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NetScout Systems Reports Fourth Quarter & Year-End Financial Results For Fiscal 2002

April 24, 2002

Pro Forma Net Income of $1.4 Million and Pro Forma EPS of $0.05 per Share Delivers 7% Sequential Revenue Growth and 8% Product Sales Increase

WESTFORD, Mass., April 24 -- 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, 2002.

Revenue for the fourth quarter of fiscal 2002 was $22.9 million, a 7% increase over revenue of $21.5 million in the previous quarter. Pro forma net income for the three months ended March 31, 2002 was $1.4 million, or $0.05 per pro forma diluted share, versus pro forma net income of $627,000 or $0.02 per pro forma diluted share, in the previous quarter. Excluding a tax benefit of $397,000, earnings for the quarter would have been $0.03 per pro forma diluted share. Pro forma net income excludes non-cash amortization of goodwill and other intangible assets and stock-based compensation. Weighted average pro forma diluted shares for the three-month period ended March 31, 2002 were 30.3 million, compared to weighted average pro forma diluted shares of 30.0 million in the quarter ended December 31, 2001.

On a GAAP basis, the net loss for the quarter was $1.7 million, or ($0.06) per basic and diluted share, compared to a net loss of $2.6 million, or ($0.09) per basic and diluted share for the previous quarter.

For the year ended March 31, 2002, NetScout reported revenue of $82.3 million, a 24 percent decrease from $108.0 million for the year ended March 31, 2001. Pro forma net income for the year ended March 31, 2002 was $1.4 million, or $0.05 per pro forma diluted share, compared to pro forma net income of $13.7 million, or $0.46 per pro forma diluted share, for the prior year. Weighted average pro forma diluted shares for the year ended March 31, 2002 were 30.1 million, compared to 29.7 million for the year ended March 31, 2001.

On a GAAP basis, the net loss for the year was $11.4 million, or ($0.39) per basic and diluted share, compared to net income of $3.7 million, or $0.12 per diluted share, in fiscal 2001.

"We are pleased with this quarter's results. Once again, our revenue and pro forma profitability grew sequentially, driven by strong product revenue indicating broad market acceptance of our solution," said Anil Singhal, President and CEO of NetScout Systems. "We are winning competitive bids in an environment where IT budget dollars are constrained. Our customers recognize that our nGenius(TM) suite of products offer a complete performance management solution with a strong ROI value that helps them optimize the performance of their networks, conserve network capacity and reduce the impact of lost business due to poor network performance. We are building for the future, and looking forward we will be rolling out our strategic growth plan that will include a number of new product launches, further extending our leadership in network performance management."

    Financial Highlights for the Fourth Quarter and Fiscal Year 2002:
    * Total revenue grew 7% sequentially, and grew 7% over fourth quarter FY
      2001.  Product revenue grew 8% sequentially, and is up 15% over fourth
      quarter FY 2001.  Service revenue grew 12% sequentially, and is up 17%
      over fourth quarter FY 2001.
    * Gross margin remained at 74% sequentially and is up 1% over fourth
      quarter FY 2001.
    * Pro forma operating margin was 3% of revenues in the fourth quarter.
    * Cash and all marketable securities increased by $6.5 million in the
      fourth quarter to $69.3 million.
    * 40 new customers worldwide in the fourth quarter and 180 for the year.
    * Sales to repeat customers were approximately 90% of revenue in the
      fourth quarter.
    * 50 large deals valued over $100,000 in the fourth quarter.
    * Direct sales represented 46% of total revenue; reseller revenue
      represented 54% of total revenue, including Cisco-channeled sales, which
      accounted for 14% of total revenue in the fourth quarter.
    * Added 27 new channel partners for the year, with emphasis on building
      international presence.
    * International business comprised approximately 19% of total revenue in
      the fourth quarter.
    * Competitive wins totaled over $4 million in the fourth quarter,
      involving approximately 30 deals against other leading network
      management vendors.

Fiscal Year 2002 in Review:

For Fiscal 2002, the Company focused on enhancing its nGenius product suite by adding powerful functions, improved performance and innovative ease- of-use, including the monitoring of Voice-over-IP traffic and Packet over SONET topologies.

    Highlights included:
    * Launched nGenius Real Time Monitor(TM) 1.3 with faster retrieval of
      traffic data and smarter data reduction.
    * Launched nGenius Capacity Planner(TM) 3.0 and nGenius Application
      Service Level Manager(TM) 3.0  with improved, easy-to-read customized
      reporting including options for web-based distribution.
    * Expanded partnership with OpNet Technologies.
    * Delivered integration of nGenius Real Time Monitor 1.3 with Hewlett
      Packard's OpenView.
    * Cisco shipped nGenius Real Time Monitor 1.3 as part of their
      CiscoWorks2000.
    * Broadened product line with additional probes for growing gigabit and
      high-speed markets.

