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What changed in NETSCOUT SYSTEMS INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of NETSCOUT SYSTEMS INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+348 added−346 removedSource: 10-K (2024-05-16) vs 10-K (2023-05-16)

Top changes in NETSCOUT SYSTEMS INC's 2024 10-K

348 paragraphs added · 346 removed · 287 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

65 edited+9 added−14 removed87 unchanged
Biggest changeAs part of that program, we offer opportunities to identify leaders and develop and support all employees, including: • Career path development – to document increasing levels of leadership responsibility, creating a transparent process, so that all employees have access to information necessary to build a career plan at NetScout. • Management and leadership development – to support an inclusive workplace and foster consistent management practices across the globe. • Strengthen high-performing teams – For selected leaders, we partner with the Center for Higher Ambition Leadership to offer programs that strengthen high-performing teams.
Biggest changeAs part of that program, we offer opportunities to identify leaders and develop and support all employees, including: • Management and leadership development – to create leaders who provide direction, apply disciplined management practices, collaborate across functions, and understand the impact they have on others. • DEI management training – to support an inclusive workplace and foster consistent management practices across the globe. • Management talent assessment – to bring greater transparency and understanding of required skills and abilities as we identify leaders at all levels.
We have also recently developed enhanced cybersecurity solutions for enterprises with our Omnis suite of products that provide greater deep-dive forensic capabilities as well as analytics that can provide visibility into anomalous behavior on the network that may be indicative of an advanced threat.
We have also recently developed enhanced cybersecurity solutions for enterprises with our Omnis Cybersecurity suite of products that provide greater deep-dive forensic capabilities as well as analytics that can provide visibility into anomalous behavior on the network that may be indicative of an advanced threat.
Our primary products can be categorized as follows: Service Assurance Solutions for Network and Application Performance and Business Intelligence Analytics • nGeniusONE Management Software and Analytic Modules - Our nGeniusONE management software is used to support our service provider, enterprise, and government customers enabling them to predict, preempt, and resolve network and service delivery problems while facilitating the optimization and capacity planning of their network infrastructures.
Our primary products can be categorized as follows: Service Assurance Solutions for Network Application Performance, and Business Intelligence Analytics • nGeniusONE Management Software and Analytic Modules - Our nGeniusONE management software is used to support our service provider, enterprise, and government customers enabling them to predict, preempt, and resolve network and service delivery problems while facilitating the optimization and capacity planning of their network infrastructures.
Enterprise Market Within the enterprise market, NetScout's nGeniusONE, ISNG, Omnis, and Arbor Edge Defense offerings enable IT organizations to support a growing range of performance management and cybersecurity use cases including: • Network Performance Management - Our nGeniusONE analytics and our ISNG real-time information platform provide the necessary insight to optimize network performance, restore service and understand the quality of the users’ experience.
Enterprise Market Within the enterprise market, NetScout's nGeniusONE, ISNG, Omnis Cybersecurity solutions, and Arbor Edge Defense offerings enable IT organizations to support a growing range of performance management and cybersecurity use cases including: • Network Performance Management - Our nGeniusONE analytics and our ISNG real-time information platform provide the necessary insight to optimize network performance, restore service and understand the quality of the users’ experience.
In the enterprise market, our competitors include companies who provide network performance management, application performance management, infrastructure performance management and other related solutions such as CA Technologies (a Broadcom Inc. business), Cisco Systems, Dynatrace, Datadog, ExtraHop, IBM, Infovista, Keysight, Viavi, Gigamon, New Relic, Riverbed Technology, Splunk and SolarWinds.
In the enterprise market, our competitors include companies who provide network performance management, application performance management, infrastructure performance management and other related solutions such as CA Technologies (a Broadcom Inc. business), Cisco Systems, Dynatrace, Datadog, ExtraHop, IBM, Infovista, Viavi, Gigamon, New Relic, Riverbed Technology, Splunk (a Cisco Systems business) and SolarWinds.
We embrace and encourage our employees' differences in age, color, disability, ethnicity, family or marital status, gender identity or expression, language, national origin, physical and mental ability, political affiliation, race, religion, sexual orientation, socio-economic status, veteran status, and other characteristics that make our employees unique.
We embrace our employees' differences in age, color, disability, ethnicity, family or marital status, gender identity or expression, language, national origin, physical and mental ability, political affiliation, race, religion, sexual orientation, socio-economic status, veteran status, and other characteristics that make our employees unique.
As a result, we believe we are well positioned to expand the scope of many of these relationships as well as acquire new customer relationships as we identify new opportunities to support new network, cybersecurity, and broader technology projects. • Expand our Customer Base - The investments we have made over the past several years to expand our product portfolio and support greater deployment flexibility also positions us to win new customers in established geographic markets where we can leverage our global direct sales organization and an extensive network of value-added resellers and systems integrators. 8 Table of Contents • Increase Market Relevance and Awareness - We plan to continue to implement marketing campaigns aimed at generating high-quality sales opportunities with both current and prospective enterprise and service provider customers, promoting thought leadership and building the NetScout brand. • Extend our Technology Partner Alliance Ecosystem - We plan to continue to develop and fortify alliances with complementary solutions providers that can help us support a larger, more global and more diverse customer base.
As a result, we believe we are well positioned to expand the scope of many of these relationships as well as acquire new customer relationships as we identify new opportunities to support new network, cybersecurity, and broader technology projects. • Expand our Customer Base - The investments we have made over the past several years to expand our product portfolio and support greater deployment flexibility also positions us to win new customers in established geographic markets where we can leverage our global direct sales organization and an extensive network of value-added resellers and systems integrators. • Increase Market Relevance and Awareness - We plan to continue to implement marketing campaigns aimed at generating high-quality sales opportunities with both current and prospective enterprise and service provider customers, promoting thought leadership and building the NetScout brand. • Extend our Technology Partner Alliance Ecosystem - We plan to continue to develop and fortify alliances with complementary solutions providers that can help us support a larger, more global and more diverse customer base.
Our solutions are deployed by customers in one of four form factors: as integrated hardware and software, as software only that is then integrated into commercial off-the-shelf hardware, in a virtualized environment as software only, or as a Software as a Service (SaaS) solution.
Our solutions are deployed by customers in one of four form factors: as integrated hardware and software appliance, as software only that is then integrated into commercial off-the-shelf hardware, in a virtualized environment as software only, or as a Software as a Service (SaaS) solution.
However, there is no assurance that pending or future patent applications will be granted, that we will be able to obtain patents covering all of our products, or that we will be able to license, if needed, patents from other companies on favorable terms or at all.
However, there is no assurance that pending or future patent applications will be granted, that we will be able to obtain patents covering all our products, or that we will be able to license, if needed, patents from other companies on favorable terms or at all.
NetScout's analytics deliver timely insights into a service provider's subscribers, services, networks, and applications, as well as easy export capabilities so that this information can be integrated into their data lakes and third-party analytic platforms. • DDoS Protection - Internet Service Providers (ISPs), including leading telecommunications providers, cable multi-service operators and cloud providers, have seen significant increases in the sophistication, scale and frequency of high-volume and application-specific DDoS attacks on their networks.
Our analytics deliver timely insights into a service provider's subscribers, services, networks, and applications, as well as easy export capabilities so that this information can be integrated into their data lakes and third-party analytic platforms. • DDoS Protection - Internet Service Providers (ISPs), including leading telecommunications providers, cable multi-service operators and cloud providers, have seen significant increases in the sophistication, scale and frequency of high-volume and application-specific DDoS attacks on their networks.
The Nominating and Corporate Governance Committee meets regularly and reviews and advises on ESG strategy and apprises the full Board of Directors, which also considers our ESG program and strategy as well as its alignment with our mission.
The Nominating and Corporate Governance Committee meets regularly and reviews and advises on ESG strategy and apprises the full Board of Directors, which also considers our overall ESG program and strategy as well as its alignment with our mission.
We offer visibility across all virtual desktop infrastructure (VDI) tiers including remote access, client, virtualization, web, front-end application, and related database systems, and help customers gain actionable metrics and insight from monitoring and analyzing the consumption and performance of VDI services. 5 Table of Contents • Cybersecurity: DDoS Protection and Omnis Cyber Intelligence - Computer networks continue to be targeted for cyberattacks that are aimed at disrupting, damaging, or otherwise destroying an enterprise’s ability to conduct its business or gaining unauthorized access to corporate applications and restricting or stealing valuable information.
