NETSCOUT SYSTEMS, INC. (NASDAQ: NTCT), a leading provider of
enterprise performance management, carrier service assurance,
cybersecurity, and DDoS protection solutions, today announced
financial results for its third quarter ended December 31,
2024.
Remarks by Anil Singhal, NETSCOUT’s President & Chief
Executive Officer:
“Our Q3 fiscal year 2025 revenue and earnings results exceeded
our expectations with strong performance across both our
Cybersecurity and Service Assurance product lines. These results
include certain customer orders received in our Q3 that were
anticipated to be received in our Q4, as customers leveraged their
calendar year-end budgets. The contribution of these early orders
enhanced our Q3 performance, providing greater visibility and
reinforcing our confidence in achieving our full fiscal year 2025
financial objectives.
Looking ahead, as we enter the final quarter of our fiscal year
2025, we are narrowing our fiscal 2025 outlook ranges while
maintaining the midpoints from previous guidance for revenue and
non-GAAP net income per share. We remain focused on executing
effectively as we position the Company for fiscal year 2026 and
beyond. At the same time, we continue to leverage the strength of
our ‘Visibility Without Borders’ platform to enable customers to
address the performance, availability, and security challenges
inherent in today’s complex digital landscape.”
Q3 FY25 Financial Results
Total revenue (GAAP and non-GAAP) for the third quarter of
fiscal year 2025 was $252.0 million, compared with $218.1 million
(GAAP and non-GAAP) in the third quarter of fiscal year 2024. A
reconciliation of all 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 2025 was $128.2 million, or approximately 51% of total
revenue in the period. This compares with product revenue (GAAP and
non-GAAP) of $95.8 million in the third quarter of fiscal year
2024, which was approximately 44% of total revenue in the period.
As of December 31, 2024, NETSCOUT had a product backlog consisting
of fulfillable orders of approximately $30 million. This compares
with approximately $5 million of fulfillable orders as of December
31, 2023.
Service revenue (GAAP and non-GAAP) for the third quarter of
fiscal year 2025 was $123.8 million, or approximately 49% of total
revenue in the period. This compares with service revenue (GAAP and
non-GAAP) of $122.2 million in the third quarter of fiscal year
2024, which was approximately 56% of total revenue for the
period.
NETSCOUT’s GAAP income from operations was $61.7 million in the
third quarter of fiscal year 2025, which included a restructuring
charge of $0.9 million. This compares with a GAAP loss from
operations of $134.4 million in the third quarter of fiscal year
2024, which included a non-cash goodwill impairment charge of
$167.1 million. The Company’s GAAP operating margin was 24.5% in
the third quarter of the fiscal year, versus (61.7)% in the same
period of fiscal year 2024. Non-GAAP income from operations was
$89.7 million with a non-GAAP operating margin of 35.6% in the
third quarter of fiscal year 2025. This compares to non-GAAP income
from operations of $63.2 million and a non-GAAP operating margin of
29.0% in the third quarter of fiscal year 2024. Non-GAAP EBITDA
from operations in the third quarter of fiscal year 2025 was $92.8
million, or 36.8% of quarterly revenue for the period. This
compares to non-GAAP EBITDA from operations of $67.6 million in the
third quarter of fiscal year 2024, or 31.0% of quarterly revenue
for the period.
GAAP Net income for the third quarter of fiscal year 2025 was
$48.8 million, or $0.67 per share (diluted), which included the
restructuring charge mentioned above and an unrealized loss on a
foreign investment, versus a GAAP net loss of $132.6 million, or
$(1.87) per share (diluted), for the third quarter of fiscal year
2024, which included the previously mentioned non-cash goodwill
impairment charge. On a non-GAAP basis, net income for the third
quarter of fiscal year 2025 was $68.3 million, or $0.94 per share
(diluted), which includes the unrealized loss on a foreign
investment mentioned above. This compares with $52.0 million, or
$0.73 per share (diluted), for the third quarter of fiscal year
2024.
