WESTFORD, Mass., Oct. 14 /PRNewswire-FirstCall/ -- NetScout Systems, Inc.
(Nasdaq: NTCT), a leading provider of network performance management
solutions, today announced financial results for its second quarter of fiscal
year 2005.
Revenue for the second quarter of fiscal year 2005, ended September 30,
2004, was $20.5 million, compared to revenue of $20.1 million in the previous
quarter and revenue of $17.5 million in the second quarter of fiscal year
2004. Net profit for the quarter was $1.1 million or $0.03 per diluted share,
compared to a net profit of $297,000, or $0.01 per diluted share, for the
previous quarter and compared to breakeven, or $0.00 per diluted share, in the
second quarter of fiscal year 2004. The second quarter net profit includes an
adjustment of $368,000, or $0.01 per diluted share, from completion of an IRS
tax audit for fiscal years 2000 through 2003.
"In an environment that continues to be challenging, we are pleased that
NetScout has had another strong quarter," said Anil Singhal, President and CEO
of NetScout Systems. "It is indicative of the market acceptance of our
CDM(TM) strategy and products that have been in the market for more than a
year. We are now well positioned to use CDM as a platform to drive future
growth, both by continuing to enhance our existing products and by adding new
products to the nGenius(R) family. In the third quarter, we will be
announcing yet another significant initiative in the ongoing evolution of
CDM."
Financial Highlights for the Second Quarter:
-- Total revenue increased 2% sequentially and increased 17% from the
second quarter of fiscal year 2004. Product revenue increased 6%
sequentially and increased 24% from the second quarter of fiscal year
2004. Service revenue decreased 3% sequentially and increased 9% from
the second quarter of fiscal year 2004. Royalty revenue increased 2%
sequentially and decreased 1% from the second quarter of fiscal year
2004.
-- Gross margin was 76% of total revenue, down 1 point sequentially and
up 1 point compared to the second quarter of fiscal year 2004.
-- Cash flow from operations was positive.
-- Cash and short and long-term marketable securities increased by $1.7
million to $78.2 million in the second quarter and increased by $6
million year-over-year.
-- 31 new customers were added worldwide.
-- 249 customers made repeat purchases.
-- 52 customers placed orders over $100,000.
-- International business comprised approximately 18% of total revenue.
Product and Company Highlights:
-- NetScout announced the market's first solution for optimizing the
performance of applications in wide area networks using Inverse
Multiplexing over ATM (IMA) technology. Delivered via NetScout's new
nGenius T1/E1 IMA Probes and NetScout's nGenius(R) Performance Manager
v2.0, the new solution allows enterprises to effectively monitor,
troubleshoot and report on the performance of applications being
delivered across IMA links, as well as manage the performance of those
links in conjunction with the rest of the network.
-- NetScout joined the Citrix(R) Alliance Partner program as a Premier
member and was a sponsor of the Citrix iForum(TM) 2004.
-- NetScout further expanded its sales channels in Asia by signing a new
partnership agreement with Transition Systems, a distributor of data
communications products to enterprises and government organizations in
Southeast Asia. Under the agreement, Transition Systems will resell
NetScout's nGenius Performance Management Solution through its
extensive network of system integrators and value-added resellers in
Malaysia, Thailand and the Philippines.
-- NetScout hosted its third annual User Forum conference in early
October. The three-day conference, titled "Path to Performance,"
provided a forum for NetScout customers to learn more about future
product and technology direction and to exchange information about new
ways to use nGenius to bring value to their business. Attendance
increased by 50% over the prior year with customers and resellers
coming from North America, Asia and Europe.
Guidance:
For the third quarter of fiscal year 2005, the Company expects revenue to
be in the range of $20.5 million to $21.5 million and net profit per diluted
share to be in the range of $0.01 to $0.02.
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 888-273-9885 for U.S./Canada and 612-332-0637 for
international callers. A replay of the call will be available after 8:00 p.m.
ET on October 14 for approximately two weeks. The number for the replay is
800-475-6701 for U.S./Canada and 320-365-3844 for international callers. The
access code is 750086.
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 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.