We offer visibility across all virtual desktop infrastructure (VDI) tiers including remote access, client, virtualization, web, front-end application, and related database systems, and help customers gain actionable metrics and insight from monitoring and analyzing the consumption and performance of VDI services. • Cybersecurity: DDoS Protection and Omnis Cyber Intelligence - Computer networks continue to be targeted for cyberattacks that are aimed at disrupting, damaging, or otherwise destroying an enterprise’s ability to conduct its business or gaining unauthorized access to corporate applications and restricting or stealing valuable information.
We also market our nGenius Business Analytics solution, which enables service providers to quickly and efficiently analyze their network traffic to gain greater and more timely insights into their subscribers, services, networks, and applications, as well as easily export our smart data into their data lakes and into third-party analytic platforms. • Visibility Products (Probes, Packet Flow Systems and Taps) - Our ISNG platform provides real-time collection and analysis of information-rich, high-volume packet-flow data from across the network that is displayed through the nGeniusONE Service Assurance Solution.
We also market our nGenius Business Analytics solution, which enables service providers to quickly and efficiently analyze their network traffic to gain greater and more timely insights into their subscribers, services, networks, and applications, as well as easily export our smart data into their data lakes and into third-party analytic platforms. 7 Table of Contents • Visibility Products (Probes, Packet Flow Systems and Taps) - Our ISNG platform provides real-time collection and analysis of information-rich, high-volume packet-flow data from across the network that is displayed through the nGeniusONE Service Assurance Solution.
In the enterprise market for Network Detection and Response (NDR) solutions that utilize specialized threat analysis, traffic analysis, and packet forensics to detect and raise alerts of advanced network threats, we compete under the NetScout Omnis Security brand with a range of vendors including Darktrace, Vectra Networks, Extrahop, Cisco, and other specialist providers.
In the enterprise market for Network Detection and Response (NDR) solutions that utilize specialized threat analysis, traffic analysis, and packet forensics to detect and raise alerts of advanced network threats, we compete under the NetScout Omnis Cybersecurity brand with a range of vendors including Darktrace, Vectra Networks, Extrahop, Cisco, and other specialist providers.
Growth Strategy The following are key elements in our growth strategy for fiscal year 2024: • Drive Platform Innovation - In order to support our customers' near-term and longer-term requirements, we plan to continue innovating by enhancing and expanding our product portfolio as well as developing an integrated platform to serve our customers combined service assurance and cybersecurity requirements.
Growth Strategy The following are key elements in our growth strategy for fiscal year 2025 : • Drive Platform Innovation - In order to support our customers' near-term and longer-term requirements, we plan to continue innovating by enhancing and expanding our product portfolio as well as developing an integrated platform to serve our customers combined service assurance and cybersecurity requirements.
During fiscal year 2023, we continued to invest in the promotion of the NetScout brand related to service assurance and cybersecurity products in their respective markets. We expect to continue these initiatives during fiscal year 2024. Research and Development Our continued success depends significantly on our ability to anticipate and create solutions that will meet emerging customer requirements.
During fiscal year 2024, we continued to invest in the promotion of the NetScout brand related to service assurance and cybersecurity products in their respective markets. We expect to continue these initiatives during fiscal year 2025. Research and Development Our continued success depends significantly on our ability to anticipate and create solutions that will meet emerging customer requirements.
Our employees are in 35 countries with 64% of our employees located in the United States. Culture & Values We believe that our company culture is critical to our success and growth. Our culture complements and acts as a multiplier to our technology, exceptional talent, and forward-thinking innovation.
Our employees are in 35 countries with 63% of our employees located in the United States. Culture & Values We believe that our company culture is critical to our success and growth. Our culture complements and acts as a multiplier to our technology, exceptional talent, and forward-thinking innovation.
Factors that affect our ability to maximize our operating results include, but are not limited to, our ability to introduce new products and enhance existing products, the marketplace acceptance of those new or enhanced products, continued expansion into international markets, expansion into new or adjacent markets, development of strategic partnerships, competition, successful acquisition integration efforts, and our ability to control costs and make improvements in a highly competitive industry.
Factors that affect our ability to maximize our operating results include, but are not limited to, our ability to introduce new products and services, enhance existing products and services, the marketplace acceptance of those new or enhanced products and services, continued expansion into international markets, expansion into new or adjacent markets, development of strategic partnerships, competition, successful acquisition integration efforts, and our ability to control costs, retain talent, and make improvements in a highly competitive industry.
Some of the more significant technology trends and catalysts for our business include the evolution of customers' digital transformation initiatives such as the migration to "edge" environments, like the cloud, the rapidly evolving cybersecurity threat landscape, business intelligence and analytics advancements, and the 5G evolution in both the service provider and enterprise customer verticals.
Some of the more significant technology trends and catalysts for our business include the evolution of customers' digital transformation initiatives such as the migration to "edge" environments, like the cloud, the rapidly evolving cybersecurity threat landscape, business intelligence and analytics advancements, including artificial intelligence, and the 5G technology evolution for both the service provider and enterprise customer verticals.
These vendors include Anritsu, Cisco, Ericsson, EXFO, Huawei, IBM, Infovista, Niksun, Elisa Polystar, Radcom, Splunk, Nokia and Viavi. We face additional competitive threats from startups and new entrants that seek to offer innovative solutions in an industry characterized by rapid technological change.
These vendors include Anritsu, Cisco, Ericsson, EXFO, Huawei, IBM, Infovista, Niksun, Elisa Polystar, Radcom, Splunk (a Cisco Systems business), Nokia and Viavi. We face additional competitive threats from startups and new entrants that seek to offer innovative solutions in an industry characterized by rapid technological change.
NetScout's service assurance solutions help service providers effectively manage capacity, assess overall network quality, take proactive steps to modify the network before issues impact subscribers, and quickly identify and troubleshoot network problems.
Our service assurance solutions help service providers effectively manage capacity, assess overall network quality, take proactive steps to modify the network before issues impact subscribers, and quickly identify and troubleshoot network problems.
Our solutions portfolio also includes a range of virtual appliances that can help enterprise customers extend their monitoring of applications deeper into their traditional data centers, confidently migrate applications into public cloud environments and gain a comprehensive, cohesive view into the resulting hybrid cloud environment. • Unified Communications (UC) - We deliver deep application-level unified visibility into voice, data and video services side-by-side in order to understand the interrelationships of all UC services that traverse the network infrastructure and assess quality and performance of the delivery of these services.
Our solutions portfolio also includes a range of virtual appliances that can help enterprise customers extend their monitoring of applications deeper into their traditional or "colo" data centers, confidently migrate applications into public cloud environments and gain a comprehensive, cohesive view into the resulting hybrid cloud environment. 5 Table of Contents • Unified Communications (UC) - We deliver deep application-level unified visibility into voice, data and video services side-by-side in order to understand the interrelationships of all UC services that traverse the network infrastructure and assess quality and performance of the delivery of these services.
By capitalizing on our extensive experience with global enterprise, service provider and government organizations with IP-based networks, we remain well positioned to cross-leverage our technology development across all major platforms and relevant technologies to address the evolving demands of current and prospective customers. • Deliver Pervasive Visibility - By making our visibility products available in multiple form factors, including software that can be deployed with commercial off-the-shelf servers and as virtual appliances, we believe that it is easier and more affordable for customers to deploy our technology more broadly across their hybrid network and IT infrastructures.
By capitalizing on our extensive experience with global enterprise, service provider and government organizations with IP-based networks, we believe we remain well positioned to cross-leverage our technology development across all major platforms and relevant technologies to address the evolving demands of current and prospective customers. 8 Table of Contents • Deliver Pervasive Visibility - By making our visibility products available in multiple form factors, including as an integrated appliance, software that can be deployed with commercial off-the-shelf servers and as virtual appliances, we believe that it is easier and more affordable for customers to deploy our technology more broadly across their hybrid network and IT infrastructures.
