WESTFORD, Mass., Jan. 15 /PRNewswire-FirstCall/ --
NetScout Systems, Inc. (Nasdaq: NTCT), a leading provider of network
performance management solutions, today announced financial results for its
third quarter of fiscal year 2003.
Revenue for the third quarter of fiscal year 2003 was $18.2 million,
compared to revenue of $17.9 million in the previous quarter and revenue of
$21.5 million in the third quarter of fiscal year 2002. The net loss for the
quarter was $328,000, or ($0.01) per basic and diluted share, compared to a
net loss of $710,000, or ($0.02) per basic and diluted share for the previous
quarter and compared to a net loss of $2.6 million, or ($0.09) per basic and
diluted share in the third quarter of fiscal year 2002.
Pro forma net income for the third quarter of fiscal year 2003 was
$10,000, or $0.00 per pro forma diluted share, versus pro forma net loss of
$373,000, or ($0.01) per pro forma basic and diluted share in the previous
quarter and compared to pro forma net income of $627,000, or $0.02 per pro
forma diluted share in the third quarter of fiscal year 2002. Pro forma net
income or loss excludes acquisition and stock-based compensation costs.
"Our new, Common Data Model, or CDM(TM) strategy continues to gain
traction in the marketplace. Our customers are beginning to understand the
opportunity to simplify their network management operations by using our
nGenius(TM) solution for a growing range of network performance tasks. We were
pleased with the feedback from the customers who attended our successful User
Conference in November, representing more than 40 companies from around the
world. Users expressed enthusiasm about our CDM(TM) Technology and told us
that our products are on target to help them meet their needs for a unifying
network performance management solution that reduces their total cost of
network ownership," said Anil Singhal, President and CEO of NetScout Systems.
"We announced two new products this quarter for network storage and security
which support our CDM(TM) initiative to reduce management data and tool
clutter in these related areas of infrastructure performance."
Financial Highlights for the Third Quarter:
* Total revenue increased sequentially 1% and decreased 15% from the third
quarter of fiscal year 2002. Product revenue increased 1% sequentially,
and was down 23% from the third quarter of fiscal year 2002. Service
revenue increased 8% sequentially, and increased 19% from the third
quarter of fiscal year 2002. Royalty revenue decreased 25% sequentially
and was down 50% from the third quarter of fiscal year 2002.
* Gross margin was 75% of total revenue, up 1 point both sequentially and
compared to the third quarter of fiscal year 2002.
* Cash flow from operations was positive.
* Cash and short and long-term marketable securities increased by $347,000
to $70.3 million.
* 53 new customers were added worldwide.
* 286 customers made repeat purchases.
* 41 orders over $100,000 were received.
* Direct sales represented 49% of total revenue; reseller revenue
represented 51% of total revenue.
* International business comprised approximately 16% of total revenue in
the third quarter.
Product Highlights:
* A new nGenius(R) Fibre Channel probe was released during the quarter
expanding nGenius Performance Manager's LAN and WAN support to include
storage area networks. The probe monitors traffic flows across any
number of 1Gbps or 2Gbps Fibre Channel links with multi-port
configuration for single or aggregated views across multiple load-
sharing or redundant links and packet capture and decode for complex,
in-depth troubleshooting of problems such as multi-vendor
interoperability.
* A new patent-pending nGenius(R) Network Security Adaptor was also
released during the quarter to help improve the dependability of
network-based intrusion detection systems (NIDS). The nGenius Network
Security Adaptor allows NIDS sensors to be placed further out to the
edge of the network and to focus on the most relevant data streams to
help reduce false positives and false negatives that can arise from
processing high volumes of traffic.
Guidance:
NetScout's near term expectations are based on the continued climate of
tight enterprise IT spending and the uncertain timing of the impact of
improving general economic conditions. For the fourth quarter, the Company
expects revenue to be $18 to $19 million dollars, GAAP earnings per share to
be ($0.02) to ($0.01) and pro forma earnings per share to be ($0.01) to $0.00.
We expect to be cash neutral in the quarter.
CONFERENCE CALL INSTRUCTIONS:
The Company invites shareholders to listen to its conference call today at
4:30 p.m. EST, which will be webcast live through the Company's website at
http://www.netscout.com/investors. Please log onto the website 15 minutes
prior to the broadcast. Alternatively, shareholders can listen to the call by
dialing 800-450-0785 (U.S.) and 612-332-0523 (International). A replay of the
call will be available after 9:00 p.m. EST this evening for approximately one
week. The numbers for the replay are 800-475-6701 (U.S.) and 320-365-3844
(International). The access code is 669131.
About NetScout Systems, Inc.
NetScout Systems, Inc. (Nasdaq: NTCT) is a market leader and pioneer of
integrated network performance management solutions for leading companies and
service providers worldwide. NetScout's offerings are based upon its
nGenius(R) Performance Management System, an integrated solution of advanced
monitoring and reporting applications that draw on the rich performance data
generated by NetScout's real-time, application-aware probes, advanced
intelligent software agents and other network devices. The nGenius System
helps organizations increase their return on infrastructure investments by
optimizing the performance of their network and applications. NetScout is
headquartered in Westford, Massachusetts and has offices in North America,
Europe and Asia. Further information on the company is available on the World
Wide Web at http://www.netscout.com.
