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NETSCOUT Reports Second Quarter Fiscal Year 2021 Financial Results

October 29, 2020

Company Delivers Solid EPS Growth

WESTFORD, Mass.--(BUSINESS WIRE)-- NETSCOUT SYSTEMS, INC. (NASDAQ: NTCT), a leading provider of service assurance, security, and business analytics, today announced financial results for its second quarter fiscal year 2021 ended September 30, 2020.

“We delivered solid earnings per share growth in the second quarter of fiscal year 2021, compared with the same period last year,” stated Anil Singhal, NETSCOUT’s president and chief executive officer. “We are pleased with our ability to serve our customers’ visibility and security needs while ensuring the safety and productivity of our team as we executed our strategy and delivered stable results in this tough and uncharted COVID-19 environment.”

Singhal continued, “Our business and operations have proven to be largely resilient as we navigate the global pandemic and macroeconomic uncertainty. This is due to our relevant solutions, trusted brand, strong customer relationships, dedicated team, and solid financial profile. That said, we are not immune from the impacts of the COVID-19 global pandemic and resulting challenging macro-economic environment that is causing elongated purchasing cycles and we expect our fiscal year financial results to be affected given these uncertainties. However, with long-term market trends in our favor, such as, digital transformation, cloud migration, increased cyber threats, and 5G networks, NETSCOUT is well-positioned as “Guardians of the Connected World” when we emerge from this global crisis.”

Q2 FY21 Financial Results

Total revenue (GAAP and non-GAAP) for the second quarter of fiscal year 2021 was $205.3 million, compared with $216.4 million (GAAP) and $216.5 million (non-GAAP) in the same quarter one year ago. A reconciliation of GAAP and non-GAAP results is included in the attached financial tables.

Product revenue (GAAP and non-GAAP) for the second quarter of fiscal year 2021 was $92.0 million, which was approximately 45% of total revenue. This compares with second-quarter fiscal year 2020 product revenue (GAAP and non-GAAP) of $102.8 million, which was approximately 47% of total revenue.

Service revenue (GAAP and non-GAAP) for the second quarter of fiscal year 2021 was $113.4 million, or approximately 55% of total revenue versus service revenue (GAAP) of $113.6 million and (non-GAAP) of $113.7 million, or approximately 53% of total revenue, for the same quarter one year ago.

NETSCOUT’s income from operations (GAAP) was $3.8 million in the second quarter of fiscal year 2021, compared with a loss from operations (GAAP) of $7.3 million in the comparable quarter one year ago. Second-quarter fiscal year 2021 non-GAAP EBITDA from operations was $46.8 million, or 22.8% of non-GAAP quarterly revenue, which compares with $38.5 million, or 17.8% of non-GAAP quarterly revenue in the second quarter of fiscal year 2020. The Company’s second-quarter fiscal year 2021 (GAAP) operating margin was 1.8% versus -3.4% in the prior fiscal year’s same period. Second-quarter fiscal year 2021 non-GAAP income from operations was $39.8 million with a non-GAAP operating margin of 19.4%. This compares with second-quarter fiscal year 2020 non-GAAP income from operations of $31.6 million and a non-GAAP operating margin of 14.6%.

Net loss (GAAP) for the second quarter of fiscal year 2021 was $3.7 million, or $0.05 per share (diluted) versus net loss (GAAP) of $17.5 million, or $0.23 per share (diluted), for the second quarter of fiscal year 2020. On a non-GAAP basis, net income for the second quarter of fiscal year 2021 was $28.2 million, or $0.38 per share (diluted), which compares with $21.4 million, or $0.28 per share (diluted), for the second quarter of fiscal year 2020.

As of September 30, 2020, cash and cash equivalents, and short and long-term marketable securities were $427.8 million, compared with $426.5 million as of June 30, 2020, and $389.1 million as of March 31, 2020. In addition, NETSCOUT has $450.0 million outstanding on its $1.0 billion credit facility.

