Slide 1: Q3 FY 2020 Conference Call
Q3 FY 2020 Conference Call NETSCOUT SYSTEMS, INC. January 30, 2020 ©2020 NETSCOUT January 30, 2020
Slide 2: Agenda
Agenda • Introduction & Safe Harbor – Tony Piazza, Vice President, 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 ©2020 NETSCOUT 2 January 30, 2020
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 gross profit, 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 January 30, 2020
Slide 6: Q3 FY'20 Highlights
Q3 FY’20 Highlights Non-GAAP Q3 FY’20 Q3 FY’19 YTD FY'20 YTD FY'19 ($ in millions, except per share data) 12/31/2019 12/31/2018 12/31/2019 12/31/2018 Revenue $ 260.1 $ 246.3 $ 662.6 $ 676.3 Gross Margin 77.8% 75.6% 76.6% 75.5% Operating Margin 27.3% 21.4% 17.3% 13.7% EPS $ 0.73 $ 0.45 $ 1.07 $ 0.72
Slide 7: Business Highlights
Business Highlights • Service Provider • Key Q3 Transactions • Market Overview • Enterprise • Digital Transformation • Integration of Service Assurance & Security Technology ©2020 NETSCOUT 7 January 30, 2020
Slide 8: FY'20 Outlook & Summary
FY’20 Outlook & Summary • Remain excited about the opportunities we are seeing and our ability to capitalize on them • Focused on generating low-single digit organic revenue growth, and are narrowing our revenue range to $900 million to $910 million • Increasing our diluted non-GAAP EPS by 6 cents t
Slide 9: COO Update
COO Update Michael Szabados Chief Operating Officer N E T S CO U T.CO M January 30, 2020
Slide 10: COO Highlights
COO Highlights • Customer wins • Go-to-market activities ©2020 NETSCOUT 10 January 30, 2020
Slide 11: Financial Review & FY'20 Outlook
Financial Review & FY’20 Outlook Jean Bua Executive Vice President and Chief Financial Officer N E T S CO U T.CO M January 30, 2020
Slide 12: Q3 and First Nine Months YTD FY'20 Results
Q3 and First Nine Months YTD FY’20 Results Q3 FY’20 Q3 FY’19 Q3 FY’20 Q3 FY’19 YTD FY’20 YTD FY’19 YTD FY’20 YTD FY’19 Non-GAAP Non-GAAP % GAAP GAAP % Non-GAAP Non-GAAP % GAAP GAAP % (in millions except EPS and % data) 12/31/2019 12/31/2018 Change 12/31/2019 12/31/2018 Change 12/31/2019 12/31/2018 C
Slide 13: YTD FY'20 Revenue Trends: Customer Verticals Excluding HNT Tools Divestiture
First Nine Months YTD FY’20 Revenue Trends: Customer Verticals Excluding HNT Tools Divestiture Total Non-GAAP Revenue by Customer Vertical Total Non-GAAP Revenue Composition by Customer Vertical ($ in millions) YTD FY’20 YTD FY’19 $662.6 $658.3 Non-GAAP Non-GAAP $317.1 $326.9 48% 52% 50% 50% $345.5
Slide 14: YTD FY'20 Revenue Trends: Geographic Mix on a GAAP Basis
First Nine Months YTD FY’20 Revenue Trends: Geographic Mix on a GAAP Basis YTD FY’20 YTD FY’19 GAAP GAAP 12/31/19 12/31/18 YTD FY’20 YTD FY’19 Total Revenue $662.5 $674.9 United States $410.3 $412.4 6% 8% International $252.2 $262.5 62% 38% 15% 61% 39% 15% 17% 16% Europe $110.3 $109.5 Asia $41.6 $54
Slide 15: GAAP Balance Sheet Highlights & Free Cash Flow
GAAP Balance Sheet Highlights & Free Cash Flow (in millions) Q3 FY'20 Free Cash Flow (Unaudited) 12/31/19 Q1 FY’20 Q2 FY'20 Q3 FY'20 YTD FY'20 Cash and Securities* $ 346.5 6/30/2019 9/30/2019 12/31/2019 12/31/2019 Operating Cash Flow $ 49.5 $ (1.0) $ 69.3 $ 117.8 Accounts Receivable, Net $ 244.9 Pur
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 Revenue $909.9 $911.5 ~$900 to ~$910 * Tax rate anticipated to range from 20% HNT Tools ($18.0) ($18.0) - to 22% Organic Revenue $891.9 $893.5 ~$900 to ~$910 * Weighted average
Slide 17: Appendix
Appendix N E T S CO U T.CO M January 30, 2020
Slide 18: 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 ~$900 million to ~$910 million Deferred service revenue fai
Slide 19: Total Revenue Composition
Total Revenue Composition (in millions) Q3 FY'20 Q3 FY'19 YTD FY'20 YTD FY'19 Q3 FY'20 Q3 FY'19 YTD FY'20 YTD FY'19 12/31/2019 12/31/2018 12/31/2019 12/31/2018 12/31/2019 12/31/2018 12/31/2019 12/31/2018 GAAP GAAP GAAP GAAP Non-GAAP Non-GAAP Non-GAAP Non-GAAP Total Revenue $260.0 $246.0 $662.5 $674.
Slide 20: GAAP to Non-GAAP Reconciliation: Revenue
GAAP to Non-GAAP Reconciliation: Q3’FY20, Q3’FY19, Q2 FY’20, YTD’FY20 & YTD 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 Nine Months En
Slide 21: GAAP to Non-GAAP Reconciliation: Organic Non-GAAP Revenue
GAAP to Non-GAAP Reconciliation: Q3’FY20, Q3’FY19, YTD’FY20 & YTD FY’19 Organic Non-GAAP Revenue NETSCOUT SYSTEMS, INC. Reconciliation of GAAP Revenue to Non-GAAP Organic Revenue (In thousands) (Unaudited) Three Months Ended Nine Months Ended December 31, December 31, 2019 2018 2019 2018 GAAP Produc
Slide 22: GAAP to Non-GAAP Reconciliation: Gross Profit, Income from Operations and Net Income
GAAP to Non-GAAP Reconciliation: Q3’FY20, Q3’FY19, Q2’FY20, YTD’FY20 & YTD 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) Th
Slide 23: GAAP to Non-GAAP Reconciliation: Itemization
GAAP to Non-GAAP Reconciliation: Q3’FY20, Q3’FY19, Q2’FY20, YTD’FY20 & YTD 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 Nine Months Ended Dece
Slide 24: Thank You
Thank You N E T S CO U T.CO M January 30, 2020