As of December 31, 2024, cash, cash equivalents, short and
long-term marketable securities and investments were $427.9
million, compared with $424.1 million as of March 31, 2024.
NETSCOUT did not repurchase any shares of its common stock during
the third quarter of fiscal year 2025. On October 4, 2024, NETSCOUT
amended and extended its revolving credit facility, reducing the
facility size from $800 million to $600 million and extending the
maturity from July 2026 to October 2029. At the end of the third
quarter, NETSCOUT had $75.0 million outstanding on its revolving
credit facility. In the fourth quarter of fiscal year 2025 we
intend to fully repay the outstanding $75.0 million dollars of
debt.
Nine-Months FY25 Financial Results
- Total revenue (GAAP and non-GAAP) for the first nine months of
fiscal year 2025, was $617.7 million, versus total revenue (GAAP
and non-GAAP) of $626.0 million in the first nine months of fiscal
year 2024. 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 2025 was $270.4 million, compared with $271.0
million in the first nine months of fiscal year 2024.
- Service revenue (GAAP and non-GAAP) for the first nine months
of fiscal year 2025 was $347.3 million, compared with $355.0
million in the first nine months of fiscal year 2024.
- NETSCOUT’s GAAP loss from operations for the first nine months
of fiscal year 2025 was $387.5 million, which includes a non-cash
goodwill impairment charge of $427.0 million taken in the first
quarter of fiscal year 2025 and restructuring charges of $19.9
million. This compared with a GAAP loss from operations of $112.9
million in the first nine months of fiscal year 2024, which
included a non-cash goodwill impairment charge of $167.1 million.
The Company’s GAAP operating margin for the first nine months of
fiscal year 2025 was (62.7)%, versus (18.0)% in the first nine
months of fiscal year 2024. The Company’s non-GAAP EBITDA from
operations for the first nine months of fiscal year 2025 was $158.2
million, or 25.6% of total revenue, versus non-GAAP EBITDA from
operations of $162.2 million, or 25.9% of total revenue, in the
first nine months of fiscal year 2024. The Company’s non-GAAP
income from operations for the first nine months of fiscal year
2025 was $147.8 million with a non-GAAP operating margin of 23.9%,
compared with non-GAAP income from operations of $148.0 million and
a non-GAAP operating margin of 23.6% for the first nine months of
fiscal year 2024.
- For the first nine months of fiscal year 2025, NETSCOUT’s GAAP
net loss was $385.5 million, or ($5.39) per share (diluted), which
includes the non-cash goodwill impairment and restructuring charges
mentioned above. This compared with a GAAP net loss of $115.3
million, or $(1.61) per share (diluted), in the first nine months
of fiscal year 2024, which included the previously mentioned
non-cash goodwill impairment charge. Non-GAAP net income for the
first nine months of fiscal year 2025 was $122.4 million, or $1.70
per share (diluted), compared with non-GAAP net income of $119.3
million, or $1.65 per share (diluted), for the first nine months of
fiscal year 2024.
Financial Outlook
The Company’s GAAP net loss per share outlook for fiscal year
2025 has been updated to reflect the latest restructuring charges
related to the Company’s Voluntary Separation Program (VSP) and
recent termination agreements with certain employees. NETSCOUT is
narrowing the ranges for its fiscal year 2025 outlook while
maintaining the midpoints from previous guidance for revenue and
non-GAAP net income per share. The Company’s outlook for fiscal
year 2025 is as follows:
- Revenue (GAAP and non-GAAP) is now expected to be in the range
of $810 million to $820 million compared to the previous range of
$800 million to $830 million, which maintains the mid-point.
- GAAP net loss per share (diluted) is now expected to be in the
range of ($5.21) to ($5.10), primarily attributable to goodwill
impairment and restructuring charges taken in the first nine months
of fiscal year 2025, as well as restructuring charges anticipated
for the fourth quarter of fiscal year 2025. This compares to the
previous GAAP net loss per share range of ($5.22) to ($5.01).
Non-GAAP net income per share (diluted) is now expected to be in
the range of $2.15 to $2.25 compared to the previous range of $2.10
to $2.30, which maintains the mid-point.
