Slide 1: Q2 FY 2020 Conference Call
Q2 FY 2020 Conference Call NETSCOUT SYSTEMS, INC. October 31, 2019 ©2019 NETSCOUT October 31, 2019
Slide 2: Agenda
Agenda • Introduction & Safe Harbor – Tony Piazza, VP of Corporate Finance • 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 October 31, 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 gross profit, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income,
Slide 5: CEO Perspective
CEO Perspective Anil Singhal President and Chief Executive Officer N E T S CO U T.CO M October 31, 2019
Slide 6: Q2 FY'20 Highlights
Q2 FY’20 Highlights Non-GAAP Q2 FY’20 Q2 FY’19 1H FY'20 1H FY'19 ($ in millions, except per share data) 9/30/2019 9/30/2018 9/30/2019 9/30/2018 Revenue $ 216.5 $ 224.0 $ 402.5 $ 430.0 Gross Margin 76.6% 76.0% 75.8% 75.4% Operating Margin 14.6% 14.7% 10.9% 9.4% EPS $ 0.28 $ 0.25 $ 0.35 $ 0.27 • Reven
Slide 7: Business Highlights
Business Highlights • Service Provider • Large cable operator deal completed • 5G perspective • Enterprise • Strong government funding • Digital transformation perspective ©2019 NETSCOUT 7 October 31, 2019
Slide 8: FY'20 Outlook & Summary
FY’20 Outlook & Summary • We remain excited about the opportunities we are seeing and our ability to capitalize on them • We remain focused on generating low-single digit organic revenue growth, which would translate into a range of $895 million to $915 million of non-GAAP revenue for the fiscal yea
Slide 9: COO Update
COO Update Michael Szabados Chief Operating Officer N E T S CO U T.CO M October 31, 2019
Slide 10: COO Highlights
COO Highlights • Customer wins • Go-to-market activities ©2019 NETSCOUT 10 October 31, 2019
Slide 11: Financial Review & FY'20 Outlook
Financial Review & FY’20 Outlook Jean Bua Executive Vice President and Chief Financial Officer N E T S CO U T.CO M October 31, 2019
Slide 12: Q2 and 1H FY'20 Results
Q2 and 1H FY’20 Results Q2 FY’20 Q2 FY’19 Q2 FY’20 Q2 FY’19 1H FY’20 1H FY’19 1H FY’20 1H FY’19 Non-GAAP Non-GAAP % GAAP GAAP % Non-GAAP Non-GAAP % GAAP GAAP % (in millions except EPS and % data) 9/30/2019 9/30/2018 Change 9/30/2019 9/30/2018 Change 9/30/2019 9/30/2018 Change 9/30/2019 9/30/2018 Cha
Slide 13: 1st Half FY'20 Revenue Trends
1st Half FY’20 Revenue Trends: Customer Verticals & Geographic Mix Total Non-GAAP Revenue by Customer Segment Total Non-GAAP Revenue Composition by Customer Segment ($ in millions) 1H FY’20 1H FY’19 $402.5 $430.0 Non-GAAP Non-GAAP $193.1 $224.3 48% 52% 52% 48% $209.4 $205.7 1H FY'20 1H FY'19 Service
Slide 14: GAAP Balance Sheet Highlights & Free Cash Flow
GAAP Balance Sheet Highlights & Free Cash Flow (in millions) Q2 FY'20 Free Cash Flow (Unaudited) 9/30/19 Q1 FY’20 Q2 FY'20 1H FY'20 Cash and Securities* $ 307.8 6/30/2019 9/30/2019 9/30/2019 Operating Cash Flow $ 49.5 $ (1.0) $ 48.5 Accounts Receivable, Net $ 202.3 Purchase of Fixed Assets & Intangi
Slide 15: 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 of Revenue $909.9 $911.5 ~$895 to ~$915 approximately 76% HNT Tools ($18.0) ($18.0) - * Operating expenses expected to range Organic Revenue $
Slide 16: Upcoming Investor Events
Upcoming Investor Events Date Event Location November 6, 2019 6th Annual Bernstein Technology Innovation Summit New York November 12, 2019 Needham Security, Networking and Communications New York Conference November 14, 2019 Stephens Investment Conference Nashville November 20, 2019 RBC Capital Mark
Slide 17: Appendix
Appendix N E T S CO U T.CO M October 31, 2019
Slide 18: FY'20 Guidance 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 19: Q3 FY'20 Guidance Reconciliation
Q3 FY’20 Guidance: GAAP to Non-GAAP Reconciliation NETSCOUT SYSTEMS, INC Q3 FY'20 Reconciliation of GAAP Financial Guidance to Non-GAAP Financial Guidance (Unaudited) (In millions, except net income per share - diluted) Q3 FY'19 Q3 FY'20 GAAP revenue $ 246.0 ~$245 million to ~$255 million Deferred s
Slide 20: Total Revenue Composition
Total Revenue Composition (in millions) Q2 FY'20 Q2 FY'19 1H FY'20 1H FY'19 Q2 FY'20 Q2 FY'19 1H FY'20 1H FY'19 9/30/2019 9/30/2018 9/30/2019 9/30/2018 9/30/2019 9/30/2018 9/30/2019 9/30/2018 GAAP GAAP GAAP GAAP Non-GAAP Non-GAAP Non-GAAP Non-GAAP Total Revenue $216.4 $223.8 $402.4 $428.9 $216.5 $22
Slide 21: GAAP to Non-GAAP Revenue Reconciliation
GAAP to Non-GAAP Reconciliation: Q2’FY20, Q2’FY19, Q1 FY’20, 1H’FY20 & 1H FY’19 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 Ended
Slide 22: Organic Non-GAAP Revenue Reconciliation
GAAP to Non-GAAP Reconciliation: Q2’FY20, Q2’FY19, 1H’FY20 & 1H FY’19 Organic Non-GAAP Revenue NETSCOUT SYSTEMS, INC. Reconciliation of GAAP Revenue to Non-GAAP Organic Revenue (In thousands) (Unaudited) Three Months Ended Six Months Ended September 30, September 30, 2019 2018 2019 2018 GAAP Product
Slide 23: Gross Profit and Income Reconciliation
GAAP to Non-GAAP Reconciliation: Q2’FY20, Q2’FY19, Q1’FY20, 1H’FY20 & 1H FY’19 Gross Profit, Income from Operations and Net Income (loss) NETSCOUT SYSTEMS, INC. Reconciliation of Current GAAP to Current and Historical Non-GAAP Financial Measures (In thousands, except per share data) (Unaudited) Thre
Slide 24: Itemization
GAAP to Non-GAAP Reconciliation: Q2’FY20, Q2’FY19, Q1 FY’20, 1H’FY20 & 1H FY’19 Itemization NETSCOUT SYSTEMS, INC. Reconciliation of Current GAAP to Current and Historical Non-GAAP Financial Measures - Continued (In thousands) (Unaudited) Three Months Ended Three Months Ended Six Months Ended Septem
Slide 25: Thank You
Thank You N E T S CO U T.CO M October 31, 2019