Business Wire | May 6, 2021 07:30AM EDT

NETSCOUT Reports Fourth Quarter and Full Fiscal Year 2021 Financial Results

May 06, 2021

WESTFORD, Mass.--(BUSINESS WIRE)--May 06, 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-anticipated fourth-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-annual Threat 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 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 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).

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 (785) 424-1667. 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 (800) 283-4216 for U.S./Canada and (402) 220-9033 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 understanding of NETSCOUT's current financial performance and NETSCOUT's prospects for the future by providing a higher degree of transparency for certain financial measures and providing a level of disclosure that helps investors understand how the Company plans and measures its own business. NETSCOUT believes that providing these non-GAAP measures affords investors a view of NETSCOUT's operating results that may be more easily compared to peer companies and also enables investors to consider NETSCOUT's operating results on both a GAAP and non-GAAP basis during and following the integration period of NETSCOUT's acquisitions. Presenting the GAAP measures on their own, without the supplemental non-GAAP disclosures, might not be indicative of NETSCOUT's core operating results. Furthermore, NETSCOUT believes that the presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures provides useful information to management and investors regarding present and future business trends relating to its financial condition and results of operations.

NETSCOUT management regularly uses supplemental non-GAAP financial measures internally to understand, manage and evaluate its business and to make operating decisions. These non-GAAP measures are among the primary factors that management uses in planning and forecasting.

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.

Safe Harbor

Forward-looking statements in this release are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934 and other federal securities laws. Investors are cautioned that statements in this press release, which are not strictly historical statements, including, without limitation, statements regarding NetScout's financial outlook for revenue and earnings per share for fiscal year 2022, NetScout's excitement and optimism about the future and long-term technology market trends, such as the advancement of 5G networks, the evolving cyber security threat landscape, and digital transformation through cloud migration, that NetScout believes it is well-positioned as "Guardians of the Connected World" to be a leader in these market categories due to its robust and relevant solutions, trusted brand, strong customer relationships, dedicated team, and solid financial profile, and that NetScout's focus for fiscal year 2022 is to grow revenue, enhancing diluted earnings per share performance, and continuing to deliver strong free cash. Actual results could differ materially from the forward-looking statements due to impacts from known and unknown risks, uncertainties, assumptions, and other factors. Such factors include, but are not limited to, impacts from the COVID-19 pandemic, slowdowns or downturns in economic conditions generally and in the market for advanced network, service assurance and cybersecurity solutions specifically; the volatile foreign exchange environment; the Company's relationships with strategic partners and resellers; dependence upon broad-based acceptance of the Company's network performance management solutions; the presence of competitors with greater financial resources than we have, and their strategic response to our products; our ability to retain key executives and employees; the Company's ability to realize the anticipated savings from restructuring actions and other expense management programs; lower than expected demand for the Company's products and services; and the timing and magnitude of stock buyback activity based on market conditions, corporate considerations, debt agreements, and regulatory requirements. For a more detailed description of the risk factors associated with the Company, please refer to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2020 and the Company's subsequent Quarterly Reports on Form 10-Q, which are on file with the Securities and Exchange Commission. NetScout assumes no obligation to update any forward-looking information contained in this press release or with respect to the announcements described herein.

(c)2021 NETSCOUT SYSTEMS, INC. All rights reserved. NETSCOUT and the NETSCOUT logo are registered trademarks or trademarks of NETSCOUT SYSTEMS, INC. and/or its subsidiaries and/or affiliates in the USA and/or other countries.

NETSCOUT SYSTEMS, INC.Condensed Consolidated Statements of Operations(In thousands, except per share data)(Unaudited) Three Months Ended Twelve Months Ended March 31, March 31, 2021 2020 2021 2020

Revenue:Product $ 99,084 $ 116,538 $ 377,721 $ 438,341

Service 114,305 112,813 453,561 453,479

Total revenue 213,389 229,351 831,282 891,820

Cost of revenue:Product 23,573 32,332 95,965 122,832

Service 31,369 30,400 126,132 119,360

Total cost of revenue 54,942 62,732 222,097 242,192

Gross profit 158,447 166,619 609,185 649,628

Operating expenses:Research and 43,558 45,903 179,163 188,294 developmentSales and marketing 62,062 62,278 242,730 276,523

