WESTFORD, Mass., Jan. 15 /PRNewswire-FirstCall/ -- NetScout Systems, Inc.
(Nasdaq: NTCT), a leading provider of network performance management
solutions, today announced financial results for its third quarter of fiscal
year 2004.
Revenue for the third quarter of fiscal year 2004 ended December 31, 2003
was $18.9 million, compared to revenue of $17.5 million in the previous
quarter and revenue of $18.2 million in the third quarter of fiscal year 2003.
Net income for the quarter was $184,000, or $0.01 per diluted share, compared
to breakeven, or $0.00 per diluted share, for the previous quarter and
compared to a net loss of ($328,000), or ($0.01) per basic and diluted share,
in the third quarter of fiscal year 2003.
"We are encouraged with this quarter's results. Our revenue,
profitability and cash increased sequentially and we exceeded our guidance for
the quarter in all areas," said Anil Singhal, President and CEO of NetScout
Systems. "The results of this quarter demonstrate that our industry-leading
CDM(TM) technology is beginning to deliver on its promise of consolidating
many performance management functions and traffic flow data into a single,
integrated solution and of providing rich performance analysis and data for
additional applications in important areas of security forensics, virus
tracking, billing, modeling and simulation and policy-based orchestration. We
are winning competitive bids and continue to gain attention in the market as
customers recognize the value of our products in simplifying the management of
their complex network environments."
Financial Highlights for the Third Quarter:
* Total revenue increased 8% sequentially and increased 4% from the third
quarter of fiscal year 2003. Product revenue increased 13%
sequentially and increased 5% from the third quarter of fiscal year
2003. Service revenue increased 1% sequentially and increased 14% from
the third quarter of fiscal year 2003. Royalty revenue decreased 3%
sequentially and decreased 61% from the third quarter of fiscal year
2003.
* Gross margin was 76% of total revenue, up 1 point both sequentially and
compared to the third quarter of fiscal year 2003.
* Cash flow from operations was positive.
* Cash and short and long-term marketable securities increased by $1.5
million to $73.7 million.
* 41 new customers were added worldwide.
* 273 customers made repeat purchases.
* 43 orders over $100,000 were received.
* Direct sales represented 54% of total revenue; indirect sales to
resellers represented 46% of total revenue.
* International business comprised approximately 18% of total revenue.
Product and Company Highlights:
* NetScout unveiled QoS performance monitoring for large, complex networks
as part of the recently released nGenius(R) Performance Manager 2.0 and
related nGenius Probe firmware 6.0. This new enhanced monitoring
capability allows enterprises and government agencies to improve the
accuracy and success of network-based QoS implementations with features
that allow IT managers to easily view application traffic composition
and behavior within each configured QoS class in real-time and via
historical web-based reports.
* NetScout was awarded ISO 9001:2000 certification demonstrating the
Company's ongoing commitment to provide the highest-quality products
and service to its customers. The certification encompasses all of the
design, manufacturing and customer service processes used by NetScout
to produce and support its nGenius(R) Performance Management System
products. To be granted the certification, NetScout met rigorous
standards in its business processes and systems used to assure quality
products and services for its customers.
Guidance:
For the fourth quarter of fiscal year 2004, the Company expects revenue to
be in the range of $19 million to $20 million and net income per diluted share
to be in the range of ($0.01) to $0.00. 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. Alternatively, people can listen to the call by
dialing 800-450-0788 for U.S./Canada and 612-332-0523 for international
callers. A replay of the call will be available after 7:45 p.m. ET on January
15 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
715486.
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.
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 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, 2003 and its quarterly report on Form 10-Q for the quarter
ended September 30, 2003 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.
Contact:
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)
December 31, March 31,
2003 2003
Assets
Current assets:
Cash and cash equivalents $23,154 $43,823
Marketable securities 38,028 27,442
Accounts receivable, net 9,486 11,906
Inventories 2,973 2,982
Refundable income taxes 1,935 1,226
Deferred income taxes 1,667 1,782
Prepaids and other current assets 2,037 2,088
Total current assets 79,280 91,249
Fixed assets, net 5,844 6,912
Capitalized software development
costs 1,049 -
Goodwill, net 28,839 28,839
Other intangible assets, net - 272
Deferred income taxes 7,586 7,651
Long-term marketable securities 12,528 -
Total assets $135,126 $134,923
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $1,915 $1,403
Accrued compensation 3,728 3,658
Accrued other 2,201 1,819
Deferred revenue 14,619 16,242
Total current liabilities 22,463 23,122
Stockholders' equity:
Common stock 34 34
Additional paid-in capital 110,101 108,835
Accumulated other comprehensive income (11) 7
Deferred compensation (26) (132)
Treasury stock (26,490) (26,366)
Retained earnings 29,055 29,423
Total stockholders' equity 112,663 111,801
Total liabilities and
stockholders' equity $135,126 $134,923
NetScout Systems, Inc.
Condensed Consolidated Statements of Operations
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
December 31, December 31,
2003 2002 2003 2002
Revenue:
Product $11,190 $10,641 $29,696 $31,473
Service 7,268 6,401 21,017 18,086
License and royalty 432 1,113 1,295 4,382
Total revenue 18,890 18,155 52,008 53,941
Cost of revenue:
Product(1) 3,462 3,363 9,601 10,212
Service (including stock-based
compensation of $-, $2, $2 and
$5, respectively) 1,066 1,228 3,132 3,362
Total cost of revenue 4,528 4,591 12,733 13,574
Gross margin 14,362 13,564 39,275 40,367
Operating expenses:
Research and development (including
stock-based compensation of
$24, $46, $95 and $779,
respectively)(2) 3,836 4,050 10,515 12,834
Sales and marketing (including
stock-based compensation of
$3, $16, $13 and $54, respectively) 8,655 8,502 24,637 25,289
General and administrative
(including stock-based
compensation of $-, $2, $-
and $5, respectively) 1,553 1,708 4,752 5,953
Amortization of other intangible
assets - 272 272 816
Total operating expenses 14,044 14,532 40,176 44,892
Income (Loss) from operations 318 (968) (901) (4,525)
Interest income and other expenses, net 167 258 524 897
Income (loss) before income tax
expense (benefit) 485 (710) (377) (3,628)
Income tax expense (benefit) 301 (382) (9) (1,443)
Net income (loss) $184 $(328) $(368) $(2,185)
Basic net income (loss) per share $0.01 $(0.01) $(0.01) $(0.07)
Diluted net income (loss) per share $0.01 $(0.01) $(0.01) $(0.07)
Shares used in computing:
Basic net income (loss) per share 30,182 29,940 30,092 29,870
Diluted net income (loss) per
share 31,440 29,940 30,092 29,870
(1) Cost of product revenue includes amortization of capitalized software
of $166 and $276 for the three and nine months ended December 31,
2003.
(2) Research and development costs are net of capitalized software
development costs of $0 for the three months ended December 31, 2003
and $1,325 for the nine months ended December 31, 2003.
SOURCE NetScout Systems, Inc.