- A reconciliation between GAAP and non-GAAP numbers for
NETSCOUT’s fiscal year 2025 outlook is included in the financial
tables below.
As previously announced in the first quarter of fiscal year
2025, NETSCOUT initiated a Voluntary Separation Program (VSP) as
part of its restructuring efforts for fiscal year 2025. The VSP is
expected to result in a net reduction of approximately 142
employees, which represents approximately 6.2% of its workforce as
of March 31, 2024. As a result of the related workforce reduction,
during the three months and nine months ended December 31, 2024,
the Company recorded restructuring charges totaling $0.6 million
and $19.6 million, respectively. All one-time termination benefits
are expected to be paid in full by the end of the fiscal year
ending March 31, 2025.
In addition, during the third quarter of fiscal year 2025, the
Company entered into agreements designed to ensure an orderly
transition of responsibilities and maintain continuity. These
agreements provide termination benefits totaling approximately $2.0
million to certain employees who continue to render services to the
Company. These benefits will be paid through the end of fiscal year
ending March 31, 2027. As a result, the Company recorded
restructuring charges of $0.3 million during the three months and
nine months ended December 31, 2024. The Company estimates
restructuring charges related to the transition agreements for
fiscal year 2025 will amount to approximately $1 million.
The Company expects that these combined actions will generate
net annual run-rate savings of approximately $25 million.
Approximately $19 million of the annual run-rate savings are
expected to be realized in fiscal year 2025, including $6 million
in the fourth quarter of fiscal year 2025. The charges and expected
savings have been factored into NETSCOUT's GAAP and non-GAAP
outlook for fiscal year 2025.
Recent Developments and Highlights
- In mid-December 2024, NETSCOUT announced updates to its
industry-leading Arbor Edge Defense (AED) and Arbor Enterprise
Manager (AEM) products as part of its Adaptive DDoS Protection
Solution to combat AI-enabled DDoS threats and to protect critical
IT infrastructure. NETSCOUT employs artificial intelligence (AI)
and machine learning (ML) technology in its ATLAS Threat
Intelligence Feed and in a unique set of capabilities for adaptive
DDoS protection.
- In mid-November, NETSCOUT announced an expanded partnership
with Arelion to strengthen the Internet carrier’s DDoS attack
mitigation capabilities. By enhancing its capabilities with
NETSCOUT, Arelion improves network security across its #1 ranked
global Internet backbone, empowering enterprise customers in more
than 125 countries worldwide with resilient, high-performance
connectivity services.
- In early November, NETSCOUT announced its customer NRB, a
leading IT services provider in Belgium and Europe, was successful
in protecting the integrity of local and provincial elections in
Belgium from cyberattacks. NRB’s cybersecurity specialists employed
NETSCOUT’s Arbor Cloud, a cloud-based managed DDoS protection
service, along with Arbor Edge Defense (AED), an on-premises
Adaptive DDoS Protection solution, to perform preemptive mitigation
in the days before the election. Working collaboratively, the teams
planned and implemented an effective strategy to ensure the
security and performance of NRB’s infrastructure during the
election to protect Belgium’s democratic process.
Conference Call
Instructions:
NETSCOUT will host a conference call to discuss its
third-quarter fiscal year 2025 financial results and financial
outlook 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 NTCTQ325. 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) 839-2385 for U.S./Canada
and (402) 220-7203 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 expense, and
acquisition-related depreciation expense. Non-GAAP income from
operations includes the aforementioned adjustments and also removes
the legal expense related to civil judgments, restructuring
charges, goodwill impairment charges, and gains on the divestiture
of a business. 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 loss on extinguishment of
debt and 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, operating margin, net income,
and diluted net income per share), and may have limitations because
they do not reflect all 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 and availability
disruptions through the company’s unique visibility platform and
solutions powered by its pioneering deep packet inspection at scale
technology. NETSCOUT serves 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 and expectations, that the impact of
the early orders has provided it greater visibility and reinforces
its confidence in achieving its full fiscal year 2025 financial
objectives; that it remains focused on executing effectively as it
positions the Company for fiscal year 2026 and beyond; that it
continues to leverage the strength of its ‘Visibility Without
Borders’ platform to enable customers to address the performance,
availability, and security challenges inherent in today’s complex
digital landscape; statements regarding charges and benefits
resulting from the VSP and transitions program; 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 networks, 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, 2024, 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.
