WESTFORD, Mass.--(BUSINESS WIRE)--May 3, 2006--NetScout Systems,
Inc. (NASDAQ: NTCT), a leading provider of network performance
management solutions, today announced financial results for its fourth
quarter and fiscal year ended March 31, 2006.
Total revenue for the fourth quarter of fiscal year 2006 was $25.8
million, a 14% increase year-over-year and a 4% increase sequentially.
Within total revenue, product revenue was $17.2 million, which grew
20% year-over-year and 6% sequentially.
Net income for the fourth quarter was $1.8 million, or $0.06 per
diluted share, compared to net income of $610,000, or $0.02 per
diluted share, in the fourth quarter of fiscal year 2005 and compared
to net income of $1.9 million, or $0.06 per diluted share, for the
previous quarter. Operating income for the quarter was $2.0 million,
which includes stock-based compensation expense of $455,000 and
amortization of intangible assets of $144,000. Operating margin on a
GAAP basis for the fourth quarter was 8%.
For the fiscal year ended March 31, 2006, NetScout reported total
revenue of $97.9 million, an increase of 15% over total revenue of
$85.2 million for the fiscal year ended March 31, 2005. Net income for
the fiscal year ended March 31, 2006 was $5.8 million, or $0.18 per
diluted share, compared to a net income of $2.9 million, or $0.09 per
diluted share, for the prior fiscal year.
Anil Singhal, President and CEO of NetScout Systems, stated "We
are extremely pleased with the Company's performance in the fiscal
fourth quarter, which was highlighted by revenue and profitability at
or above the high-end of our expectations. Moreover, from a full year
perspective, we achieved our goal of 15% revenue growth while
delivering a 100% increase in earnings per share versus last year. We
are optimistic that strong market demand and our clear product
leadership position will enable us to maintain our top line momentum
while continuing to expand operating margins, leading to bottom line
growth in the 40% to 60% range in fiscal 2007." Singhal added, "We are
continuing to make investments for our long-term financial success
demonstrated by the announcement today of NetScout's next generation
Application Fabric Performance Management (AFPM) architecture and our
first AFPM product, nGenius Analytics. This will extend our
performance management solution to embrace the important emerging
multi-tier, composite and Service Oriented Application architectures."
Guidance:
For the first quarter of fiscal year 2007, the Company expects
total revenue to be in the range of $25.5 million to $26.5 million and
net income per diluted share to be in the range of $0.05 to $0.06. The
Company expects its quarterly GAAP operating margin to reach 13% by
the fourth quarter of fiscal 2007 and its annual GAAP net income per
diluted share to grow by 40% to 60%.
Current News:
For the second consecutive year, NetScout received the NorthFace
ScoreBoard(R) award for excellence in customer satisfaction from the
Omega Management Group Corp. NetScout earned the award based on
best-in-class customer satisfaction ratings from its user base
throughout 2005.
Fiscal Year 2006 in Review:
- NetScout acquired the business and substantially all of the
assets of privately-held Quantiva, Inc., a provider of
automated analytics solutions for application performance
management. The purchase price totaled approximately $9.5
million in cash.
- NetScout achieved certification of its nGenius(R) Performance
Management System's integration with HP OpenView Network Node
Manager and HP OpenView Operations. Accompanying the
certification, NetScout is a Platinum Business Partner in the
HP Enterprise Management Alliance Program.
- Customer implementations of the nGenius Performance Management
System included: ExxonMobil, Aetna, Enterprise Rent-A-Car,
Ericsson, Telecom Italia, Telekom Austria, Virgin Mobile,
BellSouth, U.S. Securities and Exchange Commission, and
McAfee.
- NetScout released a number of new products including its
important new technology initiative called High Definition
Performance Management (HDPM):
- nGenius(R) Performance Manager 3.0 and nGenius(R) Probe
firmware - incorporating HDPM technology, a technology that
significantly improves performance information detail and
granularity, extending the functionality of the nGenius
Performance Management System with increased visibility into
the activity and usage of web services and other complex and
multi-layered applications, including more accurate metrics
for application and network traffic data at shorter intervals
and enhanced reporting of user and application utilization.
- nGenius(R) Flow Recorders - Enterprise and lower-priced
Workgroup models offering more powerful performance
troubleshooting features, including expanded expert analysis
and ease-of-use functionality.
- nGenius(R) Performance Manager Workgroup - a lower-priced
version of its flagship nGenius Performance Manager software
providing fully integrated application and network performance
management capabilities scaled down to a smaller number of
managed elements.
- nGenius(R) Performance Manager Appliance for NetFlow -
highly-scalable, cost-effective appliance dedicated to
aggregating and analyzing data from large deployments of
Cisco's NetFlow routers and switches.
- nGenius(R) Performance Manager Standby Server - addresses
large enterprises and government agencies' regulated
requirements for business continuity, including disaster
recovery.
- nGenius(R) OC-48 Packet-over-SONET Probe - for the performance
management of high-speed optical core networks, targeted at
wireless carriers needs for visibility into converged IP-based
voice, data, and video services.
- nGenius(R) 10 Gigabit Ethernet Probes - for the performance
management of high speed network backbones, targeted at
enterprise and government organizations that are upgrading
their network infrastructures.
CONFERENCE CALL INSTRUCTIONS:
The Company invites shareholders to listen to its conference call
today at 4:30 p.m. ET, which will be webcast live through the
Company's website at http://www.netscout.com/investors. Alternatively,
people can listen to the call by dialing 800-374-0581 for U.S./Canada
and 706-634-5113 for international callers and using conference ID:
8108898. A replay of the call will be available after 5:30 p.m. ET on
May 3rd for approximately two weeks. The number for the replay is
800-642-1687 for U.S./Canada and 706-645-9291 for international
callers. The conference ID is: 8108898.
