NETSCOUT Reports Third Quarter Fiscal Year 2024 Financial Results
NETSCOUT SYSTEMS, INC. (NASDAQ: NTCT) announced its Q3 FY24 financial results, reporting a total revenue of $218.1 million, a decrease from $269.5 million in Q3 FY23. The company experienced a non-cash goodwill impairment charge, resulting in a net loss of $132.6 million for Q3 FY24. The loss from operations was $134.4 million, with a negative operating margin of -61.7%. However, non-GAAP EPS performance is expected to be at the higher end of the range due to cost containment actions. The company's cash, cash equivalents, short- and long-term marketable securities, and investments decreased to $330.1 million as of December 31, 2023, from $427.9 million as of March 31, 2023.
Negative
The company experienced a significant decrease in total revenue in Q3 FY24 compared to Q3 FY23
The non-cash goodwill impairment charge resulted in a net loss of $132.6 million for Q3 FY24
The company's cash and marketable securities decreased from $427.9 million to $330.1 million
NETSCOUT's Q3 FY24 financial results indicate a significant year-over-year decline in total revenue , with a notable decrease in product revenue from 55% to 44% of total revenue. The non-cash goodwill impairment charge of $167.1 million is a key factor in the company's loss from operations, which contrasts sharply with the income reported in the same quarter of the previous fiscal year. This impairment suggests a reassessment of the company's intangible assets' value, potentially due to changes in business prospects or market conditions.
The company's non-GAAP measures , however, paint a more favorable picture, with a smaller decline in non-GAAP income from operations and a maintained non-GAAP operating margin of 29.0%. The emphasis on non-GAAP results, which exclude certain expenses and non-recurring charges, may indicate management's focus on presenting an adjusted earnings perspective that they believe more accurately reflects the company's operational performance.
From an investment standpoint, the updated financial outlook for FY24, with expected revenues at the low end of the target range and a non-GAAP EPS at the higher end, suggests cautious optimism. The company's cost containment actions seem to be mitigating some of the negative impacts on profitability. However, the substantial GAAP loss per share forecasted due to the goodwill impairment charge could raise concerns about the company's valuation and future earnings potential.
NETSCOUT's performance reflects broader market challenges , such as constrained customer spending and elongated sales cycles, particularly impacting the service assurance segment. Despite these challenges, the growth in the cybersecurity business highlights a strategic shift in customer priorities, aligning with industry trends that emphasize security in an increasingly digital and connected landscape.
The company's strategic focus on its 'Visibility Without Borders' platform suggests an attempt to capitalize on the growing demand for comprehensive network visibility and security solutions. As enterprises and service providers adapt to complex digital ecosystems, NETSCOUT's offerings may become more integral to maintaining operational continuity and defending against cyber threats.
Investors might also consider the company's share repurchase activity during Q3 as a sign of confidence in the company's value proposition. The repurchase of shares at an average price of $26.66, totaling approximately $18.8 million, indicates management's belief that the stock is undervalued and represents a good investment for the company's capital.
The reported growth in NETSCOUT's cybersecurity business amidst overall revenue decline is indicative of the resilience of the cybersecurity sector . Enterprises and service providers continue to prioritize cybersecurity investments, which is consistent with the increasing threat landscape and the need for robust defense mechanisms in the digital age.
The focus on 'Visibility Without Borders' suggests that NETSCOUT is strategically positioning itself to offer solutions that cater to the complexities of modern networks, including cloud environments, virtualized infrastructure and IoT devices. This is in line with the industry's shift towards integrated platforms that can provide end-to-end visibility and security.
The company's ability to navigate the current market environment and deliver shareholder value despite headwinds could be a testament to the strength of its cybersecurity offerings and its alignment with essential market needs. However, the long-term success will likely depend on continued innovation and the ability to adapt to the evolving cybersecurity landscape.
01/25/2024 - 07:30 AM
WESTFORD, Mass. --(BUSINESS WIRE)--
NETSCOUT SYSTEMS, INC. (NASDAQ: NTCT), a leading provider of performance management, cybersecurity, and DDoS attack protection solutions, today announced financial results for its third quarter ended December 31, 2023.
Remarks by Anil Singhal, NETSCOUT’s President and Chief Executive Officer:
“We delivered third fiscal quarter revenue ahead of expectations as we benefitted from the timing of calendar year-end customer budget spending. While the market environment remains challenging with constrained customer spending and elongated sales cycles, primarily impacting our service assurance business, our cybersecurity business once again grew year-over-year as enterprise and service provider customers continue to prioritize spending in this area.
