NetScout Systems, Inc.

Please stand by. Your program is about to begin. If you need assistance during your conference today, please press star zero. Ladies and gentlemen, thank you for standing by. And welcome to NETSCOUT's fourth quarter and full fiscal year 2024 financial results conference call. At this time, all parties are in a listen-only mode. And tell the question and answer portion of the call. As a reminder, this call is being recorded. Tony Piazza, Senior Vice President of 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 fourth quarter and full fiscal year 2024 conference call for the period ended March 31st, 2024. Joining me today are Anil Senghal, NETSCOUT's President and Chief Executive Officer, Michael Zabados, NETSCOUT's Chief Operating Officer, and Gene Bua, NETSCOUT's Executive Vice President and Chief Financial Officer. There's 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 four 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. Actual results differ materially from any forward-looking statements. These statements speak only as of today's date and involve risks and uncertainties, including but not limited to those described on the slide and in today's financial results press release, which are available on the investor relations section of our website, as well as in the company's most recent annual report on Form 10-K and subsequent SEC filings on file with the Securities and Exchange Commission. Natscout assumes no obligation to update any forward-looking information except as required by law. Let's now turn to slide number four, which involves non-GAAP metrics. While this slide presentation includes both GAAP and non-GAAP metrics, 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 the 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 for all for joining us today. In fiscal year 2024, strong cybersecurity revenue growth was a highlight for NETSCOUT as customers continue to prioritize cybersecurity spending amid heightened geopolitical tensions and the expanding cyber threat landscape. This trend was more than offset by the constrained customer spending environment effective over service assurance offerings, primarily related to our domestic service provider customers. Despite the top line headwind, our diligent cost containment actions and flexible cost structure contributed to non-gap earnings per share growth year over year. With that as the backdrop, let's now turn to slide number six for a brief a high-level recap of our non-GAAP financial results for the fourth quarter and full fiscal year 2024. Jean will provide more detail on the results later in the call. For the fourth quarter, we delivered revenue of approximately $203 million, down 2%, and non-GAAP diluted earnings per share of $0.55, up $0.17, or approximately 45%, both on a year-over-year basis. For the full fiscal year 2024, we delivered revenue of approximately $830 million, representing a decline of approximately 9% year-over-year due in part to a lower level of our service assurance and radio frequency propagation modeling project revenue compared to an unusually high level in fiscal year 2023. When excluding the radio frequency propagation modeling project revenue from total revenue, the decline was approximately 3% year-over-year. From a non-GAAP EPS perspective, for the full fiscal year 2024, we delivered $2.20 per diluted share, a 2-cent or approximately 1% improvement over fiscal year 2023. We achieved this result despite the revenue headwinds, partially due to our cost containment actions taken during the fiscal year. Now let's move to slide number seven, for some further perspective on business and market insights. Starting with our service assurance offerings, starting with the service assurance offerings. In fiscal year 2024, service assurance revenue declined approximately 18% year over year. This was primarily attributable to lower radio frequency propagation modeling project revenue year over year, as well as constrained spending from the domestic Tier 1 carrier market as previously discussed. Excluding the impact of radio frequency propagation modeling project revenue, service assurance revenue were down approximately 11% year-over-year. As we consider the demand dynamics for the service assurance offering moving forward, we continue to see customers being cautious as budgets remain tight and the number of required approvals remains elevated. While we expect relative stability in the enterprise vertical as customers continue to prioritize mission-critical solutions and monitoring at the edge, we believe the ongoing headwinds in the service provider vertical will persist for much of the fiscal year 2025. The demand dynamic for service providers is an issue that is primarily domestic. Domestic service providers remain cautious in their spending decision as the 5G standalone infrastructure deployed has not yet delivered a return on investment with network traffic below capacity and no material new application driving increasing demand. This has caused providers to delay significant further investment until a monetization strategy becomes clearer to obtain acceptable returns on the investment. Strategically, we continue to be ready to support both the domestic and international carriers as the customer demand market progress and as emerging network technology trends gain momentum. For example, fixed wireless access has been a promising long-term opportunity, although service providers currently already have the bandwidth to support recent deployments. Additionally, network slicing also offers long-term opportunity for NETSCOUT but is still in early stages. We are also encouraged by 5G investment activity at the international carriers. While international carrier spending levels tend to be lower than the domestic market, they remain an important contributor to long-term growth. Finally, NETSCOUT is actively taking early steps of bringing new value proposition opportunities as it collaborates with customers to fully unlock the critical value of our smart data generate from our DPI technology. This relates to the increasing needs and requirement of emerging AI op strategies, tool sets, and applications. In the future, we intend to be an important contributor to this emerging technology market as we make our smart data available for customer AI use cases in partnership with other technology innovators in this field. Shifting to our cybersecurity offering, In fiscal year 2024, our cybersecurity offering delivered approximately 15% revenue growth year-over-year, which was the result of growth in both our service providers and enterprise customer verticals. In addition, we believe customers prioritize spending amid heightened geopolitical tensions and the expanding threat landscape. As revealed in our recently released DDoS threat intelligence report, political-motivated hacktivist groups, and an increase in DNS water torture attacks contributed to over 7 million DDoS attacks globally in the second half of 2023. This is an increase of 15% from the first half of the year. With this high activity threat landscape, companies are increasingly depending on NETSCOT for their cybersecurity protection needs. As we look to fiscal year 2024, we believe the value proposition of our solution should continue to resonate with customers and expect our core as well as new offerings such as adaptive DDoS, mobile security, and Omni Cyber Intelligence solution to fuel continued momentum in this space. Michael and Jean will provide more insight regarding customer wins as well as product offering and customer vertical performance during the remarks. Now let's move to slide number eight regarding our outlook and summary. As we look forward to fiscal year 2025, we are encouraged by the momentum in our cybersecurity offerings. We have begun to take further actions that will enhance our focus on cybersecurity. This includes increased R&D investment as well as go-to-market strategy modification. Also, we recognize the lingering headwinds in the domestic service provider vertical of our service assurance offering. This will likely create a top line offset resulting in a flat to slightly down revenue scenario for the new fiscal year despite the continued growth in our cybersecurity offerings. We are continuing to align our cost structure with the current demand environment. We have implemented a voluntary separation program as part of a restructuring effort focused on reducing headcount as we seek to execute on our strategic priorities, preserve earnings for shareholders, and position NETSCOUT for long-term success. Jean will provide more specifics in the outlook in her remarks. NETSCOUT has always been and remains a long-term focused company, and we believe we are well positioned to benefit from future fundamental demand trends as enterprise and service providers require leading cybersecurity and service assurance solutions to deliver actionable visibility at scale. We remain confident that our Visibility Without Borders platform is essential for helping customers tackle the performance, availability, and cybersecurity challenges of the increasingly complex connected digital world, as we also remain committed to delivering long-term shareholder value. We look forward to sharing our progress with everyone on our quarterly earning calls. With that, I will turn the call over to Michael.