- Record First Quarter Revenue of $27.9 Million
- Revenue Up 18% Year- over-Year
- EPS Up 100% Year-over-Year
WESTFORD, Mass.--(BUSINESS WIRE)--July 26, 2007--NetScout Systems,
Inc. (NASDAQ: NTCT), an industry pacesetter for advanced network and
service assurance solutions, today announced financial results for its
first quarter of fiscal year 2008, ended June 30, 2007.
Total revenue for the first quarter of fiscal year 2008 was $27.9
million, up 18% year-over-year. Product revenue was $17.5 million, up
23% from 2007. Net income was $2.7 million, an increase of 95% on a
year-over-year basis, leading to net income per diluted share of
$0.08. Operating income, which included stock-based compensation
expense of $385,000 and amortization of acquired intangible assets of
$111,000, was $2.9 million in the first quarter of fiscal 2008,
representing an operating margin of 10%.
"We are off to a fast start to our fiscal year due to strong sales
execution into our target, high-end vertical markets which are
increasingly receptive to our nGenius solution approach to application
and service management," said Anil Singhal, President and CEO of
NetScout Systems. "Our pipeline has been growing over the last several
quarters as our sales force expansion has come on line and our
strategy has yielded increased order sizes. We believe that the
results in the quarter demonstrate that the growth initiatives that we
put in place last year are delivering on their promise and validate
our confidence in our full year guidance of EPS growth in excess of
40%."
Financial and Company Highlights for the First Quarter 2008:
- First quarter revenue increased 18% year-over-year and 2%
sequentially.
- Product revenue increased 23% year-over-year and 2%
sequentially.
- Operating margin was 10% of total revenue, up six points
year-over-year and up three points sequentially.
- Cash and cash equivalents and short and long-term marketable
securities increased by $5.1 million in the first quarter to
$105.2 million.
- NetScout received its third consecutive NorthFace ScoreBoard
Award for exemplary customer support.
- NetScout released nGenius(R) Analytics version 1.2 providing
early warning capabilities for potential VoIP degradations,
application response time increases, application utilization
decreases and other critical aspects to assuring services and
reducing Mean Time to Restore on today's converged networks.
- NetScout was selected to the Business 2.0 "B2 100" list
ranking NetScout as the 34th fastest-growing tech company in
America. NetScout was also featured by Forbes.com for making
Audit Integrity's Top 100 report which identifies the most
trustworthy public companies in the U.S. in terms of
accounting transparency and fair dealing to stakeholders in
2006.
- NetScout participated at the HP Software Universe 2007
conference hosting educational sessions centered on best
practices for reducing MTTR in virtual and converged networks
and assuring performance on MPLS networks.
Guidance:
For the second quarter of fiscal year 2008, the Company expects
total revenue to be in the range of $28.0 million to $29.0 million and
net income per diluted share to be in the range of $0.08 to $0.09. The
Company reiterates its guidance for net income per diluted share
growth at or above 40% in fiscal year 2008.
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 866-701-8242 for U.S./Canada
and 706-634-5113 for international callers and using conference ID:
10060718. A replay of the call will be available after 7:30 p.m. ET on
July 26 for approximately one week. The number for the replay is
800-642-1687 for U.S./Canada and 706-645-9291 for international
callers. The conference ID is: 10060718.
About NetScout Systems
NetScout Systems, Inc. (NASDAQ: NTCT) has been an industry
pacesetter for advanced network and service assurance solutions for
over a decade, and counts the world's largest enterprises, government
agencies, and service providers among its customers. Enterprise and
government IT organizations deploy NetScout's nGenius(R) Performance
Management System to increase service levels to their users by
reducing or preventing service disruptions. Service providers depend
on NetScout's proven IP performance management technology and
expertise to protect the quality of their customers' experience with
IP-based services. 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 and other federal securities laws. 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, 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, and risks of 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, 2007 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.
(C)2007 NetScout Systems, Inc. All rights reserved. NetScout and
the NetScout logo and nGenius are registered trademarks of NetScout
Systems, Inc.
NetScout Systems, Inc.
Condensed Consolidated Statements of Operations
(In thousands)
(Unaudited)
Three Months
Ended
June 30,
---------------
2007 2006
------- -------
Revenue:
Product $17,512 $14,227
Service 10,400 9,348
------- -------
Total revenue 27,912 23,575
------- -------
Cost of revenue:
Product (1) (2) 4,652 3,856
Service (1) 1,487 1,267
------- -------
Total cost of revenue 6,139 5,123
------- -------
Gross profit 21,773 18,452
------- -------
Operating expenses:
Research and development (1) 4,534 4,422
Sales and marketing (1) 11,541 10,830
General and administrative (1) 2,833 2,106
Amortization of acquired intangible assets 6 39
------- -------
Total operating expenses 18,914 17,397
------- -------
Income from operations 2,859 1,055
Interest and other income, net 1,009 1,015
------- -------
Income before income tax expense and cumulative
effect of
accounting change 3,868 2,070
Income tax expense 1,188 766
------- -------
Income before cumulative effect of accounting change 2,680 1,304
Cumulative effect of accounting change, net of taxes
of $41 - 70
------- -------
Net income $ 2,680 $ 1,374
======= =======
Basic net income per share $ 0.08 $ 0.04
Diluted net income per share $ 0.08 $ 0.04
Shares used in computing:
Basic net income per share 32,140 31,480
Diluted net income per share 33,253 33,049
(1) Share-based compensation expense included in
these amounts is as follows:
Cost of product revenue $ 11 9
Cost of service revenue 12 13
Research and development 114 133
Sales and marketing 171 157
General and administrative 77 75
------- -------
Total share-based compensation expense $ 385 $ 387
======= =======
(2) Amortization expense related to acquired software
included in these amounts is as follows:
Cost of Product Revenue $ 105 $ 104
NetScout Systems, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
June 30, March
31,
2007 2007
--------- ---------
Assets
Current assets:
Cash and cash equivalents $ 12,650 $ 18,925
Marketable securities 80,530 69,204
Accounts receivable, net 15,894 18,317
Inventories 4,932 4,562
Refundable income taxes 284 657
Deferred income taxes 2,679 2,535
Prepaid expenses and other current assets 3,401 3,380
--------- ---------
Total current assets 120,370 117,580
Fixed assets, net 8,868 8,262
Goodwill 36,561 36,561
Acquired intangible assets, net 331 442
Capitalized software development costs, net 129 170
Deferred income taxes 5,391 5,382
Long-term marketable securities 12,035 11,975
Other assets 100 47
--------- ---------
Total assets $183,785 $180,419
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 2,973 $ 3,023
Accrued compensation 8,011 8,271
Accrued other 2,467 2,609
Income taxes payable 809 192
Deferred revenue 24,234 23,992
--------- ---------
Total current liabilities 38,494 38,087
Other long-term liabilities 1,007 1,008
Accrued long-term retirement benefits 1,235 1,155
Long-term deferred revenue 1,332 1,762
--------- ---------
Total liabilities 42,068 42,012
--------- ---------
Stockholders' equity:
Common stock 37 36
Additional paid-in capital 122,720 122,074
Accumulated other comprehensive loss (63) (46)
Treasury stock (28,939) (28,939)
Retained earnings 47,962 45,282
--------- ---------
Total stockholders' equity 141,717 138,407
--------- ---------
Total liabilities and stockholders' equity $183,785 $180,419
========= =========
CONTACT: NetScout Systems, Inc.
Catherine Taylor, 978-614-4286
Director of Investor Relations
IR@netscout.com
SOURCE: NetScout Systems, Inc.