WESTFORD, Mass.--(BUSINESS WIRE)--NETSCOUT SYSTEMS, INC. (NASDAQ: NTCT), a leading provider of service assurance, security, and business analytics, today announced financial results for its second quarter fiscal year 2021 ended September 30, 2020.

“We delivered solid earnings per share growth in the second quarter of fiscal year 2021, compared with the same period last year,” stated Anil Singhal, NETSCOUT’s president and chief executive officer. “We are pleased with our ability to serve our customers’ visibility and security needs while ensuring the safety and productivity of our team as we executed our strategy and delivered stable results in this tough and uncharted COVID-19 environment.”

Singhal continued, “Our business and operations have proven to be largely resilient as we navigate the global pandemic and macroeconomic uncertainty. This is due to our relevant solutions, trusted brand, strong customer relationships, dedicated team, and solid financial profile. That said, we are not immune from the impacts of the COVID-19 global pandemic and resulting challenging macro-economic environment that is causing elongated purchasing cycles and we expect our fiscal year financial results to be affected given these uncertainties. However, with long-term market trends in our favor, such as, digital transformation, cloud migration, increased cyber threats, and 5G networks, NETSCOUT is well-positioned as “Guardians of the Connected World” when we emerge from this global crisis.”

Q2 FY21 Financial Results

Total revenue (GAAP and non-GAAP) for the second quarter of fiscal year 2021 was $205.3 million, compared with $216.4 million (GAAP) and $216.5 million (non-GAAP) in the same quarter one year ago. A reconciliation of GAAP and non-GAAP results is included in the attached financial tables.

Product revenue (GAAP and non-GAAP) for the second quarter of fiscal year 2021 was $92.0 million, which was approximately 45% of total revenue. This compares with second-quarter fiscal year 2020 product revenue (GAAP and non-GAAP) of $102.8 million, which was approximately 47% of total revenue.

Service revenue (GAAP and non-GAAP) for the second quarter of fiscal year 2021 was $113.4 million, or approximately 55% of total revenue versus service revenue (GAAP) of $113.6 million and (non-GAAP) of $113.7 million, or approximately 53% of total revenue, for the same quarter one year ago.

NETSCOUT’s income from operations (GAAP) was $3.8 million in the second quarter of fiscal year 2021, compared with a loss from operations (GAAP) of $7.3 million in the comparable quarter one year ago. Second-quarter fiscal year 2021 non-GAAP EBITDA from operations was $46.8 million, or 22.8% of non-GAAP quarterly revenue, which compares with $38.5 million, or 17.8% of non-GAAP quarterly revenue in the second quarter of fiscal year 2020. The Company’s second-quarter fiscal year 2021 (GAAP) operating margin was 1.8% versus -3.4% in the prior fiscal year’s same period. Second-quarter fiscal year 2021 non-GAAP income from operations was $39.8 million with a non-GAAP operating margin of 19.4%. This compares with second-quarter fiscal year 2020 non-GAAP income from operations of $31.6 million and a non-GAAP operating margin of 14.6%.

Net loss (GAAP) for the second quarter of fiscal year 2021 was $3.7 million, or $0.05 per share (diluted) versus net loss (GAAP) of $17.5 million, or $0.23 per share (diluted), for the second quarter of fiscal year 2020. On a non-GAAP basis, net income for the second quarter of fiscal year 2021 was $28.2 million, or $0.38 per share (diluted), which compares with $21.4 million, or $0.28 per share (diluted), for the second quarter of fiscal year 2020.

As of September 30, 2020, cash and cash equivalents, and short and long-term marketable securities were $427.8 million, compared with $426.5 million as of June 30, 2020, and $389.1 million as of March 31, 2020. In addition, NETSCOUT has $450.0 million outstanding on its $1.0 billion credit facility.

First-Half FY21 Financial Results

• For the first half of fiscal year 2021, total revenue (GAAP and non-GAAP) was $389.2 million versus total revenue (GAAP) of $402.4 million and total revenue (non-GAAP) of $402.5 million for the comparable six-month period of fiscal year 2020. A reconciliation of GAAP and non-GAAP results is included in the attached financial tables.
• Product revenue (GAAP and non-GAAP) for the first six months of fiscal year 2021 was $163.7 million, compared with $178.5 million in the same period one year ago.
• First-half fiscal year 2021 service revenue (GAAP and non-GAAP) was $225.5 million versus $224.0 million in the same period last year.
• NETSCOUT’s loss from operations (GAAP) during the first six months of fiscal year 2021 was $10.7 million, compared with a loss from operations of $31.7 million for the comparable six-month period of fiscal year 2020. The Company’s first-half fiscal year 2021 (GAAP) operating margin was -2.8% versus -7.9% in the comparable period of fiscal year 2020. During the first two quarters of fiscal year 2021, the Company’s non-GAAP EBITDA from operations was $73.4 million, or 18.9% of non-GAAP total revenue versus non-GAAP EBITDA from operations of $57.4 million, or 14.3% of non-GAAP total revenue, in the first six months of fiscal year 2020. The Company’s non-GAAP income from operations for the first half of fiscal year 2021 was $60.5 million with a non-GAAP operating margin of 15.5%, compared with non-GAAP income from operations for the same period of fiscal year 2020 of $43.7 million and a non-GAAP operating margin of 10.9%.
• For the first six months of fiscal year 2021, NETSCOUT’s net loss (GAAP) was $21.1 million, or $0.29 per share (diluted) compared with a net loss of $46.8 million, or $0.61 per share (diluted) in the same six-month period one year ago. Non-GAAP net income for the first half of fiscal year 2021 was $40.5 million, or $0.55 per share (diluted)versus non-GAAP net income for the same period of fiscal year 2020 of $27.0 million, or $0.35 per share (diluted).

Outlook:

For fiscal year 2021, NETSCOUT expects revenue (GAAP and non-GAAP) to decline in the mid-to -upper single digits, on a percentage basis, compared with fiscal year 2020. This outlook is due to the COVID-19 global pandemic and resulting challenging macro-economic environment causing elongated purchasing cycles. NETSCOUT will continue to prudently manage its cost structure and expects to deliver improved annual GAAP earnings per share and expects non-GAAP earnings per share to be in-line with our non-GAAP fiscal year 2020 earnings per share number.

About NETSCOUT SYSTEMS, INC.

NETSCOUT SYSTEMS, INC. (NASDAQ: NTCT) assures digital business services against disruptions in availability, performance, and security. Our market and technology leadership stems from combining our patented smart data technology with smart analytics. We provide real-time, pervasive visibility, and insights customers need to accelerate and secure their digital transformation. Our approach transforms the way organizations plan, deliver, integrate, test, and deploy services and applications. Our nGenius service assurance solutions provide real-time, contextual analysis of service, network, and application performance. Arbor security solutions protect against DDoS attacks that threaten availability and advanced threats that infiltrate networks to steal critical business assets. To learn more about improving service, network, and application performance in physical or virtual data centers, or in the cloud, and how NETSCOUT’s performance and security solutions, powered by service intelligence can help you move forward with confidence, visit www.netscout.com or follow @NETSCOUT and @ArborNetworks on Twitter, Facebook, or LinkedIn.