NetScout Systems Corporate Overview - Jefferies …2 NetScout Systems Overview | May 2013 | ©...

1 NetScout Systems Overview | May 2013 | © 1992-2013 NetScout Systems, Inc. All rights reserved.

NetScout Systems Corporate Overview

Jean Bua

Chief Financial Officer

May 2013


Safe Harbor Statement

Certain matters being discussed by NetScout’s manage ment today include forward-looking statements which are made pursuant to the Safe Harbor provisions of section 21-E of the Securities Exchange Act of 1 934. Stockholders are cautioned that statements which are not strictly historical s tatements, including statements concerning future expected financial performance, m anagement objectives and plans for future operations, our relationships with strategic partners, the release date of new products or enhancements to existing pr oducts, growth and trends in the market for network and application performance management and market acceptance of our products, constitute forward-look ing statements.

The forward-looking statements include, but are not limited to, any statements containing the words “expect,” “anticipa te,” “estimates,” “believes,” “may,” “will,” “should” and similar expressions and the negatives thereof. These forward-looking statements involve a number of risk s and uncertainties that could cause actual results to differ materially from the forward-looking statements. Those risks and uncertainties are detailed in the company 's filings from time to time with the Securities and Exchange Commission. The inform ation in the forward-looking statements is provided as of the date of such oral statements and the company disclaims any obligation to update such statements.


NetScout Foundation (Nasdaq: NTCT)• Over 25 years of evolution and leadership

within the industry focused on…

• Core, patented technologies enabling the most powerful information capture and pro-active workflows

• Fortune 1000 customer base that operate with complex network environments

• International footprint with sales, support, and services in over 30 countries

• Market leader in assuring delivery of services across IP-based networks

• FY ’13: $352M revenue; $1.32 EPS; (non-GAAP)

Industry vision and strategy: Unified Service Delivery Management (USDM)


NetScout: What We Have Achieved…

1993 - 20092009 to Present

Leverage packet analysis and network performance knowledge to become the Enterprise NPM market

leader

Leverage Enterprise success to enter the large

and complex Service Provider market to become

IP Probe market leader

Brand recognition and market leadership in our target markets!


Market Leader in our Targeted Markets

“NetScout is expected to continue dominating the total market throughout

the forecast period with a market share of 30.8 percent in 2010.”

Source: Analysys Mason, March 2012

Service Provider IP Probe MarketEnterprise/NPM Market

Global network performance monitoring and management solutions for distributed environments

(market share by revenue)

Source: Frost & Sullivan

“NetScout has achieved a market leading position in the IP probe market”

IP Probe systems market shares by revenue, Total revenue USD $367M

30.8%

13.2%

12.1%

10.9%8.6%

6.2%5.1%

3.3%

9.8%

NetScout

IBM

Hewlett Packard

CA

Fluke Networks

Solar Winds

Network Instruments

Alcatel Lucent

Others

28.0%

25.0%

13.0% 34.0%

NetScout

Tektronics

JDS Uniphase

Other


NetScout: Next Growth Stage

1993 - 20092009 to Present Present to 2016

Enterprise NPM market leader

IP Probe market leader

Leverage knowledge from Service Provider success to progress into a connected product solution enabling

Business Intelligence


Tier 3: nGenius Analytics Apps

nGenius Apps delivered on Thin Client WebSDM, Experience Monitor, NewsStandsPacket Analysis, Configuration Manager

NetScout: Our Product and Solution

Tier 2: nGenius Middleware

nGenius Middleware, Correlation & Analytics Provisioning and Mediation Server

Tier 3: nGenius Analytics Apps

nGenius Apps delivered on Thin Client WebSDM, Experience Monitor, NewsStandsPacket Analysis, Configuration Manager

Tier 1: nGenius Data Sources

Packet collection & ASI meta data creationnGenius InfiniStream with ASI Adaptors (Infinistream/PFS)

NGenius: Service Assurance


Trends We See Driving IT Operations

Challenges Impact

Convergence of services Resource contention

Collaboration within IT silos Common means of communicating

Consistency of performance Deviation from the norm

Exploding traffic volumes Lack of visibility into delays

Distributed organization Cyber attacks

Aging Infrastructure Change management

Current available approaches aren’t addressing cust omer issues ...


