Slide 1: Q4 & FY 2019 Conference Call
Q4 & FY 2019 Conference Call NETSCOUT SYSTEMS, INC. May 2, 2019 ©2019 NETSCOUT May 2, 2019
Slide 2: Agenda
Agenda • Introduction & Safe Harbor – Andrew Kramer, Vice President of Investor Relations • CEO Perspective – Anil Singhal, President and CEO • COO Update – Michael Szabados, Chief Operating Officer • Financial Review and FY’20 Outlook – Jean Bua, EVP and CFO ©2019 NETSCOUT 2 May 2, 2019
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 the following non-GAAP metrics: non-GAAP total revenue, non-GAAP product revenue, non-GAAP service revenue, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income, and non-GAAP net incom
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 2, 2019 October 26, 2017
Slide 6: Q4 and FY’19 Financial Highlights
Q4 and FY’19 Financial Highlights Non-GAAP Q4 FY’19 Q4 FY’18 YTD FY'19 YTD FY'18 ($ in millions, except per share data) 3/31/2019 3/31/2018 3/31/2019 3/31/2018 Revenue $ 235.2 $ 238.5 $ 911.5 $ 999.3 Gross Margin 79.0% 76.7% 76.4% 77.2% Operating Margin 29.2% 17.8% 17.7% 18.4% EPS $ 0.66 $ 0.36 $ 1.
Slide 7: FY’19 Highlights & Developments
FY’19 Highlights & Developments • Severe revenue headwinds have largely receded • Solid execution on our product strategy • Sales momentum is building in our enterprise customer segment – 3 consecutive quarters of solid organic revenue growth in our enterprise customer segment • Completed the restru
Slide 8: Driving Top-Line Growth in FY’20 and Beyond
Driving Top-Line Growth in FY’20 and Beyond • Good scope for continuing to help our enterprise customers with their data center transformation initiatives • Security represents a promising adjacency • Combining Arbor’s sales resources with our larger service assurance enterprise sales teams provides
Slide 9: FY’20 Outlook & Summary
FY’20 Outlook & Summary • We remain bullish on the opportunities we see and confident in our ability to capitalize on them • Our top FY’20 priority is to produce top-line growth, which is fundamental to driving operating leverage, EPS growth and stronger free cash flow • Our FY’20 plan is to generat
Slide 10: COO Update
COO Update Michael Szabados Chief Operating Officer N E T S CO U T.CO M May 2, 2019 October 26, 2017
Slide 11: COO Highlights
COO Highlights • Go-to-market Activity • Customer Wins ©2019 NETSCOUT 11 May 2, 2019
Slide 12: Financial Review & FY’19 Outlook
Financial Review & FY’19 Outlook Jean Bua Executive Vice President and Chief Financial Officer N E T S CO U T.CO M May 2, 2019 October 26, 2017
Slide 13: Q4 FY’19 and FY’19 Results
Q4 FY’19 and FY’19 Results Q4 FY’19 Q4 FY’18 Q4 FY’19 Q4 FY’18 FY’19 FY’18 FY’19 FY’18 Non-GAAP Non-GAAP % GAAP GAAP % Non-GAAP Non-GAAP % GAAP GAAP % (in millions except EPS and % data) 3/31/2019 3/31/2018 Change 3/31/2019 3/31/2018 Change 3/31/2019 3/31/2018 Change 3/31/2019 3/31/2018 Change Reven
Slide 14: FY’19 Revenue Trends: Customer Verticals & Geographic Mix
FY’19 Revenue Trends: Customer Verticals & Geographic Mix Total Non-GAAP Revenue by Customer Segment Total Non-GAAP Revenue Composition by Customer Segment ($ in millions) FY’19 FY’18 $911.5 $999.3 Non-GAAP Non-GAAP $473.5 50% 50% 47% 53% $455.8 $455.7 $525.8 FY'19 FY'18 Service Provider Enterprise
Slide 15: Balance Sheet Highlights & Free Cash Flow
Balance Sheet Highlights & Free Cash Flow (in millions) FY’19 Free Cash Flow Q1 FY’19 Q2 FY'19 Q3 FY'19 Q4 FY'19 FY'19 (Unaudited) 3/31/19 6/30/2018 9/30/2018 12/31/2018 3/31/2019 3/31/2019 Cash and Securities* $ 487.0 Operating Cash Flow $ 25.5 $ 7.2 $ 36.8 $ 80.3 $ 149.8 Purchase of Fixed Assets &
Slide 16: FY‘20 Guidance