About NetScout Systems, Inc.
NetScout Systems, Inc. (NASDAQ: NTCT) is a market leader and
pioneer of integrated network performance management products that
unify performance across the enterprise. NetScout's nGenius(R)
Performance Management System is helping more than 3,000 leading
companies increase their return on infrastructure investments by
optimizing the performance of networks and applications according to
business priorities. NetScout is headquartered in Westford,
Massachusetts and has offices worldwide. Further information is
available 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 and other federal securities laws. 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 relationships with strategic 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 product platform
probes and software solutions, High Definition Performance Management
functionality, the analytic solutions acquired from Quantiva and the
implementation of the Company's CDM Technology strategy, the ability
of the Company 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, 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, 2005
and its quarterly report on Form 10-Q for the quarter ended December
31, 2005 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.
(C)2006 NetScout Systems, Inc. All rights reserved. NetScout and
the NetScout logo, nGenius, and Quantiva are registered trademarks of
NetScout Systems, Inc. Other brands, product names and trademarks are
property of their respective owners.
NetScout Systems, Inc.
Condensed Consolidated Statements of Operations
(In thousands)
(Unaudited)
Three Months Twelve Months
Ended Ended
March 31, March 31,
----------------- -----------------
2006 2005 2006 2005
-------- -------- -------- --------
Revenue:
Product $17,202 $14,337 $63,591 $51,352
Service 8,612 7,839 34,101 32,124
License and royalty - 452 184 1,738
-------- -------- -------- --------
Total revenue 25,814 22,628 97,876 85,214
-------- -------- -------- --------
Cost of revenue:
Product (including
amortization expense
related to acquired
software of $105, $0,
$401, and $0, respectively
and stock-based
compensation of $11, $0,
$11, and $0, respectively) 4,959 4,628 18,639 16,251
Service (including stock-
based compensation of $14,
$0, $14, and $0,
respectively) 1,319 1,157 4,928 4,384
-------- -------- -------- --------
Total cost of revenue 6,278 5,785 23,567 20,635
-------- -------- -------- --------
Gross margin 19,536 16,843 74,309 64,579
-------- -------- -------- --------
Operating expenses:
Research and development
(including stock-based
compensation of $196, $0,
$411, and $0, respectively) 4,508 4,232 18,141 16,789
Sales and marketing
(including stock-based
compensation of $160, $0,
$228, and $0, respectively) 10,859 9,773 40,467 36,889
General and administrative
(including stock-based
compensation of $74, $0,
$131, and $0, respectively) 2,090 2,306 8,873 8,135
Amortization of
other intangible
assets 39 - 149 -
In-process research
and development - - 143 -
-------- -------- -------- --------
Total operating expenses 17,496 16,311 67,773 61,813
-------- -------- -------- --------
Income from operations 2,040 532 6,536 2,766
Interest income and
other expenses, net 836 402 2,627 1,053
-------- -------- -------- --------
Income before income
tax expense 2,876 934 9,163 3,819
Income tax expense 1,072 324 3,366 949
-------- -------- -------- --------
Net income $1,804 $610 $5,797 $2,870
======== ======== ======== ========
Basic net income per
share $0.06 $0.02 $0.19 $0.09
Diluted net income per
share $0.06 $0.02 $0.18 $0.09
Shares used in
computing:
Basic net income
per share 31,250 30,686 31,041 30,572
Diluted net income
per share 32,417 31,304 31,885 31,521
NetScout Systems, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
March 31, March 31,
2006 2005
----------- ---------
Assets
Current assets:
Cash and cash equivalents $61,676 $57,070
Marketable securities 19,810 26,793
Accounts receivable, net 16,765 11,886
Inventories 2,816 3,114
Refundable income taxes 985 1,399
Deferred income taxes 2,896 2,356
Restricted Cash 1,339 -
Prepaids and other current assets 3,119 3,003
----------- ---------
Total current assets 109,406 105,621
Fixed assets, net 7,577 6,011
Capitalized software development costs 312 221
Other intangible assets, net 1,015 -
Goodwill 36,561 28,839
Deferred income taxes 4,889 7,586
Other assets 16 9
Long-term marketable securities 5,979 -
----------- ---------
Total assets $165,755 $148,287
=========== =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $2,727 $2,520
Accrued compensation 8,635 6,385
Accrued other 2,325 2,058
Deferred acquisition payment - Quantiva 1,339 -
Deferred revenue 21,382 17,680
----------- ---------
Total current liabilities 36,408 28,643
Accrued compensation 72 -
Accrued other 1,085 918
Long-term deferred revenue 1,599 1,277
----------- ---------
Total liabilities 39,164 30,838
----------- ---------
Stockholders' equity:
Common stock 35 35
Additional paid-in capital 120,170 112,286
Accumulated other comprehensive income (122) (130)
Deferred compensation (4,547) -
Treasury stock (26,490) (26,490)
Retained earnings 37,545 31,748
----------- ---------
Total stockholders' equity 126,591 117,449
----------- ---------
Total liabilities and stockholders'
equity $165,755 $148,287
=========== =========
CONTACT: NetScout Systems, Inc.
Catherine Taylor, 978-614-4286
Director of Investor Relations
IR@netscout.com
SOURCE: NetScout Systems, Inc.