Netscout Systems, Inc. · NASDAQ:NTCT
Netscout Systems — Q2 FY2015 Earnings Presentation
27 slides from Netscout Systems's earnings presentation, Oct 16, 2014
Slide 1: Q2 FY 2015 Conference Call
NetScout October 16, 2014 Q2 FY 2015 Conference Call Filed by NetScout Systems, Inc. Pursuant to Rule 425 under the Securities Act of 1933, as amended and deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act of 1934, as amended Subject Company: NetScout Systems, Inc. (Commission Fi
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 2015 Outlook – Jean Bua
Slide 3: Additional Information and Where You Can Find It
Additional Information and Where You Can Find It NetScout will file a Registration Statement on Form S-4 containing a proxy statement/prospectus of NetScout and other documents concerning the proposed acquisition with the Securities and Exchange Commission (the “SEC”). Investors are urged to read th
Slide 4: Safe Harbor & Non-GAAP Financial Metrics
Safe Harbor & Non-GAAP Financial Metrics Forward-looking statements in this communication are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and other federal securities laws. Investors are cautioned that statements in this communicatio
Slide 5: CEO Perspective
CEO Perspective Anil Singhal Co-Founder, President and CEO
Slide 6: NetScout Highlights
NetScout Highlights • Very strong Q2 • Reaffirm FY15 guidance – Revenue of $450m-$465m – Non-GAAP EPS of $1.74 per share to $1.81 per share • Acquisition of Danaher’s Communications Business Financial Highlights
Slide 7: Key Questions about NetScout's Acquisition of Danaher's Communication Business
4 Key Questions about NetScout’s Acquisition of Danaher’s Communication Business Understanding the unique benefits of this acquisition. 1. What is the growth profile of the businesses being acquired? 2. How do Tektronix and NetScout businesses complement each other? 3. Are we biting off too much? 4.
Slide 8: Danaher's Communications Business
1a. Danaher’s Communications Business Better Access to Service Providers Jump Starting our Cyber Security Initiative Broader Access in Enterprise • Track record of growth • Targeting markets currently growing in the mid-single digit to low double digit range • Each business is profitable with upside
Slide 9: A Closer Look
1b. A Closer Look ~50% of total revenue ~25% of total revenue ~25% of total revenue • It has consistently performed in the high-single digit revenue growth range. • A challenging 2014 • Orders have turned positive • A growth outlook for 2015 with product revenue anticipated to reach the upper single
Slide 10: Top-line synergy and opportunities
2. Top-line synergy and opportunities • Primary capabilities of Tektronix Communications (troubleshooting) and NetScout (monitoring) are very complementary and both are needed by service provider – Better positioned for future technology turns with a broader range of service providers • Extend our r
Slide 11: Are we biting off more than we can chew?
3. Are we biting off more than we can chew? • No! • Proven experience in successfully integrating the transformative acquisition of Network General, which created an industry leader while assuring customer continuity • Proven experience in integrating small technology acquisitions (five in the past
Slide 12: Operating Synergies
4. Operating Synergies • Meaningful synergies, in conjunction with anticipated revenue growth, will help us drive profitability substantially higher, particularly as we move out of year 1 and into year 2 • Deal is accretive in the first full year of operation • Gross margin upside: leverage our purc
Slide 13: COO Update
COO Update Michael Szabados Chief Operating Officer