The potential impacts of the global and macroeconomic conditions and potential supply chain disruptions on our business are further described in Item 1A "Risk Factors." 9 Table of Contents Sales and Marketing Sales We sell our products, support and services through a direct sales force and an indirect reseller and distribution channel.
The potential impacts of the global and macroeconomic conditions and potential supply chain disruptions on our business are further described in Item 1A "Risk Factors." Sales and Marketing Sales We sell our products, support and services through a direct sales force and an indirect reseller and distribution channel.
We expect to continue to provide support services for the acquired platforms under existing agreements and plan to explore opportunities to further simplify and standardize our support obligations over the coming years. Manufacturing Our manufacturing operations consist primarily of final product assembly, configuration, and testing.
We expect to continue to provide support services for the acquired platforms under existing agreements and plan to explore opportunities to further simplify and standardize our support obligations over the coming years. 9 Table of Contents Manufacturing Our manufacturing operations consist primarily of final product assembly, configuration, and testing.
Item 1. Business Overview We are an industry leader with over three decades of experience in providing service assurance and cybersecurity solutions that are based on our pioneering deep packet inspection technology at scale, which are used by many Fortune 500 companies to protect their digital business services against disruption.
Item 1. Business Overview We are an industry leader with nearly four decades of experience in providing service assurance and cybersecurity solutions that are based on our pioneering deep packet inspection technology at scale, which are used by many Fortune 500 companies to protect their digital business services against disruption.
Our continued investment in research and development is crucial to our business and our continued success in the market. We have assembled a team of highly skilled engineers with expertise in various technologies associated with our business and the 10 Table of Contents technologies being deployed by our customers.
Our continued investment in research and development is crucial to our business and our continued success in the market. We have assembled a team of highly skilled engineers with expertise in various technologies associated with our business and the technologies being deployed by our customers.
DDoS attacks are aimed at disrupting the 6 Table of Contents online services of an ISP's business customer by overwhelming the network with traffic or by over-exercising specific functions or features of a website with the intention to disable those functions or features.
DDoS attacks are aimed at disrupting the online services of an ISP's business customer by overwhelming the network with traffic or by over-exercising specific functions or features of a website with the intention to disable those functions or features.
By collecting network traffic via our probes, we can expand our value proposition by providing specialized analytics for both service assurance and cybersecurity. We have introduced and will continue to advance solutions such as new packet forensic capabilities, which includes Omnis Cyber Intelligence, designed specifically for security operations teams.
By collecting network traffic via our probes, we can expand our value proposition by providing specialized analytics for both service assurance and cybersecurity offerings. We continue to advance solutions such as new packet forensic capabilities, which includes Omnis Cyber Intelligence, designed specifically for security operations teams.
Environmental Social Governance We believe that effectively managing ESG matters is an important part of creating business value. As set out in its Charter, our Nominating and Corporate Governance Committee oversees our ESG program.
Environmental, Social and Governance We believe that effectively managing ESG matters is an important part of creating long-term value. As set out in its Charter, our Nominating and Corporate Governance Committee oversees our ESG program.
Mobile operators use our offerings to gain real-time, detailed IP packet-level insight and core-to-access visibility, which enables them to ensure services offered over the network meet certain pre-defined quality levels for an optimal subscriber experience.
Mobile operators use our offerings to gain real-time, detailed IP packet-level insight and core-to-access visibility, which enables them to ensure services offered over the network meet certain pre-defined 6 Table of Contents quality levels for an optimal subscriber experience.
In particular, we are broadening our cybersecurity solutions beyond the DDoS market with enterprise security offerings that can help our customers extract more value from the network traffic that we are already collecting to support service assurance use cases. • Fortify and Expand Existing Customer Relationships - We have an expansive, global customer base of service providers and enterprises that have purchased our products in support of major technology and network initiatives that they have implemented over the past decade.
In particular, we are broadening our cybersecurity solutions beyond the DDoS market with enterprise security offerings such as Network Detection and Response (NDR) that can help our customers extract more value from the network traffic that we are already collecting to support cybersecurity use cases. • Fortify and Expand Existing Customer Relationships - We have an expansive, global customer base of service providers and enterprises that have purchased our products in support of major technology and network initiatives that they have implemented over the past decade.
This, coupled with the challenge of internet protocol (IP) transformation activities and complex technologies such as 5G, Long-Term Evolution (LTE), Network Functions Virtualization (NFV), Internet Protocol Television (IP-TV), wireless network (WiFi) and cloud services drives the need for a more automated and unified approach to managing service delivery and the subscriber experience.
This, coupled with the challenge of internet protocol (IP) transformation activities and complex technologies such as 5G, Long-Term Evolution (LTE), Network Functions Virtualization (NFV), Internet Protocol Television (IP-TV), wireless network (WiFi), Fixed Wireless Access (FWA) and cloud services drives the need for a more automated and unified approach to managing service delivery and the subscriber experience and protecting the mobile network.
The growing demand for high-bandwidth triple-play services, broadband connectivity, content anywhere, IP-TV, on-demand video traffic, new extended WiFi initiatives and carrier Ethernet services presents fixed line and cable multi-system operators with significant revenue opportunities.
The growing demand for high-bandwidth triple-play services, broadband connectivity, content anywhere, IP-TV, on-demand video traffic, newer 5G technology, extended WiFi initiatives, and carrier Ethernet services presents fixed line and cable multi-system operators with significant revenue opportunities.
Our operating results are influenced by a number of factors, including, but not limited to, the mix and quantity of products and services sold, pricing, costs and availability of materials used in our products, growth in employee-related costs, 4 Table of Contents including commissions, and the expansion of our operations.
Our operating results are influenced by a number of factors, including, but not limited to, the volume, mix, and quantity of products and services sold, pricing, costs and availability of materials used in our products, growth in employee-related costs, including commissions, and the expansion of our operations.
Our proprietary rights are subject to other risks and uncertainties described under Item 1A "Risk Factors." Human Capital Management NetScout strives to remain a team of entrepreneurs, with the agility of a start-up and the heft of a global technology company. We believe that our culture is critical to our success and growth.
Our proprietary rights are subject to other risks and uncertainties described under Item 1A "Risk Factors." Human Capital Management We strive to remain a team of entrepreneurs, with the agility of a start-up and the sophistication of a global technology company. We believe that our culture is critical to our success and growth.
Our smart DDoS offerings for enterprises include Arbor Edge Defense, a perimeter-based appliance for identifying and blocking incoming DDoS attacks and outbound malicious communications, and Arbor Cloud, a global, cloud-based traffic scrubbing service that 7 Table of Contents quickly removes DDoS attack traffic.
Our smart DDoS offerings for enterprises include Arbor Edge Defense, a perimeter-based appliance for identifying and blocking incoming DDoS attacks and outbound malicious communications, and Arbor Cloud, a global, cloud-based traffic scrubbing service that quickly removes DDoS attack traffic.
Our Compensation Committee oversees our key human capital management strategies and programs and shares oversight of environmental, health, and safety matters, with the Nominating and Corporate Governance Committee of the Board of Directors. Employees At March 31, 2023, we had 2,355 employees worldwide – over 99% of whom were full time employees.
Our Compensation Committee oversees our key human capital management strategies and programs and shares oversight of health and safety matters with the Nominating and Corporate Governance Committee of the Board of Directors. Employees At March 31, 2024, we had 2,296 employees worldwide – over 99% of whom were full time employees.
Environmental, Health, and Safety Regulatory Compliance NetScout's Environment, Health, and Safety (EHS) Council is responsible for EHS policy, managing and coordinating EHS regulatory compliance, and tracking goals and results. The EHS Council reports to senior executives and its results are reported to the Nominating and Corporate Governance Committee of the Board of Directors.
Health and Safety Regulatory Compliance Our Health and Safety (H&S) Council is responsible for H&S policy, managing and coordinating H&S regulatory compliance, and tracking goals and results. The H&S Council reports to senior executives and its results are reported to the Nominating and Corporate Governance Committee of the Board of Directors.
We plan to further enhance and expand these capabilities in ways that will enable greater adoption of our solutions by service provider and enterprise customers. • Advanced Threat Detection – We are actively expanding our enterprise cybersecurity offerings to better leverage the investment that our enterprise customers have made in our traditional service assurance solutions.
