Quarter Highlighted by NextPoint Networks Acquisition; Strong
Penetration of New Accounts in Enterprise, eCommerce and Service Provider Markets
WESTFORD, Mass.--(BUSINESS WIRE)--July 20, 2000--
NetScout Systems, Inc. (NASDAQ: NTCT), the leader in real-time network and application performance management for e-business, today announced financial results for its first quarter of fiscal 2001 ended June 30, 2000.
Revenue for the first quarter of fiscal 2001 was $25.2 million, a 32 percent increase over revenue of $19.1 million for the same period a year earlier, and a 5 percent increase over revenue of $23.9 million for the fourth quarter of fiscal 2000. Net income for the first quarter ended June 30, 2000 was $4.3 million, or $0.15 per diluted share, compared to $3.1 million, or $0.13 per diluted share, for the first quarter of fiscal 2000 and $4.5 million, or $0.16 per diluted share for the fourth quarter of fiscal 2000. Weighted average diluted shares for the first quarter of fiscal 2001 were 28.0 million, compared to 24.9 million for the first quarter of fiscal 2000, and 28.2 million for the fourth quarter of fiscal 2000.
"We are off to a strong start in the new fiscal year," said Anil Singhal, chairman and CEO of NetScout Systems. "We added more than 70 new accounts in the quarter, furthering good penetration into each of our focused markets: enterprise, e-commerce, and service provider. Large deals were up approximately 66% from last quarter from both new and repeat business. Slightly after the end of the quarter, we closed on the acquisition of NextPoint Networks. We are moving ahead swiftly with product and organizational integration and have completed the first phase of sales training to introduce NextPoint's products into our installed base. We anticipate no significant disruption to ongoing operations or sales momentum from the merger."
Flagship new accounts signed during the quarter through direct and channel sales included Chase Manhattan Bank, Sprint, Worldcom Wireless, Clear Channel Communications, Chicago Public Schools, General Dynamics, IBM Europe, Singapore Ministry of Defense, Discover Card, Sprint BWG, Nestle, and AT&T Wireless. These roll outs of our solutions were for performance management of telecommunications services, networked enterprise applications and new e-business infrastructures.
Significant repeat business was received from Price WaterhouseCoopers, Morgan Stanley, PacificCorp, GTE Corporation, MCI Worldcom, The DataStore Inc., General Datatech, Andersen Consulting, Bristol-Myers Squibb and Exenet Technologies. Repeat business with Exenet included selling of NetScout solutions into their enterprise customer base to achieve end-to-end quality of service and performance monitoring in their applications infrastructure services.
First-quarter highlights also include the acquisition of NextPoint Networks, an award-winning developer of performance and service level management solutions. With the acquisition of NextPoint, NetScout adds new capabilities to its nGenius Performance Management System for eBusiness.
Also during the first quarter, NetScout launched its nGenius (TM) e-business performance management system, including the nGenius Performance Monitor (TM), nGenius Traffic Monitor (TM) , nGenius Server (TM) and the nGenius Probe (TM). The nGenius product suite is an integral part of NetScout's strategy for meeting the needs of enterprise, e-commerce and service provider markets. The nGenius system allows customers access to real-time critical network performance data from anywhere in the system, providing its customers with a complete view of their entire infrastructure at a glance.
The acquisition of NextPoint adds significant capabilities to the nGenius suite in application service level management based on end-user experience and capacity planning on both network and device utilization trends. It also assembles a powerful suite of network performance data through a single performance management system--from real-time, application-aware probes to network devices and active agents--providing an unparalleled system-wide view into the performance of the network from a single vendor.
As part of the company's investments in creating top line growth, NetScout continued to develop its sales force. NetScout expanded its presence domestically, in Europe and Asia. In Hong Kong, the company established a headquarters site for its sales and marketing operations for the Asia Pacific regions.
NetScout received two other distinctions during the quarter. The company joined the Russell 3000 indexes, which ranks the largest 3,000 U.S. companies based on market capitalization. Moreover, the company was named to BusinessWeek magazine's list of 100 Hot Growth Companies.
About NetScout Systems, Inc.