General and 21,525 27,558 88,969 99,994 administrativeAmortization of 15,234 16,110 61,131 64,505 acquired intangibleassetsRestructuring charges - 2,208 62 2,674

Total operating 142,379 154,057 572,055 631,990 expenses Income from operations 16,068 12,562 37,130 17,638

Interest and other (3,069 ) (3,784 ) (14,826 ) (15,714 )expense, net Income before income 12,999 8,778 22,304 1,924 tax expenseIncome tax expense 1,562 1,442 2,952 4,678

Net income (loss) $ 11,437 $ 7,336 $ 19,352 $ (2,754 )

Basic net income (loss) $ 0.16 $ 0.10 $ 0.26 $ (0.04 )per shareDiluted net income $ 0.15 $ 0.10 $ 0.26 $ (0.04 )(loss) per shareWeighted average commonshares outstanding usedin computing:Net income (loss) per 73,557 73,293 73,103 75,162 share - basicNet income (loss) per 74,766 74,134 73,822 75,162 share - dilutedNETSCOUT SYSTEMS, INC.Consolidated Balance Sheets(In thousands)(Unaudited) March 31, March 31, 2021 2020AssetsCurrent assets:Cash, cash equivalents and marketable $ 476,453 $ 386,458 securitiesAccounts receivable and unbilled costs, net 197,717 213,514

Inventories 22,813 22,227

Prepaid expenses and other current assets 25,489 37,544

Total current assets 722,472 659,743

Fixed assets, net 48,474 57,715

Goodwill and intangible assets, net 2,229,420 2,307,859

Long-term marketable securities - 2,613

Operating lease right-of-use assets 61,512 68,583

Other assets 23,160 23,990

Total assets $ 3,085,038 $ 3,120,503

Liabilities and Stockholders' EquityCurrent liabilities:Accounts payable $ 17,964 $ 20,004

Accrued compensation 83,057 75,632

Accrued other 28,152 22,743

Current portion of operating lease liabilities 12,354 10,337

Deferred revenue and customer deposits 269,748 270,281

Total current liabilities 411,275 398,997

Other long-term liabilities 21,641 10,039

Deferred tax liability 92,287 114,394

Accrued long-term retirement benefits 39,479 34,256

Long-term deferred revenue 103,310 104,240

Operating lease liabilities, net of current 61,267 70,658 portionLong-term debt 350,000 450,000

Total liabilities 1,079,259 1,182,584

Stockholders' equity:Common stock 124 122

Additional paid-in capital 2,955,400 2,891,553

Accumulated other comprehensive loss (1,940 ) (3,160 )

Treasury stock, at cost (1,322,496 ) (1,305,935 )

Retained earnings 374,691 355,339

Total stockholders' equity 2,005,779 1,937,919

Total liabilities and stockholders' equity $ 3,085,038 $ 3,120,503

NETSCOUT SYSTEMS, INC.Reconciliation of Current GAAP to Current and Historical Non-GAAP FinancialMeasures(In thousands, except per share data)(Unaudited) Three Three Months Ended Months Twelve Months Ended March 31, Ended March 31, December 31,

2021 2020 2020 2021 2020

Revenue (GAAP) $ 213,389 $ 229,351 $ 228,739 $ 831,282 $ 891,820

Service deferred 1 48 2 6 192 revenue fairvalue adjustmentNon-GAAP Revenue $ 213,390 $ 229,399 $ 228,741 $ 831,288 $ 892,012