We plan to further enhance and expand these capabilities in ways that will enable greater adoption of our solutions by service provider and enterprise customers. • Advanced Threat Detection – We have actively expanded our en terprise cybersecurity offerings into the Network Detection and Response (NDR) market to better leverage the investment that our enterprise customers have made in our traditional service assurance solutions.
The Nominating and Corporate Governance Committee oversees these efforts as part of its comprehensive review of environmental, social and governance (ESG) matters. Diversity, Equity & Inclusion Diversity, equity, and inclusion (DEI) are important to our organizational excellence and complement our core values of performing with integrity, compassion, collaboration, and innovation.
The Nominating and Corporate Governance Committee oversees these efforts as part of its comprehensive review of environmental, social, and governance (ESG) matters and the Compensation Committee oversees NetScout’s human capital management as related to culture and values as well. 13 Table of Contents Diversity, Equity & Inclusion Diversity, equity, and inclusion (DEI) are important to our organizational excellence and complement our core values of performing with integrity, compassion, collaboration, and innovation.
We have also 12 Table of Contents filed and obtained U.S. patents and international counterparts to protect certain unique NetScout inventions from being unlawfully exploited by other parties.
We have obtained U.S. and international trademark registrations to preserve and protect certain trademarks. We have also filed and obtained U.S. patents and international counterparts to protect certain unique NetScout inventions from being unlawfully exploited by other parties.
As a result of our philosophy, we have pledged to be considerate, loyal and appreciative of our employees while also enacting decision-making processes and business strategies that result in efficient business outcomes. We take seriously our mission as Guardians of the Connected World.
As a result of our philosophy, we have pledged to be considerate, loyal and appreciative of our employees while also enacting decision-making processes and business strategies that result in efficient business outcomes. We dedicate heightened attention to our mission as Guardians of the Connected World and this mission serves as a key component in our employee engagement program.
We recently revised our Diversity, Equity, and Inclusion Policy and seek to enhance our employees' understanding of DEI through company-wide training, tracked and reviewed with the executive team.
We revised our Diversity, Equity, and Inclusion Policy and seek to enhance our employees' understanding of DEI through company-wide training.
Relatedly, the Audit Committee also regularly reviews ESG-related topics such as enterprise risk management, our anticorruption program, ethics and compliance issues, supply chain issues including human rights protections, and cybersecurity and data privacy.
The Audit Committee also regularly reviews ESG-related topics such as enterprise risk management, our anticorruption program, ethics and compliance issues, supply chain issues including human rights protections, and data privacy and security. The Compensation Committee regularly reviews ESG-related topics such as talent development and human capital management as well as compensation, DEI, and leadership training.
The ESG Steering Committee, under the strategic direction of the Chief Executive Officer and chaired by NetScout's General Counsel, provides guidance and management oversight for the ESG program. The Office of ESG, chaired by our General Counsel in his role as Chief ESG Officer, is responsible for the development and implementation of the ESG program.
The ESG Steering Committee, under the strategic direction of the Chief Executive Officer and chaired by our General Counsel, who also serves as our Chief ESG Officer, provides guidance and management oversight for the ESG program.
These meetings allow us to stay connected with all employees and ensure everyone is equipped with the knowledge and tools so all their efforts can be aligned with our vision, mission and goals as part of our ongoing internal efforts.
These meetings allow leaders to stay connected with all employees and ensure everyone is equipped with the knowledge and tools to align their efforts with our vision, mission and goals.
We continue to monitor the impact of the war in Ukraine, global geopolitical tension, worsening macroeconomic conditions and the COVID-19 pandemic, as well as other factors, on our supply chain.
We continue to monitor the impact of the war in Ukraine and the hostilities in the Middle East, global geopolitical tension, and macroeconomi c conditions, as w ell as other factors, on our supply chain.
Delivery of our fulfillable backlog typically occurs early in the subsequent quarter. However, delivery may be delayed or accelerated due to various other reasons, including but not limited to, changes in timing of customer projects and product delivery schedules, which may not be within our control.
However, delivery may be delayed or accelerated due to various other reasons, including but not limited to, changes in timing of customer projects and product delivery schedules, which may not be within our control. Our total combined product backlog at March 31, 2024 was $6.8 million compared to $44.4 million at March 31, 2023.
While our intellectual property rights are an important element in our success, our business as a whole does not depend on any one particular patent, trademark, copyright, trade secret, license, or other intellectual property right.
While our intellectual property rights are an important element in our success, our business does not depend on any one particular patent, trademark, copyright, trade secret, license, or other intellectual property right. We use contracts, statutory laws, domestic and foreign intellectual property registration processes, and international intellectual property treaties to protect our intellectual property portfolio and rights from infringement.
In the service provider DDoS solutions market, we compete under the NetScout Arbor brand with a broad range of vendors including Radware, Akamai, F5 Networks, A10 Networks, Fortinet, Fastly, Cloudflare and Corero Network Security.
We believe that the scalability of our solutions, flexible deployment, and price-performance of our cybersecurity solutions positions us well to compete against both larger network equipment and security companies and smaller niche security solutions vendors. 12 Table of Contents In the service provider DDoS solutions market, we compete under the NetScout Arbor brand with a broad range of vendors including Radware, Akamai, F5 Networks, A10 Networks, Fortinet, Fastly, Cloudflare and Corero Network Security.
Our total combined product backlog at March 31, 2023 was $44.4 million compared to $92.8 million at March 31, 2022. Combined product backlog included fulfillable backlog of $41.1 million and $51.5 million at March 31, 2023 and 2022, respectively. Total backlog includes orders that were received late in the quarter and radio frequency propagation modeling projects.
Combined product backlog included fulfillable backlog of $2.5 million and $41.1 million at March 31, 2024 and 2023, respectively. Total backlog includes orders that were received late in the quarter and radio frequency propagation modeling projects. In some cases, we have begun these projects but have not yet hit billable milestones.
Customers generally may reschedule or cancel unfulfilled orders with little or no penalty. Our total backlog at any particular time is not necessarily indicative of future sales levels. Within total backlog, fulfillable backlog includes what we consider to represent orders that are generally available to be delivered to customers as of the end of the reporting period.
Customers generally may 11 Table of Contents reschedule or cancel unfulfilled orders with little or no penalty. Our total backlog at any particular time is not necessarily indicative of future sales levels.
We also partner with universities with diverse student enrollment to recruit college hires and summer interns. 13 Table of Contents Talent Development NetScout invests in the ongoing development of its employees across the globe.
We also partner with universities with diverse student enrollment to recruit college hires and summer interns. We collaborate with several nonprofit organizations to provide technology education and internship opportunities in the tech field to members of underrepresented communities. Talent Development We invest in the ongoing development of its employees across the globe.
Additionally, certain competitors, either due to their size and resources or due to their technological strengths, may be able to respond more effectively than we can to new or changing opportunities, technologies, standards and customer requirements. 11 Table of Contents Principal competitive factors in our service assurance market include scalability; ability to address a large number of applications, locations and users; product performance; the ability to easily deploy into existing network environments; the ability to offer virtualized solutions; and the ability to administer and manage the solution.
Principal competitive factors in our service assurance market include scalability; ability to address a large number of applications, locations and users; product performance; the ability to easily deploy into existing network environments; the ability to offer virtualized solutions; and the ability to administer and manage the solution.
In addition to license agreements, we rely on U.S. and international copyright law to protect against unauthorized copying of software programs in the U.S. and abroad. We have obtained U.S. and foreign trademark registrations to preserve and protect certain trademarks and trade names.
From a contractual perspective, we use license agreements and non-disclosure agreements to control the use of our intellectual property and protect our trade secrets from unauthorized use and disclosure. In addition to license agreements, we rely on U.S. and international copyright law to protect against unauthorized copying of software programs in the U.S. and abroad.
In some cases, we have begun these projects but have not yet hit billable milestones. At March 31, 2023 and 2022, deferred revenue and accounts receivable each contained a gross balance of $8.3 million and $19.9 million, respectively, related to these radio frequency propagation modeling project orders.
At March 31, 2024, deferred revenue contained a gross balance of $1.2 million related to these radio frequency propagation modeling project orders. At March 31, 2023, deferred revenue and accounts receivable each contained a gross balance of $8.3 million related to these radio frequency propagation modeling project orders. Competition We compete with many companies in the markets we serve.
