NetScout Systems, Inc.

Please stand by. Your program is about to begin. Ladies and gentlemen, thank you for standing by and welcome to NETSCOUT's third quarter fiscal year 2022 financial results conference call. At this time, all parties are in a listen-only mode until the Q&A session 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 and 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 third quarter fiscal year 2022 conference call for the period ended December 31st, 2021. Joining me today are Anil Singhal, 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 sections 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 on to slide number three, today's conference call will include forward-looking statements. Examples of forward-looking statements include statements regarding our future financial performance or position, results of operations, business strategy, plans and objectives of management for future operations, and other statements that are not historical facts. You can identify forward-looking statements by age. by their use of forward-looking words such as anticipate, believe, plan, will, should, expect, or other comparable terms. We caution listeners not to place undue reliance on any forward-looking statements included in this presentation which speak only as of today's date. These forward-looking statements involve risks and uncertainties, and actual results could differ materially from the 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 announcements 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 the 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 all for joining us today. Let's begin on slide number six with a brief recap of our third quarter and first nine months non-GAAP results. During the third quarter, we delivered strong performance across the board. Higher quarterly sales, margins, and profitability were mainly driven by increased enterprise customer demand. and customer acceleration of orders, primarily within our service provider vertical, of approximately $25 to $30 million that were previously forecasted to occur in a fourth quarter. As a result, we achieved strong top-line growth, with revenue increasing more than 14% year-over-year to $262.2 million. Product revenue grew more than 25%, and service revenue grew more than 3%, both on a year-over-year basis. We exited the third quarter with a product backlog of approximately $30 million in unshipped orders, which exclude radio frequency propagation modeling orders. Moving to our bottom line, based on the third quarter's revenue performance and product mix, diluted earnings per share increased to $0.89 from $0.66 a year ago, an increase of approximately 35%. On a year-to-day basis, Revenue in the first nine months of fiscal year 2022 increased more than 7% to $664.4 million. This was driven by product revenue growth of more than 17%, partially offset by 0.8% decline in service revenue. Diluted earnings per share increased approximately 29% to $1.56 for the first nine months of the fiscal year. These comparisons are all made on a year-over-year basis. In summary, our strong third quarter performance has further demonstrated the financial strength of our business model. This success, combined with our year-to-date results, has provided us with even greater clarity into our full fifth career outlook and the confidence to update it. I'll provide more details on all of this later in my remarks. Let's now move to slide number seven for some further perspective on market and business insights. Starting with markets, we continue to see digital connectivity increasing around the world accelerated by the pandemic and longer-term technology trends. NETSCOUT now has more than three decades of experience providing service assurance and cybersecurity solutions at the crossroads of modern business performance and cutting-edge technology. Since our inception, we have developed a solid reputation for being innovative, delivering industry-leading solutions and cultivating close-knit customer relationships. Our established mindshare and best-in-class solutions are positioned as well to capitalize on world's growing connectivity. To address the latest challenges of customers dealing with the new normal, hybrid workforces, edge connectivity, and the ever-expanding cybersecurity threat landscape, we recently released several new products, including SmartEdge Monitoring and our Omni's Cyber Intelligence. We are excited about the potential of these recently released products and services, which are starting to gain traction. And we believe that these offerings will further further accelerate our business momentum in the next fiscal year and beyond. We are also actively working with many of our partners to better integrate our solutions into their ecosystems and thereby enhance the overall quality and technical capabilities of their technology tools. Michael will provide more context on these developments during his remarks. Now I would like to discuss our customer verticals to provide more perspective on our performance as well as the related trends that we are seeing. For the first three quarters of fiscal year, we grew revenue in our service provider customer vertical by more than 7% year over year. As mentioned earlier, in the third quarter, several service provider customers accelerated orders with us that were previously anticipated to occur in the fourth quarter of fiscal year 2022. In terms of trends for this vertical, we continue to see 5G deployed globally and our radio frequency propagation modeling solutions being used in carrier planning. Last week, for example, two tier one domestic carriers lit up their 5G networks as they leveraged mid-band spectrum to deliver their solution. Meanwhile, the latest FCC mid-band spectrum auction in the U.S. just raised over $22 billion. These events further underscored the industry's steady progress and persistent interest in 5G-related initiatives. We continued to win notable service provider deals in the third quarter, which included more 5G-related orders from Tier 1 domestic and international carriers. We also won a second large radio frequency propagation modeling order from a Tier 1 domestic carrier as the organization continues to advance its 5G network planning. Michael will comment on some of these service-wide improvements in his remarks. Now moving to our enterprise customer vertical. Revenue for this vertical grew by more than 7% year-over-year in the first three quarters of our fiscal year. in line in line with our remarks from last quarter we continue to see enterprise customers moving from reactivity to proactivity in their execution as they restart projects previously delayed by the pandemic and adjustment to the new normal of today's operating environment michael will highlight some of the customer wins we achieved during the quarter in this vertical in his remarks now let's move to slide number eight to review our outlook Looking back on our business performance so far, we have delivered three-quarters of solid results with strong business momentum. Importantly, our third-quarter performance has demonstrated the financial strength of our business model and provided us with even greater clarity and confidence regarding our fiscal year 2022 forecast. We remain on track to meet our financial objectives for the full fiscal year. And after considering all these factors, we have made the decision to update our full-year guidance raising our revenue midpoint and increasing our EPS outlook for the fiscal year 2022. These updates reflect our expectation for lower product revenue in the fourth quarter, attributable to the previously mentioned acceleration of orders by customers and movement of revenue from fourth quarter to our third quarter results. It also reflects our expectation to end the fourth quarter with a product backlog of unshipped orders similar to that of the third quarter. Jeanne will provide additional color and recap on the number of her remarks. In conclusion, we have performed well year to date. Our visibility has further improved, and our business model has demonstrated significant financial strength. We remain excited about our future growth prospects, and I look forward to sharing our final fiscal year 2022 results. and our fiscal year 2022-23 outlook with everyone on our next earning score. With that, I'll turn the call over to Michael.