First-Half FY21 Financial Results

  • For the first half of fiscal year 2021, total revenue (GAAP and non-GAAP) was $389.2 million versus total revenue (GAAP) of $402.4 million and total revenue (non-GAAP) of $402.5 million for the comparable six-month period of fiscal year 2020. A reconciliation of GAAP and non-GAAP results is included in the attached financial tables.
  • Product revenue (GAAP and non-GAAP) for the first six months of fiscal year 2021 was $163.7 million, compared with $178.5 million in the same period one year ago.
  • First-half fiscal year 2021 service revenue (GAAP and non-GAAP) was $225.5 million versus $224.0 million in the same period last year.
  • NETSCOUT’s loss from operations (GAAP) during the first six months of fiscal year 2021 was $10.7 million, compared with a loss from operations of $31.7 million for the comparable six-month period of fiscal year 2020. The Company’s first-half fiscal year 2021 (GAAP) operating margin was -2.8% versus -7.9% in the comparable period of fiscal year 2020. During the first two quarters of fiscal year 2021, the Company’s non-GAAP EBITDA from operations was $73.4 million, or 18.9% of non-GAAP total revenue versus non-GAAP EBITDA from operations of $57.4 million, or 14.3% of non-GAAP total revenue, in the first six months of fiscal year 2020. The Company’s non-GAAP income from operations for the first half of fiscal year 2021 was $60.5 million with a non-GAAP operating margin of 15.5%, compared with non-GAAP income from operations for the same period of fiscal year 2020 of $43.7 million and a non-GAAP operating margin of 10.9%.
  • For the first six months of fiscal year 2021, NETSCOUT’s net loss (GAAP) was $21.1 million, or $0.29 per share (diluted) compared with a net loss of $46.8 million, or $0.61 per share (diluted) in the same six-month period one year ago. Non-GAAP net income for the first half of fiscal year 2021 was $40.5 million, or $0.55 per share (diluted)versus non-GAAP net income for the same period of fiscal year 2020 of $27.0 million, or $0.35 per share (diluted).

Outlook:

For fiscal year 2021, NETSCOUT expects revenue (GAAP and non-GAAP) to decline in the mid-to -upper single digits, on a percentage basis, compared with fiscal year 2020. This outlook is due to the COVID-19 global pandemic and resulting challenging macro-economic environment causing elongated purchasing cycles. NETSCOUT will continue to prudently manage its cost structure and expects to deliver improved annual GAAP earnings per share and expects non-GAAP earnings per share to be in-line with our non-GAAP fiscal year 2020 earnings per share number.

Conference Call Instructions:

NETSCOUT will host a conference call to discuss its second-quarter fiscal year 2021 financial results today 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 NTCTQ221. A replay of the call will be available after 12:00 p.m. ET on October 29, 2020 for approximately one week. The number for the replay is (800) 283-8486 for U.S./Canada and (402) 220-0869 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 gross profit, non-GAAP income from operations, non-GAAP net income, non-GAAP net income per share (diluted) and non-GAAP earnings before interest and other expense, income taxes, depreciation and amortization (EBITDA) from operations. Non-GAAP revenue eliminates the GAAP effects of acquisitions by adding back revenue related to deferred revenue revaluation. Non-GAAP gross profit includes the aforementioned revenue adjustments and also removes expenses related to the amortization of acquired intangible assets, share-based compensation, and acquisition-related depreciation. Non-GAAP income from operations includes the aforementioned adjustments and also removes business development and integration expense, compensation for post-combination services, legal expenses related to a civil judgment, restructuring charges, and costs related to new accounting standard implementation, and adds back transitional service agreement income. Non-GAAP net income includes the foregoing adjustments related to non-GAAP income from operations, net of related income tax effects while removing transitional service agreement income and changes in contingent consideration. Non-GAAP EBITDA from operations includes the aforementioned items related to non-GAAP income from operations and also removes non-acquisition related depreciation expense. 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 tables 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 margin, 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, statements regarding NetScout’s revenue and earnings per share financial performance for fiscal year 2021, NetScout’s ability to continue to navigate the global pandemic and macroeconomic uncertainty, that NetScout’s business and operations have proven to be largely resilient due to our relevant solutions, trusted brand, strong customer relationships, dedicated team, and solid financial profile, that market trends such as, digital transformation, cloud migration, increased cyber threats, and 5G networks, position NetScout well, as “Guardians of the Connected World”, when we emerge from the global pandemic, constitute forward looking statements that involve risks and uncertainties. Actual results could differ materially from the forward-looking statements due to impacts known and unknown risk, uncertainties, assumptions, and other factors. Such factors include impacts from the COVID-19 pandemic, 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 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, 2020 and the Company’s subsequent Quarterly Report on Form 10-Q, both of 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.

