NetScout : Earnings Release (opens in new window)

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NETSCOUT Reports Fourth Quarter and Full Fiscal Year 2021 Financial Results

WESTFORD, Mass., May 6, 2021 -NETSCOUT SYSTEMS, INC.(NASDAQ: NTCT), a leading provider of service assurance, security, and business analytics, today announced financial results for its fourth quarter and full fiscal year ended March 31, 2021.

"We delivered stronger-than-anticipatedfourth-quarter diluted earnings per share performance on overall revenue that was in-line with our expectations," stated Anil Singhal, NETSCOUT's president and chief executive officer. "For the full fiscal year 2021, we met the objectives that we set as we managed through the unprecedented and challenging environment created by the COVID-19 global pandemic. We served and supported our customers well, kept our team safe and productive, supported the communities that surround us, continued to invest for the future, and delivered on our financial goals of expanding operating leverage and growing diluted earnings per share. This performance demonstrates the importance of our smart visibility and cybersecurity solutions as well as the flexibility, agility, and resiliency of our business. I would like to thank all those who both directly and indirectly contributed to NETSCOUT's success during the fiscal year."

Singhal continued, "As we look ahead, we are excited and optimistic about the future and long- term technology market trends that favor NETSCOUT, such as the advancement of 5G networks, the evolving cybersecurity threat landscape, and digital transformation through cloud migration. We believe that we are well-positioned as "Guardians of the Connected World" to be a leader in these market categories due to our robust and relevant solutions, trusted brand, strong customer relationships, dedicated team, and solid financial profile. For fiscal year 2022, we are focused on growing revenue, further enhancing our diluted earnings per share performance, and continuing to deliver strong free cash flow."

Recent news and highlights:

• In late-April 2021, NETSCOUT held its annual technology and user summit, Engage 21, virtually. Registration for the event hit record highs at more than 4,200 registrants, with more than 1,000 first-time attendees. These registrants represented many of the world's largest and most innovative service providers and enterprises. At the event, the Company showcased its Service Assurance and Cyber Security capabilities, introduced its new Omnis brand, and promoted its Visibility Without Borders campaign. The virtual conference was a combination of presentations, panel discussions, demonstrations, and hands-on training.
• In mid-April 2021, NETSCOUT released the findings of its bi-annualThreat Intelligence Report, punctuated by a record-setting 10,089,687 Distributed Denial of Service (DDoS) attacks observed during 2020. Cybercriminals exploited vulnerabilities exposed by massive internet usage shifts since many users were no longer protected by enterprise- grade security. Attackers paid particular attention to vital pandemic industries such as e- commerce, streaming services, online learning, and healthcare generating a 20% year- over-year increase in attack frequency over 2019 with a 22% increase in the last six months of 2020.
• In early-April 2021, NETSCOUT announced a collaboration with Dell Technologies OEM Solutions to deliver offerings designed for medium-to-large sized enterprises looking for agile, cost-efficient solutions to address their data center and digital transformation needs. The two companies will initially work together to sell these solutions in the U.S. to accommodate organizations that have standardized on Dell Technologies platforms in their data centers while also offering new customers a simple, reliable, cost-efficient solution. Plans are in place to extend the solutions offered and expand into international markets.
• Recently, NETSCOUT announced that it is sponsoring its seventh civic hackathon
  with Shooting Stars Foundation. This 12-hour virtual event helps grow students' interest in STEM topics and community issues by providing an opportunity to practice
  21st century skills such as critical thinking, technology literacy, collaboration, and innovation. This year's theme is "Life in 2031" and students will be asked to consider what the world might look like 10 years from now, whether in learning, travel, culture, climate change, environment, health, or technology. Students, who may or may not have coding experience, will then develop and present creative solutions to address those anticipated needs and challenges. With organizers making a concerted effort to include

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minority students by reaching out to youth organizations in underserved communities, a diverse group of middle and high school students from 22 states and Puerto Rico, as well as Jamaica, Canada, and four other countries are registered to participate.

Q4 FY21 Financial Results

Total revenue (GAAP and non-GAAP) for the fourth quarter of fiscal year 2021 was $213.4 million, compared with $229.4 million 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 fourth quarter of fiscal year 2021 was $99.1 million, which was approximately 46% of total revenue. This compares with fourth-quarter fiscal year 2020 product revenue (GAAP and non-GAAP) of $116.5 million, which was approximately 51% of total revenue.

Service revenue (GAAP) for the fourth quarter of fiscal year 2021 was $114.3 million, or approximately 54% of total revenue versus service revenue (GAAP) of $112.8 million, or approximately 49% of total revenue, for the same period one year ago. On a non-GAAP basis, service revenue for fiscal year 2021's fourth quarter was $114.3 million, or approximately 54% of total non-GAAP revenue, versus non-GAAP service revenue of $112.9 million, or approximately 49% of total non-GAAP revenue, for the same quarter one year ago.

NETSCOUT's income from operations (GAAP) was $16.1 million in the fourth quarter of fiscal year 2021, compared with income from operations (GAAP) of $12.6 million in the comparable quarter one year ago. Fourth-quarter fiscal year 2021 non-GAAP EBITDA from operations was $53.9 million, or 25.3% of non-GAAP quarterly revenue, which compares with $54.9 million, or 23.9% of non-GAAP quarterly revenue in the fourth quarter of fiscal year 2020. The Company's fourth-quarter fiscal year 2021 operating margin (GAAP) was 7.5% versus 5.5% in the prior fiscal year's fourth quarter. Fourth-quarter fiscal year 2021 non-GAAP income from operations was $47.8 million with a non-GAAP operating margin of 22.4%. This compares with fourth-quarter fiscal year 2020 non-GAAP income from operations of $48.7 million and a non-GAAP operating margin of 21.2%.

