WESTFORD, Mass.--(BUSINESS WIRE)--
NETSCOUT
SYSTEMS, INC. (NASDAQ: NTCT), a leading provider of service
assurance, security, and business analytics, today announced preliminary
financial results for its fourth quarter and fiscal year ended March 31,
2019. The preliminary results announced today are subject to change
based on the completion of the Company’s quarter-end review process.
NETSCOUT expects that its fourth-quarter fiscal year 2019 revenue will
be approximately $15 million lower than originally anticipated,
primarily due to delayed revenue recognition on a large service
assurance project at an international mobile operator. The Company was
unable to make up for this shortfall amid a difficult service provider
capital spending environment. Despite the lower-than-expected revenue,
NETSCOUT anticipates a solid quarterly GAAP and non-GAAP EPS performance
due to healthy gross margins resulting from a more favorable product mix
and lower operating costs. The Company’s full fiscal year 2019 GAAP net
loss per share (diluted) and the Company’s full fiscal year 2019
non-GAAP net income per share (diluted) are expected to be around the
mid-point of its prior January 2019 guidance range.
Anil Singhal, NETSCOUT’s president and CEO, stated, “Our fourth-quarter
fiscal year 2019 revenue shortfall was primarily caused by a
longer-than-expected implementation schedule for the largest phase of a
$15 million project at an international mobile operator, which delayed
revenue recognition. Nevertheless, we expect that the revenue associated
with this phase of our customer’s project will be recognized within the
next several quarters. Despite this delay, we produced another quarter
of solid top-line results in our enterprise customer segment and
experienced a relatively strong performance in our security product
area. Healthy gross margins aided by good adoption of our
software-centric offerings and cost controls throughout the year played
important roles in our ability to successfully achieve our prior EPS
guidance.”
Singhal concluded, “As we move forward, we believe that the most severe
headwinds impacting our revenue performance in recent years have largely
subsided, and we remain focused on executing key elements of our
strategy that we believe are integral to driving improved, sustainable
financial performance. Our plans for fiscal year 2020 anticipate both
organic top-line growth and EPS growth. We will share more insight when
we report our full-year fiscal year 2019 results next month.”
Anticipated Q419 and FY19 Revenue and EPS (Diluted) Performance
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The Company currently expects fourth-quarter fiscal year 2019 GAAP and
non-GAAP revenue of approximately $235 million with fiscal year 2019
GAAP revenue of approximately $908 million and fiscal year 2019
non-GAAP revenue of approximately $910 million.
-
The Company’s fourth-quarter fiscal year 2019 GAAP net income per
share (diluted) and full fiscal year 2019 GAAP net loss per share
(diluted) performance are anticipated to be around the mid-point of
its prior January 2019 guidance range. The Company’s fourth-quarter
and full fiscal year 2019 non-GAAP net income per share (diluted)
performance are anticipated to be around the mid-point of its prior
January 2019 guidance range.
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The Company’s January 2019 guidance for fiscal year 2019 GAAP net
loss per share (diluted) ranged from $0.96 to $0.89, which implied
fourth-quarter fiscal year 2019 GAAP net income per share
(diluted) in the range of $0.21 per share to $0.27 per share. The
Company’s January 2019 guidance for fiscal year 2019 non-GAAP net
income per share (diluted) ranged from $1.30 to $1.35, which
implied fourth-quarter fiscal year 2019 non-GAAP net income per
share (diluted) in the range of $0.59 to $0.64.
-
NETSCOUT’s tax rate assumptions for the January 2019 guidance have
remained unchanged at this time.
-
The Company anticipates that its average weighted shares
outstanding for the fourth quarter of fiscal year 2019 will be
approximately 78.6 million versus its January 2019 guidance that
assumed 78.2 million average weighted shares outstanding for the
fourth quarter of fiscal year 2019. NETSCOUT anticipates that its
average weighted shares outstanding for fiscal year 2019 will be
approximately 78.6 million for GAAP net loss per share (diluted)
and 79.3 million for non-GAAP net income per share (diluted)
versus its January 2019 guidance that assumed 79.3 million for
GAAP net loss per share (diluted) and non-GAAP net income per
share (diluted).
-
A reconciliation of the preliminary fourth-quarter and full fiscal
year 2019 GAAP and non-GAAP results is included in the attached
financial tables.
Q419 and FY19 Results Conference Call Date and
Instructions:
NETSCOUT plans to announce its
fourth-quarter and fiscal year-end 2019 financial results for the period
ended March 31, 2019 on Tuesday, May 7, 2019 at approximately 7:30 a.m.