During the fiscal years ended March 31, 2022 and 2021, no direct customers or indirect channel partners accounted for more than 10% of our total revenue.
In many cases, there are multiple channel partners with the required contractual relationships, so dependence on any single channel partner is not significant. 10 Table of Contents During the fiscal years ended March 31, 2024 and 2022, no direct customers or indirect channel partners accounted for more than 10% of our total revenue.
Our internal NETSCOUT WITHOUT BORDERS initiative is a key component in our employee engagement program and allows us to continuously communicate our mission and goals to all of our global employees through a series of town hall meetings that provide direct interaction with the CEO, in-depth focus groups, and follow-on development programs.
We continuously communicate our mission, values, and goals to all of our global employees through town hall meetings that provide direct interaction with the CEO, and in-depth focus groups that support messaging from top executives.
Under this approach, we have limited dependence upon channel partners for the major elements of the selling process. In many cases, there are multiple channel partners with the required contractual relationships, so dependence on any single channel partner is not significant.
Under this approach, we have limited dependence upon channel partners for the major elements of the selling process.
We work with industry partners, including third-party recruiting organizations that specialize in diversity in hiring, and post our open position requisitions on diversity job boards. We track our progress and make improvements to reach a broader, more diverse, talent base.
A cornerstone of our DEI strategy is collaborating with industry, nonprofit and university partners to enhance our diversity and to help advance underrepresented populations into technology professions. We work with third-party recruiting organizations that specialize in diversity in hiring, and post our open position requisitions on diversity job boards.
With representation across key business functions, the mandate of the ESG Steering Committee is to consider our existing ESG efforts, understand stakeholder perspectives, identify areas for improvement that align with our business, and work collaboratively to support programs designed to accelerate ESG initiatives.
With representation across key business functions, the mandate of the Office of ESG is to consider our existing ESG efforts, understand stakeholder perspectives (including customers, investors, and employees among others), identify areas for improvement that align with our business, and work collaboratively to support programs designed to accelerate ESG initiatives in a practical, cost-effective way. 14 Table of Contents Our global ESG program encompasses a broad range of areas, including sustainable operations, responsible management of our supply chain, human capital, ethical business practices, and data privacy and security.
NETSCOUT Arbor DDoS virtual and physical solutions provide similar operational protection. For a discussion of the risks we face related to information security, see Part I, Item 1A. "Risk Factors". Corporate Information Our corporate headquarters are located at 310 Littleton Road, Westford, Massachusetts, and our telephone number is (978) 614-4000. We were incorporated in Delaware in 1984.
Corporate Information Our corporate headquarters are located at 310 Littleton Road, Westford, Massachusetts, and our telephone number is (978) 614-4000. We were incorporated in Delaware in 1984. Our internet address is http://www.NetScout.com.
NetScout continues to seek opportunities to align ESG with our core business strategy and more thoroughly integrate ESG into our operations. Information Security Cybersecurity, data privacy and data protection are critical to our business. As such, we have developed information security designed toward vigilant protection of personal data and maintaining vigorous standards of privacy and security.
We continue to seek opportunities to align ESG with our core business strategy and more thoroughly integrate ESG into our operations.
In addition, we have a designated DEI program team, reporting to the Chief Human Resources Officer, to foster transparent and equitable processes in employee engagement, onboarding, learning and development, policymaking, and career planning. A cornerstone of our DEI strategy is collaborating with industry and university partners to enhance our diversity.
In addition, we have a designated DEI program team that includes members from multiple functional areas and whose activities are overseen by our executive ESG Steering Committee, to foster transparent and equitable processes in employee engagement, onboarding, learning and development, policymaking, and career planning.
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Radio frequency propagation modeling project orders received in the third quarter of fiscal year 2022 allowed NetScout to bill for the entire projects based upon partial delivery. At March 31, 2023, deferred revenue related to these radio frequency propagation modeling projects included a gross balance of $8.3 million compared to a gross balance of $19.9 million at March 31, 2022.
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Within total backlog, fulfillable backlog includes what we consider to represent orders that are generally available to be delivered to customers as of the end of the reporting period. Delivery of our fulfillable backlog typically occurs early in the subsequent quarter.
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A majority of the revenue for these projects is expected to be recognized into revenue throughout the fiscal year ending March 31, 2024. Competition We compete with many companies in the markets we serve.
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Additionally, certain competitors, either due to their size and resources or due to their technological strengths, may be able to respond more effectively than we can to new or changing opportunities, technologies, standards and customer requirements.
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We believe that the scalability of our solutions, flexible deployment, and price-performance of our cybersecurity solutions positions us well to compete against both larger network equipment and security companies and smaller niche security solutions vendors.
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The Office of ESG, chaired by our General Counsel, acting in his role of Chief ESG Officer, is responsible for the development and implementation of the ESG program.
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We use contracts, statutory laws, domestic and foreign intellectual property registration processes, and international intellectual property treaties to police and protect our intellectual property portfolio and rights from infringement. From a contractual perspective, we use license agreements and non-disclosure agreements to control the use of our intellectual property and protect our trade secrets from unauthorized use and disclosure.
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Government Regulation As a company with global operations, we are subject to a variety of evolving regulatory requirements in the countries in which we operate or in which we offer our service assurance and cybersecurity solutions, including, among other things, with respect to data privacy, AI, information security and other legal, regulatory and compliance requirements.
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We have adopted four ESG pillars that lay out our current top ESG priorities, underpinned by a strong governance focus: 1. Demonstrating product leadership through sustainability by design and helping our customers reduce their environmental footprint, including through reducing electricity requirements of our products; 2. Reducing electricity use in our facilities, with emphasis on our engineering labs; 3.
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In the ordinary course of business, we may collect, receive, use, store, generate, transfer, dispose of, transmit, share, and process sensitive, proprietary, and confidential information, including personal information, business data, trade secrets, intellectual property, and confidential third-party data.
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Furthering our diversity, equity, and inclusion efforts alongside our employee engagement programs; and 4. Supporting community digital inclusion programs that improve underserved communities’ participation in the connected world. NetScout's global ESG program encompasses a broad range of areas, including environmental sustainability, responsible management of our supply chain, human capital, ethical business practices, and data privacy and security.
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Accordingly, we may be subject to numerous data privacy and security obligations, including federal, state, and local laws, regulations, guidance, and other obligations related to data privacy and security.
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We take a layered defense approach to protect confidentiality and prevent data compromise and breaches, including technology safeguards, organizational safeguards such as training and awareness programs, and physical safeguards. We maintain a robust Information Security Program (ISP) to help ensure the confidentiality, integrity, and availability of corporate data and the systems storing this information.
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Additionally, to the extent we collect personal information from individuals outside of the United States, we are, or may become, subject to foreign data privacy and security laws, such as the European Union's General Data Protection Regulation ("EU GDPR"). Foreign data privacy and security laws impose significant and complex compliance obligations on entities that are subject to those laws.
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Our ISP also includes annual information security awareness training for employees and audits of our systems and enhanced training for specialized personnel, and we have instituted regular phishing email 14 Table of Contents simulations for all employees and all contractors with access to corporate email systems to enhance awareness and responsiveness to such possible threats.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWhile we may be entitled to damages if our third-party service providers fail to satisfy their data privacy or security-related obligations to us, we cannot be certain that our applicable contracts with these third parties will adequately limit our data security-related liability to them or others, be sufficient to allow us to obtain indemnification or recovery from them for data security-related liabilities that they cause us to incur, or be sufficient to cover our damages. 17 Table of Contents Although we have multiple and layered controls and security measures in place designed to prevent cyberattacks, experienced computer hackers are increasingly organized and sophisticated and we cannot guarantee that our, or our third-party partners’, security measures will be sufficient to protect against unauthorized access to our IT networks, software and systems.
Biggest changeWhile we may be entitled to damages if a third party with whom we work fails to satisfy their data privacy or security-related obligations to us, we cannot be certain that our applicable contracts with these third parties will adequately limit our data privacy or security-related liability to them or others, be sufficient to allow us to obtain indemnification or recovery from them for data privacy or security-related liabilities we incur that are caused by them, or be sufficient to cover all or any of our damages.