©2020 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.

NETSCOUT SYSTEMS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
 
Three Months Ended Six Months Ended
September 30, September 30,

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue:
Product

$

91,979

 

$

102,775

 

$

163,672

 

$

178,494

 

Service

 

113,360

 

 

113,646

 

 

225,482

 

 

223,951

 

Total revenue

 

205,339

 

 

216,421

 

 

389,154

 

 

402,445

 

 
Cost of revenue:
Product

 

26,977

 

 

29,368

 

 

48,129

 

 

56,303

 

Service

 

31,923

 

 

29,764

 

 

63,751

 

 

57,572

 

Total cost of revenue

 

58,900

 

 

59,132

 

 

111,880

 

 

113,875

 

 
Gross profit

 

146,439

 

 

157,289

 

 

277,274

 

 

288,570

 

 
Operating expenses:
Research and development

 

46,455

 

 

50,058

 

 

91,836

 

 

93,785

 

Sales and marketing

 

60,300

 

 

73,067

 

 

119,734

 

 

146,592

 

General and administrative

 

20,573

 

 

25,177

 

 

45,726

 

 

47,388

 

Amortization of acquired intangible assets

 

15,363

 

 

16,132

 

 

30,624

 

 

32,275

 

Restructuring charges

 

(31

)

 

150

 

 

62

 

 

273

 

 
Total operating expenses

 

142,660

 

 

164,584

 

 

287,982

 

 

320,313

 

 
Income (loss) from operations

 

3,779

 

 

(7,295

)

 

(10,708

)

 

(31,743

)

Interest and other expense, net

 

(3,394

)

 

(3,616

)

 

(8,174

)

 

(8,015

)

 
Income (loss) before income tax expense

 

385

 

 

(10,911

)

 

(18,882

)

 

(39,758

)

Income tax expense

 

4,071

 

 

6,561

 

 

2,224

 

 

7,057

 

Net loss

$

(3,686

)

$

(17,472

)

$

(21,106

)

$

(46,815

)

 
 
Basic net loss per share

$

(0.05

)

$

(0.23

)

$

(0.29

)

$

(0.61

)

Diluted net loss per share

$

(0.05

)

$

(0.23

)

$

(0.29

)

$

(0.61

)

Weighted average common shares outstanding used in computing:
Net loss per share - basic

 

73,058

 

 

75,687

 

 

72,682

 

 

76,490

 

Net loss per share - diluted

 

73,058

 

 

75,687

 

 

72,682

 

 

76,490

 

 
 
NETSCOUT SYSTEMS, INC.
Consolidated Balance Sheets
(In thousands)
 

September 30,

March 31,

 

2020

 

 

2020

 

(Unaudited)
Assets
Current assets:
Cash, cash equivalents and marketable securities

$

427,846

 

$

386,458

 

Accounts receivable and unbilled costs, net

 

169,687

 

 

213,514

 

Inventories

 

26,223

 

 

22,227

 

Prepaid expenses and other current assets

 

45,652

 

 

37,544

 

 
Total current assets

 

669,408

 

 

659,743

 

 
Fixed assets, net

 

53,168

 

 

57,715

 

Goodwill and intangible assets, net

 

2,270,378

 

 

2,307,859

 

Long-term marketable securities

 

-

 

 

2,613

 

Operating lease right-of-use assets

 

65,562

 

 

68,583

 

Other assets

 

19,035

 

 

23,990

 

 
Total assets

$

3,077,551

 

$

3,120,503

 

 
 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable

$

18,083

 

$

20,004

 

Accrued compensation

 

61,842

 

 

75,632

 