ET. NETSCOUT will host a corresponding conference call and live webcast
to discuss its financial results and its outlook for fiscal year 2020 on
the same day at 8:30 a.m. ET. This call will be webcast live through
NETSCOUT’s website at https://ir.netscout.com/investors/overview/default.aspx.
Alternatively, people can listen to the call by dialing (785) 424-1667.
The conference call ID is NTCTQ419. A replay of the call will be
available after 12:00 p.m. ET on May 7, 2019 for approximately one week.
The number for the replay is (800) 283-8217 for U.S./Canada and (402)
220-0868 for international callers.
Use of Non-GAAP Financial Information:
To
supplement the financial measures presented in NETSCOUT's press release
in accordance with accounting principles generally accepted in the
United States ("GAAP"), NETSCOUT also reports the following non-GAAP
measures: non-GAAP revenue, non-GAAP net income and non-GAAP net income
per share (diluted). Non-GAAP revenue eliminates the GAAP effects of
acquisitions by adding back revenue related to deferred revenue
revaluation, as well as revenue impacted by the amortization of
intangible assets. Non-GAAP net income and non-GAAP net income per share
(diluted) includes the aforementioned revenue adjustments and also
removes expenses related to the amortization of acquired intangible
assets, stock-based compensation, transitional service agreement income,
restructuring charges, intangible asset impairment charges, loss on
divestiture, costs related to new accounting standard implementation,
and certain expenses relating to acquisitions including depreciation
costs, compensation for post-combination services and business
development and integration costs while adding back transitional service
agreement income, net of related income tax effects. Investors are
encouraged to review the related GAAP financial measures and the
reconciliation of these non-GAAP financial measures to their most
directly comparable GAAP financial measures included in the attached
table within this press release.
These non-GAAP measures are not in accordance with GAAP, should not be
considered an alternative for measures prepared in accordance with GAAP
(revenue, gross profit, operating profit, net income and diluted net
income per share), and may have limitations because they do not reflect
all of NETSCOUT’s results of operations as determined in accordance with
GAAP. These non-GAAP measures should only be used to evaluate NETSCOUT’s
results of operations in conjunction with the corresponding GAAP
measures. The presentation of non-GAAP information is not meant to be
considered superior to, in isolation from or as a substitute for results
prepared in accordance with GAAP.
NETSCOUT believes these non-GAAP financial measures will enhance the
reader’s overall understanding of NETSCOUT’s current financial
performance and NETSCOUT's prospects for the future by providing a
higher degree of transparency for certain financial measures and
providing a level of disclosure that helps investors understand how the
Company plans and measures its own business. NETSCOUT believes that
providing these non-GAAP measures affords investors a view of NETSCOUT’s
operating results that may be more easily compared to peer companies and
also enables investors to consider NETSCOUT’s operating results on both
a GAAP and non-GAAP basis during and following the integration period of
NETSCOUT’s acquisitions. Presenting the GAAP measures on their own,
without the supplemental non-GAAP disclosures, might not be indicative
of NETSCOUT’s core operating results. Furthermore, NETSCOUT believes
that the presentation of non-GAAP measures when shown in conjunction
with the corresponding GAAP measures provides useful information to
management and investors regarding present and future business trends
relating to its financial condition and results of operations.
NETSCOUT management regularly uses supplemental non-GAAP financial
measures internally to understand, manage and evaluate its business and
to make operating decisions. These non-GAAP measures are among the
primary factors that management uses in planning and forecasting.
About NETSCOUT SYSTEMS, INC.
NETSCOUT
SYSTEMS, INC. (NASDAQ: NTCT) assures digital business services against
disruptions in availability, performance, and security. Our market and
technology leadership stems from combining our patented smart data
technology with smart analytics. We provide real-time, pervasive
visibility, and insights customers need to accelerate and secure their
digital transformation. Our approach transforms the way organizations
plan, deliver, integrate, test, and deploy services and applications.
Our nGenius service assurance solutions provide real-time, contextual
analysis of service, network, and application performance. Arbor
security solutions protect against DDoS attacks that threaten
availability and advanced threats that infiltrate networks to steal
critical business assets. To learn more about improving service,
network, and application performance in physical or virtual data
centers, or in the cloud, and how NETSCOUT’s performance and security
solutions, powered by service intelligence can help you move forward
with confidence, visit www.netscout.com
or follow @NETSCOUT and @ArborNetworks on Twitter, Facebook, or LinkedIn.