Net income (GAAP) for the fourth quarter of fiscal year 2021 was $11.4 million, or $0.15 per share (diluted) versus net income (GAAP) of $7.3 million, or $0.10 per share (diluted), for the fourth quarter of fiscal year 2020. On a non-GAAP basis, net income for the fourth quarter of fiscal year 2021 was $36.5

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million, or $0.49 per share (diluted), which compares with $37.4 million, or $0.50 per share (diluted), for the fourth quarter of fiscal year 2020.

As of March 31, 2021, cash and cash equivalents, and short and long-term marketable securities were $476.5 million, compared with $490.4 million as of December 31, 2020 and $389.1 million as of March 31, 2020. At the end of the fourth quarter of fiscal year 2021 NETSCOUT had $350.0 million outstanding on its $1.0 billion revolving credit facility.

Full Year FY21 Financial Results

• For fiscal year 2021, total revenue (GAAP and non-GAAP) was $831.3 million versus total revenue (GAAP) of $891.8 million and non-GAAP total revenue of $892.0 million in fiscal year 2020. A reconciliation of GAAP and non-GAAP results is included in the attached financial tables.
• Product revenue (GAAP and non-GAAP) in fiscal year 2021 was $377.7 million compared with $438.3 million in the same period one year ago.
• Service revenue (GAAP) in fiscal year 2021 was $453.6 million versus $453.5 million in the same period last year. Non-GAAP service revenue was $453.6 million compared with $453.7 million for the comparable period of fiscal year 2020.
• NETSCOUT's income from operations (GAAP) in fiscal year 2021 was $37.1 million, compared with $17.6 million in fiscal year 2020. The Company's operating margin (GAAP) in fiscal year 2021 was 4.5% versus 2.0% in fiscal year 2020. In fiscal year 2021, the Company's non-GAAP EBITDA from operations was $198.2 million, or 23.8% of non-GAAP total revenue versus non-GAAP EBITDA from operations of $189.6 million, or 21.3% of non-GAAP total revenue, for fiscal year 2020. The Company's non-GAAP income from operations for fiscal year 2021 was $172.8 million with a non-GAAP operating margin of 20.8% compared with non- GAAP income from operations of $163.3 million and a 18.3% non-GAAP operating margin for fiscal year 2020.
• NETSCOUT's net income (GAAP) in fiscal year 2021 was $19.4 million, or $0.26 per share (diluted) compared with a net loss of $2.8 million, or -$0.04 per share (diluted) in fiscal year 2020. Non-GAAP net income in fiscal year 2021 was $125.8 million, or $1.70 per share (diluted) versus non-GAAP net income in fiscal year 2020 of $119.1 million, or $1.57 per share (diluted).

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Financial Outlook:

The Company's financial outlook for fiscal year 2022 is as follows:

• Revenue (GAAP and non-GAAP) is expected to be in the range of $835 million to $865 million.
• GAAP net income per share (diluted) is expected to be in the range of $0.44 to $0.50. Non- GAAP net income per share (diluted) is expected to be in the range of $1.71 to $1.77.
• A reconciliation between GAAP and non-GAAP revenue and net income per share (diluted) for
  NETSCOUT's financial outlook is included in the attached financial tables.

Conference Call Instructions:

NETSCOUT will host a conference call to discuss its fourth-quarter and full fiscal year 2021

financial results today at 8:30 a.m. ET. This call will be webcast live through NETSCOUT's website at https://ir.netscout.com/investors/overview/default.aspx. Alternatively, people can listen to the call by dialing [phone]. The conference call ID is NTCTQ421. A replay of the call will be available after 12:00 p.m. ET on May 6, 2021 for approximately one week. The number for the replay is [phone] for U.S./Canada and [phone] for international callers.

Use of Non-GAAP Financial Information:

To supplement the financial measures presented in NETSCOUT's press release in accordance with accounting principles generally accepted in the United States ("GAAP"), NETSCOUT also reports the following non-GAAP measures: non-GAAP revenue, non-GAAP gross profit, non-GAAP income from operations, non-GAAP net income, non-GAAP net income per share (diluted) and non-GAAP earnings before interest and other expense, income taxes, depreciation, amortization, and (EBITDA) from operations. Non-GAAP revenue eliminates the GAAP effects of acquisitions by adding back revenue related to deferred revenue revaluation. Non-GAAP gross profit includes the aforementioned revenue adjustments and also removes expenses related to the amortization of acquired intangible assets, share- based compensation, and acquisition-related depreciation. Non-GAAP income from operations includes the aforementioned adjustments and also removes business development and integration expense, compensation for post-combination services, legal expenses related to a civil judgment, restructuring charges, and costs related to new accounting standard implementation, and adds back transitional service agreement income. Non-GAAP net income includes the foregoing adjustments related to non-GAAP income from operations, net of related income tax effects while removing transitional service agreement income and changes in contingent consideration. Non-GAAP EBITDA from operations includes the aforementioned items related to non-GAAP income from operations and also removes non-acquisition related depreciation expense. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures included in the attached tables within this press release.

These non-GAAP measures are not in accordance with GAAP, should not be considered an alternative for measures prepared in accordance with GAAP (revenue, gross profit, operating margin, net income, and diluted net income per share), and may have limitations because they do not reflect all of NETSCOUT's results of operations as determined in accordance with GAAP. These non-GAAP measures should only be used to evaluate NETSCOUT's results of operations in conjunction with the corresponding GAAP measures. The presentation of non-GAAP information is not meant to be considered superior to, in isolation from or as a substitute for results prepared in accordance with GAAP.

NETSCOUT believes these non-GAAP financial measures will enhance the reader's overall

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