Slide 1: Q4 & FY 2018 Conference Call
Q4 & FY 2018 Conference Call NETSCOUT SYSTEMS, INC. May 3, 2018 ©2018 NETSCOUT May 3, 2018
Slide 2: Agenda
Agenda • Introduction & Safe Harbor – Andrew Kramer, Vice President of Investor Relations • Top Investor Questions – Anil Singhal, President and CEO • COO Update – Michael Szabados, Chief Operating Officer • Financial Review and Fiscal Year 2019 Guidance – Jean Bua, EVP and CFO ©2018 NETSCOUT 2 May
Slide 3: Safe Harbor
Safe Harbor Forward Looking Statements: Forward-looking statements in this communication 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 communication, which are n
Slide 4: Non-GAAP Financial Metrics
Non-GAAP Financial Metrics Regulation G Disclosure: This presentation makes reference to certain non-GAAP measures such as non-GAAP total revenue, non-GAAP product revenue, non-GAAP service revenue, non-GAAP income from operations, non-GAAP net income, non-GAAP diluted net income per share, non-GAAP
Slide 5: CEO Perspective
CEO Perspective Anil Singhal Co-Founder, President and Chief Executive Officer N E T S CO U T.CO M May 3, 2018 October 26, 2017
Slide 6: Q4 and FY'18 Highlights
Q4 and FY’18 Highlights Non-GAAP Q4 FY’18 Q4 FY’17 YTD FY'18 YTD FY'17 ($ in millions, except per share data) 3/31/2018 3/31/2017 3/31/2018 3/31/2017 Revenue $ 238.5 $ 327.2 $ 999.3 $ 1,199.8 Gross Profit Margin 76.7% 75.2% 77.2% 75.2% Operating Profit Margin 17.8% 27.5% 18.4% 23.0% EPS $ 0.36 $ 0.6
Slide 7: Likely Investor Questions
Likely Investor Questions 1. Do you believe that the strongest revenue headwinds are behind you? 2. What is your outlook for the Service Provider customer segment? 3. Where and why do you expect to see growth in FY’19? 4. What new enterprise budgets will you target in FY’19? 5. What steps are you ta
Slide 8: Outlook, Long-Term Targets & Closing Comments
Outlook, Long-Term Targets & Closing Comments Long-Term Targets • We anticipate resuming top-line growth (Non-GAAP) through higher product revenue over the coming quarters and improve our underlying FY’18 FY’22 Target profitability in the process Revenue $999M Mid-single-digit CAGR or better • Good
Slide 9: COO Update
COO Update Michael Szabados Chief Operating Officer N E T S CO U T.CO M May 3, 2018 October 26, 2017
Slide 10: COO Highlights
COO Highlights • Customer wins • Go-to-market activity ©2018 NETSCOUT 10 May 3, 2018
Slide 11: Financial Review & Fiscal Year 2018 Outlook
Financial Review & Fiscal Year 2018 Outlook Jean Bua Executive Vice President and Chief Financial Officer N E T S CO U T.CO M May 3, 2018 October 26, 2017
Slide 12: Q4 FY'18 and FY'18 Results
Q4 FY’18 and FY’18 Results Q4 FY’18 Q4 FY’17 Q4 FY’18 Q4 FY'17 FY’18 FY’17 FY’18 FY’17 GAAP GAAP % Non-GAAP Non-GAAP % GAAP GAAP % Non-GAAP Non-GAAP % (in millions except EPS and % data) 3/31/2018 3/31/2017 Change 3/31/2018 3/31/2017 Change 3/31/2018 3/31/2017 Change 3/31/2018 3/31/2017 Change Reven
Slide 13: FY'18 Revenue Trends: Customer Verticals & Geographic Mix
FY’18 Revenue Trends: Customer Verticals & Geographic Mix Total Non-GAAP Revenue by Customer Segment Total Non-GAAP Revenue Composition by Customer Segment ($ in millions) FY’18 FY’17 $1,199.8 $999.3 Non-GAAP Non-GAAP $528.0 $473.5 47% 53% 44% 56% $525.8 $671.8 FY'18 FY'17 Service Provider Enterpris
