WESTFORD, Mass., April 30 /PRNewswire-FirstCall/ --
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, 2003.
Revenue for the fourth quarter of fiscal year 2003 was $17.7 million,
compared to revenue of $18.2 million in the previous quarter and revenue of
$22.9 million in the fourth quarter of fiscal year 2002. The net loss for the
quarter was $354,000, or ($0.01) per basic and diluted share, compared to a
net loss of $328,000, or ($0.01) per basic and diluted share, for the previous
quarter and compared to a net loss of $1.7 million, or ($0.06) per basic and
diluted share, in the fourth quarter of fiscal year 2002.
For the fiscal year ended March 31, 2003, NetScout reported revenue of
$71.7 million, a 13 percent decrease from $82.3 million for the fiscal year
ended March 31, 2002. The net loss for the fiscal year ended March 31, 2003
was $2.5 million, or ($0.08) per basic and diluted share, compared to a net
loss of $11.4 million, or ($0.39) per basic and diluted share, for the prior
fiscal year.
Pro forma net loss for the fourth quarter of fiscal year 2003 was $27,000,
or $0.00 per pro forma basic and diluted share, versus pro forma net income of
$10,000, or $0.00 per pro forma diluted share, in the previous quarter and
compared to pro forma net income of $1.4 million or $0.05 per pro forma
diluted share in the fourth quarter of fiscal year 2002. Pro forma net
income and net loss excludes acquisition and stock-based compensation costs.
Pro forma net loss for the fiscal year was $553,000, or ($0.02) per pro
forma basic and diluted share, compared to pro forma net income of $1.4
million, or $0.05 per pro forma diluted share, in fiscal 2002.
"Given the continuing weak economy and tight enterprise IT spending, we
achieved good results for the quarter," said Anil Singhal, President and CEO
of NetScout Systems. "With the uncertainty of improving market conditions, we
continue to maintain tight expense controls while we sustain our product
development and sales momentum. We are on course in the deployment of our
CDM(TM) strategy through innovative new products to be released during fiscal
year 2004. We are pleased with the early success of our nGenius(R)
Performance Manager product that is being adopted by customers as their core
network management solution for superior data, optimal network performance and
high ROI."
Financial Highlights for the Fourth Quarter:
* Total revenue decreased 2% sequentially and decreased 23% from the
fourth quarter of fiscal year 2002. Product revenue decreased 4%
sequentially, and was down 32% from the fourth quarter of fiscal year
2002. Service revenue increased 1% sequentially, and increased 7% from
the fourth quarter of fiscal year 2002. Royalty revenue decreased 5%
sequentially and was down 44% from the fourth quarter of fiscal year
2002.
* Gross margin was 76% of total revenue, up 1 point sequentially and up 2
points compared to the fourth quarter of fiscal year 2002.
* Cash flow from operations was positive.
* Cash and short and long-term marketable securities increased by $949,000
in the fourth quarter to $71.3 million.
* 43 new customers were added worldwide in the fourth quarter.
* 320 customers made repeat purchases.
* 46 orders over $100,000 were received.
* Direct sales represented 41% of total revenue; reseller revenue
represented 59% of total revenue.
* International business comprised approximately 25% of total revenue in
the fourth quarter.
Product Highlights for the Fourth Quarter:
* NetScout released a new family of nGenius(R) WAN/Frame Relay Probes that
will allow enterprises to extend management capabilities to T3/E3
circuits in their corporate data centers and to T1/E1 circuits at remote
sites. The probes can optionally be configured with either Fast
Ethernet LAN monitoring for integrated LAN and WAN performance
management of remote facilities or an nGenius(R) Network Security
Adaptor to extend the security perimeter of the corporate network.
* A new nGenius(R) Gigabit Ethernet over Copper Probe was released during
the quarter for enterprises that have upgraded their network from Fast
Ethernet to Gigabit Ethernet while leveraging their existing twisted
pair cabling.
Fiscal Year 2003 in Review:
* A major NetScout achievement in fiscal 2003 was the announcement and
initial delivery of its new Common Data Model (CDM(TM)) technology and
architecture, which will allow customers to consolidate performance
management functions through its single solution, the nGenius(R)
Performance Manager that advances the state of network management by
reducing the number of tools and the complexity required to optimize the
monitoring, troubleshooting, and performance of networks. nGenius
Performance Manager utilizes a simplified architecture that allows
enterprises to address performance across the enterprise with superior
information and greater ease. The nGenius Performance Manager provides
capacity planning, application monitoring, network monitoring,
troubleshooting, performance fault management, and service level
management from a single, integrated solution.
* NetScout introduced an Alliance Program targeted at both network
infrastructure vendors and network management application providers.
The alliances will leverage the value of the nGenius Performance
Management solution by incorporating data from a wider range of network
devices and by providing nGenius information to complementary network
management applications.
* New probes and probe add-ons were released during the year. The
additions and enhancements focused on incorporating a reduced size
chassis, broader functions and higher speeds:
* New probe product lines with reduced chassis size from 3U to 1U
for conserving rack space.
* nGenius(R) Gigabit Ethernet Aggregation Probe and the nGenius
Eight-Port Gigabit Ethernet Probe for the fast growing gigabit
Ethernet market.
* nGenius(R) ATM OC-3/OC-12 probe for high-speed optical ATM
environments.
* nGenius(R) Fibre Channel probe for expanding nGenius Performance
Manager's LAN and WAN support to include storage area networks.
