NetScout Systems, Inc.

Ladies and gentlemen, thank you for standing by and welcome to NETSCOUT's first quarter fiscal year 2022 financial results conference call. At this time, all parties are in a listen-only mode until the question and answer portion of the call. As a reminder, this call is being recorded. Tony Piazza, Vice President of Corporate Finance, and his colleagues at NETSCOUT are on the line with us today. If you require operator assistance at any time, please press star zero. I would now like to turn the call over to Tony Piazza to begin the company's prepared remarks.

Thank you, operator, and good morning, everyone. Welcome to NETSCOUT's first quarter fiscal year 2022 conference call for the period ended June 30th, 2021. Joining me today are Anil Sankal, NETSCOUT's President and Chief Executive Officer, Michael Zabados, NETSCOUT's Chief Operating Officer, and Jean Bua, NETSCOUT's Executive Vice President and Chief Financial Officer. There is a slide presentation that accompanies our prepared remarks. You can advance the slides in the webcast viewer to follow our commentary. Both the slides and the prepared remarks can be accessed in multiple areas within the investor relations section of our website at www.netscout.com, including the IR landing page under financial results, the webcast itself, and under financial information on the quarterly results page. Moving to slide number three, today's conference call will include forward-looking statements. These statements may be prefaced by words such as anticipate, believe, and expect, and will cover a range of topics that are not strictly historical facts, such as our financial outlook, our market opportunities and market share, key business initiatives, and future product plans, along with their potential impact on our financial performance. These forward-looking statements involve risks and uncertainties, and actual results could differ materially from those forward-looking statements due to known and unknown risks, uncertainties, assumptions, and other factors, which are described on this slide and in today's financial results press release, as well as in the company's annual report on Form 10-K for the year ended March 31, 2021. on file with the Securities and Exchange Commission. NETSCOUT assumes no obligation to update any forward-looking information contained in this communication or with respect to the announcement described herein. Let's turn to slide number four, which involves non-GAAP metrics. While this slide presentation includes both GAAP and non-GAAP results, unless otherwise stated, financial information discussed on today's conference call will be on a non-GAAP basis only. The rationale for providing non-GAAP measures along with the limitations of relying solely on those measures is detailed on this slide and in today's press release. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. Reconciliations of all non-GAAP metrics with the applicable GAAP measures are provided in the appendix of this slide presentation, in today's earnings press release, and they are also on our website. I will now turn the call over to Anil for his prepared remarks. Anil? Thank you, Tony.

Good morning, everyone, and thank you for joining us. Let's begin on slide number six with a brief recap of our first quarter non-GAAP results. We had a solid start to the fiscal year. First quarter revenue increased more than 3% to $190.3 million compared with the same quarter last year. Strong product revenue growth in both the service assurance and cybersecurity product lines more than offset lower service revenue and drove our revenue increase while contributing to our strong diluted earning per share performance. Diluted earnings per share increased more than 17% to 20 cents compared with the same quarter last year. Let's move to slide seven for some further perspective as we review business insights and market trends. In our service provider vertical, revenue grew approximately 10% compared with the same quarter last year. This growth was partially attributable to a large domestic cable operator investing in the 5G core and H environment solutions. We also benefited from an international carrier customer accepting completion of an implementation earlier than expected, as we recognized revenue a quarter earlier than planned. During the quarter, We also received a low eight figure radio frequency propagation modeling order from a tier one North American carrier as they progress their 5G network planning. We anticipate that we'll be able to complete these projects by the end of our fiscal year. Within the service provider market, we have started seeing some momentum around 5G network advancement globally. Michael will discuss how this means during his remarks. Turning to our enterprise customer vertical, revenue declined approximately 1% compared with the same quarter last year. Low single-digit revenue growth in the service assurance area was offset by a mid-single-digit decline in the enterprise security area, primarily attributable to reduced spending from the financial institution sector compared to the same quarter in the earlier year. Despite the relatively flat overall enterprise and customer vertical performance in the first quarter, we see opportunity in this vertical for the full fiscal year as customers accelerate cloud migration and cybersecurity investments. The ability of our solutions to provide visibility and protection during a cloud transition and in hybrid or multi-cloud environments gives customers the control and confidence required to innovate. Some recently launched solutions which includes SmartEdge Monitoring and OmniCyber Investigator, will help address this visibility and security needs. Our SmartEdge Monitoring solution uses an innovative approach that combines smart data analytics and synthetic transaction testing to assist in early identification and rapid resolution of performance issues to protect the digital experience from anywhere. This unique solution gives IT teams complete visibility and insight to assure the highest quality end-user experience in any network or application, regardless of where employees perform their job. We believe our new products will gain greater traction as our sales team resumes traveling, conduct in-person customer meetings, and complete proof of concepts that demonstrate the value of our solution in reducing mean time to resolution of issues while saving time and expense. Michael will highlight some of the customer wins we experienced in this vertical during the quarter in his remarks. In the longer term, we see potential opportunity emerging in the enterprise customer vertical for 5G utilization as enterprises and governments look to leverage 5G technology in private networks through network slices and at the edge. NETSCOUT is one of the only handful of vendors that have both service provider and enterprise knowledge in providing both scale and functionality. This should serve us and our customers well as 5G advancements unfold in the future. Now let's move to slide number eight to review our outlook. With one quarter behind us, we are off to a solid start to the fiscal year. As the world continues to emerge from the pandemic, we remain focused on meeting our customer needs for service assurance and cybersecurity solutions that solve some of the connected world's toughest challenges. As we advance our new service assurance and omni-cyber security solutions and resume normal customer interaction selling these solutions, we believe sales will accelerate toward the second half of the fiscal year. We also believe we will build greater momentum with our NetScout Without Borders initiative that is focused on expanding our business with existing customers by leveraging our incumbency to access both existing and new budgets, acquiring new customers through new consumption choices, and expanding our reach into high-value adjacencies such as expanded cybersecurity and big data analytics that can leverage our smart data. We remain committed to delivering within the non-GAAP fiscal year 2022 outlook that was provided on our May 6, 2021 earnings call, which calls for low single-digit revenue growth and enhanced diluted earnings per share at the midpoint of our outlook. Jean will recap the numbers during her remarks. Finally, I'm proud to announce that we recently issued our inaugural environmental, social, and governance ESG report, which is available in the company section of our website at www.netscout.com. While ESG is a growing area of interest for a diverse set of stakeholders, This principle has always been part of who we are at NETSCOUT. To obtain greater insight into how we think about ESG and our efforts in the area, I invite you to explore this new report and join us as we strive to increase our positive impact on the world. I look forward to sharing our progress with you as the fiscal year progresses. I will now turn the call over to Michael for his remarks.