Netscout Systems, Inc. · NASDAQ:NTCT
Netscout Systems — Q2 2019 Earnings Presentation
28 slides from Netscout Systems's earnings presentation, Nov 1, 2018
Slide 1: Q2 FY 2019 Conference Call
Q2 FY 2019 Conference Call NETSCOUT SYSTEMS, INC. November 1, 2018 ©2018 NETSCOUT November 1, 2018
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’19 Outlook – Jean Bua, EVP and CFO ©2018 NETSCOUT 2 November 1, 2018
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 November October 26,1,2017 2018
Slide 6: Q2 FY’19 Financial & Operational Highlights
Q2 FY’19 Financial & Operational Highlights Non-GAAP Q2 FY’19 Q2 FY’18 1H FY'19 1H FY'18 ($ in millions, except per share data) 9/30/2018 9/30/2017 9/30/2018 9/30/2017 Revenue $ 224.0 $ 259.9 $ 430.0 $ 488.8 Gross Profit Margin 76.0% 75.5% 75.4% 75.7% Operating Profit Margin 14.7% 16.3% 9.4% 11.6% E
Slide 7: Potential Earnings Power
Potential Earnings Power • Lower cost structure – on pace to exceed our initial cost- reduction target of $50m – HNT Tools divestiture – VSP and other related measures – Low incremental OpEx requirements • Higher gross margins – Continued adoption of the ISNG software by service providers ©2018 NETS
Slide 8: Growth Opportunities
Growth Opportunities Service Provider Customer Segment • Anticipating solid growth outside the US and meaningful contributions from 5G calibration projects while larger tier-one service providers limit spending on existing 4G networks • 5G represents an important catalyst to drive higher spending •
Slide 9: Outlook & Summary
Outlook & Summary • Updated our guidance for fiscal year 2019 revenue to primarily reflect the sale of the HNT tools business and a more modest second-half recovery in DDoS service provider revenue than we originally expected • We remain on track to achieve our original non-GAAP diluted EPS guidance
Slide 10: COO Update
COO Update Michael Szabados Chief Operating Officer N E T S CO U T.CO M November October 26,1,2017 2018
Slide 11: COO Highlights
COO Highlights • Customer Wins • Go-to-market Activity ©2018 NETSCOUT 11 November 1, 2018
Slide 12: Financial Review & FY’19 Outlook
Financial Review & FY’19 Outlook Jean Bua Executive Vice President and Chief Financial Officer N E T S CO U T.CO M November October 26,1,2017 2018
Slide 13: Q2 FY’19 and 1H FY’19 Results
Q2 FY’19 and 1H FY’19 Results Q2 FY’19 Q2 FY’18 Q2 FY’19 Q2 FY’18 1H FY ’19 1H FY ’18 1H FY’19 1H FY’18 GAAP GAAP % Non-GAAP Non-GAAP % GAAP GAAP % Non-GAAP Non-GAAP % (in millions except EPS and % data) 9/30/2018 9/30/2017 Change 9/30/2018 9/30/2017 Change 9/30/2018 9/30/2017 Change 9/30/2018 9/30/
Slide 14: 1H FY’19 Revenue Trends: Customer Verticals & Geographic Mix
1H FY’19 Revenue Trends: Customer Verticals & Geographic Mix Total Non-GAAP Revenue by Customer Segment Total Non-GAAP Revenue Composition by Customer Segment ($ in millions) 1H FY’19 1H FY’18 $488.8 Non-GAAP Revenue Non-GAAP Revenue $430.0 $232.5 $224.3 52% 48% 48% 52% $205.7 $256.3 1H FY'19 1H FY'
Slide 15: Balance Sheet Highlights & Free Cash Flow