* nGenius(R) Network Security Adaptor for lending focus,
flexibility, and forensics to network-based intrusion detection
system deployments.
* nGenius(R) Gigabit Ethernet over Copper Probe.
* nGenius(R) WAN/Frame Relay Probes.
* NetScout held its first User Conference that was attended by
representatives from over 40 domestic and international companies.
* This year NetScout added 51 partners to its channel partner program with
an emphasis on international alliances, including Digital China,
Dimension Data (UK and Germany), and SCS Networks (Singapore).
Guidance:
NetScout's near term expectations are based on the continued climate of
tight enterprise IT spending and the uncertain timing of general economic
improvement. For the first quarter of fiscal 2004, the Company expects
revenue to show little change from the fourth quarter of fiscal 2003, GAAP
loss per share to be in the range of ($0.02) to ($0.01) and pro forma loss per
share to be in the range of ($0.01) to $0.00. The difference between GAAP and
pro forma earnings per share is stock-based compensation of $49,000 and
amortization of other intangible assets of $272,000. The Company expects 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. ET, 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 612-332-0228 (International). A replay of the
call will be available after 8:00 p.m. ET this evening for approximately two
weeks. The numbers for the replay are 800-475-6701 (U.S.) and 320-365-3844
(International). The access code is 678639.
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 December 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, nGenius, and the NetScout logo are registered trademarks of
NetScout Systems, Inc., Because the network is the business and Common Data
Model (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
IR@netscout.com
NetScout Systems, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
March 31, March 31,
2003 2002
Assets
Current assets:
Cash and cash equivalents $43,823 $19,332
Marketable securities 27,442 44,849
Accounts receivable, net 11,906 12,932
Inventories 2,982 3,698
Refundable income taxes 1,226 -
Deferred income taxes 1,782 1,293
Prepaids and other current assets 2,088 2,876
Total current assets 91,249 84,980
Fixed assets, net 6,912 8,628
Other intangible assets, net 272 1,429
Goodwill, net 28,839 28,770
Deferred income taxes 7,651 7,617
Long-term marketable securities - 5,084
Other assets - 790
Total assets $134,923 $137,298
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $1,403 $2,456
Accrued compensation 3,658 5,775
Accrued other 1,819 2,715
Income tax payable - 542
Deferred revenue 16,242 13,103
Total current liabilities 23,122 24,591
Stockholders' equity:
Common stock 34 34
Additional paid-in capital 108,835 107,529
Other comprehensive income 7 -
Deferred compensation (132) (1,063)
Treasury stock (26,366) (25,755)
Retained earnings 29,423 31,962
Total stockholders' equity 111,801 112,707
Total liabilities and
stockholders' equity $134,923 $137,298
NetScout Systems Inc.
Condensed Consolidated
Statements of Operations
(In thousands)
(Unaudited)
Three Months Ended Year Ended
March 31, March 31,
2003 2002 2003 2002
Revenue:
Product $10,223 $15,016 $41,696 $51,583
Service 6,441 6,000 24,527 21,102
License and royalty 1,053 1,887 5,435 9,599
Total revenue 17,717 22,903 71,658 82,284
Cost of revenue:
Product (including stock-based
compensation of $0, $0, $0
and $1, respectively) 3,070 5,043 13,282 18,465
Service (including stock-based
compensation of $1, $2, $6
and $8, respectively) 1,203 960 4,565 3,628
Total cost of revenue 4,273 6,003 17,847 22,093
Gross margin 13,444 16,900 53,811 60,191
Operating expenses:
Research and development
(including stock-based
compensation of
$42, $551, $821 and $2,193,
respectively) 4,266 5,361 17,100 19,841
Sales and marketing (including
stock-based compensation of $11
$26, $65 and $109,
respectively) 8,091 9,079 33,380 36,017
General and administrative
(including stock-based
compensation
of $1, $2, $6 and $7,
respectively) 1,494 2,376 7,447 8,107
Amortization of goodwill - 2,202 - 9,026
Amortization of other intangible
assets 272 380 1,088 1,457
Total operating expenses 14,123 19,398 59,015 74,448
Loss from operations (679) (2,498) (5,204) (14,257)
Interest income and other expenses,
net 248 360 1,145 1,919
Loss before income tax benefit (431) (2,138) (4,059) (12,338)
Income tax benefit (77) (397) (1,520) (927)
Net loss $(354) $(1,741) $(2,539) $(11,411)
Basic and diluted net
loss per share $(0.01) $(0.06) $(0.08) $(0.39)
Shares used in computing:
Basic and diluted net loss per
share 29,981 29,606 29,897 29,533
Calculation of non-GAAP financial
measures:
Net loss $(354) $(1,741) $(2,539) $(11,411)
Stock-based compensation (as detailed
in expense categories above) 55 581 898 2,318
Amortization of goodwill and other
intangible assets 272 2,582 1,088 10,483
Pro forma net income (loss) excluding
acquisition and stock-based
compensation costs $(27) $1,422 $(553) $1,390
Pro forma diluted net income (loss)
per share, excluding
acquisition and stock-based
compensation costs $- $0.05 $(0.02) $0.05
Shares used in computing pro forma
diluted net income (loss) per share,
excluding acquisition and stock-
based compensation costs 29,981 30,341 29,897 30,051
SOURCE NetScout Systems, Inc.