NetScout Systems, Inc.

Please stand by, your program is about to begin. If you need audio since program, please press star zero. Ladies and gentlemen, thank you for standing by and welcome to NETSCOUT's first quarter fiscal year 2023 financial results conference call. At this time, all parties are in listen only mode until the question answer portion of the call. As a reminder, this call is being recorded. Tony Piazza, Senior 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 2023 conference call for the period ended June 30th, 2022. 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 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 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 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, including but not limited to those described on this slide and in today's financial results press release. 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, 2022, 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 now 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 on our website. I will now turn the call over to Anil for his prepared remarks. Anil?

Thank you, Tony, and good morning, everyone. Welcome and thank you all for joining us today. Let's turn to slide number six for a brief recap of our non-GAAP financial results for the first quarter of our fiscal year 2023. In the first quarter, we achieved a strong top and bottom line performance, extending our business momentum from our last fiscal year into our current fiscal year, 2023. Revenue was $208.8 million, representing year-over-year growth of nearly 10%. Our strong revenue expansion was driven by approximately 20% product revenue growth, and approximately 2% service revenue growth, both on a year-over-year basis. During the first quarter, our service assurance revenue grew by approximately 11%, while our security revenue grew by approximately 7%, both on a year-over-year basis. As a result, we grew our diluted EPS by approximately 20% year-over-year to deliver $0.24 per diluted share in the period. Now let's move to slide number seven, for some further perspective on market and business insights. On the security front, our new Omnis solution suite continued to gain recognition and traction in the marketplace as we further expanded its offerings. For example, we recently launched the Omnis Atlas intelligence feed for smarter automated DDoS attack blocking. As a new innovative AI-based solution, our Omnis AI is continuously updated and enables the instantaneous blocking of a large portion of DDoS attacks, thus simplifying operations and minimizing risk for our customers' businesses. In recognition of our ongoing cybersecurity focus, we recently received the Cyber Defense Magazine Global InfoSec Award, and for Market Leader in Network Detection and Response, as well as the Fortress Cybersecurity Award in the threat detection category. Although the total contribution from our new Omni solution within our security portfolio remains small relative to our overall revenue, this solution suite continues to show solid potential, and we are seeing our customers' network and security teams beginning to understand the value of a shared visibility platform. Now let's turn to our customer verticals for more business insights starting with our service providers. Service provider revenue in the first quarter grew approximately 27% year-over-year, primarily driven by radio frequency propagation modeling-related revenues. We continue to see carriers invest in their 5G deployments, as evidenced by the number of radio frequency propagation modeling projects we are working on. During the first quarter, we also received additional 5G-related orders from both Tier 1 domestic and international carriers. Moving to our enterprise customer vertical, revenue declined by approximately 5% year-over-year in the first quarter of our fiscal year 2023. This decline was primarily due to the timing of enterprise customer order shipments. We remain confident in the health of this customer vertical despite the fluctuations in the near term. Enterprises continue to demand best-in-class cybersecurity solutions as well as those solutions that can help facilitate the acceleration of the digital transformation. Michael will provide more insight regarding customer orders in our verticals during his remarks. Now let's move to slide number eight to review our outlook. Looking ahead, we remain excited about the market opportunity we are seeing for both our existing and new solutions. From both a financial and a business perspective, we remain confident in our underlying fundamentals and positioning, despite the persistence of various macro headwinds. As such, we are reiterating our non-GAAP outlook for our full fiscal year 2023. Jean will provide additional color and a recap of the numbers in her remarks. In summary, our first quarter performance has extended our momentum into the new fiscal year, while also providing us with a solid foundation going forward. Additionally, we remain encouraged by our ability to help customers address the challenges and opportunities of today's digital world effectively through our unique solutions. We look forward to sharing our progress with everyone throughout the remainder of our fiscal year. With that, I'll turn the call over to Michael.