FY‘20 Guidance Revenue FY’19 FY’19 FY’20 Guidance Other FY’20 Guidance Assumptions $ millions GAAP Non-GAAP GAAP & Non-GAAP * Anticipated gross profit margin Revenue $909.9 $911.5 ~$895 to ~$915 between 77% to 78% HNT Tools ($18.0) ($18.0) - * Operating expenses expected to range Organic Revenue $89
Slide 17: Upcoming Investor Events
Upcoming Investor Events Date Event Location May 8, 2019 Bernstein Software Summit NYC May 29, 2019 Craig-Hallum Institutional Investor Conference Minneapolis June 6, 2019 Baird Consumer, Technology & Services Conference NYC June 13, 2019 Piper Jaffray Fish & Chips Symposium Boston ©2019 NETSCOUT 17
Slide 18: Appendix
Appendix N E T S CO U T.CO M May 2, 2019 October 26, 2017
Slide 19: FY’20 Guidance: GAAP to Non-GAAP Reconciliation
FY’20 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'19 FY'20 GAAP revenue $ 909.9 ~$895 million to ~$915 million Deferred service revenue fai
Slide 20: Q1 FY’20 Guidance: GAAP to Non-GAAP Reconciliation
Q1 FY’20 Guidance: GAAP to Non-GAAP Reconciliation NETSCOUT SYSTEMS, INC Q4 FY'19 Reconciliation of GAAP Financial Guidance to Non-GAAP Financial Guidance (Unaudited) (In millions, except net income per share - diluted) Q1 FY'19 Q1 FY'20 GAAP revenue $ 205.1 ~$195 million to ~$200 million Deferred s
Slide 21: Total Revenue Composition
Total Revenue Composition (in millions) Q4 FY’19 Q4 FY’18 Q4 FY’19 Q4 FY’18 YTD FY’19 YTD FY’18 YTD FY’19 YTD FY’18 GAAP GAAP Non-GAAP Non-GAAP GAAP GAAP Non-GAAP Non-GAAP Total Revenue $235.0 $235.2 $235.2 $238.5 $909.9 $986.8 $911.5 $999.3 Product Revenue $125.5 $122.2 $125.5 $123.1 $467.3 $520.4
Slide 22: GAAP to Non-GAAP Reconciliation: Revenue
GAAP to Non-GAAP Reconciliation: Q4 FY’19, Q3 FY’19, Q4 FY’18, FY’19 and FY’18 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 23: GAAP to Non-GAAP Reconciliation: Organic Non-GAAP Revenue
GAAP to Non-GAAP Reconciliation: Q4 FY’19, Q4 FY’18, FY’19 and FY’18 Organic Non-GAAP Revenue NETSCOUT SYSTEMS, INC. Reconciliation of GAAP Revenue to Non-GAAP Organic Revenue (In thousands, except per share data) (Unaudited) Three Months Ended Twelve Months Ended March 31, March 31, 2019 2018 2019
Slide 24: GAAP to Non-GAAP Reconciliation: FY’19 Quarterly Organic Non-GAAP Revenue
GAAP to Non-GAAP Reconciliation: FY’19 Quarterly Organic Non-GAAP Revenue NETSCOUT SYSTEMS, INC. Reconciliation of GAAP Revenue to Non-GAAP Organic Revenue (In thousands, except per share data) (Unaudited) Three Months Ended Twelve Months Ended March 31, March 31, 2019 2018 2019 2018 GAAP Product Re
Slide 25: GAAP to Non-GAAP Reconciliation: Gross Profit, Income from Operations and Net Income
GAAP to Non-GAAP Reconciliation: Q4 FY’19, Q4 FY’18, Q3 FY’19, FY’19 and FY’18 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 26: GAAP to Non-GAAP Reconciliation: Itemization
GAAP to Non-GAAP Reconciliation: Q4 FY’19, Q4 FY’18, Q3 FY’19, FY’19 and FY’18 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 27: Supplementary Data: Reclassification of GAAP Product and Service Revenue
Supplementary Data: Reconciliation of Reclassification of GAAP Product and Service Revenue and Cost of Product and Service Revenue* Supplementary Data NETSCOUT SYSTEMS, INC. Reconcilation of Reclassification of Product and Service Revenue and Cost of Product and Service Revenue (In thousands) (Unaud
Slide 28: Supplementary Data: Reclassification of Non-GAAP Product and Service Revenue
Supplementary Data: Reconciliation of Reclassification of Non-GAAP Product and Service Revenue and Cost of Product and Service Revenue* Supplementary Data NETSCOUT SYSTEMS, INC. Reconcilation of Reclassification of Product and Service Revenue and Cost of Product and Service Revenue (In thousands) (U
Slide 29: Thank You
Thank You N E T S CO U T.CO M May 2, 2019 October 26, 2017