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 third-quarter fiscal year 2021 ended December 31, 2020.

“We are pleased with our third-quarter results and strong year-to-date earnings per share performance compared with our prior fiscal year,” stated Anil Singhal, NETSCOUT’s president and chief executive officer. “Our offerings are being well received in the market given our ability to provide service assurance, with real-time, pervasive visibility and insight, and security solutions that mitigate disruption for our customers regardless of their underlying infrastructure. This is important as customers further safeguard their Information Technology infrastructure in this pandemic environment that is straining networks in terms of volume and attempted security breaches. Our focus during these challenging times has been to keep our team safe and productive, to serve our customers well with the highest quality solutions and service, and to drive overall margin expansion while preserving liquidity to maintain a strong balance sheet and financial flexibility.”

Singhal continued, “Our relevant solutions, trusted brand, strong customer relationships, dedicated team, and solid financial profile have positioned us well as we continue to weather the current macro-economic environment. We remain committed to enhancing our profitability and are raising our fiscal year 2021 earnings per share outlook given our performance year-to-date. With long-term market trends, such as digital transformation, cloud migration, cyber threats, and 5G networks, in NETSCOUT’s favor, we believe we are well-positioned as “Guardians of the Connected World” when we emerge from this global crisis.”

Notable developments and highlights:

Notable developments and highlights in the third quarter included extending partnerships with AWS and Vodafone, custom research on the Information Technology challenges brought about by the pandemic, announcement of NETSCOUT’s Engage 21 Virtual Technology and User Summit, and sponsorship and grant funding to provide digital services to underserved students.

• NETSCOUT announced the extension of its Smart Perimeter Protection to AWS. The combination of NETSCOUT’s Cyber Investigator (NCI) and CyberStream software with new AWS packet access services helps contain costs and achieve better efficiencies in mitigating novel security threats as enterprises move applications to the cloud. As the threat surface expands, the solution uses packet data and powerful cyber analytics to get to the root cause of cybersecurity issues quickly.
• NETSCOUT announced the extension of its long-term partnership with Vodafone. The exclusive, multi-year agreement leverages NETSCOUT’s InfiniStreamNG platform to help provide real-time, end-to-end visibility across Vodafone’s hybrid environment.
• NETSCOUT announced findings from a survey it commissioned to understand the network infrastructure challenges associated with keeping employees connected in remote-work environments. The findings confirmed the increased use of unified communications and collaboration (UC&C) solutions since the start of the pandemic and the impact and challenges the increased use has had on Information Technology teams.
• NETSCOUT plans to host, virtually, customers and partners at its annual Engage Technology and User Summit from April 19th through April 30th. Over the two-week Engage 2021 event, it will showcase its Security, Service Assurance and DDoS capabilities through presentations, panel discussions, demonstrations, and hands-on training. An annual tradition, the event is a highlight of the year for the Company given the opportunity to meet with its user and partner community and discuss how it truly offers Visibility Without Borders.
• NETSCOUT announced it has partnered with Tech Goes Home (TGH), a Massachusetts nonprofit dedicated to ending digital inequity, to provide digital devices, internet access, and digital skills training to more than 160 households in Roxbury, MA. Through a grant, NETSCOUT is sponsoring virtual Tech Goes Home courses at Roxbury partner sites, including Boston Central Adult High School and Vine Street Community Center.

Q3 FY21 Financial Results

Total revenue (GAAP and non-GAAP) for the third quarter of fiscal year 2021 was $228.7 million, compared with $260.0 million (GAAP) and $260.1 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 third quarter of fiscal year 2021 was $115.0 million, which was approximately 50% of total revenue. This compares with third-quarter fiscal year 2020 product revenue (GAAP and non-GAAP) of $143.3 million, which was approximately 55% of total revenue.

Service revenue (GAAP and non-GAAP) for the third quarter of fiscal year 2021 was $113.8 million, or approximately 50% of total revenue versus service revenue (GAAP) of $116.7 million and (non-GAAP) of $116.8 million, or approximately 45% of total revenue, for the same quarter one year ago.

NETSCOUT’s income from operations (GAAP) was $31.8 million in the third quarter of fiscal year 2021, compared with income from operations (GAAP) of $36.8 million in the comparable quarter one year ago. Third-quarter fiscal year 2021 non-GAAP EBITDA from operations was $70.9 million, or 31.0% of non-GAAP quarterly revenue, which compares with $77.3 million, or 29.7% of non-GAAP quarterly revenue in the third quarter of fiscal year 2020. The Company’s third-quarter fiscal year 2021 (GAAP) operating margin was 13.9% versus 14.2% in the prior fiscal year’s same period. Third-quarter fiscal year 2021 non-GAAP income from operations was $64.5 million with a non-GAAP operating margin of 28.2%. This compares with third-quarter fiscal year 2020 non-GAAP income from operations of $70.9 million and a non-GAAP operating margin of 27.3%.

Net income (GAAP) for the third quarter of fiscal year 2021 was $29.0 million, or $0.39 per share (diluted) versus net income (GAAP) of $36.7 million, or $0.49 per share (diluted), for the third quarter of fiscal year 2020. On a non-GAAP basis, net income for the third quarter of fiscal year 2021 was $48.9 million, or $0.66 per share (diluted), which compares with $54.7 million, or $0.73 per share (diluted), for the third quarter of fiscal year 2020.

As of December 31, 2020, cash and cash equivalents, and short and long-term marketable securities were $490.4 million, compared with $427.8 million as of September 30, 2020, and $389.1 million as of March 31, 2020. In addition, NETSCOUT had $450.0 million outstanding on its $1.0 billion credit facility. During the third quarter of fiscal year 2021, NETSCOUT repurchased a total of 154,271 shares of its common stock at an average price of $21.23 per share, totaling approximately $3.3 million in the aggregate.

Nine-Months FY21 Financial Results

• For the first nine months of fiscal year 2021, total revenue (GAAP and non-GAAP) was $617.9 million versus total revenue (GAAP) of $662.5 million and total revenue (non-GAAP) of $662.6 million for the comparable nine-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 nine months of fiscal year 2021 was $278.6 million, compared with $321.8 million in the same period one year ago.
• For the first nine months of fiscal year 2021, total service revenue (GAAP and non-GAAP) was $339.3 million versus (GAAP) $340.7 million and (non-GAAP) $340.8 million in the same period last year.
• NETSCOUT’s income from operations (GAAP) during the first nine months of fiscal year 2021 was $21.1 million, compared with income from operations of $5.1 million for the comparable nine-month period of fiscal year 2020. The Company’s operating margin for the first nine months of fiscal year 2021 (GAAP) was 3.4% versus 0.8% in the comparable period of fiscal year 2020. During the first nine months of fiscal year 2021, the Company’s non-GAAP EBITDA from operations was $144.3 million, or 23.4% of non-GAAP total revenue versus non-GAAP EBITDA from operations of $134.7 million, or 20.3% of non-GAAP total revenue, in the first nine months of fiscal year 2020. The Company’s non-GAAP income from operations for the first nine months of fiscal year 2021 was $125.0 million with a non-GAAP operating margin of 20.2%, compared with non-GAAP income from operations for the same period of fiscal year 2020 of $114.6 million and a non-GAAP operating margin of 17.3%.
• For the first nine months of fiscal year 2021, NETSCOUT’s net income (GAAP) was $7.9 million, or $0.11 per share (diluted) compared with a net loss of $10.1 million, or a loss of $0.13 per share (diluted) in the same nine-month period one year ago. Non-GAAP net income for the first nine months of fiscal year 2021 was $89.3 million, or $1.21 per share (diluted) versus non-GAAP net income for the same period of fiscal year 2020 of $81.6 million, or $1.07 per share (diluted).
• During the first three quarters of fiscal year 2021, NETSCOUT repurchased a total of 154,271 shares of its common stock at an average price of $21.23 per share, totaling approximately $3.3 million in the aggregate.

Guidance:

NETSCOUT is updating its fiscal year 2021 guidance, originally issued on October 29, 2020, with one quarter remaining in the fiscal year. The expected revenue range is being narrowed, while maintaining the mid-point, and the expected net income per share range is being raised. The Company’s guidance for fiscal year 2021 is now as follows:

• Revenue, GAAP and non-GAAP, is expected to be in the range of $825 million to $840 million.
• GAAP net income per share (diluted) is now expected to be in the range of $0.21 to $0.28.
• Non-GAAP net income per share (diluted) is now expected to be in the range of $1.60 to $1.67.
• A reconciliation between GAAP and non-GAAP revenue and net income per share (diluted) for NETSCOUT’s guidance is included in the attached financial tables.

NETSCOUT also plans to repay $100 million on its revolving credit facility during the fourth quarter of fiscal year 2021.

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.