“Looking ahead, we expect to deliver full fiscal year 2024 revenue at the low-end of our previously disclosed target range as we continue to navigate the current market environment. From a bottom-line standpoint, our GAAP results for the fiscal year will include a third quarter non-cash goodwill impairment charge. Our non-GAAP EPS performance is expected to be at the higher end of our previously disclosed range due to benefits from our ongoing cost containment actions. Strategically, we remain focused on leveraging our industry leading ‘Visibility Without Borders’ platform to help customers tackle the performance, availability, and security challenges of the increasingly complex connected digital world while delivering shareholder value.”
Q3 FY24 Financial Results
Total revenue (GAAP and non-GAAP) for the third quarter of fiscal year 2024 was $218.1 million , compared with $269.5 million (GAAP and non-GAAP) in the third quarter of fiscal year 2023. A reconciliation of GAAP and non-GAAP results is included in the financial tables below.
Product revenue (GAAP and non-GAAP) for the third quarter of fiscal year 2024 was $95.8 million , or approximately 44% of total revenue in the period. This compares with product revenue (GAAP and non-GAAP) of $149.5 million in the third quarter of fiscal year 2023, which was approximately 55% of total revenue in the period.
Service revenue (GAAP and non-GAAP) for the third quarter of fiscal year 2024 was $122.2 million , or approximately 56% of total revenue in the period. This compares with service revenue (GAAP and non-GAAP) of $120.1 million in the third quarter of fiscal year 2023, which was approximately 45% of total revenue for the period.
NETSCOUT’s third quarter of fiscal 2024 loss from operations (GAAP) was $134.4 million , which includes a non-cash goodwill impairment charge of $167.1 million . This compares with income from operations of $63.8 million in the third quarter of fiscal year 2023. The Company’s operating margin (GAAP) was -61.7% in the third quarter of fiscal year 2024, versus 23.7% in the same period of fiscal year 2023. Non-GAAP income from operations was $63.2 million with a non-GAAP operating margin of 29.0% in the third quarter of fiscal year 2024. This compares to non-GAAP income from operations of $95.6 million and a non-GAAP operating margin of 35.5% in the third quarter of fiscal year 2023. Non-GAAP EBITDA from operations in the third quarter of fiscal year 2024 was $67.6 million , or 31.0% of non-GAAP quarterly revenue for the period. This compares to non-GAAP EBITDA from operations of $100.9 million in the third quarter of fiscal year 2023, or 37.4% of non-GAAP quarterly revenue for the period.
Net loss (GAAP) for the third quarter of fiscal year 2024 was $132.6 million , or ($1.87 ) per share (diluted), which includes the previously mentioned non-cash goodwill impairment charge, versus net income (GAAP) of $52.6 million , or $0.72 per share (diluted), for the third quarter of fiscal year 2023. On a non-GAAP basis, net income for the third quarter of fiscal year 2024 was $52.0 million , or $0.73 per share (diluted), compared with $73.0 million , or $1.00 per share (diluted), for the third quarter of fiscal year 2023.
As of December 31, 2023, cash, cash equivalents, short- and long-term marketable securities, and investments were $330.1 million , compared with $427.9 million as of March 31, 2023. During the third quarter of fiscal year 2024, NETSCOUT repurchased a total of 705,892 shares of its common stock at an average price of $26.66 per share for an aggregate purchase price of approximately $18.8 million . The Company’s outstanding debt balance under its revolving credit facility was $100 million as of December 31, 2023. The Company’s $800 million revolving credit facility will expire in July 2026.
Nine-Months FY24 Financial Results
Total revenue (GAAP and non-GAAP) for the first nine months of fiscal year 2024, was $626.0 million , compared with total revenue (GAAP and non-GAAP) of $706.4 million in the first nine months of fiscal year 2023. A reconciliation of GAAP and non-GAAP results is included in the financial tables below.
Product revenue (GAAP and non-GAAP) for the first nine months of fiscal year 2024 was $271.0 million , compared with $359.5 million in the first nine months of fiscal year 2023.
Service revenue (GAAP and non-GAAP) for the first nine months of fiscal year 2024 was $355.0 million , compared with $346.9 million in the first nine months of fiscal year 2023.
