Netscout Systems, Inc. · NASDAQ:NTCT
Netscout Systems — Q2 2018 Earnings Presentation
24 slides from Netscout Systems's earnings presentation, Oct 26, 2017
Slide 1: Q2 FY 2018 Conference Call
Q2 FY 2018 Conference Call NETSCOUT SYSTEMS, INC. October 26, 2017 ©2017 NETSCOUT October 26, 2017
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-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 October 26, 2017
Slide 6: Q2 FY’18 Highlights
Q2 FY’18 Highlights Non-GAAP Q2 FY’18 Q2 FY’17 1H FY'18 1H FY'17 ($ in millions, except per share data) 9/30/2017 9/30/2016 9/30/2017 9/30/2016 Revenue $ 259.9 $ 283.3 $ 488.8 $ 561.2 Gross Profit Margin 75.5% 74.5% 75.7% 73.7% Income from Operations Margin 16.3% 20.5% 11.6% 18.0% EPS $ 0.29 $ 0.39
Slide 7: “Smart Data” Strategy and Product Development Highlights
“Smart Data” Strategy and Product Development Highlights ©2017 NETSCOUT 7 October 26, 2017
Slide 8: Outlook
Outlook • Although NETSCOUT’s results to date are slightly ahead of original expectations, there are some challenges ahead in the second half • We have left our non-GAAP revenue and EPS guidance for the year unchanged – Delivering on our EPS targets continues to be our top priority • We remain confi
Slide 9: COO Update
COO Update Michael Szabados Chief Operating Officer N E T S CO U T.CO M October 26, 2017
Slide 10: COO Highlights
COO Highlights • Customer wins and use cases – Service Provider – Enterprise – DDoS • Go-to-market activity ©2017 NETSCOUT 10 October 26, 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 October 26, 2017
Slide 12: Q2 FY’18 and 1H FY’18 Results
Q2 FY’18 and 1H FY’18 Results Q2 FY’18 Q2 FY’17 Q2 FY’18 Q2 FY'17 1H FY ’18 1H FY'17 1H FY’18 1H FY’17 GAAP GAAP % Non-GAAP Non-GAAP % GAAP GAAP % Non-GAAP Non-GAAP % (in millions except EPS and % data) 9/30/2017 9/30/2016 Change 9/30/2017 9/30/2016 Change 9/30/2017 9/30/2016 Change 9/30/2017 9/30/2
Slide 13: 1H FY’18 Revenue Trends: Customer Verticals & Geographic Mix
1H 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) 1H FY’18 1H FY’17 $561.2 $488.8 Non-GAAP Non-GAAP $251.4 $232.5 48% 52% 45% 55% $256.3 $309.8 1H FY'18 1H FY'17 Service Provi
Slide 14: Balance Sheet Highlights & Free Cash Flow
Balance Sheet Highlights & Free Cash Flow (in millions) Balance Sheet Highlights Free Cash Flow (Unaudited) as of 9/30/2017 Q1 FY’18 Q2 FY'18 1H FY'18 6/30/2017 9/30/2017 9/30/2017 Cash and Securities* $ 313.4 Operating Cash Flow $ 52.6 $ 18.8 $ 71.4 Accounts Receivable, Net $ 215.2 Purchase of Fixe
Slide 15: FY 2018 Guidance
FY 2018 Guidance (in billions except EPS) Other FY’18 Guidance Assumptions * Improved gross margins as the primary factor FY’18 Guidance for operating profit margin growth to 25% GAAP FY’17 (on a % basis compared with FY’17) * Plan to maintain relatively flat operating costs Revenue $1.162 Low singl
Slide 16: Upcoming Investor Events
Upcoming Investor Events Date Event Location November 7, 2017 RBC Global TIMT Conference NYC November 14, 2017 Needham & Co. Networking & Security Conference NYC December 6, 2017 Nasdaq London 37th Investor Conference London ©2017 NETSCOUT 16 October 26, 2017
Slide 17: Appendix
Appendix N E T S CO U T.CO M October 26, 2017
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) (In millions, except net income per share - diluted) FY'17 FY'18 Updated (10/26/17) GAAP revenue $ 1,162.1 Low single
Slide 19: Q2 FY 2018 Guidance: GAAP to Non-GAAP Reconciliation
Q2 FY 2018 Guidance: GAAP to Non-GAAP Reconciliation Q3 FY'18 GAAP revenue $297 million to $317 million Deferred service revenue fair value adjustment ~$2 million Deferred product revenue fair value adjustment ~$1 million Non-GAAP revenue $300 million to $320 million GAAP Net Income ~$23 million to
Slide 20: Total Revenue Composition
Total Revenue Composition (in millions) Q2 FY’18 Q2 FY’17 Q2 FY’18 Q2 FY’17 1H FY’18 1H FY’17 1H FY’18 1H FY’17 GAAP GAAP Non-GAAP Non-GAAP GAAP GAAP Non-GAAP Non-GAAP Total Revenue $256.9 $272.0 $259.9 $283.3 $482.6 $541.0 $488.8 $561.2 Product Revenue $149.3 $168.9 $150.0 $174.9 $264.1 $333.5 $265
Slide 21: GAAP to Non-GAAP Reconciliation: Revenue
GAAP to Non-GAAP Reconciliation: Q2 FY’18, Q2 FY’17, Q1 FY’18, 1H FY’18 and 1H 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 Six Months
Slide 22: GAAP to Non-GAAP Reconciliation: Gross Profit, Income from Operations and Net Income
GAAP to Non-GAAP Reconciliation: Q2 FY’18, Q2 FY’17, Q1 FY’18, 1H FY’18 and 1H 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
Slide 23: GAAP to Non-GAAP Reconciliation: Itemization
GAAP to Non-GAAP Reconciliation: Q2 FY’18, Q2 FY’17, Q1 FY’18, 1H FY’18 and 1H 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 E
Slide 24: Thank You
Thank You N E T S CO U T.CO M October 26, 2017