Malicious attack efforts operate on a large-scale and sometimes offer targeted attacks as a paid-for service. In addition, the techniques used to obtain access or sabotage networks change frequently, and we may be unable to anticipate such techniques, implement adequate preventative measures, or stop security breaches that may arise from such techniques.
Malicious attack efforts operate on a large-scale and sometimes offer targeted attacks as a paid-for service. In addition, the techniques used to obtain access or sabotage networks change frequently, and we may be unable to anticipate such techniques, implement adequate preventative measures, or detect and stop security breaches that may arise from such techniques.
As our business evolves, we must also expand and adapt our information technology (IT) and operational infrastructure. Our business relies on our data systems, billing systems and other operational and financial reporting and control systems. All these systems have become increasingly complex due to the diversification and complexity of our business and acquisitions of new businesses with different systems.
As our business evolves, we must also expand and adapt our information technology (IT) and operational infrastructure. Our business relies on our data systems, billing systems and other operational and financial reporting and control systems. These systems have become increasingly complex due to the diversification and complexity of our business and acquisitions of new businesses with different systems.
Foreign Corrupt Practices Act (FCPA), generally prohibits U.S. companies and their intermediaries from making corrupt payments to foreign officials for the purpose of obtaining or keeping business or otherwise obtaining favorable treatment and requires companies to maintain appropriate record-keeping and internal accounting practices to accurately reflect the transactions of the company.
Foreign Corrupt Practices Act (FCPA) prohibits U.S. companies and their intermediaries from making corrupt payments to foreign officials for the purpose of obtaining or keeping business or otherwise obtaining favorable treatment and requires companies to maintain appropriate record-keeping and internal accounting practices to accurately reflect the transactions of the company.
Our future success may require us to increase the number and use of our indirect sales efforts through our distributors and channel partners and to leverage those relationships to expand these distribution channels and to develop new indirect distribution channels to increase revenue. Our channel partners have no obligation to purchase any products from us.
Our future growth and success may require us to increase the number and use of our indirect sales efforts through our distributors and channel partners and to leverage those relationships to expand these distribution channels and to develop new indirect distribution channels to increase revenue. Our channel partners have no obligation to purchase any products from us.
The occurrence of a natural disaster, public health crisis, or an act of terrorism, or a decision or need to close any of our facilities without adequate notice or time for making alternative arrangements could result in interruptions in the delivery of our products and services.
The occurrence of a natural disaster, public health crisis, or an act of war or terrorism, or a decision or need to close any of our facilities without adequate notice or time for making alternative arrangements could result in interruptions in the delivery of our products and services.
There can be no assurance that the steps we have taken to protect our intellectual property rights will be adequate to deter misappropriation of proprietary information, or that we will be able to detect unauthorized use by third parties and take appropriate steps to enforce our intellectual property rights.
There can be no assurance that the steps we have taken to protect our intellectual property rights will be adequate to deter misappropriation or loss of proprietary information, or that we will be able to detect unauthorized use by third parties and take appropriate steps to enforce our intellectual property rights.
Although we endeavor to ensure there is redundancy in these systems and that they are regularly backed-up, there is no guarantee that data recovery in the event of a disaster would be effective or occur in an efficient manner.
Although we endeavor to ensure there is redundancy in these systems and that they are regularly backed-up, there is no guarantee that data recovery in the event of a disaster would be effective or occur in an efficient and timely manner.
Our reliance on sole or limited suppliers involves several risks, including a lack of control over the manufacturing process and inventory management and potential inability to obtain an adequate supply of required components and the inability to exercise control over pricing, quality and timely delivery of components.
Our reliance on sole or limited suppliers involves several risks, a lack of control over the manufacturing process and inventory management, potential inability to obtain an adequate supply of required components, and the inability to exercise control over pricing, quality and timely delivery of components.
We may be impacted by changes in taxation, trade, and other regulatory requirements. We are subject to income tax in local, national, and international jurisdictions. In addition, our products are subject to import and excise duties and/or sales or value-added taxes (VAT) in many jurisdictions.
We may be impacted by changes in taxation, trade, tariffs, and other regulatory requirements. We are subject to income tax in local, national, and international jurisdictions. In addition, our products are subject to import and excise duties and/or sales or value-added taxes (VAT) in many jurisdictions.
If we or our distributors, resellers, agents, or other intermediaries fail to comply with the FCPA, the EAR, OFAC or U.S. government contracting laws, or the anti-corruption, export or governmental contracting laws of other countries, governmental authorities in the U.S. or other countries could seek to impose civil and/or criminal penalties, which could have a material adverse effect on our business, results of operations, financial conditions and cash flows.
If we or our distributors, resellers, agents, or other intermediaries fail to comply with the FCPA, the EAR, OFAC or U.S. or state and local government contracting laws, or the anti-corruption, export or governmental contracting laws of other countries, governmental authorities in the U.S. or other countries could seek to impose civil and/or criminal penalties, which could have a material adverse effect on our business, results of operations, financial conditions and cash flows.
We have actively expanded our operations in the past through acquisitions and organic growth and may continue to expand them in the future to gain share in the evolving markets in which we operate.
We have expanded our operations in the past through acquisitions and organic growth and may continue to expand them in the future to gain share in the evolving markets in which we operate.
Our data processing activities may subject us to numerous data privacy and security obligations, such as various laws, regulations, external and internal privacy and security policies, contractual requirements, and other obligations relating to data privacy and security.
Our data processing activities subject us to numerous data privacy and security obligations, such as various laws, regulations, external and internal privacy and security policies, contractual requirements, and other obligations relating to data privacy and security.
Our current revolving credit facility also imposes certain restrictions on us; for a more detailed description please refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations." Upon an event of default, for example, the administrative agent, with the consent of, or at the request of, the holders of more than 50% in principal amount of the loans and commitments, may terminate the commitments and accelerate the maturity of the loans outstanding under the Second Amended and Restated Credit Agreement and enforce certain other remedies under the Second Amended and Restated Credit Agreement and other loan documents, which would adversely affect our liquidity and financial condition.
Our current revolving credit facility also imposes certain restrictions on us; for a more detailed description please refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations." Upon an 22 Table of Contents event of default, for example, the administrative agent, with the consent of, or at the request of, the holders of more than 50% in principal amount of the loans and commitments, may terminate the commitments and accelerate the maturity of the loans outstanding under the Second Amended and Restated Credit Agreement and enforce certain other remedies under the Second Amended and Restated Credit Agreement and other loan documents, which would adversely affect our liquidity and financial condition.
While we have business continuity programs in place, a disruption or failure of systems or operations because of a disaster, public health crisis or other business continuity event could cause data to be lost or otherwise delay our ability to complete sales and provide the highest level of service to our customers.
While we have business continuity programs in place, a disruption or failure of systems or operations because of a disaster, public health crisis or other business continuity event could cause data to be lost or otherwise delay our ability to complete sales and provide products and services and provide the highest level of service to our customers.
The potential inability to develop relationships with new partners in new markets, expand and manage our existing partner relationships, the unwillingness of our partners to market and sell our products effectively or the loss of existing partnerships could have a material and adverse impact on our business, operating results and financial condition.
The potential inability to develop relationships with new partners in new markets, expand and manage our existing partner relationships, the unwillingness of our partners to market and sell our products effectively or the loss of existing partnerships or experienced personnel could have a material and adverse impact on our business, operating results and financial condition.
In addition to the factors discussed in this "Risk Factors" section and elsewhere in this report, factors that could cause fluctuations in the market price of our common stock include the following: • ratings changes by any securities analysts who follow our company; • announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments; • changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; • changes in accounting standards, policies, guidelines, interpretations, or principles; • actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally; • developments or disputes concerning our intellectual property or our products and platform capabilities, or third-party proprietary rights; 29 Table of Contents • cybersecurity attacks or incidents; • announced or completed acquisitions of businesses or technologies by us or our competitors; • changes in our board of directors or management; • announced or completed equity or debt transactions involving our securities; • sales of shares of our common stock by us, our officers, directors, or other stockholders; and • other events or factors, including those resulting from global and macroeconomic conditions, including heightened inflation, rising interest rates, bank failures, and a potential recession, and speculation regarding the same, as well as public health crises, the war in Ukraine or other wars and related geopolitical tension, incidents of terrorism, or responses to these events.
