Exhibit 99.1
NetScout Systems Reports Fourth Quarter & Year-End
Financial Results for Fiscal 2007
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