WESTFORD, Mass., Jan 26, 2005 /PRNewswire-FirstCall via COMTEX/ -- NetScout Systems, Inc.
(Nasdaq: NTCT), a leading provider of network performance management
solutions, today announced financial results for its third quarter of fiscal
year 2005.
Revenue for the third quarter of fiscal year 2005, ended December 31,
2004, was $22.0 million, compared to revenue of $20.5 million in the previous
quarter and revenue of $18.9 million in the third quarter of fiscal year 2004.
Net profit for the quarter was $906,000, or $0.03 per diluted share, compared
to a net profit of $1.1 million, or $0.03 per diluted share, for the previous
quarter and compared to net profit of $184,000, or $0.01 per diluted share, in
the third quarter of fiscal year 2004.
"We reported another quarter of good results, exceeding our expectations,
resulting from strong customer year-end activity," said Anil Singhal,
President and CEO of NetScout Systems. "This quarter we released a series of
new products including two appliance-based extensions to the nGenius(R)
product line, the nGenius(R) Flow Recorder and nGenius(R) Flow Collector. We
also made a strategic announcement of a new technology initiative called High
Definition Performance Management (HDPM) that will provide a greater level of
detail and granular visibility for application performance management.
Representing the next evolutionary step of NetScout's CDM architecture and
strategy, HDPM is a powerful initiative that will further differentiate us
from our competition. We will be releasing further details about HDPM in the
coming quarter."
Financial Highlights for the Third Quarter:
* Total revenue increased 7% sequentially and increased 16% from the
third quarter of fiscal year 2004. Product revenue increased 8%
sequentially and increased 18% from the third quarter of fiscal year
2004. Service revenue increased 7% sequentially and increased 15%
from the third quarter of fiscal year 2004. Royalty revenue decreased
5% sequentially and decreased 4% from the third quarter of fiscal year
2004.
* Gross margin was 77% of total revenue, up 1 point sequentially and up 1
point compared to the third quarter of fiscal year 2004.
* Cash flow from operations was positive.
* Cash and short and long-term marketable securities increased by $1.1
million to $79.3 million in the third quarter and increased by $5.6
million year-over-year.
* 36 new customers were added worldwide.
* 296 customers made repeat purchases.
* 58 customers placed orders over $100,000.
* International business comprised approximately 24% of total revenue.
Product and Company Highlights:
* NetScout announced an important new technology initiative called High
Definition Performance Management (HDPM), addressing the critical need
for more detailed, granular visibility for application performance
management. HDPM, the next evolutionary step for NetScout's CDM
architecture, will extend the functionality of the nGenius(R)
Performance Management System with increased visibility into the
activity and usage of web services and other complex and multi-layered
applications, including more granular measurement of application and
network traffic data at shorter intervals and enhanced reporting of
user and application utilization. Upcoming HDPM enhancements to
nGenius(R) Performance Manager and nGenius Probes(R) will be made
available as free upgrades to current NetScout MasterCare customers.
* NetScout launched the nGenius Flow Recorder, a Linux-based appliance
providing continuous recording of network traffic for audit trails and
forensic analyses, including anomaly detection, replay and long-
interval detailed troubleshooting.
* NetScout announced the nGenius Flow Collector, a new appliance used in
combination with nGenius Performance Manager for dedicated, high-
volume collection and analysis of NetFlow conversation records drawn
from network infrastructure devices.
* NetScout released a new software module, nGenius (R) Integrator for
Cisco Network Analysis Modules (NAMs), as a migration solution for
customers using NetScout's legacy nGenius(R) Real Time Monitor.
* NetScout began shipping the nGenius Eight-Port T1/E1 Probe(R), the
market's first high-density probe for monitoring T1/E1 wide area
networks.
* NetScout released an enhancement to the nGenius Performance Management
System extending its leading-edge application-layer visibility across
IPSec and MPLS-based Virtual Private Network (VPN) environments.
Guidance:
For the fourth quarter of fiscal year 2005, the Company expects revenue to
be in the range of $21.5 million to $22 million and net profit per diluted
share to be in the range of $0.00 to $0.01.
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 888-423-3281 for U.S./Canada and 612-288-0329 for
international callers. A replay of the call will be available after 8:00 p.m.
ET on January 26 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 765874.
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, the delivery of HDPM functionality 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 September 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. 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 Statements of Operations
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
December 31, December 31,
2004 2003 2004 2003
Revenue:
Product $13,231 $11,190 $37,015 $29,696
Service 8,354 7,268 24,285 21,017
License and royalty 415 432 1,286 1,295
Total revenue 22,000 18,890 62,586 52,008
Cost of revenue:
Product(1) 4,069 3,462 11,623 9,601
Service
respectively) 1,085 1,066 3,227 3,132
Total cost of revenue 5,154 4,528 14,850 12,733
Gross margin 16,846 14,362 47,736 39,275
Operating expenses:
Research and development(2) 4,180 3,836 12,557 10,515
Sales and marketing 9,531 8,655 27,116 24,637
General and administrative 2,062 1,553 5,822 4,752
Amortization of other intangible
assets - - - 272
Total operating expenses 15,773 14,044 45,495 40,176
Income (Loss) from operations 1,073 318 2,241 (901)
Interest income and other expenses,
net 346 167 644 524
Income (loss) before income tax
expense (benefit) 1,419 485 2,885 (377)
Income tax expense (benefit) 513 301 625 (9)
Net income (loss) $906 $184 $2,260 $(368)
Basic net income (loss) per share $0.03 $0.01 $0.07 $(0.01)
Diluted net income (loss) per share $0.03 $0.01 $0.07 $(0.01)
Shares used in computing:
Basic net income (loss) per share 30,621 30,182 30,534 30,092
Diluted net income (loss) per
share 31,702 31,440 31,579 30,092
(1) Cost of product revenue includes amortization of capitalized software
of $166 for the three months ended December 31, 2004 and 2003 and
$497 and $276 for the nine months ended December 31, 2004 and 2004,
respectively.
(2) Research and development costs are net of capitalized software
development costs of $- and $1,325 for the three and nine months ended
December 31, 2003.
NetScout Systems, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
December 31, March 31,
2004 2004
Assets
Current assets:
Cash and cash equivalents $33,500 $19,011
Marketable securities 39,842 50,432
Accounts receivable, net 13,172 10,851
Inventories 3,113 3,366
Refundable income taxes 1,231 2,102
Deferred income taxes 2,082 1,667
Prepaids and other current assets 2,486 2,175
Total current assets 95,426 89,604
Fixed assets, net 6,252 5,415
Capitalized software development
costs 387 884
Goodwill, net 28,839 28,839
Deferred income taxes 8,006 8,378
Long-term prepaid expense 18 45
Long-term marketable securities 5,972 6,016
Total assets $144,900 $139,181
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $2,674 $1,984
Accrued compensation 5,323 4,481
Accrued other 3,093 2,140
Income tax payable - 490
Deferred revenue 15,751 15,968
Total current liabilities 26,841 25,063
Long-term liabilities:
Long-term deferred revenue 1,247 1,006
Total liabilities 28,088 26,069
Stockholders' equity:
Common stock 35 34
Additional paid-in capital 112,236 110,683
Accumulated other comprehensive
income (107) 7
Treasury stock (26,490) (26,490)
Retained earnings 31,138 28,878
Total stockholders' equity 116,812 113,112
Total liabilities and
stockholders' equity $144,900 $139,181
SOURCE NetScout Systems, Inc.
Catherine Taylor, Director of Investor Relations of NetScout Systems, Inc.,
+1-978-614-4286, IR@netscout.com
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