Accrued other

 

34,717

 

 

22,743

 

Current portion of operating lease liabilities

 

11,325

 

 

10,337

 

Deferred revenue and customer deposits

 

236,240

 

 

270,281

 

 
Total current liabilities

 

362,207

 

 

398,997

 

 
Other long-term liabilities

 

14,646

 

 

10,039

 

Deferred tax liability

 

108,716

 

 

114,394

 

Accrued long-term retirement benefits

 

36,408

 

 

34,256

 

Long-term deferred revenue

 

99,581

 

 

104,240

 

Operating lease liabilities, net of current portion

 

66,673

 

 

70,658

 

Long-term debt

 

450,000

 

 

450,000

 

 
Total liabilities

 

1,138,231

 

 

1,182,584

 

 
Stockholders' equity:
Common stock

 

123

 

 

122

 

Additional paid-in capital

 

2,924,757

 

 

2,891,553

 

Accumulated other comprehensive loss

 

(1,258

)

 

(3,160

)

Treasury stock, at cost

 

(1,318,535

)

 

(1,305,935

)

Retained earnings

 

334,233

 

 

355,339

 

 
Total stockholders' equity

 

1,939,320

 

 

1,937,919

 

 
Total liabilities and stockholders' equity

$

3,077,551

 

$

3,120,503

 

 
NETSCOUT SYSTEMS, INC.
Reconciliation of Current GAAP to Current and Historical Non-GAAP Financial Measures
(In thousands, except per share data)
(Unaudited)
 
Three Months Ended

Three Months Ended

Six Months Ended
September 30, June 30, September 30,

 

2020

 

 

2019

 

 

2020

 

 

2020

 

 

2019

 

 
Revenue (GAAP)

$

205,339

 

$

216,421

 

$

183,815

 

$

389,154

 

$

402,445

 

Service deferred revenue fair value adjustment

 

1

 

 

48

 

 

2

 

 

3

 

 

96

 

Non-GAAP Revenue

$

205,340

 

$

216,469

 

$

183,817

 

$

389,157

 

$

402,541

 

 
Gross Profit (GAAP)

$

146,439

 

$

157,289

 

$

130,835

 

$

277,274

 

$

288,570

 

Service deferred revenue fair value adjustment

 

1

 

 

48

 

 

2

 

 

3

 

 

96

 

Share-based compensation expense (1)

 

2,154

 

 

2,187

 

 

1,595

 

 

3,749

 

 

3,921

 

Amortization of acquired intangible assets (2)

 

4,765

 

 

6,225

 

 

4,735

 

 

9,500

 

 

12,455

 

Acquisition related depreciation expense (6)

 

5

 

 

6

 

 

6

 

 

11

 

 

19

 

Non-GAAP Gross Profit

$

153,364

 

$

165,755

 

$

137,173

 

$

290,537

 

$

305,061

 

 
Income (loss) from Operations (GAAP)

$

3,779

 

$

(7,295

)

$

(14,487

)

$

(10,708

)

$

(31,743

)

Service deferred revenue fair value adjustment

 

1

 

 

48

 

 

2

 

 

3

 

 

96

 

Share-based compensation expense (1)

 

15,736

 

 

15,857

 

 

12,096

 

 

27,832

 

 

28,600

 

Amortization of acquired intangible assets (2)

 

20,128

 

 

22,357

 

 

19,996

 

 

40,124

 

 

44,730

 

Business development and integration expense (3)

 

-

 

 

39

 

 

16

 

 

16

 

 

18

 

New standard implementation expense (4)

 

-

 

 

-

 

 

-

 

 

-

 

 

9

 

Compensation for post-combination services (5)

 

63

 

 

135

 

 

64

 

 

127

 

 

328

 

Restructuring charges

 

(31

)

 

150

 

 

93

 

 

62

 

 

273

 

Acquisition related depreciation expense (6)

 

60

 

 

69

 

 

61

 

 

121

 

 

190

 

Transitional service agreement income (7)

 

101

 

 

275

 

 

-

 

 

101

 

 

1,184

 

Legal judgments expense (8)

 

-

 

