Exhibit 99.1
NetScout Systems Reports Fourth Quarter & Year-End Financial Results For
Fiscal 2004
WESTFORD, Mass., April 28 /PRNewswire-FirstCall/ -- NetScout Systems, Inc.
(Nasdaq: NTCT), a leading provider of network performance management
solutions, today announced financial results for its fourth quarter and fiscal
year ended March 31, 2004.
Revenue for the fourth quarter of fiscal year 2004 was $19.5 million,
compared to revenue of $18.9 million in the previous quarter and revenue of
$17.7 million in the fourth quarter of fiscal year 2003. Net loss for the
quarter was $177,000, or ($0.01) per basic and diluted share, compared to net
income of $184,000, or $0.01 per diluted share, for the previous quarter and
compared to a net loss of $354,000, or ($0.01) per basic and diluted share, in
the fourth quarter of fiscal year 2003.
For the fiscal year ended March 31, 2004, NetScout reported revenue of
$71.5 million, flat compared to revenue of $71.7 million for the fiscal year
ended March 31, 2003. The net loss for the fiscal year ended March 31, 2004
was $545,000, or ($0.02) per basic and diluted share, compared to a net loss
of $2.5 million, or ($0.08) per basic and diluted share, for the prior fiscal
year.
"We are very pleased with the results of this quarter and the consistent
improvements our business has been experiencing in each successive quarter of
fiscal year 2004," said Anil Singhal, President and CEO of NetScout Systems.
"For the last three quarters, both total revenue as well as product revenue
have grown sequentially with stronger order flow and improving visibility.
Over the last three years, despite the tough economic climate, we maintained
our commitment to R&D investment in our CDM(R) strategy, preserving our
precious human resources and talent while remaining cash flow positive. We
believe that our strategy is starting to deliver results, putting NetScout in
a much stronger competitive position than ever before. As we enter the new
fiscal year, we expect to build further upon the successes we have achieved so
far."
Financial Highlights for the Fourth Quarter:
-- Total revenue increased 3% sequentially and increased 10% from the
fourth quarter of fiscal year 2003. Product revenue increased 5%
sequentially and increased 15% from the fourth quarter of fiscal year
2003. Service revenue increased 1% sequentially and increased 14% from
the fourth quarter of fiscal year 2003. Royalty revenue increased 8%
sequentially and decreased 56% from the fourth quarter of fiscal year
2003.
-- Gross margin was 76% of total revenue, flat both sequentially and
compared to the fourth quarter of fiscal year 2003.
-- Cash flow from operations was positive.
-- Cash and short and long-term marketable securities increased by $1.7
million to $75.5 million in the fourth quarter and increased by $4.2
million year-over-year.
-- 39 new customers were added worldwide.
-- 283 customers made repeat purchases.
-- 58 customers with order volume over $100,000 were received.
-- Direct sales represented 48% of total revenue; indirect sales to
resellers represented 52% of total revenue.
-- International business comprised approximately 23% of total revenue.
Product and Company Highlights for the Fourth Quarter:
-- NetScout released new features for monitoring the performance of
Citrix-hosted applications on converged networks, allowing customers to
monitor individual or groups of Citrix-based applications, measure
response time, proactively manage faults, rapidly troubleshoot problems
and dynamically plan network bandwidth changes.
-- NetScout announced the nGenius(R) Express Linux Appliance, a server
with Red Hat's Enterprise Linux operating system and pre-installed with
nGenius(R) Performance Manager 2.0.1 for enterprises preferring Unix-
based server operating systems.
-- NetScout added functionality to its SAN monitoring probe with
performance monitoring and reporting for Virtual SAN (VSAN) technology
in Cisco Fibre Channel SAN implementations. Features include expanded
troubleshooting with new switch roving support. The features are
available in a firmware upgrade to the nGenius(R) 9800 Fibre Channel
Probe and software enhancements to nGenius Performance Manager 2.0.1.
-- NetScout expanded its sales channels in Asia by signing a new
partnership agreement with Stark Technology Inc., a major provider of
information technology solutions in Taiwan.
Fiscal Year 2004 in Review:
-- During the year NetScout delivered a major product release, the nGenius
Performance Manager 2.0 series and related nGenius Probe(R) firmware
6.0 series, the first solution in the market to unify the information,
features and functions of multiple performance management disciplines
within a single product. The solution delivers network and application
monitoring, capacity planning and reporting, troubleshooting, fault
prevention and service level management using enterprise-wide
information that has been gathered and analyzed using NetScout's
patent-pending CDM(TM) Technology. Key features include the following:
-- The ability to gather and analyze flows from network infrastructure
devices, such as routers and switches, supporting partnerships with
Cisco, Foundry and Extreme.
-- A common framework for passive and active response time measurement.
-- A distributed server architecture for virtually unlimited
scalability.
-- Power Alarms(TM) that automatically collect detailed evidence for
troubleshooting.
-- Workspaces(TM) for real-time troubleshooting and planning.
-- Enhanced monitoring for QoS classified application traffic.
-- Enhanced application and protocol support for applications such as
Citrix, IP-based storage protocols, SIP for Voice-over-IP traffic,
and packet capture and decode for 450 protocols and applications,
including wireless and multicast.
-- Special interfaces that allow partners and end-users to tap into the
CDM data repository for additional applications in important areas
of security forensics, virus tracking, billing, modeling and
simulation and policy-based orchestration.