Slide 14: Balance Sheet Highlights & Free Cash Flow
Balance Sheet Highlights & Free Cash Flow (in millions) FY’18 (Unaudited) 3/31/18 Free Cash Flow Q1 FY’18 Q2 FY'18 Q3 FY'18 Q4 FY'18 FY'18 Cash and Securities* $ 447.8 6/30/2017 9/30/2017 12/31/2017 3/31/2018 3/31/2018 Operating Cash Flow $ 52.6 $ 19.4 $ 76.9 $ 73.5 $ 222.5 Accounts Receivable, Net
Slide 15: FY'19 Guidance
FY‘19 Guidance (in millions except Gross Margin, Operating Margin, EPS) FY’18 FY’19 (ASC 606) (ASC 605) Guidance Range GAAP Revenue $986.8 Low single-digit decline to low single-digit growth on a % basis 606 impact - Reduces GAAP revenue by ~$26 605 comparison $986.8 Low single-digit growth to mid s
Slide 16: Upcoming Investor Events
Upcoming Investor Events Date Event Location May 9, 2018 Jefferies Technology Conference Beverly Hills, CA May 17, 2018 JP Morgan TMT Conference Boston, MA May 23, 2018 B. Riley FBR Institutional Investor Conference Santa Monica, CA June 6, 2018 Baird Consumer, Technology & Services Conference NYC J
Slide 17: Appendix
Appendix N E T S CO U T.CO M May 3, 2018 October 26, 2017
Slide 18: FY 2019 Guidance: GAAP to Non-GAAP Reconciliation
FY 2019 Guidance: GAAP to Non-GAAP Reconciliation NETSCOUT SYSTEMS, INC. Reconciliation of GAAP Financial Guidance to Non-GAAP Financial Guidance (Unaudited) (In millions, except net income per share - diluted) FY'18 FY'19 606 Adjustment FY'19 (605 Comparison) Low single-digit decline to Low single-
Slide 19: Q1 FY 2019 Guidance: GAAP to Non-GAAP Reconciliation
Q1 FY 2019 Guidance: GAAP to Non-GAAP Reconciliation NETSCOUT SYSTEMS, INC. Q1 FY'19 Reconciliation of GAAP Financial Guidance to Non-GAAP Financial Guidance (Unaudited) (In millions, except net income per share - diluted) in millions except per share Q1 FY'18 Q1 FY'19 606 Adjustment Q1 FY'19 (605 C
Slide 20: Total Revenue Composition
Total Revenue Composition (in millions) Q4 FY’18 Q4 FY’17 Q4 FY’18 Q4 FY’17 YTD FY’18 YTD FY’17 YTD FY’18 YTD FY’17 GAAP GAAP Non-GAAP Non-GAAP GAAP GAAP Non-GAAP Non-GAAP Total Revenue $235.2 $318.9 $238.5 $327.2 $986.8 $1,162.1 $999.3 $1,199.8 Product Revenue $128.8 $210.0 $129.8 $213.7 $546.1 $73
Slide 21: GAAP to Non-GAAP Reconciliation: Revenue
GAAP to Non-GAAP Reconciliation: Q4 FY’18, Q4 FY’17, Q3 FY’18, FY’18 and FY’17 Revenue 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 Twelve Months End
Slide 22: GAAP to Non-GAAP Reconciliation: Gross Profit, Income from Operations and Net Income
GAAP to Non-GAAP Reconciliation: Q4 FY’18, Q4 FY’17, Q3 FY’18, FY’18 and FY’17 Gross Profit, Income from Operations and Net Income NETSCOUT SYSTEMS, INC. Reconciliation of Current GAAP to Current and Historical Non-GAAP Financial Measures (In thousands, except per share data) (Unaudited) Three Month
Slide 23: GAAP to Non-GAAP Reconciliation: Itemization
GAAP to Non-GAAP Reconciliation: Q4 FY’18, Q4 FY’17, Q3 FY’18, FY’18 and FY’17 Itemization NETSCOUT SYSTEMS, INC. Reconciliation of Current GAAP to Current and Historical Non-GAAP Financial Measures - Continued (In thousands, except per share data) (Unaudited) Three Months Ended Three Months Ended T
Slide 24: Thank You
Thank You N E T S CO U T.CO M May 3, 2018 October 26, 2017