NetScout Announces Record Revenue and Earnings for Fiscal 2000 Fourth Quarter and Year-End
David Sommers is Appointed as New Chief Financial Officer; nGenius Performance Management System Begins Launch
WESTFORD, Mass.--(BUSINESS WIRE)--April 27, 2000-- NetScout Systems, Inc. (NASDAQ: NTCT), a leading provider of products that enable businesses to monitor, analyze and improve the performance of their computer networks and software applications, today announced financial results for its fiscal fourth quarter and fiscal year ended March 31, 2000.
Revenue for the fourth quarter of fiscal 2000 was $23.9 million, a 28 percent increase from revenue of $18.7 million for the same period last year. Net income for the three months ended March 31, 2000 was $4.5 million, or $0.16 per pro forma diluted share, compared to $2.6 million, or $0.10 per pro forma diluted share, for the same period last year.
Weighted average pro forma diluted shares for the three-month period ended March 31, 2000 were 28.1 million, compared to 24.8 million for the same period in 1999.
For the year ended March 31, 2000, NetScout reported revenue of $86.2 million, a 28 percent increase from $67.6 million for the year ended March 31, 1999. Net income for the year ended March 31, 2000 was $15.2 million, or $0.56 per pro forma diluted share, compared to net income of $10.3 million, or $0.43 per pro forma diluted share, for the year ended March 31, 1999.
"We are very pleased to be reporting record financial results, and to have accomplished a number of significant development milestones that will propel our success, going forward," said Anil Singhal, NetScout's chairman and chief executive officer. "There is an increasing level of urgency to validate network and application performance, and to protect the huge outlays involved in maintaining business over the net. Our new products, designed to deploy faster and deliver critical performance data, will enable IT and business managers to regain the control they ultimately need to ensure network, and hence e-business, viability."
Fourth Quarter Highlights
Fourth-quarter highlights included the announcement of NetScout's comprehensive strategy to deliver its business-critical performance solutions for the e-business market. As part of this strategy, the Company commenced roll out of its nGenius Performance Management System. Initial feedback from beta customers and industry analysts was favorable:
John McConnell, president of McConnell Associates said, "The intense demands of e-business demand nothing less than guaranteed performance and availability of the e-business infrastructure. The entire infrastructure must be visible, and a set of point tools with limited coverage can't do the job. NetScout's nGenius gives customers a complete, real-time view of the infrastructure - including the content being moved. This integration of data sources from the front to back office is what organizations have been looking for."
Other product highlights for the fourth quarter included the release of NetScout's E3/ATM probe, an industry first and extension of NetScout instrumentation for the European markets; Webcast 3.1, a newspaper-style reporting application that gives executive level presentation of trends in application bandwidth consumption; and NetScout's WAN De-compression Probe, another industry first that adds visibility into applications running over compressed WAN links.
In support of deploying its solutions faster and enabling clients to derive fuller benefit from NetScout solutions, the Company also established a major new service offering in partnership with Greenwich Technology Partners. The focused implementation and training available through this program will improve customer satisfaction and increase opportunities for repeat business.
NetScout received fourth quarter orders from enterprise customers in North America such as TPF&C, Bank of NY, American Home Products, Citigroup, Columbia HCA, Cabletron, and CSC, as well as significant deals with its existing clientele in the banking, financial and insurance industries. New .com and service provider customers during the fourth quarter, included Earthlink, Datek Online, LightBridge, Media Metrix, Netcontext and Viag Interkom.
During the quarter, NetScout extended and expanded its OEM and technology sharing alliance with Cisco Systems (NASDAQ: CSCO). As part of this agreement, Cisco has extended NetScout's technology into its Routed WAN management solutions.
The Company also announced a strategic alliance with Akamai Technologies. Through co-marketing events and complementary selling efforts, the two companies will be able to enhance and share opportunities in their respective markets. NetScout also announced alliances with leading systems integrators Logical Networks and Siemens Network Systems Ltd. to assist in penetrating European markets.
Company Names CFO
Also today, NetScout announced the appointment of David P. Sommers as the Company's chief financial officer. From 1993 to present, David served as chief financial officer at Flexi International Software, SystemSoft Corporation, and Advanced Media Inc. Prior to that, he served for twenty years in successive management roles at IBM Corporation and its business units. David has also consulted at major corporations such as Lotus Development Corp. Sommers is a Certified Management Accountant and received his MBA from New York University and his Bachelor of Arts in Physics from Harvard University.
"David brings strong financial and public company experience to NetScout, particularly in the areas of mergers and acquisitions and communicating with Wall Street," Singhal said. "We welcome David to the management team and look forward to having him contribute to NetScout's continued growth and success."
Outlook
"Fiscal year 2000 has been highlighted by consistent revenue growth, new customers and partners, the extension of our enabling technology and the expansion of our relationship with Cisco Systems," Singhal said. "In the year ahead, we look forward to accelerating our growth, fueled by increased market readiness for our application-aware products and our new nGenius Performance Management System. Our strategy, technology and products are key differentiators for NetScout as we continue to expand our position in the network management market."