Current Approaches Result in…

Various Data Collection Appliances

No Unified PerspectiveDisparate and disconnected toolsMultiple and limited data sources

Syslog UC Active

Agents

Java / .netMonitoring

NetFlow

Past practice has only made a tactical use of packe t analysis, intelligence and DPI … including NetScout product solutions


Network Team Application Team Voice/Video Team Security Team

Unified Services Dashboard

NetworkPerformance

ApplicationPerformance

Voice/VideoPerformance

Cyber SecurityIncident

Response

Analytics Applications

NetScout Approach

NetScout connects IT organizations through our USDM s trategy and patent pending ASI software technology


NetScout Approach Competitors Approach

Highest value source: Packet derived

Predictive/Proactive: IT monitoring

Various components in an environment

Reactive: user call into IT

Service Model by application/service Model for individual application problem

Communities of users Single user

Automated analytics for use by multiple IT operations groups

Manual analytics used by individual IT groups

Unified Service Delivery Management Strategy

Leveraging “modern workflow” vision from Service Pr ovider markets enables connected NetScout approach


NetScout Product Differentiator: ASI

Live PacketStream

ASI Meta Data

Monitoring Network(Traditional Architecture)

Monitoring Services(Next Generation Architecture)10-100 times data reduction

Storage capacity:32 TB -- 320 TB1 day -- 1 week

ASI technology transforms network transactions (pac ket flows) into structured data enabling a more leveraged monitoring of network ser vices and applications


Beyond 2013: Business Intelligence for “Big Data”

ASI

nGenius SA, BI, OI, CI

Packet Flow Switch

Network

Analytics & Reporting

IntelligenceExtraction & Analysis

AdaptiveTraffic Conditioning

InfiniStream

ASI technology provides the platform for Business I ntelligence analytics for “Big Data” uses


NetScout Business Model

• Sales, support and services in 32+ countries

• Dedicated sales for major markets

• Global centers of R&D excellence

• Pricing models: simple and easy

• Gross margins similar to software industry

• Fortune 1000 customer base

• Strong cash flow generation

• Minimal capital expenditure requirements

Prior investment in infrastructure creates a scalab le organization poised for the next growth stage


$262$290

$309

$352

$0.86

$1.04$1.10

$1.32

FY '10 FY '11 FY '12 FY '13 FY '14Guidance

Non-GAAP$385 - $400

10 – 14% Growth

$1.40 - $1.506 – 14% Growth

Revenue and EPS Performance Overview

Accelerating revenue and EPS growthGuidance as of April 25, 2013


NetScout Investment Position:

Balance Sheet Highlights (in millions)

Total liquidity at 3/31/13 exceeds $404M

FY ’13 FY ’12 FY ’11 FY ’10

Cash and Securities $154 $214 $229 $170

Accounts Receivable $74 $70 $63 $66

Total Debt $0 $62 $68 $79

Total Deferred Revenue $121 $112 $100 $102

Total Stockholders’ Equity $372 $342 $320 $267

Free Cash Flow $83 $57 $60 $40


Free Cash Flow Generation (in millions)

$-

$50

$100

$150

$200

$250

$300

FY '10 FY '11 FY '12 FY '13

FY '13 FCFFY '12 FCFFY '11 FCFFY '10 FCF

$40

$100

$157

$240

Significant cash generation


NetScout Operating Targets (non-GAAP)

Operating

Targets

FY ’14 Guidance

(as of 4/25/13)

Revenue Growth Mid-teens 10 – 14%

Gross Margin 78 – 81% 79 – 80%

R&D of Revenue 13 – 15% 15 – 16%

S&M of Revenue 33 – 35% 33 – 34%

G&A of Revenue 6 – 8% 6 – 7%

Operating Margin 24 – 27% 25 – 26%

Increasing operating leverage through revenue growt h

Growth drivers:� Service Provider:

• Global deployments of LTE• Consumer adoption of LTE• Increasing LTE services• Cable/MSO capture of mobile users• Integrated voice/data functionality• Further to the RAN…

� Enterprise:• USDM strategy• NPM + APM functionality• Aging infrastructure

� Business Intelligence


Summary

� Stable, experienced management & workforce

� Industry vision and strategy: Unified Service Delivery Management (USDM)

� Core focus on IP networks and performance with industry transforming technology (ASI)

� Brand recognition and market leadership in all targeted markets

� Scalable infrastructure requiring limited future investment

� Solid cash flow and investment position for continuing growth and business development

� Accelerating revenue growth producing increased operating margins


Non-GAAP Measure Reconciliation

Please see the press release on our website for a reconciliation of GAAP to non-GAAP information

www.NetScout.com/investor


www.NetScout.com

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