 

-

 

 

2,804

 

 

2,804

 

 

-

 

Non-GAAP Income from Operations

$

39,837

 

$

31,635

 

$

20,645

 

$

60,482

 

$

43,685

 

 
Net Loss (GAAP)

$

(3,686

)

$

(17,472

)

$

(17,420

)

$

(21,106

)

$

(46,815

)

Service deferred revenue fair value adjustment

 

1

 

 

48

 

 

2

 

 

3

 

 

96

 

Share-based compensation expense (1)

 

15,736

 

 

15,857

 

 

12,096

 

 

27,832

 

 

28,600

 

Amortization of acquired intangible assets (2)

 

20,128

 

 

22,357

 

 

19,996

 

 

40,124

 

 

44,730

 

Business development and integration expense (3)

 

-

 

 

39

 

 

16

 

 

16

 

 

18

 

New standard implementation expense (4)

 

-

 

 

-

 

 

-

 

 

-

 

 

9

 

Compensation for post-combination services (5)

 

63

 

 

135

 

 

64

 

 

127

 

 

328

 

Restructuring charges

 

(31

)

 

150

 

 

93

 

 

62

 

 

273

 

Acquisition related depreciation expense (6)

 

60

 

 

69

 

 

61

 

 

121

 

 

190

 

Change in contingent consideration

 

-

 

 

(6

)

 

-

 

 

-

 

 

517

 

Legal judgments expense (8)

 

-

 

 

-

 

 

2,804

 

 

2,804

 

 

-

 

Income tax adjustments (9)

 

(4,027

)

 

181

 

 

(5,496

)

 

(9,523

)

 

(994

)

Non-GAAP Net Income

$

28,244

 

$

21,358

 

$

12,216

 

$

40,460

 

$

26,952

 

 
Diluted Net Loss Per Share (GAAP)

$

(0.05

)

$

(0.23

)

$

(0.24

)

$

(0.29

)

$

(0.61

)

Share impact of non-GAAP adjustments identified above

 

0.43

 

 

0.51

 

 

0.41

 

 

0.84

 

 

0.96

 

Non-GAAP Diluted Net Income Per Share

$

0.38

 

$

0.28

 

$

0.17

 

$

0.55

 

$

0.35

 

 
Shares used in computing non-GAAP diluted net income per share

 

73,594

 

 

76,310

 

 

73,454

 

 

73,521

 

 

77,387

 

 
NETSCOUT SYSTEMS, INC.
Reconciliation of Current GAAP to Current and Historical Non-GAAP Financial Measures - Continued
(In thousands)
(Unaudited)
 
Three Months Ended Three Months Ended Six Months Ended
September 30, June 30, September 30,

 

2020

 

 

2019

 

 

2020

 

 

2020

 

 

2019

 

 

(1

)

Share-based compensation expense included in these amounts
is as follows:
Cost of product revenue

$

344

 

$

345

 

$

245

 

$

589

 

$

612

 

Cost of service revenue

 

1,810

 

 

1,842

 

 

1,350

 

 

3,160

 

 

3,309

 

Research and development

 

4,935

 

 

4,820

 

 

3,781

 

 

8,716

 

 

8,639

 

Sales and marketing

 

5,357

 

 

5,288

 

 

3,992

 

 

9,349

 

 

9,423

 

General and administrative

 

3,290

 

 

3,562

 

 

2,728

 

 

6,018

 

 

6,617

 

Total share-based compensation expense

$

15,736

 

$

15,857

 

$

12,096

 

$

27,832

 

$

28,600

 

 

(2

)

Amortization expense related to acquired software and product
technology, tradenames, customer relationships included in these
amounts is as follows:
Cost of product revenue

$

4,765

 

$

6,225

 

$

4,735

 

$

9,500

 

$

12,455

 

Operating expenses

 

15,363

 

 

16,132

 

 

15,261

 

 

30,624

 

 

32,275

 

Total amortization expense

$

20,128

 

$

22,357

 

$

19,996

 

$

40,124

 

$

44,730

 

 

(3

)

Business development and integration expense included in
these amounts is as follows:
Research and development