-- 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, or simultaneous
monitoring of Fast Ethernet LAN and ATM WAN traffic. In addition the
Probe extends security visibility into the WAN by allowing a Network
Intrusion Detection System to access WAN traffic using the nGenius(R)
Flow Director probe option.
-- NetScout was awarded ISO 9001:2000 certification, demonstrating the
Company's ongoing commitment to provide the highest-quality products
and service to its customers.
-- During the year NetScout added 27 partners to its channel partner
program, including several alliances in Asia: Comstor (Singapore),
Stark Technology (Taiwan), nMetrics Pty Ltd. (Australia).
-- Customer implementations of nGenius(R) during the year include: China
Telecom (China), Jet Propulsion Laboratory, Sony Electronics, Verizon
Information Services, Defense Intelligence Agency, Goodyear Tire &
Rubber Company, Electrolux (Sweden), University of California at San
Francisco, American Red Cross, Great River Energy, Factiva, Arizona
Supreme Court, Kaiser Permanente, Deutsche Angestellten-Krankenkasse
(Germany), Catalina Marketing, Skandia (Sweden), Hanover Compressor
Company, Phoenix Companies, U.S. Coast Guard, Colorado Division of
Wildlife, Kodak, Shin Kong Life (Taiwan), Georgia-Pacific, Food Lion,
Scandinavian IT Group (Sweden) and Hallmark Cards, Inc.
Guidance:
For the seasonally slow first quarter of fiscal year 2005, the Company
expects revenue to be in the range of $19 million to $20 million and net
income per diluted share to be in the range of ($0.01) 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
4:30 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 888-273-9890 for U.S./Canada and 612-288-0340 for international
callers. A replay of the call will be available after 8:00 p.m. ET on April
28 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
728286.
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 December 31, 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
Statements of Operations
(In thousands)
(Unaudited)
Three Months Ended Twelve Months Ended
March 31, March 31,
2004 2003 2004 2003
Revenue:
Product $11,746 $10,223 $41,442 $41,696
Service 7,314 6,441 28,331 24,527
License and royalty 466 1,053 1,761 5,435
Total revenue 19,526 17,717 71,534 71,658
Cost of revenue:
Product(1) 3,534 3,070 13,135 13,282
Service (including stock-based
compensation of
$-, $1, $2 and $6,
respectively) 1,111 1,203 4,243 4,565
Total cost of revenue 4,645 4,273 17,378 17,847
Gross margin 14,881 13,444 54,156 53,811
Operating expenses:
Research and development (including
stock-based compensation of
$23, $42, $118 and $821,
respectively)(2) 4,189 4,266 14,704 17,100
Sales and marketing (including
stock-based compensation of
$3, $11, $16 and $65, respectively) 9,725 8,091 34,362 33,380
General and administrative
(including stock-based
compensation
of $-, $1, $- and $6, respectively) 1,772 1,494 6,524 7,447
Amortization of other intangible
assets - 272 272 1,088
Total operating expenses 15,686 14,123 55,862 59,015
Income (Loss) from operations (805) (679) (1,706) (5,204)
Interest income and other expenses,
net 170 248 694 1,145
Income (loss) before income tax
expense (benefit) (635) (431) (1,012) (4,059)
Income tax expense (benefit) (458) (77) (467) (1,520)
Net income (loss) $(177) $(354) $(545) $(2,539)
Basic net income (loss) per share $(0.01) $(0.01) $(0.02) $(0.08)
Diluted net income (loss) per share $(0.01) $(0.01) $(0.02) $(0.08)
Shares used in computing:
Basic net income (loss) per share 30,346 29,981 30,155 29,897
Diluted net income (loss) per
share 30,346 29,981 30,155 29,897
(1) Cost of product revenue includes amortization of capitalized software
of $166 and $442 for the three and twelve months ended March 31, 2004.
(2) Research and development costs are net of capitalized software
development costs of $0 for the three months ended March 31, 2004 and
$1,325 for the twelve months ended March 31, 2004.
NetScout Systems, Inc.
Condensed Consolidated
Balance Sheet
(In thousands)
(Unaudited)
March 31, March 31,
2004 2003
Assets
Current assets:
Cash and cash equivalents $19,011 $43,823
Marketable securities 50,432 27,442
Accounts receivable, net 10,851 11,906
Inventories 3,366 2,982
Refundable income taxes 2,102 1,226
Deferred income taxes 1,667 1,782
Prepaids and other current assets 2,175 2,088
Total current assets 89,604 91,249
Fixed assets, net 5,415 6,912
Capitalized software development
costs 884 -
Goodwill, net 28,839 28,839
Other intangible assets, net - 272
Deferred income taxes 8,378 7,651
Long-term prepaid expense 45
Long-term marketable securities 6,016 -
Total assets $139,181 $134,923
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $1,984 $1,403
Accrued compensation 4,481 3,658
Accrued other 2,140 1,819
Income tax payable 490 -
Deferred revenue 16,974 16,242
Total current liabilities 26,069 23,122
Stockholders' equity:
Common stock 34 34
Additional paid-in capital 110,683 108,835
Accumulated other comprehensive
income 7 7
Deferred compensation - (132)
Treasury stock (26,490) (26,366)
Retained earnings 28,878 29,423
Total stockholders' equity 113,112 111,801
Total liabilities and
stockholders' equity $139,181 $134,923
SOURCE NetScout Systems, Inc.
-0- 04/28/2004
/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 STW
SU: ERN CCA MAV