Outlook:

Commenting on NetScout's future outlook, Singhal said, "Our engineering team is focused on keeping us at the forefront of technological change. We have growth plans in place and a commitment to deliver to our customers a robust network management platform that will provide for converged network management data from many data sources allowing our customers to further consolidate a number of network tools. In the coming months we will make an announcement which will begin to unfold this broad strategy."

    Future product announcements include the following:
    * A new product release called nGenius Performance Manager(TM) 1.4,
      implementing advanced architecture providing for converged network
      management data from many data sources such as probes, routers, switches
      and agents that will integrate that data into real time, historical, and
      projected trend information.  This product is currently in beta test
      with enterprise and service providers and will begin shipment in the
      first quarter of fiscal 2003.
    * New probes incorporating reduced size, higher function and speeds such
      as OC-12 for ATM and gigabit LAN probes.

Guidance:

Consistent with NetScout's current business model, the Company maintains its longer-term financial objectives as follows: Gross Margins between 72% and 75%, R&D operating expense to revenue ratios of 12% to 14%, Sales and Marketing operating expense to revenue ratios of 33% to 35%, G&A operating expense to revenue ratios of 5% to 6%, and Operating Income margin target between 18% and 20%.

The Company is adjusting its guidance format for fiscal 2003. The Company expects to continue to increase investments in sales, support and R&D this year, to strengthen its competitive position and to be poised to accelerate growth when IT spending picks up. The Company expects Q1 revenue of $23 to $24 million dollars and pro forma EPS of $0.03 to $0.04. Beyond Q1 the Company expects revenue growth to be within the former guidance range of 5 to 10% sequentially. This will lead to modest pro forma EPS growth. Guidance for Q2 is revenue of $24 to $25 million dollars and pro forma EPS of $0.04 to $0.05. Q3 revenue is expected to be in the range of $25 to $27 million dollars and pro forma EPS of $0.05 to $0.07 cents. Q4 revenue is expected to be in the range of $27 to $30 million dollars and pro forma EPS of $0.06 to $0.09. For the full fiscal year, the Company expects revenue to be in the range of $100 to $106 million dollars and pro forma EPS of $0.18 to $0.25 cents.

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. Please log onto the website 15 minutes prior to the broadcast. Alternatively, people can listen to the call by dialing 888-273- 9889 for U.S./Canada and 612-332-0632 for international callers. A replay of the call will be available after 9:45 p.m. EDT this evening for approximately one week. The number for the replay is 800-475-6701 for U.S./Canada, and 320- 365-3844 for international callers. The access code is 635079.

About NetScout Systems

NetScout Systems, Inc. (Nasdaq: NTCT) is a market leader and pioneer of integrated infrastructure performance management solutions for leading companies and service providers worldwide. NetScout serves a major portion of the Fortune 500 and counts among its customers AmericanGreetings.com, ArvinMeritor, Blue Cross and Blue Shield of Massachusetts, Cable and Wireless, Cisco Systems, China Telecom, Fidelity Investments, Getronics, Goodyear Tire & Rubber, Hold Brothers, MBNA, Nextel Communications, Northwest Airlines, Optimus Telecommunications, Samsung SDS, Siemens Health Services Corporation, Travelocity.com, and Wachovia Bank. NetScout's solutions are offered through its nGenius(TM) Performance Management System, an integrated solutions-based suite of advanced monitoring and reporting applications that draw on the rich performance data generated by NetScout's real-time, application-aware probe suite, 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 infrastructure 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, 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 infrastructure 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, 2001, and its quarterly report on Form 10-Q for the quarter ended December 31, 2001, 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 Application Service Level Manager, nGenius Real-Time Monitor and nGenius Capacity Planner and nGenius Performance Manager 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)

                                                      March 31,      March 31,
                                                        2002           2001

    Assets
    Current assets:
       Cash and cash equivalents                       $19,332        $56,372
       Marketable securities                            44,849          5,010
       Accounts receivable, net                         12,932         11,753
       Inventories                                       3,698          8,653
       Refundable income taxes                             -            2,412
       Deferred income taxes                             1,293          1,374
       Prepaids and other current assets                 2,876          3,126

          Total current assets                          84,980         88,700

    Fixed assets, net                                    8,628          6,937
    Goodwill and other intangible assets, net           30,199         41,549
    Deferred income taxes                                7,617          4,894
    Long-term marketable securities                      5,084            -
    Other assets                                           790            -

