NetScout(US:NTCT)2024-11-01 20:04Financial Performance - Total revenue decreased by $42.3 million, or 10%, for the six months ended September 30, 2024, compared to the same period in 2023[100]. - Net loss for the six months ended September 30, 2024, was $434.3 million, a significant increase of $451.6 million from a net income of $17.3 million in the prior year[100]. - Gross profit percentage decreased by one percentage point to 76% during the six months ended September 30, 2024, primarily due to lower sales volume of higher margin products and services[100]. - Total revenue for Q3 2024 was $191.1 million, a decrease of 3% compared to $196.8 million in Q3 2023[108]. - GAAP net income for Q3 2024 was $9.0 million, down from $21.5 million in Q3 2023[108]. - Non-GAAP net income for Q3 2024 was $33.6 million, compared to $44.5 million in Q3 2023, reflecting a decrease of 25%[108]. - Total revenue for the six months ended September 30, 2024, was $365.7 million, a decrease of 10% or $42.3 million compared to $407.9 million in the same period last year[133]. - The decrease in product revenue for the six months ended September 30, 2024, was 19% or $33.0 million, primarily due to capital spending constraints in the industry[133]. - Revenue from the United States decreased by 13%, or $32.2 million, primarily due to a decline in service assurance offerings[136]. - International revenue decreased by 6%, or $10.1 million, driven by lower revenue from service provider customers in both service assurance and cybersecurity[136]. - Service assurance revenue was $238.4 million, a decrease of 13% or $37.1 million, while cybersecurity revenue was $127.3 million, down 4% or $5.2 million[137]. Cash and Investments - Cash, cash equivalents, marketable securities, and investments totaled $401.9 million as of September 30, 2024, a decrease of $22.2 million from $424.1 million at March 31, 2024[100]. - Net cash provided by operating activities was $34.7 million for the six months ended September 30, 2024, compared to cash used of $48.7 million in the same period of 2023, reflecting an $83.4 million change[158]. - Cash provided by investing activities was $0.9 million during the six months ended September 30, 2024, a significant improvement from $7.0 million used in the same period of 2023[160]. - Cash used in financing activities increased to $63.8 million during the six months ended September 30, 2024, compared to $49.9 million in the same period of 2023[161]. - The company repurchased 1,362,205 shares for $25.3 million under the 2022 Share Repurchase Program during the six months ended September 30, 2024[161]. Operational Changes - The company ceased business operations in Russia in response to the war in Ukraine, impacting its operational landscape[98]. - The decrease in revenue was attributed to lower revenue from service assurance offerings and cybersecurity services due to industry-specific capital spending constraints[100]. - The company is managing discretionary costs and aligning spending with the current environment while continuing to invest in future business advancements[98]. - The company recorded restructuring charges of $19.0 million related to a voluntary separation program for employees[148]. - The company expects annual run-rate savings of approximately $25 million to $27 million from restructuring efforts, with $18 million to $19 million expected to be realized in the remainder of fiscal year 2025[150]. Expenses and Impairments - Total operating expenses increased significantly to $728.4 million, a rise of 149% or $435.6 million compared to the previous year[144]. - A $427.0 million goodwill impairment charge significantly contributed to the net loss for the six months ended September 30, 2024[100]. - Research and development expenses increased by 2% or $0.8 million to $35.9 million for the three months ended September 30, 2024[121]. - Research and development expenses decreased by 3%, or $2.3 million, primarily due to a reduction in headcount[144]. Credit and Financing - An incremental $725 million was available under the revolving credit facility as of September 30, 2024, which was later amended to $525 million[98]. - The company amended its credit facility to a five-year, $800 million senior secured revolving credit facility, with $75 million outstanding as of September 30, 2024[162]. - The interest rate on the credit facility is 5.95%, and a 10% change in the interest rate would result in an annual increase or decrease of approximately $446,000 in interest expense[169]. - The company expects to meet its funding requirements for at least the next twelve months through operating cash flows and available credit[165]. - The maximum consolidated net leverage ratio is set at 4.00 to 1.00, and the company was in compliance with all covenants as of September 30, 2024[164]. Revenue Breakdown - Product revenue increased by 1% to $81.0 million, while service revenue decreased by 5% to $110.1 million compared to the same period last year[108][109]. - Revenue from service assurance decreased by 6% to $121.7 million, while cybersecurity revenue increased by 3% to $69.4 million[112]. - The company experienced a 4% decrease in U.S. revenue, primarily driven by declines in service assurance offerings[112]. - Revenue from the service provider customer vertical decreased by 25% or $22.3 million, while revenue from the enterprise customer vertical increased by 16% or $16.7 million[114][115].