WESTFORD, Mass.--(BUSINESS WIRE)--May 3, 2007--NetScout Systems,
Inc. (NASDAQ: NTCT), an industry pacesetter for advanced network and
service assurance solutions, today announced financial results for its
fourth quarter and fiscal year ended March 31, 2007.
Total revenue for the fourth quarter of fiscal year 2007 was $27.3
million, up 6% year-over-year. Net income was $2.1 million, an
increase of 15% on a year-over-year basis, leading to net income per
diluted share of $0.06. Operating income, which included stock-based
compensation expense of $398,000 and amortization of acquired
intangible assets of $143,000, was $1.8 million in the fourth quarter
of fiscal 2007, representing an operating margin of 7%.
For the fiscal year ended March 31, 2007, NetScout reported total
revenue of $102.5 million, up 5% year-over-year. Net income was $7.7
million, or $0.23 per diluted share an increase of 33% year-over-year.
Included in the fourth quarter net income is a charge of $1.4
million or $0.03 per diluted share related to the accrued expense for
the retirement agreement with Co-Founder and former Chairman, Mr.
Narendra Popat, which had an operating margin impact of 5 percentage
points. Excluding the retirement charge, non-GAAP operating margin
would have been 12% for the fourth quarter, and non-GAAP net income
per diluted share for the full fiscal year 2007 would have been $0.26
per share, representing growth of 43% year-over-year, exceeding full
year guidance of 40% growth.
"We ended our fiscal year on a very positive note with strong
fourth quarter bookings and operating margin improvement. Our fourth
quarter EPS exceeded our previously issued guidance and revenue was at
the high end of guidance," said Anil Singhal, President and CEO of
NetScout Systems. "We are particularly pleased that our solutions are
building strong momentum against the competition in our targeted
vertical markets. Wireless service providers and financial services
customers are finding our nGenius products to be very effective for
cutting the Mean Time To Restore their networked applications and
services to optimal efficiency. We are confident that our strategy and
execution will continue to produce profitable growth. We anticipate
repeating our fiscal 2007 EPS growth target at or above 40% in fiscal
year 2008."
Financial and Company Highlights for the Fourth Quarter 2007:
- Fourth quarter revenue increased 6% year-over-year and 3%
sequentially.
- Operating margin was 7% of total revenue, down 1 point
year-over-year and flat sequentially, and, excluding Mr.
Popat's retirement charge, it was 12% of total revenue, up 4
points year-over-year.
- Cash and short and long-term marketable securities increased
by $5.0 million to $100.1 million in the fourth quarter.
- During the quarter NetScout's Chairman and Co-Founder Narendra
Popat retired from the Board of Directors and his daily role
at the company and will continue to be available on an
advisory basis. Co-Founder and CEO Anil Singhal was also
elected Chairman.
- Billing World and OSS Today Magazine selected NetScout's
nGenius solution as a finalist for the "Best New Product
Award".
Current News:
- NetScout appointed Michael Szabados as Chief Operating
Officer. Mr. Szabados has been with the Company for more than
10 years and was previously Senior Vice President, Product
Operations.
- In mid-April NetScout released substantial upgrades to two
products with the release of version 4.0 of nGenius(R)
Application Fabric Monitor and nGenius(R) Performance Manager
featuring integration of flow and packet-based data to
accelerate troubleshooting by allowing network managers to
quickly identify network problems through high-level views and
then "drill-down" to packet detail for further verification
and analysis.
Guidance:
For the first quarter of fiscal year 2008, the Company expects
total revenue to be in the range of $26.0 million to $27.0 million and
net income per diluted share to be in the range of $0.05 to $0.06
representing year-over-year growth of 10% to 15% in revenue and 25% to
50% in net income per diluted share. The Company reiterates its
long-range 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. 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: 5028946. A replay of
the call will be available after 7:30 p.m. ET on May 3 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: 5028946.