NetScout Systems, Inc. (NASDAQ: NTCT) is a leading provider of network and application performance management solutions. NetScout's solutions ensure e-business applications stay up and running at optimum performance through real-time, system-wide visibility and actionable information for fault isolation. NetScout's nGenius(TM) Performance Management System for e-business delivers one stop shopping for customers' network performance management needs. nGenius lets users analyze network and application performance, monitor website responsiveness and isolate problem areas throughout the network infrastructure. With the recent acquisition of NextPoint Networks, nGenius adds new capabilities in application service level management based on end-user experience and capacity planning on both network and device utilization trends. The NetScout solution draws from the widest range of data sources - from real-time, application-aware probes to network devices and active agents, providing a system-wide view into the performance of the network. NetScout's products are deployed worldwide in industries such as e-commerce, finance, healthcare, government, manufacturing and others. NetScout serves approximately half of the Fortune 500 and counts among its customers 3M Corporation, AT&T, Datek Online, Amazon.com, Webhire, Intel Online, Fidelity Investments, Xerox and Sun Microsystems.
Headquartered in Westford, Massachusetts, NetScout has approximately 300 employees and offices in North America, Europe and Asia. Further information on the company is available on the World Wide Web at www.netscout.com
Forward-looking statements in this release are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. Investors are cautioned that statements in this press release which are not strictly historical statements constitute forward-looking statements which involve risks and uncertainties. Actual results could differ materially from the forward-looking statements. Risks and uncertainties which could cause actual results to differ include, without limitation, risks and uncertainties associated with the company's strategic relationships with Cisco Systems and other partners, dependence upon broad-based acceptance of the company's Application Flow Management solutions, introduction and market acceptance of new products and product enhancements, competitive pricing pressures, reliance on sole source suppliers, successful expansion and management of the indirect distribution channels, the integration of NextPoint Networks and dependence on proprietary technology, as well as risks of downturns in economic conditions generally and in the market for network and application performance management solutions specifically, and risks associated with year 2000 problems affecting the company, its partners and its customers. 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, 2000, on file with the Securities and Exchange Commission.
NetScout is a registered trademark, and the NetScout logo, nGenius, WebCast, AppScout, and NetScout Manager Plus are trademarks of NetScout Systems, Inc.
NetScout Systems, Inc.
Condensed Consolidated Balance Sheet
(In thousands)
(Unaudited)
June 30, March 31,
2000 2000
Assets
Current assets:
Cash and cash equivalents $ 56,722 $48,515
Marketable securities 17,611 21,807
Accounts receivable, net 12,604 10,390
Inventories 4,362 3,131
Refundable income taxes - 1,899
Deferred income taxes 1,022 1,022
Prepaids and other current assets 4,306 3,728
Total current assets 96,627 90,492
Fixed assets, net 6,051 5,657
Deferred income taxes 599 599
Total assets $ 103,277 $96,748
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 3,887 $ 2,789
Accrued compensation 4,221 3,673
Accrued other 1,661 2,448
Income taxes payable 290 -
Customer deposits 25 78
Deferred revenue 7,357 6,638
Total current liabilities 17,441 15,626
Stockholders' equity:
Common Stock 31 31
Additional paid-in capital 67,658 67,366
Deferred compensation (518) (636)
Treasury stock (25,306) (25,306)
Retained earnings 43,971 39,667
Total stockholders' equity 85,836 81,122
Total liabilities and
stockholders' equity $ 103,277 $96,748
NetScout Systems, Inc.
Condensed Consolidated Statement of Income
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended June 30,
2000 1999
Revenue:
Product $ 17,761 $ 12,814
Service 3,976 2,465
License and royalty 3,432 3,792
Total revenue 25,169 19,071
Cost of revenue:
Product 6,094 4,814
Service 595 413
Total cost of revenue 6,689 5,227
Gross margin 18,480 13,844
Operating expenses:
Research and development 2,572 2,241
Sales and marketing 8,727 6,040
General and administrative 1,594 937
Total operating expenses 12,893 9,218
Income from operations 5,587 4,626
Interest income, net 1,034 272
Income before provision for
income taxes 6,621 4,898
Provision for income taxes 2,317 1,764
Net income $ 4,304 $ 3,134
Basic net income per share $ 0.16 $ 0.22
Diluted net income per share $ 0.15 $ 0.13
Shares used in computing:
Basic net income per share 26,762 14,331
Diluted net income per share 27,954 24,909