Gross Profit $ 158,447 $ 166,619 $ 173,464 $ 609,185 $ 649,628 (GAAP)Service deferred 1 48 2 6 192 revenue fairvalue adjustmentShare-based 1,493 1,416 1,619 6,861 6,843 compensationexpense (1)Amortization ofacquired 4,782 6,297 4,776 19,058 24,974 intangibleassets (2)Acquisitionrelated 6 5 6 23 31 depreciationexpense (6)Non-GAAP Gross $ 164,729 $ 174,385 $ 179,867 $ 635,133 $ 681,668 Profit Income from $ 16,068 $ 12,562 $ 31,770 $ 37,130 $ 17,638 Operations(GAAP)Service deferred 1 48 2 6 192 revenue fairvalue adjustmentShare-based 11,543 10,900 12,517 51,892 50,861 compensationexpense (1)Amortization ofacquired 20,016 22,407 20,049 80,189 89,479 intangibleassets (2)Businessdevelopment and (14 ) 335 - 2 373 integrationexpense (3)New standard - (5 ) - - 5 implementationexpense (4)Compensation for 61 125 63 251 578 post-combinationservices (5)Restructuring - 2,208 - 62 2,674 chargesAcquisitionrelated 60 61 61 242 312 depreciationexpense (6)Transitionalservice 57 53 57 215 1,212 agreement income(7)Legal judgments - - - 2,804 - expense (8)Non-GAAP Income $ 47,792 $ 48,694 $ 64,519 $ 172,793 $ 163,324 from Operations Net Income $ 11,437 $ 7,336 $ 29,021 $ 19,352 $ (2,754 )(Loss) (GAAP)Service deferred 1 48 2 6 192 revenue fairvalue adjustmentShare-based 11,543 10,900 12,517 51,892 50,861 compensationexpense (1)Amortization ofacquired 20,016 22,407 20,049 80,189 89,479 intangibleassets (2)Businessdevelopment and (14 ) 335 - 2 373 integrationexpense (3)New standard - (5 ) - - 5 implementationexpense (4)Compensation for 61 125 63 251 578 post-combinationservices (5)Restructuring - 2,208 - 62 2,674 chargesAcquisitionrelated 60 61 61 242 312 depreciationexpense (6)Change in - 245 - - 762 contingentconsiderationLegal judgments - - - 2,804 - expense (8)Income tax (6,619 ) (6,239 ) (12,835 ) (28,977 ) (23,415 )adjustments (9)Non-GAAP Net $ 36,485 $ 37,421 $ 48,878 $ 125,823 $ 119,067 Income Diluted Net $ 0.15 $ 0.10 $ 0.39 $ 0.26 $ (0.04 )Income (Loss)Per Share (GAAP)Share impact ofnon-GAAP 0.34 0.40 0.27 1.44 1.61 adjustmentsidentified aboveNon-GAAP Diluted $ 0.49 $ 0.50 $ 0.66 $ 1.70 $ 1.57 Net Income PerShare Shares used incomputing 74,766 74,134 73,878 73,822 75,837non-GAAP dilutednet income pershareNETSCOUT SYSTEMS, INC.Reconciliation of Current GAAP to Current and Historical Non-GAAP FinancialMeasures - Continued(In thousands)(Unaudited) Three Three Months Ended Months Twelve Months Ended March 31, Ended March 31, December 31, 2021 2020 2020 2021 2020

