NETSCOUT Reports Second Quarter Fiscal Year 2025 Financial Results
Remarks by
“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
Product revenue (GAAP and non-GAAP) for the second quarter of fiscal year 2025 was
Service revenue (GAAP and non-GAAP) for the second quarter of fiscal year 2025 was
NETSCOUT’s income from operations (GAAP) was
Net income (GAAP) for the second quarter of fiscal year 2025 was
As of
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
Recent Developments and Highlights
-
In early
October 2024 , NETSCOUT held its annual technology and user summit, ENGAGE 2024, inArlington, 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 inEurope and theMiddle 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
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
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
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
©2024
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||||||||||||||||||
Condensed Consolidated Statements of Operations |
||||||||||||||||||
(In thousands, except per share data) |
||||||||||||||||||
(Unaudited) |
||||||||||||||||||
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
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 |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
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 |
|
|
|||||||
Consolidated Balance Sheets |
|||||||
(In thousands) |
|||||||
(Unaudited) |
|||||||
|
|
|
|
||||
|
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 |
|
|
|
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 |
|
|
|
(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 |
|
|
||||||||||||||||||||||
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 |
||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
|
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 |
|
|
|
— |
|
||
|
|
|
— |
|
|
|
— |
|
|
|
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 |
|
|
|
— |
|
||
|
|
|
— |
|
|
|
— |
|
|
|
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 |
|
|
|||||||||||||||||||||||
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 |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
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 |
) |
|
||||||||||||||||||||
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 |
||||||||||||||
|
|
|
|
|
|
|
||||||||||||||
|
|
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 |
% |
|
||||||
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 |
|
|
~ |
|
|
|
|
|
|||
|
FY'24 |
|
FY'25 |
|||
GAAP net income (loss) |
$ |
(147.7 |
) |
|
( |
|
Amortization of intangible assets |
$ |
56.9 |
|
|
|
|
Share-based compensation expenses |
$ |
70.8 |
|
|
|
|
Business development & integration expenses* |
$ |
0.1 |
|
|
~Less than |
|
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 |
$ |
— |
|
|
|
|
|
$ |
217.3 |
|
|
|
|
Total adjustments |
$ |
336.7 |
|
|
|
|
Related impact of adjustments on income tax |
$ |
(29.8 |
) |
|
( |
|
Non-GAAP net income |
$ |
159.1 |
|
|
|
|
|
|
|
|
|||
GAAP net income (loss) per share (diluted) |
$ |
(2.07 |
) |
|
( |
|
Non-GAAP net income per share (diluted) |
$ |
2.20 |
|
|
|
|
|
|
|
|
|||
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
Deputy CFO
978-614-4000
IR@netscout.com
Media
AVP,
978-614-4124
Chris.Lucas@netscout.com
Source: