Exhibit 99.1
NetScout Systems Reports Second Quarter Fiscal 2004 Financial Results
WESTFORD, Mass., Oct. 14 /PRNewswire-FirstCall/-- NetScout Systems, Inc.
(Nasdaq: NTCT), a leading provider of network performance management
solutions, today announced financial results for its second quarter of fiscal
year 2004.
Revenue for the second quarter of fiscal year 2004 ended September 30th
was $17.5 million, compared to revenue of $15.6 million in the previous
quarter and revenue of $17.9 million in the second quarter of fiscal year
2003. Results for the quarter were breakeven, or $0.00 per diluted share,
compared to a net loss of ($552,000), or ($0.02) per basic and diluted share,
for the previous quarter and compared to a net loss of ($710,000), or ($0.02)
per basic and diluted share, in the second quarter of fiscal year 2003.
"Our results this quarter were in-line with our expectations," said Anil
Singhal, President and CEO of NetScout Systems. "More importantly, our
customers and prospects are beginning to show strong interest in our recently
released products that deliver unified performance management through our
market-leading CDM(TM) technology. They are understanding the value of a
single management solution that provides a cost-effective and uncluttered
environment while ensuring the delivery of business services across their
networks."
Financial Highlights:
-- Total revenue increased 12% sequentially and decreased 2% from the
second quarter of fiscal year 2003. Product revenue increased 14%
sequentially and was down 6% from the second quarter of fiscal year
2003. Service revenue increased 10% sequentially and increased 21%
from the second quarter of fiscal year 2003. Royalty revenue increased
6% sequentially and was down 70% from the second quarter of fiscal year
2003.
-- Gross margin was 75% of total revenue, flat sequentially and up 1 point
compared to the second quarter of fiscal year 2003.
-- Cash flow used in operations was $352,000.
-- Cash and short and long-term marketable securities decreased by
$969,000 in the second quarter to $72.2 million.
-- 21 new customers were added worldwide in the second quarter.
-- 256 customers made repeat purchases.
-- 34 orders over $100,000 were received.
-- Direct sales represented 54% of total revenue; reseller revenue
represented 46% of total revenue.
-- International business comprised approximately 14% of total revenue in
the second quarter.
Product and Company Highlights:
-- During the quarter NetScout began shipments of the major product
releases announced in July. The nGenius(R) Performance Manager 2.0 and
related nGenius Probe firmware 6.0 products represent the first
solution in the market to unify the information, features and functions
of multiple performance management disciplines within a single product
while also leveraging and integrating a vast array of network and
application performance management data sources.
-- NetScout released the nGenius(R) Two Port T3/E3 ATM Probe that
addresses a widespread need among enterprises for cost-effective
monitoring and management of ATM environments. The probe delivers
several market firsts for NetScout:
* Simultaneous monitoring of two separate or two redundant wide area
T3/E3 ATM circuits.
* Simultaneous monitoring of Fast Ethernet LAN and ATM WAN traffic.
* Extending security visibility into the WAN by allowing a Network
Intrusion Detection System (NIDS) to access WAN traffic using the
nGenius Flow Director probe option.
-- NetScout hosted its second annual User Forum conference in early
October. The three-day conference, titled "Partners in Performance --
Putting CDM to Work," provided a forum for NetScout customers to
exchange views about current and future product capabilities and about
the value that CDM brings to their businesses. Customers participated
worldwide from financial services, telecommunications, pharmaceutical,
healthcare, retail, government and other sectors.
Guidance:
For the third quarter of fiscal 2004, the Company expects revenue to be in
the range of $17.5 million to $18.5 million and loss per share to be in the
range of ($0.02) to $0.00. The Company expects to be cash neutral in the
quarter.
Conference Call Instructions:
The Company invites shareholders to listen to its conference call today at
4:15 p.m. ET, which will be webcast live through the Company's website at
http://www.netscout.com. Alternatively, people can listen to the call by
dialing 800-450-0788 for U.S./Canada and 612-332-0819 for international
callers. A replay of the call will be available after 7:30 p.m. ET on October
14 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
701259.
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(R) 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 strategic relationships with Cisco Systems and
other 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(R) product
platform probes and software solutions and the implementation of the company's
CDM(TM) 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, 2003 and its quarterly report on Form 10-Q for the quarter
ended June 30, 2003 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. CDM and 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 Balance Sheets
(In thousands)
(Unaudited)
Sept. 30, March 31,
2003 2003
Assets
Current assets:
Cash and cash equivalents $30,723 $43,823
Marketable securities 34,986 27,442
Accounts receivable, net 10,758 11,906
Inventories 2,231 2,982
Refundable income taxes 1,567 1,226
Deferred income taxes 1,792 1,782
Prepaids and other current assets 1,064 2,088
Total current assets 83,121 91,249
Fixed assets, net 6,247 6,912
Capitalized software development
costs 1,215 -
Goodwill, net 28,839 28,839
Other intangible assets, net - 272
Deferred income taxes 7,773 7,651
Long-term marketable securities 6,503 -
Total assets $133,698 $134,923
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $2,392 $1,403
Accrued compensation 3,703 3,658
Accrued other 1,880 1,819
Deferred revenue 14,260 16,242
Total current liabilities 22,235 23,122
Stockholders' equity:
Common stock 34 34
Additional paid-in capital 109,108 108,835
Accumulated other comprehensive
income (7) 7
Deferred compensation (53) (132)
Treasury stock (26,490) (26,366)
Retained earnings 28,871 29,423
Total stockholders' equity 111,463 111,801
Total liabilities and
stockholders' equity $133,698 $134,923
NetScout Systems, Inc.
Condensed Consolidated Statements of Operations
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
September 30, September 30,
2003 2002 2003 2002
Revenue:
Product $9,878 $10,511 $18,506 $20,832
Service 7,192 5,946 13,749 11,685
License and royalty 445 1,480 863 3,269
Total revenue 17,515 17,937 33,118 35,786
Cost of revenue:
Product(1) 3,358 3,475 6,139 6,849
Service (including stock-based
compensation of $1, $1, $2 and
$3,
respectively) 1,022 1,160 2,066 2,134
Total cost of revenue 4,380 4,635 8,205 8,983
Gross margin 13,135 13,302 24,913 26,803
Operating expenses:
Research and development (including
stock-based compensation of
$32, $46, $71 and $733,
respectively)(2) 3,670 3,982 6,679 8,784
Sales and marketing (including
stock-based compensation of
$3, $16, $10 and $37, respectively) 8,038 8,316 15,982 16,787
General and administrative
(including stock-based compensation
of $-, $2, $- and $4, respectively) 1,550 2,138 3,199 4,245
Amortization of other intangible
assets - 272 272 544
Total operating expenses 13,258 14,708 26,132 30,360
Loss from operations (123) (1,406) (1,219) (3,557)
Interest income and other expenses, net 160 326 357 639
Income (loss) before income tax expense
(benefit) 37 (1,080) (862) (2,918)
Income tax expense (benefit) 37 (370) (310) (1,061)
Net income (loss) $- $(710) $(552) $(1,857)
Basic net income (loss) per share $- $(0.02) $(0.02) $(0.06)
Diluted net income (loss) per share $- $(0.02) $(0.02) $(0.06)
Shares used in computing:
Basic net income (loss) per share 30,058 29,865 30,046 29,834
Diluted net income (loss) per
share 30,585 29,865 30,046 29,834
(1) Cost of product revenue includes amortization of capitalized software
of $110 for the three and six months ended September 30, 2003.
(2) Research and development costs are net of capitalized software
development costs of $257 for the three months
ended September 30, 2003 and $1,325 for the six months ended September
30, 2003.
SOURCE NetScout Systems, Inc.
-0- 10/14/2003
/CONTACT: Catherine Taylor, Director of Investor Relations of NetScout
Systems, Inc., +1-978-614-4286, IR@netscout.com /
/Web site: http://www.netscout.com/
(NTCT)
CO: NetScout Systems, Inc.
ST: Massachusetts
IN: CPR
SU: ERN CCA