Share-based(1 ) compensation expense included in these amounts is as follows: Cost of product $ 201 $ 226 $ 248 $ 1,038 $ 1,069 revenue Cost of service 1,292 1,190 1,371 5,823 5,774 revenue Research and 3,560 3,435 3,862 16,138 15,511 development Sales and 3,726 3,752 4,253 17,328 17,085 marketing General and 2,764 2,297 2,783 11,565 11,422 administrative Total share-based $ 11,543 $ 10,900 $ 12,517 $ 51,892 $ 50,861 compensation expense Amortization expense related to acquired software and product(2 ) technology, tradenames, customer relationships included in these amounts is as follows: Cost of product $ 4,782 $ 6,297 $ 4,776 $ 19,058 $ 24,974 revenue Operating 15,234 16,110 15,273 61,131 64,505 expenses Total $ 20,016 $ 22,407 $ 20,049 $ 80,189 $ 89,479 amortization expense Business development and(3 ) integration expense included in these amounts is as follows: Research and $ - $ - $ - $ - $ 43 development General and (14 ) 335 - 2 330 administrative Total business development and $ (14 ) $ 335 $ - $ 2 $ 373 integration expense New standard implementation(4 ) expense included in these amounts is as follows: General and $ - $ (5 ) $ - $ - $ 5 administrative Total new standard $ - $ (5 ) $ - $ - $ 5 implementation expense Compensation for post-combination(5 ) services included in these amounts is as follows: Research and $ 59 $ 125 $ 62 $ 246 $ 578 development Sales and 2 - 1 5 - marketing Total compensation for $ 61 $ 125 $ 63 $ 251 $ 578 post-combination services Acquisition related(6 ) depreciation expense included in these amounts is as follows: Cost of product $ 4 $ 3 $ 3 $ 14 $ 21 revenue Cost of service 2 2 3 9 10 revenue Research and 42 42 43 169 216 development Sales and 8 9 8 34 36 marketing General and 4 5 4 16 29 administrative Total acquisition $ 60 $ 61 $ 61 $ 242 $ 312 related depreciation expense Transitional service(7 ) agreement income included in these amounts is as follows: Research and $ 7 $ 6 $ 6 $ 24 $ 93 development Sales and 8 8 10 34 176 marketing General and 42 39 41 157 943 administrative Other Income (57 ) (53 ) (57 ) (215 ) (1,212 ) (expense), net Total transitional $ - $ - $ - $ - $ - service agreement income Legal judgments(8 ) expense included in these amounts is as follows: General and $ - $ - $ - $ 2,804 $ - administrative Total legal $ - $ - $ - $ 2,804 $ - judgments expense Total income tax adjustment(9 ) included in these amounts is as follows: Tax effect of non-GAAP $ (6,619 ) $ (6,239 ) $ (12,835 ) $ (28,977 ) $ (23,415 ) adjustments above Total income tax $ (6,619 ) $ (6,239 ) $ (12,835 ) $ (28,977 ) $ (23,415 ) adjustmentsNETSCOUT SYSTEMS, INC.Reconciliation of Current GAAP to Current and Historical Non-GAAP FinancialMeasures -Non-GAAP EBITDA from Operations(In thousands)(Unaudited) Three Three Months Months Twelve Months Ended Ended Ended March 31, December March 31, 31,

2021 2020 2020 2021 2020

$ $ $ 31,770 $ $Income from operations (GAAP) 16,068 12,562 37,130 17,638

Previous adjustments to 31,724 36,132 32,749 135,663 145,686determine non-GAAP income fromoperationsNon-GAAP Income from 47,792 48,694 64,519 172,793 163,324operations Depreciation excluding 6,114 6,239 6,376 25,397 26,313acquisition related Non-GAAP EBITDA from $ $ $ 70,895 $ $operations 53,906 54,933 198,190 189,637

NETSCOUT SYSTEMS, INC.Reconciliation of GAAP Financial Outlook to Non-GAAP Financial Outlook(Unaudited)(In millions, except net income per share - diluted)

FY'21 FY'22

$ 831.3 ~$835 million to ~$865GAAP revenue million

Deferred service revenue fair value $ 0.0 Less than $1 millionadjustment $ 831.3 ~$835 million to ~$865Non-GAAP revenue million



FY'21 FY'22

$ 19.4 ~$33 million to ~$38GAAP net income million

Deferred service revenue fair value $ 0.0 Less than $1 millionadjustmentAmortization of intangible assets $ 80.2 ~$72 million

Share-based compensation expenses $ 51.9 ~$49 million

Business development & integration $ 0.5 Less than $1 millionexpenses*Legal judgments expense $ 2.8 -

New accounting standard implementation $ 0.0 -

Restructuring costs $ 0.1 -

Total adjustments $ 135.5 ~$121 million

Related impact of adjustments on income $ (29.0 ) (~$26 million)tax $ 125.8 ~$128 million to ~$133Non-GAAP net income million



GAAP net income per share (diluted) $ 0.26 ~$0.44 to ~$0.50

Non-GAAP net income per share (diluted) $ 1.70 ~$1.71 to ~$1.77



Average weighted shares outstanding 73.8 ~75 million(diluted GAAP)Average weighted shares outstanding 73.8 ~75 million(diluted Non-GAAP)*Business development & integration expenses include compensation forpost-combination services and acquisition-related depreciation expense**Figures in table may not total due to rounding View source version on businesswire.com: https://www.businesswire.com/news/home/20210506005202/en/

CONTACT: Investors Anthony Piazza Vice President, Corporate Finance 978-614-4286 IR@netscout.com

CONTACT: Media Maribel Lopez Manager, Marketing & Corporate Communications 781-362-4330 Maribel.Lopez@netscout.com