$

-

 

$

-

 

$

-

 

$

-

 

$

43

 

General and administrative

 

-

 

 

39

 

 

16

 

 

16

 

 

(25

)

Total business development and integration expense

$

-

 

$

39

 

$

16

 

$

16

 

$

18

 

 

(4

)

New standard implementation expense included in these
amounts is as follows:
General and administrative

$

-

 

$

-

 

$

-

 

$

-

 

$

9

 

Total new standard implementation expense

$

-

 

$

-

 

$

-

 

$

-

 

$

9

 

 

(5

)

Compensation for post-combination services included in these
amounts is as follows:
Research and development

$

62

 

$

135

 

$

63

 

$

125

 

$

328

 

Sales and marketing

 

1

 

 

-

 

 

1

 

 

2

 

 

-

 

Total compensation for post-combination services

$

63

 

$

135

 

$

64

 

$

127

 

$

328

 

 

(6

)

Acquisition related depreciation expense included in these
amounts is as follows:
Cost of product revenue

$

3

 

$

4

 

$

4

 

$

7

 

$

14

 

Cost of service revenue

 

2

 

 

2

 

 

2

 

 

4

 

 

5

 

Research and development

 

42

 

 

48

 

 

42

 

 

84

 

 

131

 

Sales and marketing

 

9

 

 

9

 

 

9

 

 

18

 

 

19

 

General and administrative

 

4

 

 

6

 

 

4

 

 

8

 

 

21

 

Total acquisition related depreciation expense

$

60

 

$

69

 

$

61

 

$

121

 

$

190

 

 

(7

)

Transitional service agreement income included in these
amounts is as follows:
Research and development

$

11

 

$

10

 

$

-

 

$

11

 

$

112

 

Sales and marketing

 

16

 

 

42

 

 

-

 

 

16

 

 

168

 

General and administrative

 

74

 

 

223

 

 

-

 

 

74

 

 

904

 

Other Income (expense), net

 

(101

)

 

(275

)

 

-

 

 

(101

)

 

(1,184

)

Total transitional service agreement income

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

 

(8

)

Legal judgments expense included in these amounts is
as follows:
General and administrative

$

-

 

$

-

 

$

2,804

 

$

2,804

 

$

-

 

Total legal judgments expense

$

-

 

$

-

 

$

2,804

 

$

2,804

 

$

-

 

 

(9

)

Total income tax adjustment included in these
amounts is as follows:
Tax effect of non-GAAP adjustments above

$

(4,027

)

$

181

 

$

(5,496

)

$

(9,523

)

$

(994

)

Total income tax adjustments

$

(4,027

)

$

181

 

$

(5,496

)

$

(9,523

)

$

(994

)

 
NetScout Systems, Inc.
Reconciliation of Current GAAP to Current and Historical Non-GAAP Financial Measures -
Non-GAAP EBIDTA from Operations
(In thousands)
(Unaudited)
 
 
 
Three Months Ended Three Months Ended Six Months Ended
September 30, June 30, September 30,

 

2020

 

2019

 

 

2020

 

 

2020

 

 

2019

 

 
Income (loss) from operations (GAAP)

$

3,779

$

(7,295

)

$

(14,487

)

$

(10,708

)

$

(31,743

)

Previous adjustments to determine non-GAAP income from operations

 

36,058

 

38,930

 

 

35,132

 

 

71,190

 

 

75,428

 

Non-GAAP Income from operations

 

39,837

 

31,635

 

 

20,645

 

 

60,482

 

 

43,685

 

 
Depreciation excluding acquisition related

 

6,955

 

6,905

 

 

5,952

 

 

12,907

 

 

13,746

 

 
Non-GAAP EBITDA from operations

$

46,792

$

38,540

 

$

26,597

 

$

73,389

 

$

57,431

 

 

 

Investors
Anthony Piazza
Vice President, Corporate Finance
978-614-4286
IR@netscout.com

Media
Maribel Lopez
Manager, Marketing & Corporate Communications
781-362-4330
Maribel.Lopez@netscout.com

Source: NETSCOUT SYSTEMS, INC.

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