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. Investors are cautioned that statements in this press release which are
not strictly historical statements, including the plans, objectives and future
financial performance of NetScout, 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
network performance management solutions, the company's ability to achieve and
maintain a high rate of growth, introduction and market acceptance of new
products and product enhancements such as the delivery of nGenius(R) product
platform probes and software solutions and the implementation of the Company's
CDM(TM) Technology strategy, the ability of NetScout to take advantage of
service provider opportunities, competitive pricing pressures, reliance on
sole source suppliers, successful expansion and management of direct and
indirect distribution channels, and dependence on proprietary technology, as
well as risks associated with a continued climate of tight IT spending, and
risks of further slowdowns or downturns in economic conditions generally and
in the market for network performance management solutions specifically. 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, 2002, and its quarterly report on Form 10-Q for the quarter
ended September 30, 2002 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.
NetScout, nGenius, and the NetScout logo are registered trademarks of
NetScout Systems, Inc. ART MIB, Because the network is the business and CDM
Technology are trademarks of NetScout Systems, Inc. NetScout reserves the
right, at its sole discretion, to make changes at any time in its technical
information, specifications, and service and support programs.
The Company's condensed consolidated statements of operations and balance
sheets are attached.
Contacts:
Catherine Taylor
Director of Investor Relations
NetScout Systems, Inc.
978-614-4286
[email protected]
NetScout Systems Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
December 31, March 31,
2002 2002
Assets
Current assets:
Cash and cash equivalents $30,346 $19,332
Marketable securities 24,938 44,849
Accounts receivable, net 10,635 12,932
Inventories 3,140 3,698
Deferred income taxes 1,974 1,293
Prepaids and other current assets 1,964 2,876
Total current assets 72,997 84,980
Fixed assets, net 7,445 8,628
Other intangible assets, net 544 1,429
Goodwill, net 28,839 28,770
Deferred income taxes 8,601 7,617
Long-term marketable securities 15,032 5,084
Other assets -- 790
Total assets $133,458 $137,298
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $1,495 $2,456
Accrued compensation 4,149 5,775
Accrued other 1,964 2,715
Income tax payable 112 542
Deferred revenue 13,749 13,103
Total current liabilities 21,469 24,591
Stockholders' equity:
Common stock 34 34
Additional paid-in capital 108,735 107,529
Deferred compensation (191) (1,063)
Treasury stock (26,366) (25,755)
Retained earnings 29,777 31,962
Total stockholders' equity 111,989 112,707
Total liabilities and
stockholders' equity $133,458 $137,298
NetScout Systems, Inc.
Condensed Consolidated Statements of Operations
(In thousands)
(Unaudited)
Three Months Nine Months
Ended Ended
December 31, December 31,
2002 2001 2002 2001
Revenue:
Product $10,641 $13,879 $31,473 $36,567
Service 6,401 5,372 18,086 15,102
License and royalty 1,113 2,232 4,382 7,712
Total revenue 18,155 21,483 53,941 59,381
Cost of revenue:
Product (including stock-based
compensation of $0, $0, $0
and $1, respectively) 3,363 4,636 10,212 13,422
Service (including stock-based
compensation of $2, $2, $5
and $6, respectively) 1,228 881 3,362 2,668
Total cost of revenue 4,591 5,517 13,574 16,090
Gross margin 13,564 15,966 40,367 43,291
Operating expenses:
Research and development (including
stock-based compensation of
$46, $551, $779 and $1,642,
respectively) 4,050 4,884 12,834 14,480
Sales and marketing (including
stock-based compensation of $16
$26, $54 and $83, respectively) 8,502 9,361 25,289 26,938
General and administrative
(including stock-based
compensation
of $2, $1, $5 and $5, respectively) 1,708 2,113 5,953 5,731
Amortization of other intangible
assets 272 359 816 1,077
Amortization of goodwill -- 2,274 -- 6,824
Total operating expenses 14,532 18,991 44,892 55,050
Loss from operations (968) (3,025) (4,525) (11,759)
Interest income and other expenses,
net 258 373 897 1,559
Loss before benefit from income taxes (710) (2,652) (3,628) (10,200)
Benefit from income taxes (382) (65) (1,443) (530)
Net loss $(328) $(2,587) $(2,185) $(9,670)
Basic and diluted net loss per share $(0.01) $(0.09) $(0.07) $(0.33)
Shares used in computing:
Basic and diluted net loss per
share 29,940 29,478 29,870 29,476
Supplemental information:
Net loss $(328) $(2,587) $(2,185) $(9,670)
Stock-based compensation (as detailed
in expense categories above) 66 580 843 1,737
Amortization of goodwill and other
intangible assets 272 2,633 816 7,901
Pro forma net income (loss) excluding
acquisition and stock-based
compensation costs $10 $626 $(526) $(32)
Pro forma diluted net income (loss)
per share, excluding
acquisition and stock-based
compensation costs $-- $0.02 $(0.02) $--
Shares used in computing pro forma
diluted net income (loss) per share
excluding acquisition and stock-
based compensation costs 30,067 30,026 29,870 29,476
SOURCE NetScout Systems, Inc.