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 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, 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, 2004 and its quarterly report on Form 10-Q for the quarter ended
June 30, 2004 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 and the NetScout logo and nGenius are registered trademarks of
NetScout Systems, Inc. CDM and the CDM logo, Universal Response Time, Power
Alarms, Workspaces and MasterCare and the MasterCare logo are trademarks of
NetScout Systems, Inc. NetScout reserves the right, at its sole discretion,
to make changes at any time in its technical information and specifications
and service and support programs.
The Company's condensed consolidated statements of operations and balance
sheets are attached.
NetScout Systems, Inc.
Condensed Consolidated Statements of Operations
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
September 30, September 30,
2004 2003 2004 2003
Revenue:
Product $12,224 $9,878 $23,784 $18,506
Service 7,826 7,192 15,931 13,749
License and royalty 439 445 871 863
Total revenue 20,489 17,515 40,586 33,118
Cost of revenue:
Product(1) 3,901 3,358 7,554 6,139
Service
respectively) 1,077 1,022 2,142 2,066
Total cost of revenue 4,978 4,380 9,696 8,205
Gross margin 15,511 13,135 30,890 24,913
Operating expenses:
Research and development(2) 4,058 3,670 8,377 6,679
Sales and marketing 8,802 8,038 17,585 15,982
General and administrative 1,806 1,550 3,760 3,199
Amortization of other intangible
assets - - - 272
Total operating expenses 14,666 13,258 29,722 26,132
Income (Loss) from operations 845 (123) 1,168 (1,219)
Interest income and other expenses, net 119 160 298 357
Income (loss) before income tax expense
(benefit) 964 37 1,466 (862)
Income tax expense (benefit) (93) 37 112 (310)
Net income (loss) $1,057 $- $1,354 $(552)
Basic net income (loss) per share $0.03 $- $0.04 $(0.02)
Diluted net income (loss) per share $0.03 $- $0.04 $(0.02)
Shares used in computing:
Basic net income (loss) per share 30,533 30,058 30,491 30,046
Diluted net income (loss) per
share 31,288 30,585 31,517 30,046
(1) Cost of product revenue includes amortization of capitalized software
of $166 and $110 for the three months ended September 30, 2004 and
2003, respectively and $331 and $110 for the six months ended
September 30, 2004 and 2004, respectively.
(2) Research and development costs are net of capitalized software
development costs of $258 and $1,325 for the three and six months
ended September 30, 2003.
NetScout Systems, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
September 30, March 31,
2004 2004
Assets
Current assets:
Cash and cash equivalents $37,870 $19,011
Marketable securities 34,416 50,432
Accounts receivable, net 9,653 10,851
Inventories 2,949 3,366
Refundable income taxes 1,411 2,102
Deferred income taxes 1,750 1,667
Prepaids and other current assets 2,706 2,175
Total current assets 90,755 89,604
Fixed assets, net 5,810 5,415
Capitalized software development
costs 552 884
Goodwill, net 28,839 28,839
Deferred income taxes 8,645 8,378
Long-term prepaid expense 39 45
Long-term marketable securities 5,962 6,016
Total assets $140,602 $139,181
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $1,863 $1,984
Accrued compensation 4,995 4,481
Accrued other 2,480 2,140
Income tax payable - 490
Deferred revenue 14,832 15,968
Total current liabilities 24,170 25,063
Long-term liabilities:
Long-term deferred revenue 1,258 1,006
Total liabilities 25,428 26,069
Stockholders' equity:
Common stock 35 34
Additional paid-in capital 111,474 110,683
Accumulated other comprehensive
income (77) 7
Treasury stock (26,490) (26,490)
Retained earnings 30,232 28,878
Total stockholders' equity 115,174 113,112
Total liabilities and
stockholders' equity $140,602 $139,181
Contact:
Catherine Taylor
Director of Investor Relations
NetScout Systems, Inc.
978-614-4286
IR@netscout.com
SOURCE NetScout Systems, Inc.
-0- 10/14/2004
/CONTACT: Catherine Taylor, Director of Investor Relations of NetScout
Systems, Inc., +1-978-614-4286, IR@netscout.com/
/Web site: http://www.netscout.com/
(NTCT)
CO: NetScout Systems, Inc.
ST: Massachusetts
IN: CPR STW NET
SU: ERN CCA MAV
CP-EO
-- NETH034 --
9057 10/14/2004 16:05 EDT http://www.prnewswire.com