In addition to the factors discussed in this "Risk Factors" section and elsewhere in this report, factors that could cause fluctuations in the market price of our common stock include the following: • ratings changes by any securities analysts who follow our company; • announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments; • changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; • changes in accounting standards, policies, guidelines, interpretations, or principles; • actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally; • developments or disputes concerning our intellectual property or our products and platform capabilities, or third-party proprietary rights; • cybersecurity attacks or incidents; • announced or completed acquisitions of businesses or technologies by us or our competitors; • changes in our board of directors or management; • announced or completed equity or debt transactions involving our securities; • sales of shares of our common stock by us, our officers, directors, or other stockholders; and • other events or factors, including those resulting from global and macroeconomic conditions, including heightened inflation, rising interest rates, bank failures, and a potential recession, and speculation regarding the same, as well as public health crises, the war in Ukraine or other wars and related geopolitical tension, incidents of terrorism, or responses to these events. 29 Table of Contents In addition, the market for technology stocks and the stock markets in general have experienced extreme price and volume fluctuations.
The potential adverse consequences from acquisitions include: • the potentially dilutive issuance of common stock or other equity instruments; • the incurrence of debt and amortization expenses related to acquired intangible assets; • the potential litigation or other claims in connection with an acquisition; • the incurrence of significant costs and expenses to complete the acquisition and integrate the acquired business; and • the potentially negative impact of poor performance of an acquisition on our earnings per share.
The potential adverse consequences from acquisitions include: • the potentially dilutive issuance of common stock or other equity instruments; • the incurrence of debt and amortization expenses related to acquired intangible assets; • the potential litigation or other liabilities or claims or regulatory actions in connection with an acquisition; • the incurrence of significant costs and expenses to complete the acquisition and integrate the acquired business; and • the potentially negative impact of poor performance of an acquisition on our earnings per share.
Any of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited to, loss of customers, inability to process personal information or to operate in certain jurisdictions, limited ability to develop or commercialize our products, expenditure of time and resources to defend any claim or inquiry, adverse publicity, or substantial changes to our business model or operations.
Any of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited to, loss of customers, inability to process personal information or to operate in certain jurisdictions, limited ability to develop or 26 Table of Contents commercialize our products, expenditure of time and resources to defend any claim or inquiry, adverse publicity, or substantial changes to our business model or operations.
Unfavorable conditions in the economy both in the United States and abroad, including conditions resulting from financial and credit market fluctuations, increased interest rates, elevated or prolonged inflation, bank failures, international trade relations, political turmoil, natural catastrophes, outbreaks of contagious diseases, warfare, including in Ukraine, and terrorist attacks on the United States, Europe, the Asia Pacific region or elsewhere, could cause a decrease in business investments, including spending on information technology, and negatively affect the growth of our business and our results of operations.
Unfavorable conditions in the economy both in the United States and abroad, including conditions resulting from financial and credit market fluctuations, high interest rates, elevated or prolonged inflation, bank failures, international trade relations, political turmoil, natural catastrophes, outbreaks of contagious diseases, warfare, including in Ukraine and the Middle East, and terrorist attacks on the United States, Europe, the Asia Pacific region or elsewhere, could cause a decrease in business investments, including spending on information technology, and negatively affect the growth of our business and our results of operations.
Moreover, if we are unable to continue to acquire from these suppliers on acceptable terms or should any of these suppliers cease to supply us with components for any reason, we may not be able to identify and integrate an alternative source of supply in a timely fashion or at the same costs.
Moreover, if we are unable to continue to acquire from these suppliers on acceptable terms or should any of these suppliers cease to supply us with components for any reason, we may not 19 Table of Contents be able to identify and integrate an alternative source of supply in a timely fashion or at the same costs.
If we, or a third party upon whom we rely, experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences, such as government enforcement actions; additional reporting, disclosure, notification and/or oversight requirements; restrictions on processing sensitive data; litigation; indemnification obligations; negative publicity; reputational harm; monetary fund diversions; interruptions in our operations (including availability of data); financial loss; and other similar harms.
If we, or a third party with whom we work, experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences, such as government enforcement actions; additional reporting, disclosure, notification and/or oversight requirements; restrictions on processing sensitive data; litigation; indemnification obligations; negative publicity; reputational harm; monetary fund diversions; interruptions in our operations (including availability of data); financial loss; and other similar harms.
Risks Related to Our Business and Industry Unfavorable conditions in our industry or the global economy, or reductions in information technology spending, could limit our ability to grow our business and negatively affect our results of operations.
Risks Related to Our Business and Industry Unfavorable conditions in our industry, our customers industries, the global economy, or reductions in information technology spending, could limit our ability to grow our business and negatively affect our results of operations.
This competition could result in increased pricing pressure, reduced profit margins, increased sales and 25 Table of Contents marketing expenses, and failure to increase, or the loss of market share, any of which would likely have a material and adverse impact on our business, operating results and financial condition.
This competition could result in increased pricing pressure, reduced profit margins, increased sales and marketing expenses, and failure to increase, or the loss of market share, any of which would likely have a material and adverse impact on our business, operating results and financial condition.
If there is no lawful manner for us to transfer personal information from the EEA, the UK, or other jurisdictions to the United States, or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our data processing activities to other jurisdictions at significant expense, increased exposure to regulatory actions, fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against our processing or transferring of personal information necessary to operate our business.
If there is no lawful manner for us to transfer personal information from Europe or other jurisdictions to the United States, or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our data processing activities to other jurisdictions at significant expense, increased exposure to regulatory actions, fines and penalties, the inability to transfer data and work with resellers, vendors and other third parties, and injunctions against our processing or transferring of personal information necessary to operate our business.
Our operations are dependent upon our ability to protect our technology infrastructure against damage from business continuity events that could have a significant disruptive effect on our operations. We could experience material adverse interruptions to our operations or delivery of services to our clients in a disaster recovery scenario.
Our operations are dependent upon our ability to protect 18 Table of Contents our technology infrastructure against damage from business continuity events that could have a significant disruptive effect on our operations. We could experience material adverse interruptions to our operations or delivery of services to our clients in a disaster recovery scenario.
Increased strength of the U.S. dollar increases the effective price of our products sold in U.S. dollars into other countries, which may require us to lower our prices or adversely affect sales. Decreased strength of the U.S. dollar could adversely affect the cost of materials, products, and services we purchase overseas.
Increased strength of the U.S. dollar increases the effective price of our products sold in U.S. dollars into other countries, which may require us to lower our prices or adversely 28 Table of Contents affect sales. Decreased strength of the U.S. dollar could adversely affect the cost of materials, products, and services we purchase overseas.
If we or the third parties on which we rely fail, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, we could face significant consequences, including but not limited to: government enforcement actions; litigation; additional reporting requirements and/or oversight; bans on processing personal information; and orders to destroy or not use personal information.
If we or the third parties with whom we work fail, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, we could face significant consequences, including but not limited to: government enforcement actions; litigation; additional reporting requirements and/or oversight; bans on processing personal information; and orders to destroy or not use personal information.
Furthermore, any additional capital may have terms that adversely affect our business, such as new financial or operating covenants, or that may result in dilution to our stockholders. 23 Table of Contents We expect that existing cash, cash equivalents, marketable securities, cash provided from operations and our bank credit facilities will be sufficient to meet ongoing cash requirements.
Furthermore, any additional capital may have terms that adversely affect our business, such as new financial or operating covenants, or that may result in dilution to our stockholders. We expect that existing cash, cash equivalents, marketable securities, cash provided from operations and our bank credit facilities will be sufficient to meet ongoing cash requirements.
The unauthorized copying or use of our products or proprietary information could result in reduced sales of our products and eventually harm our operating results. 22 Table of Contents Others may claim that we infringe on their intellectual property rights.
The unauthorized copying or use of our products or proprietary information could result in reduced sales of our products and eventually harm our operating results. Others may claim that we infringe on their intellectual property rights.
For example, we rely on third parties to operate some of our business systems and process sensitive, proprietary, and confidential information in a variety of contexts, including, without limitation, cloud-based infrastructure, data center facilities, encryption and authentication technology, employee email, content delivery to customers, and other functions.