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, 2006 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 Twelve Months Ended
March 31 March 31
------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Revenue:
Product $ 17,173 $ 17,202 $ 63,524 $ 63,591
Service 10,145 8,612 38,948 34,101
License and royalty - - - 184
--------- --------- --------- ---------
Total revenue 27,318 25,814 102,472 97,876
--------- --------- --------- ---------
Cost of revenue:
Product (1) (2) 4,418 4,959 17,184 18,639
Service (1) 1,426 1,319 5,424 4,928
--------- --------- --------- ---------
Total cost of revenue 5,844 6,278 22,608 23,567
--------- --------- --------- ---------
Gross margin 21,474 19,536 79,864 74,309
--------- --------- --------- ---------
Operating expenses:
Research and development (1) 4,631 4,508 18,320 18,141
Sales and marketing (1) 11,378 10,859 43,490 40,467
General and administrative
(1) (3) 3,618 2,090 10,531 8,873
Amortization of acquired
intangible assets 39 39 155 149
In-process research and
development - - - 143
--------- --------- --------- ---------
Total operating expenses 19,666 17,496 72,496 67,773
--------- --------- --------- ---------
Income from operations 1,808 2,040 7,368 6,536
Interest income and other
expenses, net 895 836 3,898 2,627
--------- --------- --------- ---------
Income before income tax
expense and cumulative effect
of accounting change 2,703 2,876 11,266 9,163
Income tax expense 625 1,072 3,598 3,366
--------- --------- --------- ---------
Income before cumulative effect
of accounting change 2,078 1,804 7,668 5,797
Cumulative effect of accounting
change, net of taxes of $41 - - 69 -
--------- --------- --------- ---------
Net income $ 2,078 $ 1,804 $ 7,737 $ 5,797
========= ========= ========= =========
Basic net income per share $ 0.06 $ 0.06 $ 0.24 $ 0.19
Diluted net income per share $ 0.06 $ 0.06 $ 0.23 $ 0.18
Shares used in computing:
Basic net income per share 31,979 31,250 31,713 31,041
Diluted net income per
share 33,353 32,314 33,050 31,885
(1) Share-based compensation expense
included in these amounts is as
follows:
Cost of product revenue $ 12 $ 11 $ 41 $ 11
Cost of service revenue 14 14 51 14
Research and development 137 196 503 411
Sales and marketing 167 160 608 228
General and administrative 68 74 270 131
--------- --------- --------- ---------
Total share-based
compensation expense $ 398 $ 455 $ 1,473 $ 795
========= ========= ========= =========
(2) Amortization expense related to
acquired software included in these
amounts is as follows:
Cost of Product Revenue $ 104 $ 104 $ 416 $ 400
(3) Includes a non-recurring charge of $1.4 million relating to the
retirement of the Company's outgoing Founder and Chairman during the
fourth quarter of fiscal year 2007
NetScout Systems, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
March 31 March 31,
2007 2006
---------- ----------
Assets
Current assets:
Cash and cash equivalents $ 18,925 $ 61,676
Marketable securities 69,204 19,810
Accounts receivable, net 18,317 16,765
Inventories 4,562 2,816
Refundable income taxes 657 985
Deferred income taxes 2,535 2,896
Restricted cash - 1,339
Prepaids and other current assets 3,380 3,119
---------- ----------
Total current assets 117,580 109,406
Fixed assets, net 8,262 7,577
Goodwill 36,561 36,561
Acquired intangible assets, net 442 1,015
Capitalized software development costs, net 170 312
Deferred income taxes 5,382 4,889
Long-term marketable securities 11,975 5,979
Other assets 47 16
---------- ----------
Total assets $ 180,419 $ 165,755
========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 3,023 $ 2,727
Accrued compensation 8,271 8,635
Accrued other 2,609 2,325
Income taxes payable 192 -
Deferred acquisition payment - Quantiva - 1,339
Deferred revenue 23,992 21,382
---------- ----------
Total current liabilities 38,087 36,408
Accrued other 1,008 1,157
Accrued long-term retirement benefits 1,155 -
Long-term deferred revenue 1,762 1,599
---------- ----------
Total liabilities 42,012 39,164
---------- ----------
Stockholders' equity:
Common stock 36 35
Additional paid-in capital 122,074 120,057
Accumulated other comprehensive loss (46) (122)
Deferred compensation - (4,434)
Treasury stock (28,939) (26,490)
Retained earnings 45,282 37,545
---------- ----------
Total stockholders' equity 138,407 126,591
---------- ----------
Total liabilities and stockholders'
equity $ 180,419 $ 165,755
========== ==========
CONTACT: NetScout Systems, Inc.
Catherine Taylor, 978-614-4286
Director of Investor Relations
IR@netscout.com
SOURCE: NetScout Systems, Inc.