Slide 14: Financial Review and Fiscal Year 2015 Outlook
Financial Review Fiscal Year 2015 Outlook Jean Bua SVP and Chief Financial Officer
Slide 15: Slide 15
Slide 16: NetScout Q2 FY 2015 Growth
NetScout Q2 FY 2015 Growth (in millions) Non-GAAP GAAP
Slide 17: 1H FY 2015 Income Statement
1H FY 2015 Income Statement (in millions except for EPS) NON-GAAP GAAP 1H FY'15 % Change over Prior Year 1H FY'15 % Change over Prior Year Total Revenue $211.5 21% $211.5 22% Product Revenue $122.3 28% $122.3 28% Service Revenue $89.2 13% $89.1 13% Gross Profit $169.8 22% $167.3 22% % 80.3% 79.1% Op
Slide 18: 1H FY 2015 Product Revenue Composition
1H FY 2015 Product Revenue Composition (Non-GAAP, in millions) 1H FY’15 % Change over Prior Year 1H FY'15 Product Revenue 1H FY'14 Product Revenue 42% 13% 45% 50% 39% 11% Total Revenue $211.5 21% Product Revenue $122.3 28% Service Revenue $89.2 13% Service Providers Government Enterprise General Ent
Slide 19: 1H FY 2015 Product Revenue Growth by Sector
1H FY’15 % Change over Prior Year 1H FY 2015 Product Revenue Growth by Sector (Non-GAAP, in millions) Total Revenue $211.5 21% Product Revenue $122.3 28% Service Revenue $89.2 13% 53% 12% 7% 24% 49% -3% 1H FY'15 1H FY'14 Product Revenue and Growth Government Enterprise General Enterprise Service Pro
Slide 20: 1H FY 2015 Total Revenue Composition
1H FY 2015 Total Revenue Composition (Non-GAAP, in millions) 1H FY’15 % Change over Prior Year 40% 14% 46% 1H FY'15 Total Revenue 34% 13% 53% 1H FY'14 Total Revenue Total Revenue $211.5 21% Product Revenue $122.3 28% Service Revenue $89.2 13% Service Providers Government Enterprise General Enterpris
Slide 21: 1H FY 2015 Total Revenue Growth by Sector
1H FY’15 % Change over Prior Year 1H FY 2015 Total Revenue Growth by Sector (Non-GAAP, in millions) Total Revenue $211.5 21% Product Revenue $122.3 28% Service Revenue $89.2 13% 34% 0% 5% 14% 42% 3% 1H FY'15 1H FY'14 Total Revenue and Growth Government Enterprise General Enterprise Service Providers
Slide 22: 1H FY 2015 Revenue by Geography
1H FY 2015 Revenue by Geography (GAAP, in millions) 1H FY ’15 % Change over Prior Year Total Revenue $211.5 22% 1H FY ' 15 1H FY ' 14 United States $165.4 28% International $46.1 4% Europe $20.0 -7% Asia $11.4 6% Rest of World $14.7 23% 78% 22% 5% 7% 10% 75% 25% 6% 12% 7% United States Europe Asia R
Slide 23: Balance Sheet Highlights & Free Cash Flow
Balance Sheet Highlights & Free Cash Flow (in millions) Ending Balance Sheet Q2 FY ’15 Ending Balance Sheet FY ’14 % Change over Prior Year Total Liquidity > $465 million Cash and Securities $217.3 $218.8 -1% Accounts Receivables $49.8 $60.5 -18% Inventories $14.5 $12.6 15% Total Debt $0.0 $0.0 0% T
Slide 24: Guidance – FY 2015
Guidance – FY 2015 (in millions except for EPS) GAAP Low High 290 309 352 397 $1.04 $1.10 $1.32 $1.53 Revenue $450 $465 EPS $1.32 $1.39 EPS Increase from Prior Year 13% 19% Product revenue growth: 18% - 23% 7% 13% 13 - 17% 14% $450 - $465 FY '11 FY '12 FY '13 FY '14 FY '15 Non-GAAP Revenue ($MM) FY
Slide 25: GAAP Reconciliation: Net Income
GAAP Reconciliation: Net Income • For fiscal year 2015 , the non-GAAP net income per diluted share expectation excludes forecasted share-based compensation expenses of approximately $17.0 million, estimated amortization of acquired intangible assets of approximately $7.1 million, compensation for po
Slide 26: NetScout
@ neTSCOUT. BARRON SEQ)
Slide 27: Add GAAP to Non-GAAP Reconciliation
Add GAAP to Non-GAAP Reconciliation NetScout Systems, Inc. Reconciliation of Current GAAP to Current and Historical Non-GAAP Financial Measures (In thousands, except per share data) Three Months Ended June 30, GAAP Revenue 103,599 $ 92,097 $ 107,852 $ 211,451 $ 173,902 $ Deferred revenue fair value