NetScout Systems, Inc.

Ladies and gentlemen, thank you for standing by and welcome to NETSCOUT's first quarter fiscal year 2024 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, 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 2024 conference call for the period ended June 30th, 2023. 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 fact. 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 the 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 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, 2023, 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. Reconciliation of all non-GAAP metrics with the applicable GAAP measure 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 fiscal 2024. We delivered solid financial performance in the first quarter of fiscal year and released several key product offerings since our last earning call. Revenue was $211.1 million representing year-over-year growth of over 1%. We expanded both our gross margin and operating margin and grew our diluted EPS by nearly 30% year-over-year to deliver 31 cents per delivery share in the period. We also accomplished several product milestones with the release of our next generation solutions that have already been well received by customers and that we expect to start contributing to revenue in the second half of the fiscal year. This includes the release of our Visibility Without Borders platform that provides performance, security, and availability across one common data framework. By proactively identifying areas of complexity, fragility, and risk, the platform unlocks insights at unparalleled scale to deliver the intelligence needed to increase visibility, improve agility, and keep data and applications secure. Additionally, we relaunched our OmniCyber OCI or OmniCyber Intelligence solution. This next generation of OCI is an advanced network detection and response solution that uses highly scalable deep packet inspection and multiple threat detection method at the source to detect threats in real time. OCI also applies historical investigation of high fidelity network packet metadata and packets. In the face of rising cyber threats, OCI provides security teams with real time packet level visibility across the digital infrastructure and helps identify threats earlier in the attack lifecycle. OCI also quickens investigation by gathering network-based forensic evidence to reduce the mean time to response. OCI is a valuable tool for verifying the effectiveness and improving the existing cybersecurity ecosystem, ensuring compliance and lowering the risk of successful cyber attacks. We also released our two new DDoS solutions. The first is adaptive DDoS, which helps protect enterprises from rapidly spreading dynamic DDoS attacks. It adapts to the evolving threat landscape and automates countermeasures used to address cyber attacks, including the latest multi-vector direct path attacks. And the second is mobile security, which extends our powerful DDoS capability that service providers currently leverage in their wireless networks to now protect their mobile network and address that distributed threat surface. Now let's move to slide number seven for some further perspective on market and business. Starting with our enterprise customer vertical. In the first quarter of fiscal year 2024, enterprise revenue grew nearly 13% year over year, driven by the expansion in both our cybersecurity and service assurance businesses. We remain confident that our value proposition of extending visibility to the edges of the network will continue to resonate with enterprise customers seeking to cover blind spots, address control challenges, and facilitate their leverage of off-premise and cloud solutions as part of the digital transformation and new network architecture initiatives. Moving to our service provider customer vertical. As expected, revenue in the first quarter for this vertical declined approximately 9% year over year, primarily due to the lower level of radio frequency propagation modeling project revenue in the second quarter compared with the same quarter last year. We continue to see domestic and international carriers invest in their 5G deployments. Notably, several carriers now have the spectrum and deployed standalone networks in certain markets and are ready to drive traffic over those networks over 5G once 5G-required applications materialize. We believe that as the 5G adoption advances and 5G traffic volumes increase, our core visibility and cybersecurity solutions will be required. We are prepared and ready to support carriers through this inevitable transition with our differentiated solutions. Michael will provide more insight regarding customer orders in a vertical 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 and are reiterating our fiscal year 2024 outlook. We also continue to see the supply chain challenges that drove the increase in fulfillable backlogs resolving and anticipate that a full-level backlog will continue to return to more normalized levels. We remain focused on operating the business with a balanced approach to driving revenue growth and profitability as we manage through the dynamic microenvironment and position NETSCOUT to deliver long-term sustainable value for our stakeholders as the guardians of the connected world. Jean will provide additional cover and a recap of the outlook and numbers in her remarks. In summary, we deliver solid first quarter financial results and achieve several product milestones that establish a foundation for delivering our objectives for fiscal year 2024 and beyond. We remain confident that NETSCOT is well positioned to help customers address the challenges and opportunities of today's digital world through our unique and expanding 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.