NETSCOUT’s loss from operations (GAAP) for the first nine months of fiscal year 2024 was $112.9 million , which includes the previously mentioned $167.1 million non-cash goodwill impairment charge that occurred in the third quarter of fiscal year 2024. This compares with income from operations (GAAP) of $76.0 million in the first nine months of fiscal year 2023. The Company’s operating margin (GAAP) for the first nine months of fiscal year 2024 was -18.0% , versus 10.8% in the first nine months of fiscal year 2023. The Company’s non-GAAP income from operations for the first nine months of fiscal year 2024 was $148.0 million with a non-GAAP operating margin of 23.6% , compared with non-GAAP income from operations of $174.1 million and a non-GAAP operating margin of 24.6% for the first nine months of fiscal year 2023. The Company’s non-GAAP EBITDA from operations for the first nine months of fiscal year 2024 was $162.2 million , or 25.9% of non-GAAP total revenue, versus non-GAAP EBITDA from operations of $189.8 million , or 26.9% of non-GAAP total revenue, in the first nine months of fiscal year 2023.
For the first nine months of fiscal year 2024, NETSCOUT’s net loss (GAAP) was $115.3 million , or ($1.61 ) per share (diluted), primarily due to the previously mentioned $167.1 million non-cash goodwill impairment charge that occurred in the third quarter of fiscal year 2024. This compares with a net income (GAAP) of $62.9 million , or $0.86 per share (diluted), for the first nine months of fiscal year 2023. Non-GAAP net income for the first nine months of fiscal year 2024 was $119.3 million , or $1.65 per share (diluted), compared with non-GAAP net income of $132.4 million , or $1.81 per share (diluted), for the first nine months of fiscal year 2023.
Financial Outlook
Upon review of its year-to-date performance and the future timing and delivery of orders, NETSCOUT has updated its financial outlook for fiscal year 2024 as follows:
Revenue (GAAP and non-GAAP) is now expected to be approximately $840 million , at the low end of the previously disclosed range of $840 million to $860 million .
GAAP loss per share is now expected to be in the range of ($1.29 ) to ($1.24 ), compared to the previous range of $0.69 to $0.89 , primarily due to the non-cash goodwill impairment charge in the third quarter of fiscal 2024. Non-GAAP net income per share (diluted) is now expected to be in the range of $2.15 to $2.20 , at the higher end of the previously disclosed range of $2.00 to $2.20 .
NETSCOUT now expects the effective tax rate for fiscal year 2024 to be closer to the lower end of the outlook range of 20% to 22% . It also now expects approximately 72 million to 73 million diluted shares outstanding at the end of fiscal year 2024, which includes the benefit of its recent share repurchase program. This compares with the prior estimated range of 73 million to 74 million diluted shares outstanding.
A reconciliation between GAAP and non-GAAP numbers for NETSCOUT’s fiscal year 2024 outlook is included in the financial tables below.
Conference Call Instructions:
NETSCOUT will host a conference call to discuss its third-quarter fiscal year 2024 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, investors can listen to the call by dialing (203) 518-9708. The conference call ID is NTCTQ324. A replay of the call will be available after 12:00 p.m. ET today, for approximately one week. The number for the replay is (800) 839-2383 for U.S. /Canada and (402) 220-7202 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 gross profit, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income, non-GAAP diluted net income per share and non-GAAP earnings before interest and other expense, income taxes, depreciation, and amortization (Non-GAAP EBITDA) from operations. Non-GAAP gross profit 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 gain on the divestiture of a business, legal expenses related to civil judgments, restructuring charges, and goodwill impairment charges. Non-GAAP operating margin includes the foregoing adjustments related to non-GAAP income from operations. Non-GAAP net income includes the foregoing adjustments related to non-GAAP income from operations, and also removes change in fair value of derivative instruments, net of related income tax effects. Non-GAAP diluted net income per share includes the foregoing adjustments related to non-GAAP net income. 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 (gross profit, income from operations, 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) protects the connected world from cyberattacks and performance disruptions through advanced network detection and response and pervasive network visibility. Powered by our pioneering deep packet inspection at scale, we serve the world’s largest enterprises, service providers, and public sector organizations. Learn more at www.netscout.com or follow @NETSCOUT on LinkedIn, Twitter, or Facebook.