©2025 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,
2024
2023
2024
2023
Revenue:
Product
$
128,175
$
95,832
$
270,377
$
271,038
Service
123,844
122,240
347,315
354,974
Total revenue
252,019
218,072
$
617,692
626,012
Cost of revenue:
Product
16,362
15,251
41,806
48,006
Service
30,250
28,373
91,232
89,066
Total cost of revenue
46,612
43,624
133,038
137,072
Gross profit
205,407
174,448
484,654
488,940
Operating expenses:
Research and development
37,753
37,023
116,127
117,655
Sales and marketing
69,933
69,124
201,489
209,070
General and administrative
23,484
23,109
72,807
73,975
Amortization of acquired intangible
assets
11,601
12,533
34,857
37,790
Restructuring charges
923
—
19,895
—
Goodwill impairment
—
167,106
426,967
167,106
Gain on divestiture of a business
—
—
—
(3,806
)
Total operating expenses
143,694
308,895
872,142
601,790
Income (loss) from operations
61,713
(134,447
)
(387,488
)
(112,850
)
Interest and other income (expense),
net
(4,338
)
729
3,493
1,272
Income (loss) before income tax expense
(benefit)
57,375
(133,718
)
(383,995
)
(111,578
)
Income tax expense (benefit)
8,565
(1,141
)
1,544
3,737
Net income (loss)
$
48,810
$
(132,577
)
$
(385,539
)
$
(115,315
)
Basic net income (loss) per share
$
0.68
$
(1.87
)
$
(5.39
)
$
(1.61
)
Diluted net income (loss) per share
$
0.67
$
(1.87
)
$
(5.39
)
$
(1.61
)
Weighted average common shares outstanding
used in computing:
Net income (loss) per share - basic
71,737
71,077
71,551
71,577
Net income (loss) per share - diluted
72,569
71,077
71,551
71,577
NETSCOUT SYSTEMS, INC.
Consolidated Balance
Sheets
(In thousands)
(Unaudited)
December 31,
March 31,
2024
2024
Assets
Current assets:
Cash, cash equivalents, marketable
securities and investments
$
426,897
$
423,133
Accounts receivable and unbilled costs,
net
214,585
192,096
Inventories and deferred costs
14,414
14,095
Prepaid expenses and other current
assets
36,261
43,170
Total current assets
692,157
672,494
Fixed assets, net
22,054
26,487
Operating lease right-of-use assets
36,582
42,486
Goodwill and intangible assets, net
1,349,138
1,811,479
Long-term marketable securities
1,015
994
Other assets
73,799
41,362
Total assets
$
2,174,745
$
2,595,302
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable
$
13,693
$
14,506
Accrued compensation
54,657
51,362
Accrued other
17,679
15,429
Deferred revenue and customer deposits
284,783
301,806
Current portion of operating lease
liabilities
10,959
11,979
Total current liabilities
381,771
395,082
Other long-term liabilities
7,525
7,055
Deferred tax liability
3,652
4,374
Accrued long-term retirement benefits
27,346
28,413
Long-term deferred revenue and customer
deposits
127,070
130,212
Operating lease liabilities, net of
current portion
31,798
38,101
Long-term debt
75,000
100,000
Total liabilities
654,162
703,237
Stockholders' equity:
Common stock
133
131
Additional paid-in capital
3,234,959
3,181,366
Accumulated other comprehensive income
3,120
3,572
Treasury stock, at cost
(1,654,569
)
(1,615,483
)
(Accumulated deficit) Retained
earnings
(63,060
)
322,479
Total stockholders' equity
1,520,583
1,892,065
Total liabilities and stockholders'
equity
$
2,174,745
$
2,595,302
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,