About NetScout Systems
NetScout Systems, Inc. is a leading provider of business-oriented network management solutions. NetScout enables large enterprises to depend on their network to deliver business-critical applications in areas such as e-commerce, enterprise resource planning and supply chain management. The Company's solutions are based on its unique Application Flow Management technology, which uses the rich set of application traffic information collected by NetScout's instrumentation. NetScout's AFM solutions address network optimization and fault isolation, capacity management, application performance measurement & reporting, and usage-based billing. Headquartered in Westford, Massachusetts, NetScout has approximately 248 employees and has offices in North America, Europe and Asia. Further information about the Company is available on the World Wide Web at www.netscout.com.
Forward-looking statements in this release are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. Investors are cautioned that statements in this press release which are not strictly historical statements constitute forward-looking statements which involve risks and uncertainties. Actual results could differ materially from the forward-looking statements. Risks and uncertainties which could cause actual results to differ include, without limitation, risks and uncertainties associated with the company's strategic relationships with Cisco Systems and other partners, dependence upon broad-based acceptance of the company's Application Flow Management solutions, introduction and market acceptance of new products and product enhancements, competitive pricing pressures, reliance on sole source suppliers, successful expansion and management of the indirect distribution channels, and dependence on proprietary technology, as well as risks of downturns in economic conditions generally and in the market for network and application performance management solutions specifically, and risks associated with year 2000 problems affecting the company, its partners and its customers. For a more detailed description of the risk factors associated with the company, please refer to the company's prospectus dated August 12, 1999 and the Quarterly Report on Form 10-Q for the quarter ended December 31, 1999, on file with the Securities and Exchange Commission.
NetScout is a registered trademark and the NetScout logo, AppScout, NetScout Server and NetScout Manager Plus are trademarks of NetScout Systems, Inc. All other trademarks are the property of their respective owners. -0-
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NetScout Systems, Inc.
Condensed Consolidated Statement of Income
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Year Ended
March 31, March 31,
2000 1999 2000 1999
Revenue:
Product $16,267 $13,637 $57,206 $50,374
Service 3,892 2,381 12,804 8,710
License and royalty 3,783 2,653 16,149 8,467
Total revenue 23,942 18,671 86,159 67,551
Cost of revenue:
Product 5,849 5,636 21,139 19,250
Service 476 397 1,718 1,235
Total cost of revenue 6,325 6,033 22,857 20,485
Gross margin 17,617 12,638 63,302 47,066
Operating expenses:
Research and development 2,504 2,231 9,526 7,526
Sales and marketing 7,824 5,649 27,945 20,375
General and administrative 1,210 1,046 4,631 4,104
Total operating expenses 11,538 8,926 42,102 32,005
Income from operations 6,079 3,712 21,200 15,061
Interest income, net 942 259 2,551 926
Income before
provision for
income taxes 7,021 3,971 23,751 15,987
Provision for income taxes 2,508 1,388 8,539 5,715
Net income $ 4,513 $ 2,583 $15,212 $10,272
Basic net income
per share $ 0.17 $ 0.16 $ 0.70 $ 0.55
Diluted net income
per share $ 0.16 $ 0.10 $ 0.56 $ 0.43
Shares used
in computing:
Basic net income
per share 26,286 16,004 21,750 18,586
Diluted net income
per share 28,115 24,761 26,946 23,706
Pro forma basic net
income per share $ 0.17 $ 0.11 $ 0.61 $ 0.46
Pro forma diluted net
income per share $ 0.16 $ 0.10 $ 0.56 $ 0.43
Shares used in computing:
Pro forma basic net
income per share 26,286 23,292 24,751 22,301
Pro forma diluted net
income per share 28,115 24,761 26,946 23,706
NetScout Systems, Inc.
Condensed Consolidated Balance Sheet
(In thousands)
(Unaudited)
March 31,
2000 1999
Assets
Current assets:
Cash and cash equivalents $48,515 $25,477
Short-term investments 21,807 --
Accounts receivable, net 10,390 6,550
Inventories 3,131 3,165
Refundable income taxes 1,899 217
Deferred income taxes 1,022 1,196
Prepaids and other current assets 3,728 821
Total current assets 90,492 37,426
Fixed assets, net 5,657 4,227
Notes receivable - stockholders -- 2,000
Deferred income taxes 599 321
Total assets $96,748 $43,974
Liabilities, Redeemable Convertible
Common Stock and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable $ 2,789 $ 3,945
Accrued compensation 3,673 3,784
Accrued other 2,448 920
Customer deposits 78 34
Deferred revenue 6,638 4,254
Total current liabilities 15,626 12,937
Class B redeemable convertible common stock -- 44,161
Stockholders' equity (deficit):
Series A convertible preferred stock -- 5,964
Common stock:
Voting 31 16
Non-voting -- 4
Additional paid-in capital 67,366 2,143
Deferred compensation (636) (1,312)
Treasury stock (25,306) (44,394)
Retained earnings 39,667 24,455
Total stockholders' equity (deficit) 81,122 (13,124)
Total liabilities, redeemable
convertible common stock and
stockholders' equity (deficit) $ 96,748 $ 43,974
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