Safe Harbor
Certain information provided in this press release includes forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Examples of forward-looking statements include statements regarding our future financial performance or position, results of operations, business strategy, plans and objectives of management for future operations, and other statements that are not historical fact. You can identify forward-looking statements by their use of forward-looking words such as “may,” “will,” “anticipate,” “expect,” “believe,” “estimate,” “intend,” “plan,” “should,” “seek,” or other comparable terms. Investors are cautioned that such forward-looking statements in this press release including, without limitation, statements regarding NETSCOUT’s financial results, its financial outlook for the full fiscal year 2024, its focus on leveraging its industry leading ‘Visibility Without Borders’ platform to help customers tackle the performance, availability, and security challenges of the increasingly complex connected digital world while delivering shareholder value, and statements relating to the potential benefit of a market for the Company’s products and regarding product releases, updates, and functionality all constitute forward looking statements that involve risks and uncertainties. Actual results could differ materially from the forward-looking statements due to known and unknown risks, uncertainties, assumptions, and other factors. Such factors include, but are not limited to, macroeconomic factors and 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; liquidity concerns at, and failures of, banks and other financial institutions; 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 the Company has, and their strategic response to the Company’s products; the Company’s 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. The risks included above are not exhaustive. We caution readers not to place undue reliance on any forward-looking statements included in this press release which speak only as to the date of this press release. We undertake no responsibility to update or revise any forward-looking statements, except as required by law. 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, 2023, filed 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.
©2024 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
Nine Months Ended
December 31,
December 31,
2023
2022
2023
2022
Revenue:
Product
$
95,832
$
149,452
$
271,038
$
359,519
Service
122,240
120,092
354,974
346,918
Total revenue
218,072
269,544
626,012
706,437
Cost of revenue:
Product
15,251
25,281
48,006
77,967
Service
28,373
31,521
89,066
94,190
Total cost of revenue
43,624
56,802
137,072
172,157
Gross profit
174,448
212,742
488,940
534,280
Operating expenses:
Research and development
37,023
42,558
117,655
129,932
Sales and marketing
69,124
66,994
209,070
209,435
General and administrative
23,109
25,533
73,975
75,584
Amortization of acquired intangible assets
12,533
13,818
37,790
41,500
Goodwill impairment
167,106
-
167,106
-
Gain on divestiture of a business
-
-
(3,806
)
-
Restructuring charges
-
89
-
1,803
Total operating expenses
308,895
148,992
601,790
458,254
Income (loss) from operations
(134,447
)
63,750
(112,850
)
76,026
Interest and other income (expense), net
729
(3,172
)
1,272
(6,554
)
Income (loss) before income tax expense (benefit)
(133,718
)
60,578
(111,578
)
69,472
Income tax expense (benefit)
(1,141
)
7,960
3,737
6,603
Net income (loss)
$
(132,577
)
$
52,618
$
(115,315
)
$
62,869
Basic net income (loss) per share
$
(1.87
)
$
0.73
$
(1.61
)
$
0.87
Diluted net income (loss) per share
$
(1.87
)
$
0.72
$
(1.61
)
$
0.86
Weighted average common shares outstanding used in computing:
Net income (loss) per share - basic
71,077
71,744
71,577
72,015
Net income (loss) per share - diluted
71,077
73,049
71,577
73,271
NETSCOUT SYSTEMS, INC.
Consolidated Balance Sheets
(In thousands)
December 31,
March 31,
2023
2023
(unaudited)
Assets
Current assets:
Cash, cash equivalents, marketable securities and investments
$
329,112
$
418,998
Accounts receivable and unbilled costs, net
221,574
143,855
Inventories and deferred costs
15,342
17,956
Prepaid expenses and other current assets
43,290
36,551
Total current assets
609,318
617,360
Fixed assets, net
27,955
34,735
Operating lease right-of-use assets
44,977
51,456
Goodwill and intangible assets, net
1,875,440
2,090,995
Long-term marketable securities
1,010
8,940
Other assets
31,099
17,074
Total assets
$
2,589,799
$
2,820,560
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$
15,132
$
16,473
Accrued compensation
42,283
83,279
Accrued other
19,448
30,674
Deferred revenue and customer deposits
293,410
311,531
Current portion of operating lease liabilities
11,979
11,650
Total current liabilities
382,252
453,607
Other long-term liabilities
7,312
7,683
Deferred tax liability
4,505
