||
| Cost of product revenue | $ | 344 | $ | 345 | $ | 245 | $ | 589 | $ | 612 | ||||||||
| Cost of service revenue | 1,810 | 1,842 | 1,350 | 3,160 | 3,309 | |||||||||||||
| Research and development | 4,935 | 4,820 | 3,781 | 8,716 | 8,639 | |||||||||||||
| Sales and marketing | 5,357 | 5,288 | 3,992 | 9,349 | 9,423 | |||||||||||||
| General and administrative | 3,290 | 3,562 | 2,728 | 6,018 | 6,617 | |||||||||||||
| Total share-based compensation expense | $ | 15,736 | $ | 15,857 | $ | 12,096 | $ | 27,832 | $ | 28,600 | ||||||||
| (2 | ) | Amortization expense related to acquired software and product | ||||||||||||||||
| technology, tradenames, customer relationships included in these | ||||||||||||||||||
| amounts is as follows: | ||||||||||||||||||
| Cost of product revenue | $ | 4,765 | $ | 6,225 | $ | 4,735 | $ | 9,500 | $ | 12,455 | ||||||||
| Operating expenses | 15,363 | 16,132 | 15,261 | 30,624 | 32,275 | |||||||||||||
| Total amortization expense | $ | 20,128 | $ | 22,357 | $ | 19,996 | $ | 40,124 | $ | 44,730 | ||||||||
| (3 | ) | Business development and integration expense included in | ||||||||||||||||
| these amounts is as follows: | ||||||||||||||||||
| Research and development | $ | - | $ | - | $ | - | $ | - | $ | 43 | ||||||||
| General and administrative | - | 39 | 16 | 16 | (25 | ) | ||||||||||||
| Total business development and integration expense | $ | - | $ | 39 | $ | 16 | $ | 16 | $ | 18 | ||||||||
| (4 | ) | New standard implementation expense included in these | ||||||||||||||||
| amounts is as follows: | ||||||||||||||||||
| General and administrative | $ | - | $ | - | $ | - | $ | - | $ | 9 | ||||||||
| Total new standard implementation expense | $ | - | $ | - | $ | - | $ | - | $ | 9 | ||||||||
| (5 | ) | Compensation for post-combination services included in these | ||||||||||||||||
| amounts is as follows: | ||||||||||||||||||
| Research and development | $ | 62 | $ | 135 | $ | 63 | $ | 125 | $ | 328 | ||||||||
| Sales and marketing | 1 | - | 1 | 2 | - | |||||||||||||
| Total compensation for post-combination services | $ | 63 | $ | 135 | $ | 64 | $ | 127 | $ | 328 | ||||||||
| (6 | ) | Acquisition related depreciation expense included in these | ||||||||||||||||
| amounts is as follows: | ||||||||||||||||||
| Cost of product revenue | $ | 3 | $ | 4 | $ | 4 | $ | 7 | $ | 14 | ||||||||
| Cost of service revenue | 2 | 2 | 2 | 4 | 5 | |||||||||||||
| Research and development | 42 | 48 | 42 | 84 | 131 | |||||||||||||
| Sales and marketing | 9 | 9 | 9 | 18 | 19 | |||||||||||||
| General and administrative | 4 | 6 | 4 | 8 | 21 | |||||||||||||
| Total acquisition related depreciation expense | $ | 60 | $ | 69 | $ | 61 | $ | 121 | $ | 190 | ||||||||
| (7 | ) | Transitional service agreement income included in these | ||||||||||||||||
| amounts is as follows: | ||||||||||||||||||
| Research and development | $ | 11 | $ | 10 | $ | - | $ | 11 | $ | 112 | ||||||||
| Sales and marketing | 16 | 42 | - | 16 | 168 | |||||||||||||
| General and administrative | 74 | 223 | - | 74 | 904 | |||||||||||||
| Other Income (expense), net | (101 | ) | (275 | ) | - | (101 | ) | (1,184 | ) | |||||||||
| Total transitional service agreement income | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||
| (8 | ) | Legal judgments expense included in these amounts is | ||||||||||||||||
| as follows: | ||||||||||||||||||
| General and administrative | $ | - | $ | - | $ | 2,804 | $ | 2,804 | $ | - | ||||||||
| Total legal judgments expense | $ | - | $ | - | $ | 2,804 | $ | 2,804 | $ | - | ||||||||
| (9 | ) | Total income tax adjustment included in these | ||||||||||||||||
| amounts is as follows: | ||||||||||||||||||
| Tax effect of non-GAAP adjustments above | $ | (4,027 | ) | $ | 181 | $ | (5,496 | ) | $ | (9,523 | ) | $ | (994 | ) | ||||
| Total income tax adjustments | $ | (4,027 | ) | $ | 181 | $ | (5,496 | ) | $ | (9,523 | ) | $ | (994 | ) |
| NetScout Systems, Inc. | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Reconciliation of Current GAAP to Current and Historical Non-GAAP Financial Measures - | ||||||||||||||
| Non-GAAP EBIDTA from Operations | ||||||||||||||
| (In thousands) | ||||||||||||||
| (Unaudited) | ||||||||||||||
| Three Months Ended | Three Months Ended | Six Months Ended | ||||||||||||
| September 30, | June 30, | September 30, | ||||||||||||
| 2020 | 2019 | 2020 | 2020 | 2019 | ||||||||||
| Income (loss) from operations (GAAP) | $ | 3,779 | $ | (7,295 | ) | $ | (14,487 | ) | $ | (10,708 | ) | $ | (31,743 | ) |
| Previous adjustments to determine non-GAAP income from operations | 36,058 | 38,930 | 35,132 | 71,190 | 75,428 | |||||||||
| Non-GAAP Income from operations | 39,837 | 31,635 | 20,645 | 60,482 | 43,685 | |||||||||
| Depreciation excluding acquisition related | 6,955 | 6,905 | 5,952 | 12,907 | 13,746 | |||||||||
| Non-GAAP EBITDA from operations | $ | 46,792 | $ | 38,540 | $ | 26,597 | $ | 73,389 | $ | 57,431 |
Contacts
Investors
Anthony Piazza
Vice President, Corporate Finance
978-614-4286
IR@netscout.com
*Media*
Maribel Lopez
Manager, Marketing & Corporate Communications
781-362-4330
Maribel.Lopez@netscout.com