Slide 1: Q1 FY 2018 Conference Call
Q1 FY 2018 Conference Call NETSCOUT SYSTEMS, INC. July 27, 2017 ©2017 NETSCOUT
Slide 2: Agenda
Agenda • Introduction & Safe Harbor – Andrew Kramer, Vice President of Investor Relations • CEO Perspective – Anil Singhal, President and CEO • COO Update: Customer Use Cases & Business Initiatives – Michael Szabados, Chief Operating Officer • Financial Review and Fiscal Year 2018 Outlook – Jean Bua
Slide 3: Safe Harbor
Safe Harbor Forward Looking Statements: 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 thi
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-GAA
Slide 5: CEO Perspective
CEO Perspective Anil Singhal Co-Founder, President and Chief Executive Officer N E T S CO U T.CO M
Slide 6: Q1 FY’18 Highlights
Q1 FY’18 Highlights Non-GAAP Q1 FY’18 Q1 FY’17 ($ in millions, except per share data) 6/30/2017 6/30/2016 Revenue $228.8 $278.0 Gross Profit Margin 75.9% 72.9% Income from Operations Profit Margin 6.3% 15.5% EPS $0.08 $0.28 • Q1 results generally in line with our plans entering the quarter – Q1 reve
Slide 7: “Smart Data” Strategy and Product Development Highlights
“Smart Data” Strategy and Product Development Highlights ©2017 NETSCOUT 7 July 27, 2017
Slide 8: Outlook
Outlook • Substantial progress on our development roadmaps during this past quarter to largely complete our newest product cycle • To capitalize on the potential we see for these new products, we will continue to advance key sales and marketing initiatives • Our outlook for fiscal year 2018 is funda
Slide 9: COO Update
COO Update Michael Szabados Chief Operating Officer N E T S CO U T.CO M
Slide 10: COO Highlights
COO Highlights • Customer wins and use cases – Service Provider – Enterprise – DDoS • Go-to-market activity ©2017 NETSCOUT 10 July 27, 2017
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
Slide 12: Q1 FY’18 Results
Q1 FY’18 Results Q1 FY’18 Q1 FY’17 Q1 FY’18 Q1 FY’17 GAAP GAAP Non-GAAP Non-GAAP Reported Reported % Reported Reported % (in millions except EPS and % data) 6/30/17 6/30/16 Change 6/30/17 6/30/16 Change Revenue: Product $ 114.8 $ 164.6 -30.2% $ 115.5 $ 168.8 -31.6% Service $ 110.9 $ 104.4 6.3% $ 113
Slide 13: Q1 FY’18 Revenue Trends: Customer Verticals & Geographic Mix
Q1 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) Q1 FY’18 Q1 FY’17 $278.0 $228.8 Non-GAAP Non-GAAP $121.6 $110.6 48% 52% 44% 56% $118.3 $156.4 Q1 FY'18 Q1 FY'17 Service Provi
Slide 14: Balance Sheet Highlights & Free Cash Flow
Balance Sheet Highlights & Free Cash Flow (in millions) Q1 FY’18 Free Cash Flow (Unaudited) 6/30/17 Q1 FY’18 6/30/17 Cash and Securities* $ 409.7 Operating Cash Flow $ 52.6 Accounts Receivable, Net $ 185.9 Purchase of Fixed Assets & Intangible Assets $ (3.3) Free Cash Flow $ 49.3 Inventories $ 41.0
Slide 15: FY 2018 Guidance
FY 2018 Guidance (in billions except EPS) Other FY’18 Guidance Assumptions * Expect that solid revenue growth in enterprise vertical will be offset by a decline in service FY’18 Guidance provider vertical GAAP FY’17 (on a % basis compared with FY’17) * ~40% of total FY’18 revenue anticipated in 1H R
Slide 16: Upcoming Investor Events
Upcoming Investor Events Date Event Location August 7, 2017 KeyBanc (PacificCrest) Global Technology Leadership Forum Vail, CO August 15, 2017 D.A. Davidson 9th Annual Technology Forum NYC September 6, 2017 Drexel Hamilton TMT Conference NYC September 12, 2017 Deutsche Bank Technology Conference Las
Slide 17: Appendix
Appendix N E T S CO U T.CO M
Slide 18: FY 2018 Guidance: GAAP to Non-GAAP Reconciliation
FY 2018 Guidance: GAAP to Non-GAAP Reconciliation (in millions except EPS) NETSCOUT SYSTEMS, INC. Reconciliation of GAAP Financial Guidance to Non-GAAP Financial Guidance (Unaudited) FY'17 FY'18 Updated (7/27/17) GAAP revenue $ 1,162.1 Low single-digit growth over FY'17 Deferred service revenue fair
Slide 19: Q2 FY 2018 Guidance: GAAP to Non-GAAP Reconciliation
Q2 FY 2018 Guidance: GAAP to Non-GAAP Reconciliation (in millions except EPS) NETSCOUT SYSTEMS, INC. Reconciliation of GAAP Financial Guidance to Non-GAAP Financial Guidance (Unaudited) in millions except per share Q2 FY'18 GAAP revenue ~$247 million Deferred service revenue fair value adjustment ~$
Slide 20: Total Revenue Composition
Total Revenue Composition (in millions) Q1 Q1 Q1 Q1 FY’18 FY’17 FY’18 FY’17 GAAP GAAP Non-GAAP Non-GAAP Total Revenue $225.8 $269.0 $228.8 $278.0 Product Revenue $114.8 $164.6 $115.5 $168.8 Service Revenue $110.9 $104.4 $113.3 $109.1 Certain numbers may not total due to rounding ©2017 NETSCOUT 20 Ju
Slide 21: GAAP to Non-GAAP Reconciliation: Q1 FY’18, Q1 FY’17 and Q4 FY’17 Revenue
GAAP to Non-GAAP Reconciliation: Q1 FY’18, Q1 FY’17 and Q4 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 June 30, March 31, 2017 2016 20
Slide 22: GAAP to Non-GAAP Reconciliation: Gross Profit, Income from Operations and Net Income
GAAP to Non-GAAP Reconciliation: Q1 FY’18, Q1 FY’17 and Q4 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 Months Ended Three
Slide 23: GAAP to Non-GAAP Reconciliation: Itemization
GAAP to Non-GAAP Reconciliation: Q1 FY’18, Q1 FY’17 and Q4 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 June 30, March
Slide 24: Thank You
Thank You N E T S CO U T.CO M