WESTFORD, Mass., July 17 /PRNewswire-FirstCall/ --
NetScout Systems, Inc. (Nasdaq: NTCT), a leading provider of network
performance management solutions, today announced financial results for its
first quarter of fiscal year 2003.
Revenue for the first quarter of fiscal 2003 was $17.8 million, a 22%
percent decrease from revenue of $22.9 million in the previous quarter and a
2% decrease from revenue of $18.2 million in the first quarter of fiscal 2002.
Pro forma net loss for the three months ended June 30, 2002 was $163,000 or
($0.01) per pro forma diluted share, versus pro forma net income of $1.4
million or $0.05 per pro forma diluted share, in the previous quarter and
compared to pro forma net loss of $931,000, or ($0.03) per pro forma diluted
share, in the first quarter of fiscal 2002. Pro forma net income excludes
acquisition and stock-based compensation costs. Effective April 1, 2002 the
Company ceased amortization of goodwill in accordance with SFAS No. 142.
Weighted average pro forma basic and diluted shares for the three-month period
ended June 30, 2002 were 29.8 million, compared to weighted average pro forma
diluted shares of 30.3 million in the quarter ended March 31, 2002 and
weighted average pro forma diluted shares of 29.4 million in the quarter ended
June 30, 2001.
On a GAAP basis, the net loss for the quarter was $1.1 million, or ($0.04)
per basic and diluted share, compared to a net loss of $1.7 million, or
($0.06) per basic and diluted share for the previous quarter and compared to a
net loss of $4.1 million or ($0.14) per basic and diluted share for the first
quarter of fiscal 2002.
"In this challenging economic environment we are confident that we will
extend our market leadership position in network performance management. Our
recently announced Common Data Model (CDM(TM)) technology and architecture
will allow our customers to consolidate performance management functions
through our single solution, the nGenius Performance Management System. Our
customers will be able to reduce the number of tools and complexity and
optimize the performance, monitoring and troubleshooting of their networks,"
said Anil Singhal, President and CEO of NetScout Systems. "CDM technology
integrates key management tasks and links them together in a network-wide
context making IT managers' jobs easier and allowing them to make quicker
decisions in managing their networks and related business services. Our
single solution will enable enterprises to improve ROI and reduce the total
cost of ownership of their infrastructures."
Highlights for the Quarter:
* Total revenue decreased 22% sequentially and is slightly below the
first quarter of fiscal year 2002. Product revenue decreased 31%
sequentially, and is slightly below the first quarter of fiscal year
2002. Service revenue decreased 4% sequentially, and increased 22%
over the first quarter of fiscal year 2002.
* Gross margin improved to 76% and increased 2 points sequentially and
increased 6 points over the first quarter of fiscal year 2002.
* Cash flow from operations was positive.
* Cash and short and long-term marketable securities increased by
$404,000 in the first quarter to $69.7 million.
* 29 new customers were added worldwide and 310 customers had repeat
business in the quarter.
* Sales to repeat customers were approximately 90% of orders in the first
quarter.
* 46 large deals valued over $100,000 were received in the first quarter.
* Direct sales represented 47% of total revenue; reseller revenue
represented 53% of total revenue.
* International business comprised approximately 21% of total revenue in
the first quarter.
* Competitive wins totaled over $3 million in the first quarter,
involving approximately 30 deals against other leading network
management vendors.
* A new product was released, nGenius Performance Manager 1.4(TM), which
combines real-time monitoring, historical reporting, capacity planning,
troubleshooting and protocol analysis based on traffic information
collected from probes and LAN switches for voice, web and data traffic.
Future product announcements include the following:
* Future expansion of the nGenius(TM) Performance Management System will
include data collected from a wider range of network devices such as
routers, flow-based switches, and load balancers through partnerships
with infrastructure vendors as recently announced with F5 Networks,
Extreme Networks and Foundry Networks. The nGenius single solution
will also include added functionality from Capacity Planner and
Application Service Level Manager and will introduce new, intelligent
performance alarms and self-management capabilities.
* New probes incorporating reduced size, higher function and speeds such
as a new storage area network probe and probes for ATM OC-12.
Guidance:
NetScout's near term expectations are based on the current climate of
tight enterprise IT spending and the uncertain timing of the impact of
improving general economic conditions. For the second quarter, the Company
expects revenue and pro forma earnings per share to show little change from
the first quarter. The Company expects to be cash neutral in the quarter.
Due to the uncertain economic climate, the Company is not able to give
guidance beyond the second quarter. The Company expects to update guidance in
its second quarter earnings release.