24,939
Accrued long-term retirement benefits
26,310
26,049
Long-term deferred revenue and customer deposits
124,619
129,814
Operating lease liabilities, net of current portion
40,898
48,819
Long-term debt
100,000
100,000
Total liabilities
685,896
790,911
Stockholders' equity:
Common stock
131
128
Additional paid-in capital
3,158,283
3,099,698
Accumulated other comprehensive income
5,870
5,738
Treasury stock, at cost
(1,615,279
)
(1,546,128
)
Retained earnings
354,898
470,213
Total stockholders' equity
1,903,903
2,029,649
Total liabilities and stockholders' equity
$
2,589,799
$
2,820,560
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
Nine Months Ended
December 31,
September 30,
December 31,
2023
2022
2023
2023
2022
GAAP and Non-GAAP Revenue
$
218,072
$
269,544
$
196,802
$
626,012
$
706,437
Gross Profit (GAAP)
$
174,448
$
212,742
$
153,750
$
488,940
$
534,280
Share-based compensation expense (1)
2,375
2,043
2,638
7,924
6,475
Amortization of acquired intangible assets (2)
1,636
2,315
1,638
4,912
6,955
Acquisition related depreciation expense (3)
2
5
4
11
16
Non-GAAP Gross Profit
$
178,461
$
217,105
$
158,030
$
501,787
$
547,726
Income (Loss) from Operations (GAAP)
$
(134,447
)
$
63,750
$
26,292
$
(112,850
)
$
76,026
GAAP Operating Margin
-61.7
%
23.7
%
13.4
%
-18.0
%
10.8
%
Share-based compensation expense (1)
16,364
15,143
18,445
54,653
47,225
Amortization of acquired intangible assets (2)
14,169
16,133
14,188
42,702
48,455
Restructuring charges
-
89
-
-
1,803
Goodwill impairment
167,106
-
-
167,106
-
Acquisition related depreciation expense (3)
12
59
37
108
183
Gain on divestiture of a business
-
-
(3,806
)
(3,806
)
-
Legal expenses related to civil judgments (4)
45
426
44
130
426
Non-GAAP Income from Operations
$
63,249
$
95,600
$
55,200
$
148,043
$
174,118
Non-GAAP Operating Margin
29.0
%
35.5
%
28.0
%
23.6
%
24.6
%
Net Income (Loss) (GAAP)
$
(132,577
)
$
52,618
$
21,462
$
(115,315
)
$
62,869
Share-based compensation expense (1)
16,364
15,143
18,445
54,653
47,225
Amortization of acquired intangible assets (2)
14,169
16,133
14,188
42,702
48,455
Restructuring charges
-
89
-
-
1,803
Gain on divestiture of a business
-
-
(3,806
)
(3,806
)
-
Goodwill impairment
167,106
-
-
167,106
-
Acquisition related depreciation expense (3)
12
59
37
108
183
Legal expenses related to civil judgments (4)
45
426
44
130
426
Change in fair value of derivative instrument (5)
-
-
-
(206
)
-
Income tax adjustments (6)
(13,085
)
(11,449
)
(5,829
)
(26,085
)
(28,585
)
Non-GAAP Net Income
$
52,034
$
73,019
$
44,541
$
119,287
$
132,376
Diluted Net Income (Loss) Per Share (GAAP)
$
(1.87
)
$
0.72
$
0.29
$
(1.61
)
$
0.86
Share impact of non-GAAP adjustments identified above
2.60
0.28
0.32
3.26
0.95
Non-GAAP Diluted Net Income Per Share
$
0.73
$
1.00
$
0.61
$
1.65
$
1.81
Shares used in computing non-GAAP diluted net income per share
71,638
73,049
72,797
72,355
73,271
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
Nine Months Ended
December 31,
September 30,
December 31,
2023
2022
2023
2023
2022
(1)
Share-based compensation expense included in these amounts is as follows:
Cost of product revenue
$
306
$
262
$
349
$
1,027
$
869
Cost of service revenue
2,069
1,781
2,289
6,897
5,606
Research and development
4,498
4,174
4,988
14,872
13,185
Sales and marketing
5,680
5,445
6,675
19,639
17,238
General and administrative
3,811
3,481
4,144
12,218
10,327
Total share-based compensation expense
$
16,364
$
15,143
$
18,445
$
54,653
$
47,225
(2)
Amortization expense related to acquired software and product technology, tradenames, customer relationships included in these amounts is as follows:
Cost of product revenue
$
1,636
$
2,315
$
1,638
$
4,912
$
6,955
Operating expenses
12,533
13,818
12,550
37,790
41,500
Total amortization expense
$
14,169
$
16,133
$
14,188
$
42,702
$
48,455
(3)
Acquisition related depreciation expense included in these amounts is as follows:
Cost of product revenue
$
2
$
3
$
2
$
7
$
9
Cost of service revenue
-
2
2
4
7
Research and development
8
42
25
74
129
Sales and marketing
2
8
6
16
25
General and administrative
-
4
2
7
13
Total acquisition related depreciation expense
$
12
$
59
$
37
$
108
$
183
(4)
Legal expenses related to civil judgments included in this amount is as follows:
General and administrative
$
45
$
426
$
44
$
130
$
426
Total legal judgments expense
$
45
$
426
$
44
$
130
$
426
(5)
Change in fair value of derivative instrument included in this amount is as follows:
Interest and other (income) expense, net
$
-
$
-
$
-
$
(206
)
$
-
Total change in fair value of derivative instrument
$
-
$
-
$
-
$
(206
)
$
-
(6)
Total income tax adjustment included in this amount is as follows:
Tax effect of non-GAAP adjustments above
$
(13,085
)
$
(11,449
)
$
(5,829
)
$
(26,085
)
$
(28,585
)
Total income tax adjustments
$
(13,085
)
$
(11,449
)
$
(5,829
)
$
(26,085
)
$
(28,585
)
NETSCOUT SYSTEMS, INC.