2024
2023
2024
2024
2023
Revenue
$
252,019
$
218,072
$
191,108
$
617,692
$
626,012
Gross Profit (GAAP)
$
205,407
$
174,448
$
149,051
$
484,654
$
488,940
Share-based compensation expense (1)
2,196
2,375
2,200
7,716
7,924
Amortization of acquired intangible assets
(2)
994
1,636
996
2,985
4,912
Acquisition related depreciation expense
(3)
1
2
2
5
11
Non-GAAP Gross Profit
$
208,598
$
178,461
$
152,249
$
495,360
$
501,787
Income (Loss) from Operations (GAAP)
$
61,713
$
(134,447
)
$
14,123
$
(387,488
)
$
(112,850
)
GAAP Operating Margin
24.5
%
(61.7
)%
7.4
%
(62.7
)%
(18.0
)%
Share-based compensation expense (1)
14,502
16,364
14,886
50,586
54,653
Amortization of acquired intangible assets
(2)
12,595
14,169
12,638
37,842
42,702
Restructuring charges
923
—
2,409
19,895
—
Goodwill impairment
—
167,106
—
426,967
167,106
Acquisition related depreciation expense
(3)
13
12
11
36
108
Gain on divestiture of a business
—
—
—
—
(3,806
)
Legal expense related to civil judgments
(4)
—
45
—
—
130
Non-GAAP Income from Operations
$
89,746
$
63,249
$
44,067
$
147,838
$
148,043
Non-GAAP Operating Margin
35.6
%
29.0
%
23.1
%
23.9
%
23.6
%
Net Income (Loss) (GAAP)
$
48,810
$
(132,577
)
$
9,027
$
(385,539
)
$
(115,315
)
Share-based compensation expense (1)
14,502
16,364
14,886
50,586
54,653
Amortization of acquired intangible assets
(2)
12,595
14,169
12,638
37,842
42,702
Restructuring charges
923
—
2,409
19,895
—
Goodwill impairment
—
167,106
—
426,967
167,106
Acquisition related depreciation expense
(3)
13
12
11
36
108
Gain on divestiture of a business
—
—
—
—
(3,806
)
Legal expense related to civil judgments
(4)
—
45
—
—
130
Loss on extinguishment of debt (5)
1,134
—
—
1,134
—
Change in fair value of derivative
instrument (6)
—
—
—
—
(206
)
Income tax adjustments (7)
(9,695
)
(13,085
)
(5,409
)
(28,499
)
(26,085
)
Non-GAAP Net Income
$
68,282
$
52,034
$
33,562
$
122,422
$
119,287
Diluted Net Income (Loss) Per Share
(GAAP)
$
0.67
$
(1.87
)
$
0.13
$
(5.39
)
$
(1.61
)
Share impact of non-GAAP adjustments
identified above
0.27
2.60
0.34
7.09
3.26
Non-GAAP Diluted Net Income Per Share
$
0.94
$
0.73
$
0.47
$
1.70
$
1.65
Shares used in computing non-GAAP diluted
net income per share
72,569
71,638
71,837
72,084
72,355
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,
2024
2023
2024
2024
2023
(1)
Share-based compensation expense included
in these amounts is as follows:
Cost of product revenue
$
287
$
306
$
295
$
1,013
$
1,027
Cost of service revenue
1,909
2,069
1,905
6,703
6,897
Research and development
4,074
4,498
3,934
13,894
14,872
Sales and marketing
5,071
5,680
5,275
17,850
19,639
General and administrative
3,161
3,811
3,477
11,126
12,218
Total share-based compensation expense
$
14,502
$
16,364
$
14,886
$
50,586
$
54,653
(2)
Amortization expense related to acquired
software and product technology, tradenames, customer relationships
included in these amounts is as follows:
Cost of product revenue
$
994
$
1,636
$
996
$
2,985
$
4,912
Operating expenses
11,601
12,533
11,642
34,857
37,790
Total amortization expense
$
12,595
$
14,169
$
12,638
$
37,842
$
42,702
(3)
Acquisition related depreciation expense
included in these amounts is as follows:
Cost of product revenue
$
1