CONFERENCE CALL INSTRUCTIONS:
The Company invites shareholders to listen to its conference call today at
4:30 p.m. EDT, 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 888-273-9885 (U.S.) and 612-332-0923 (International). A replay of the
call will be available after 9:45 p.m. EDT 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 644001.
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 serves the Global 5000 and counts among
its customers Arvin Meritor, Blue Cross and Blue Shield of Massachusetts,
Cable and Wireless, Cisco Systems, China Telecom, Fidelity Investments,
Getronics, Goodyear Tire & Rubber, Nextel Communications, Samsung SDS, Siemens
Health Services Corporation, StarBand Communications, Travelocity.com, Visa
International and Wachovia Bank. NetScout's solutions are offered through its
nGeniusO Performance Management System, an integrated suite 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 network devices. The nGenius System helps
organizations increase their return on infrastructure investments by
optimizing the performance of their network, applications and content.
NetScout is headquartered in Westford, Massachusetts and has approximately 360
employees, with offices in North America, Europe and Asia. Further information
on the company is available on the World Wide Web at http://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, 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
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, 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 of slowdowns or downturns in economic conditions
generally and in the market for 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 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 is a registered trademark, and the NetScout logo, nGenius,
nGenius Performance Manager, nGenius Capacity Planner, nGenius Application
Service Level Manager, nGenius Real-Time Monitor and nGenius Probe are
trademarks of NetScout Systems, Inc.
The Company's condensed consolidated statements of operations and balance
sheets are attached.
NetScout Systems, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
June 30, March 31,
2002 2002
Assets
Current assets:
Cash and cash equivalents $32,754 $19,332
Marketable securities 31,875 44,849
Accounts receivable, net 10,644 12,932
Inventories 3,612 3,698
Deferred income taxes 1,380 1,293
Prepaids and other current assets 1,710 2,876
Total current assets 81,975 84,980
Fixed assets, net 8,381 8,628
Goodwill and other intangible assets,
net 29,927 30,199
Deferred income taxes 8,430 7,617
Long-term marketable securities 5,040 5,084
Other assets 318 790
Total assets $134,071 $137,298
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $1,298 $2,456
Accrued compensation 4,060 5,775
Accrued other 2,634 2,715
Income tax payable 358 542
Deferred revenue 13,344 13,103
Total current liabilities 21,694 24,591
Stockholders' equity:
Common stock 34 34
Additional paid-in capital 108,218 107,529
Deferred compensation (324) (1,063)
Treasury stock (26,367) (25,755)
Retained earnings 30,816 31,962
Total stockholders' equity 112,377 112,707
Total liabilities and
stockholders' equity $134,071 $137,298
NetScout Systems, Inc.
Condensed Consolidated Statements of
Operations
(In thousands)
(Unaudited)
Three Months Ended
June 30,
2002 2001
Revenue:
Product $10,321 $10,425
Service 5,739 4,699
License and royalty 1,789 3,042
Total revenue 17,849 18,166
Cost of revenue:
Product 3,374 4,450
Service (including stock-based
compensation
of $2 and $2, respectively) 974 917
Total cost of revenue 4,348 5,367
Gross margin 13,501 12,799
Operating expenses:
Research and development
(including stock-based
compensation of $687 and $542,
respectively) 4,802 4,613
Sales and marketing (including
stock-based compensation
of $21 and $29, respectively) 8,471 9,090
General and administrative
(including stock-based
compensation of $2 and $2,
respectively) 2,107 1,714
Amortization of goodwill and other
intangible assets 272 2,634
Total operating expenses 15,652 18,051
Loss from operations (2,151) (5,252)
Interest income and other expenses,
net 313 687
Loss before benefit from income taxes (1,838) (4,565)
Benefit from income taxes (691) (427)
Net Loss $(1,147) $(4,138)
Basic and diluted net loss per share $(0.04) $(0.14)
Shares used in computing:
Basic and diluted net loss per
share 29,804 29,407
Supplemental information:
Net loss $(1,147) $(4,138)
Stock-based compensation (as detailed
in expense categories above) 712 575
Amortization of goodwill and other
intangible assets 272 2,634
Pro forma net loss excluding
acquisition and stock-based
compensation costs $(163) $(929)
Pro forma basic and diluted net loss
per share, excluding acquisition $(0.01) $(0.03)
and stock-based compensation
costs
Shares used in computing pro forma
basic and diluted net loss per
share excluding acquisition and
stock-based compensation costs 29,804 29,407
Contacts:
Catherine Taylor
Director of Investor Relations
NetScout Systems, Inc.
978-614-4286
IR@netscout.com
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SOURCE NetScout Systems, Inc.
Web site: http: //www.netscout.com
CONTACT: Catherine Taylor, Director of Investor Relations for NetScout Systems, Inc., +1-978-614-4286, IR@netscout.com