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 without limitation, the statement related to the Company’s
anticipated fourth-quarter and fiscal year-end financial results and
related performance trends for NETSCOUT; the statement that the revenue
related associated with this phase of our customer’s project will be
recognized within the next couple of quarters; the statement that the
most severe headwinds impacting our revenue performance in recent years
have largely subsided and that we remain focused on executing key
elements of our strategy that we believe are integral to driving
improved, sustainable financial performance; the statement that our
plans for fiscal year 2020 anticipate both organic top-line growth and
EPS growth, constitute forward looking statements that involve risks and
uncertainties. Actual results could differ materially from the
forward-looking statements due to known and unknown risk, uncertainties,
assumptions and other factors. Such factors include potential
differences between NETSCOUT’s preliminary results and the final results
for the quarter ended March 31, 2019 as a result of the completion of
financial reporting processes and review, slowdowns or downturns in
economic conditions generally and in the market for advanced network,
service assurance and cybersecurity solutions specifically; the volatile
foreign exchange environment; the Company’s relationships with strategic
partners and resellers; dependence upon broad-based acceptance of the
Company’s network performance management solutions; the presence of
competitors with greater financial resources than we have, and their
strategic response to our products; our ability to retain key executives
and employees; the Company’s ability to realize the anticipated savings
from recent restructuring actions and other expense management programs;
lower than expected demand for the Company’s products and services; and
the timing and magnitude of stock buyback activity based on market
conditions, corporate considerations, debt agreements, and regulatory
requirements. 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, 2018 and the Company’s
subsequent Quarterly Reports on Form 10-Q, which are 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.
©2019 NETSCOUT SYSTEMS, INC. All rights reserved. NETSCOUT and the
NETSCOUT logo are registered trademarks or trademarks of NETSCOUT
SYSTEMS, INC. and/or its subsidiaries and/or affiliates in the USA
and/or other countries.
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NETSCOUT SYSTEMS, INC.
Reconciliation of GAAP to
Non-GAAP Financial Measures:
Preliminary
Fourth-Quarter and Full Fiscal Year 2019 Financial Results
(Unaudited)
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Three Months Ended
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Twelve Months Ended
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March 31, 2019
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March 31, 2019
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GAAP revenue
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~$235 million
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~$908 million
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Deferred service revenue fair value adjustment
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Less than $1m
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~$1 million
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Deferred product revenue fair value adjustment
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-
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Less than $1 million
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Non-GAAP revenue
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~$235 million
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~$910 million
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GAAP Net Income
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~$17 million to ~$22 million
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(~$76 million) to (~$70 million)
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Deferred service revenue fair value adjustment
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Less than $1 million
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~$1 million
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Deferred product revenue fair value adjustment
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-
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Less than $1 million
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Share-based compensation expense
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~$12 million
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~$56 million
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Amortization of acquired intangible assets
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~$24 million
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~$106 million
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Business development and integration expense*
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~$2 million
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~$4 million
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New standard implementation expense
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-
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~$1 million
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Loss on Divestiture
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Less than $1 million
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~$9 million
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Restructuring charges
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~$1 million
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~$19 million
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Impairment of Intangibles
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-
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~36 million
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Total Adjustments
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~$40 million
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~$232 million
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Related impact of adjustments on income tax**
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(~$10 million)
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(~54 million)
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Non-GAAP Net Income
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~$46 million to ~$50 million
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~$103 million to $107 million
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GAAP net income per share (diluted)
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$0.21 to $0.27
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($0.96) to ($0.89)
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Non-GAAP net income per share (diluted)
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$0.59 to $0.64
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$1.30 to $1.35
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Average Weighted Shares Outstanding (diluted GAAP)
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78.6 million
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78.6 million
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Average Weighted Shares Outstanding (diluted non-GAAP)
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78.6 million
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79.3 million
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* Business development & integration expenses include compensation
for post-combination services and acquisition-related depreciation
expense
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** Assumes a non-GAAP effective tax rate of ~25% for the three
months and 12 months ended March 31, 2019, respectively.
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View source version on businesswire.com:
https://www.businesswire.com/news/home/20190409005242/en/
Investors
Andrew Kramer
Vice President of Investor
Relations
978-614-4279
IR@netscout.com
Media
Maribel
Lopez
Manager, Marketing & Corporate Communications
781-362-4330
Maribel.Lopez@netscout.com
Source: NETSCOUT SYSTEMS, INC.