$
2
$
2
$
5
$
7
Cost of service revenue
—
—
—
—
4
Research and development
8
8
7
23
74
Sales and marketing
3
2
2
7
16
General and administrative
1
—
—
1
7
Total acquisition related depreciation
expense
$
13
$
12
$
11
$
36
$
108
(4)
Legal expense (benefit) related to civil
judgments included in this amount is as follows:
General and administrative
$
—
$
45
$
—
$
—
$
130
Total legal judgments expense
$
—
$
45
$
—
$
—
$
130
(5)
Loss on extinguishment of debt included in
this amount is as follows:
Interest and other (income) expense,
net
$
1,134
$
—
$
—
$
1,134
$
—
Total loss on extinguishment of debt
$
1,134
$
—
$
—
$
1,134
$
—
(6)
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
)
(7)
Total income tax adjustment included in
this amount is as follows:
Tax effect of non-GAAP adjustments
above
$
(9,695
)
$
(13,085
)
$
(5,409
)
$
(28,499
)
$
(26,085
)
Total income tax adjustments
$
(9,695
)
$
(13,085
)
$
(5,409
)
$
(28,499
)
$
(26,085
)
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,
2024
2023
2024
2024
2023
Income (Loss) from operations (GAAP)
$
61,713
$
(134,447
)
$
14,123
$
(387,488
)
$
(112,850
)
Income (loss) from operations (GAAP) as a
% of revenue
24.5
%
(61.7
)%
7.4
%
(62.7
)%
(18.0
)%
Previous adjustments to determine non-GAAP
income from operations
28,033
197,696
29,944
535,326
260,893
Non-GAAP Income from operations
$
89,746
$
63,249
$
44,067
$
147,838
$
148,043
Depreciation excluding acquisition
related-depreciation expense
3,077
4,337
3,451
10,312
14,118
Non-GAAP EBITDA from operations
$
92,823
$
67,586
$
47,518
$
158,150
$
162,161
Non-GAAP EBITDA from operations as a % of
revenue
36.8
%
31.0
%
24.9
%
25.6
%
25.9
%
NETSCOUT SYSTEMS, INC.
Reconciliation of GAAP
Financial Outlook to Non-GAAP Financial Outlook
(Unaudited)
(In millions, except net
income per share - diluted)
FY'24
FY'25
Revenue
$
829.5
~ $810 million to ~$820
million
FY'24
FY'25
GAAP net income (loss)
$
(147.7
)
(~$373 million) to (~$366
million)
Amortization of intangible assets
$
56.9
~$51 million
Share-based compensation expenses
$
70.8
~$64 million
Business development & integration
expenses*
$
0.1
~Less than $1 million
Gain on divestiture of a business
$
(3.8
)
—
Change in fair value of derivative
instrument
$
(0.2
)
—
Legal (benefit) expense related to civil
judgments
$
(4.4
)
—
Restructuring charges
$
—
~$21 million to ~$22 million
Loss on Debt Extinguishment
$
—
~$1 million
Goodwill impairment
$
217.3
~$427 million
Total adjustments
$
336.7
~$564 million to ~$565
million
Related impact of adjustments on income
tax
$
(29.8
)
(~$35 million)
Non-GAAP net income
$
159.1
~$156 million to ~$163
million
GAAP net income (loss) per share
(diluted)
$
(2.07
)
(~$5.21) to (~$5.10)
Non-GAAP net income per share
(diluted)
$
2.20
~$2.15 to ~$2.25
Average weighted shares outstanding
(diluted GAAP)
71.5
~72 million
Average weighted shares outstanding
(diluted Non-GAAP)
72.3
~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/20250130346747/en/
Investors Tony Piazza Deputy CFO 978-614-4000
IR@netscout.com
Media Chris Lucas AVP, Marketing & Corporate Communications
978-614-4124 Chris.Lucas@netscout.com
Netscout Systems (NASDAQ:NTCT)
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