          Total assets                                $137,298       $142,080


    Liabilities and Stockholders' Equity
    Current liabilities:
       Accounts payable                                 $2,456         $4,220
       Accrued compensation                              5,775          5,013
       Accrued other                                     2,715          1,749
       Income tax payable                                  542            -
       Deferred revenue                                 13,103         10,053

        Total current liabilities                       24,591         21,035

    Stockholders' equity:
       Common stock                                         34             33
       Additional paid-in capital                      107,529        106,354
       Deferred compensation                            (1,063)        (3,409)
       Treasury stock                                  (25,755)       (25,306)
       Retained earnings                                31,962         43,373

        Total stockholders' equity                     112,707        121,045

           Total liabilities and
            stockholders' equity                      $137,298       $142,080


                            NetScout Systems, Inc.
               Condensed Consolidated Statements of Operations
                   (In thousands, except per share amounts)
                                 (Unaudited)

                                       Three Months Ended  Twelve Months Ended
                                              March 31,          March 31,
                                            2002     2001      2002     2001
    Revenue:
       Product                            $15,016  $13,058   $51,583  $75,673
       Service                              6,000    5,109    21,102   18,506
       License and royalty                  1,887    3,323     9,599   13,772
          Total revenue                    22,903   21,490    82,284  107,951

    Cost of revenue:
         Product (including stock-based
          compensation of $0, $0, $1
          and $1, respectively)             5,043    4,734    18,465   25,737
         Service (including stock-based
          compensation of $2, $2, $8
          and $9, respectively)               960    1,036     3,628    3,453
           Total cost of revenue            6,003    5,770    22,093   29,190

    Gross margin                           16,900   15,720    60,191   78,761

    Operating expenses:
       Research and development
        (including stock-based
        compensation of $551, $533,
        $2,193 and $1,577, respectively)    5,361    4,388    19,841   15,424
       Sales and marketing (including
        stock-based compensation of $26,
        $57, $109 and $236, respectively)   9,079   10,211    36,017   39,985
       General and administrative
        (including stock-based
        compensation of $2, $2, $7 and
        $11, respectively)                  2,376    1,881     8,107    8,382
       Amortization of goodwill and other
        intangible assets                   2,582    2,609    10,483    7,892
       In-process research and
        development                           -        -         -        268
           Total operating expenses        19,398   19,089    74,448   71,951

    Income (loss) from operations          (2,498)  (3,369)  (14,257)   6,810
    Interest income and other expenses,
     net                                      360      851     1,919    3,923
    Income (loss) before provision for
     (benefit from) income taxes           (2,138)  (2,518)  (12,338)  10,733
    Provision for (benefit from) income
     taxes                                   (397)     (11)     (927)   7,027
    Net income (loss)                     $(1,741) $(2,507) $(11,411)  $3,706

    Basic net income (loss) per share      $(0.06)  $(0.09)   $(0.39)   $0.13
    Diluted net income (loss) per share    $(0.06)  $(0.09)   $(0.39)   $0.12
    Shares used in computing:
         Basic net income (loss) per
          share                            29,606   29,282    29,533   28,487
         Diluted net income (loss) per
          share                            29,606   29,282    29,533   29,726

    Supplemental information:
    Net income (loss)                     $(1,741) $(2,507) $(11,411)  $3,706
    Tax adjustment (1)                        -        (23)      -        -
    Stock-based compensation (as detailed
     in expense categories above)             581      594     2,318    1,834
    Amortization of goodwill and other
     intangible assets                      2,582    2,609    10,483    7,892
    In-process research and development       -        -         -        268
    Pro forma net income excluding
     acquisition and stock-based
     compensation costs                    $1,422     $673    $1,390  $13,700

    Pro forma diluted net income per
     share, excluding acquisition and       $0.05    $0.02     $0.05    $0.46
     stock-based compensation costs

    Shares used in computing pro forma
     diluted net income per share
     excluding acquisition and stock-based
     compensation costs                    30,341   29,961    30,051   29,726

    (1) Tax adjustment for the three months ended March 31, 2001, which was in
    the year of the NextPoint acquisition, assumes an effective tax rate
    of 35% which represents the effective tax rate before factoring in timing
    issues due to non-deductible costs related to the acquisition of NextPoint
    and stock-based compensation.

     Contacts:

     Catherine Taylor
     Director of Investor Relations
     NetScout Systems, Inc.
     978-614-4286
     IR@netscout.com

SOURCE NetScout Systems, Inc.<>

Web site: http://www.netscout.com

CONTACT: Catherine Taylor, Director of Investor Relations of
NetScout Systems, Inc., +1-978-614-4286, or IR@netscout.com

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