Reconciliation of Current GAAP to Current and Historical Non-GAAP Financial Measures -
Non-GAAP EBITDA from Operations
(In thousands)
(Unaudited)
Three Months Ended
Three Months Ended
Nine Months Ended
December 31,
September 30,
December 31,
2023
2022
2023
2023
2022
Income (loss) from operations (GAAP)
$
(134,447
)
$
63,750
$
26,292
$
(112,850
)
$
76,026
Previous adjustments to determine non-GAAP income from operations
197,696
31,850
28,908
260,893
98,092
Non-GAAP Income from operations
63,249
95,600
55,200
148,043
174,118
Depreciation excluding acquisition related-depreciation expense
4,337
5,263
4,749
14,118
15,664
Non-GAAP EBITDA from operations
$
67,586
$
100,863
$
59,949
$
162,161
$
189,782
Non-GAAP EBITDA from operations as a % of revenue
31.0
%
37.4
%
30.5
%
25.9
%
26.9
%
NETSCOUT SYSTEMS, INC.
Reconciliation of GAAP Financial Outlook to Non-GAAP Financial Outlook
(Unaudited)
(In millions, except net income per share - diluted)
FY'23
FY'24
GAAP & Non-GAAP revenue
$
914.5
~$840 million
FY'23
FY'24
GAAP net income
$
59.6
~($92) million to ~($89) million
Amortization of intangible assets
$
64.7
~$57 million
Share-based compensation expenses
$
62.0
~$70 million
Business development & integration expenses*
$
0.2
~Less than $1 million
Gain on divestiture of a business
$
-
~($3.8 million )
Change in fair value of derivative instrument
$
1.4
~Less than $1 million
Legal expenses related to civil judgments
$
0.5
-
New accounting standard implementation
$
0.0
-
Restructuring charges
$
1.8
-
Goodwill impairment
$
-
~$167 million
Total adjustments
$
130.6
~$290 million
Related impact of adjustments on income tax
$
(30.7
)
(~$42 million )
Non-GAAP net income
$
159.6
~$156 million to ~$159 million
GAAP net income per share (diluted)
$
0.82
~($1.29 ) to ~($1.24 )
Non-GAAP net income per share (diluted)
$
2.18
~$2.15 to ~$2.20
Average weighted shares outstanding (diluted GAAP)
73.0
~71 million to ~72 million
Average weighted shares outstanding (diluted Non-GAAP)
73.0
~ 72 million to ~73 million
*Business development & integration expenses include acquisition-related depreciation expense
**Figures in table may not total due to rounding
View source version on businesswire.com: https://www.businesswire.com/news/home/20240125507242/en/
Investors
Sean K. F. Hannan
Head of Investor Relations
978-614-4374
IR@netscout.com
Media
Chris Lucas
AVP, Marketing & Corporate Communications
978-614-4124
Chris.Lucas@netscout.com
Source: NETSCOUT SYSTEMS, INC
What is the ticker symbol for NETSCOUT SYSTEMS, INC.?
The ticker symbol for NETSCOUT SYSTEMS, INC. is NTCT.
What was the total revenue reported for Q3 FY24?
The total revenue for Q3 FY24 was $218.1 million.
What was the net loss for Q3 FY24?
The net loss for Q3 FY24 was $132.6 million.
What was the operating margin for Q3 FY24?
The operating margin for Q3 FY24 was -61.7%.
What was the total cash and marketable securities as of December 31, 2023?
The total cash, cash equivalents, short- and long-term marketable securities, and investments were $330.1 million as of December 31, 2023.