Balance Sheet Highlights & Free Cash Flow (in millions) Q2 FY’19 Free Cash Flow (Unaudited) 9/30/2018 Q1 FY'19 Q2 FY'19 1H FY'19 6/30/2018 9/30/2018 9/30/2018 Cash and Securities* $ 452.1 Operating Cash Flow $ 25.5 $ 7.2 $ 32.7 Accounts Receivable, Net $ 184.2 Purchase of Fixed Assets & Intangible A
Slide 16: FY‘19 Guidance
FY‘19 Guidance Prior Guidance Primary Factors Updated Guidance Other FY’19 Non-GAAP Metric (July 2018) for Changes (November 2018) Guidance Assumptions GAAP Revenue Mid single-digit % decline to low • HNT Tools divestiture $923 million to * Gross profit margin anticipated to single-digit % growth vs
Slide 17: Upcoming Investor Events
Upcoming Investor Events Date Event Location November 8, 2018 Stephens Fall Investment Conference NYC November 13, 2018 Needham Networking & Security Conference NYC November 14, 2018 RBC Capital TIMT Conference NYC ©2018 NETSCOUT 17 November 1, 2018
Slide 18: Appendix
Appendix N E T S CO U T.CO M November October 26,1,2017 2018
Slide 19: FY’19 Guidance: GAAP to Non-GAAP Reconciliation
FY’19 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) 606 FY'18 FY'19 Adjustment FY'19 (605 Comparison) GAAP revenue $ 986.8 ~$923 million to ~$95
Slide 20: FY’18 Revenue to Pro Forma FY’18 Revenue
GAAP to Non-GAAP Reconciliation: FY’18 Revenue to Pro Forma FY’18 Revenue* NETSCOUT SYSTEMS, INC. Reconciliation of Fiscal Year 2018 GAAP and Non-GAAP Revenue to Fiscal Year 2018 Pro Forma GAAP and Non-GAAP Revenue (Unaudited) (In millions) FY'18 GAAP Revenue $ 986.8 Non-GAAP Adjustments 12.5 Non-GA
Slide 21: Q3 FY’19 Guidance: GAAP to Non-GAAP Reconciliation
Q3 FY’19 Guidance: GAAP to Non-GAAP Reconciliation NETSCOUT SYSTEMS, INC Q3 FY'19 Reconciliation of GAAP Financial Guidance to Non-GAAP Financial Guidance (Unaudited) (In millions, except net income per share - diluted) 606 Q3 FY'18 Q3 FY'19 Adjustment Q3 FY'19 (605 Comparison) GAAP revenue $ 268.9
Slide 22: Total Revenue Composition
Total Revenue Composition (in millions) Q2 FY'19 Q2 FY'18 1H FY'19 1H FY'18 Q2 FY'19 Q2 FY'18 1H FY'19 1H FY'18 9/30/2018 9/30/2017 9/30/2018 9/30/2017 9/30/2018 9/30/2017 9/30/2018 9/30/2017 GAAP GAAP GAAP GAAP Non-GAAP Non-GAAP Non- Non- Total Revenue $ 223.8 $ 256.9 $ 428.9 $ 482.6 $ 224.0 $ 228.
Slide 23: Q2 FY’19 Revenue Reconciliation
GAAP to Non-GAAP Reconciliation: Q2 FY’19, Q2 FY’18, Q1 FY’19, 1H FY’19 and 1H 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 Six Months
Slide 24: Q2 FY’19 Income Reconciliation
GAAP to Non-GAAP Reconciliation: Q2 FY’19, Q2 FY’18, Q1 FY’19, 1H FY’19 and 1H 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
Slide 25: GAAP to Non-GAAP Itemization
GAAP to Non-GAAP Reconciliation: Q2 FY’19, Q2 FY’18, Q1 FY’19, 1H FY’19 and 1H 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 E
Slide 26: GAAP Product and Service Revenue Reclassification
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 27: Non-GAAP Product and Service Revenue Reclassification
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 28: Thank You
Thank You N E T S CO U T.CO M November October 26,1,2017 2018