For example, we rely on third parties and technologies to operate some of our business systems and process sensitive data in a variety of contexts, including, without limitation, cloud-based infrastructure, data center facilities, encryption and authentication technology, employee email, content delivery to customers, and other functions.
An epidemic or pandemic or other outbreak of communicable diseases, such as the COVID-19 pandemic, poses the risk that we or our customers, suppliers, and other business partners may be disrupted or prevented from conducting normal business activities for certain periods of time, the durations of which are uncertain, and may otherwise experience significant impairments of business activities.
An epidemic or pandemic or other outbreak of communicable diseases, poses the risk that we or our customers, suppliers, and other business partners may be disrupted or prevented from conducting normal business activities for certain periods of time, the durations of which are uncertain, and may otherwise experience significant impairments of business activities.
Our inability to effectively consummate acquisitions on favorable terms could significantly impact our ability to compete effectively in our targeted markets and could negatively affect our results of operations. 24 Table of Contents Acquisitions that we do complete could adversely impact our business.
Our inability to effectively consummate acquisitions on favorable terms could significantly impact our ability to compete effectively in our targeted markets and could negatively affect our results of operations. Acquisitions that we do complete could adversely impact our business.
Sales to customers outside the United States accounted for 36%, 41%, and 42% of our total revenue for the fiscal years ended March 31, 2023, 2022 and 2021, respectively. The need to develop such relationships can be particularly acute in areas outside of the U.S.
Sales to customers outside the United States accounted for 43%, 36%, and 41% of our total revenue for the fiscal years ended March 31, 2024, 2023 and 2022, respectively. The need to develop such relationships can be particularly acute in areas outside of the U.S.
These strategies may not be effective in fully protecting us against the effects of fluctuations from movements in foreign exchange rates, including the increased volatility in foreign exchange rates relating to the COVID-19 pandemic, the war in Ukraine and future global pandemics and other events.
These strategies may not be effective in fully protecting us against the effects of fluctuations from movements in foreign exchange rates, including the increased volatility in foreign exchange rates relating to the COVID-19 pandemic, the wars in Ukraine and Middle East, and future global pandemics and other events.
Export Administration Regulations (EAR) and the office of Foreign Asset Control (OFAC), as well as to U.S. government contracting laws, rules and regulations, and may be subject to government contracting laws of other countries in which we do business.
Export Administration Regulations (EAR) and the office of Foreign Asset Control (OFAC), as well as to U.S. and state and local government contracting laws, complex procurement rules and regulations, and may be subject to government contracting laws of other countries in which we do business.
If our information technology systems or data, or those of third parties upon which we rely, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse consequences.
If our information technology systems, or those of third parties with whom we work, or data are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse consequences.
To manage our technical support infrastructure effectively and improve our sales efficiency, we will need to continue to upgrade and improve our data systems, billing systems, ordering processes, customer relationship management systems, and other operational and financial systems, procedures and controls.
To manage our technical support infrastructure effectively and improve our sales 20 Table of Contents efficiency, we will need to continue to upgrade and improve our data systems, billing systems, ordering processes, customer relationship management systems, and other operational and financial systems, procedures and controls.
Any failure to maintain high quality support and services would harm our operating results and reputation.
Any failure to maintain high quality support and services could harm our operating results and reputation.
These practices may include, among other approaches, establishing buffer supply requiring suppliers to maintain adequate stocks of materials and use-based and kanban programs to set supply thresholds. We also enter into escrow arrangements for certain technologies. Where possible, we use widely available off the shelf hardware and work with large suppliers with multiple factories and other risk management practices.
These practices may include, among other approaches, establishing buffer supply requiring suppliers to maintain adequate stocks of materials and use-based and kanban programs to set supply thresholds. We also maintain escrow arrangements for certain technologies. Where possible, we use widely available off the shelf hardware and work with large suppliers with multiple factories in diverse geographies.
During times of war and other major conflicts, we and the third parties upon which we rely may be vulnerable to heightened risk of these attacks, including retaliatory cyber-attacks that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our goods and services.
During times of war and other major conflicts, we and the third parties with whom we work may be vulnerable to heightened risk of these attacks, including retaliatory cyber-attacks that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our goods and services.
If we or our channel partners do not effectively assist our customers in deploying our products, succeed in 19 Table of Contents helping our customers quickly resolve post-deployment issues, and provide effective ongoing support, it would adversely affect our ability to sell our products to existing customers and would harm our reputation with existing and potential customers.
If we or our channel partners do not effectively assist our customers in deploying our products, succeed in helping our customers quickly resolve post-deployment issues, and provide effective ongoing support, it could adversely affect our ability to sell our products to existing customers and could harm our reputation with existing and potential customers.
For most of our products, we do not have the internal manufacturing capabilities to meet our customers' demands. It is our practice to mitigate these risks by partnering with key suppliers, including distributors, to establish a variety of supply continuity practices.
For most of our products, we do not have the internal manufacturing capabilities to meet our customers' demands so we rely on third parties to supplement our capabilities. It is our practice to mitigate these risks by partnering with key suppliers, including distributors, to establish a variety of supply continuity practices.
Some actors now engage, and are expected to continue to engage, in cyber-attacks, including for geopolitical reasons and in conjunction with military conflicts and defense activities.
Some actors now engage, and are expected to continue to engage, in cyber-attacks, including without limitation nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities.
The COVID-19 pandemic has resulted in, and future epidemics or pandemics may result in, the extended shutdown of certain businesses and the closure of international borders throughout the world, which may result in disruptions to our supply chain, including from temporary closure of third-party supplier and manufacturer facilities, interruptions in product supply or restrictions on the export or shipment of our products, as well as the import of products into countries in which we operate.
Future epidemics or pandemics may result in the shutdown of certain businesses and the closure of international borders, which may result in disruptions to our supply chain, including from temporary closure of third-party supplier and manufacturer facilities, interruptions in product supply or restrictions on the export or shipment of our products, as well as the import of products into countries in which we operate.
Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, personnel (such as through theft or misuse), sophisticated nation states, and nation-state-supported actors.
Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including traditional computer "hackers", threat actors, "hacktivists", organized criminal threat actors, personnel (such as through theft or misuse or unintentional disclosure), sophisticated nation states, and nation-state-supported actors.
We are developing and are already deploying a number of new products as well as enhancements to our existing products and offerings, including our new Omnis cybersecurity suite as well as additional software only solutions and products available in multiple form factors for most of our existing solutions.
We are developing and are already deploying a number of new products as well as enhancements to our existing products and offerings, including our Omnis cybersecurity suite as well as additional software only solutions and products available in multiple form factors for most of our existing solutions. We must invest in research and development to remain competitive in our industry.
Our actual, or perceived failure to comply with such obligations could lead to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business, results of operations; reputational harm; loss of revenue or profits; and other adverse business consequences.
Our actual, or perceived failure to comply with such obligations (or such failure by the third parties with whom we work) could lead to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business, results of operations; reputational harm; loss of revenue or profits; and other adverse business consequences.
Any of the previously identified or similar threats could cause a security incident or other interruption that could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to our sensitive, proprietary, or confidential information or our information technology systems, or those of the third parties upon whom we rely.
Any of the previously identified or similar threats could cause a security incident or other interruption that could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss alternation, encryption, disclosure of, or access to our sensitive data or our information technology systems, or those of the third parties with whom we work.
We must invest in research and development to remain competitive in our industry. However, there can be no assurances that continued investment and increased research and development expenses will ultimately result in our maintaining or increasing our market share, which could result in a decline in our operating results.
However, there can be no assurances that continued investment and increased research and development expenses will ultimately result in our maintaining or increasing our market share, which could result in a decline in our operating results.
We and the third parties upon which we rely are subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, telecommunications failures, and other similar threats.
We and the third parties with whom we work are subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks, credential stuffing, credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, telecommunications failures, earthquakes, fires, floods, and other similar threats, including attacks enhanced or facilitated through the use of Artificial Intelligence ("AI").
If we are not able to successfully manage these issues, the anticipated benefits and efficiencies of the acquisitions may not be realized fully or at all, or may take longer to realize than expected, and our ability to compete, our revenue and gross margins and our results of operations may be adversely affected.
If we are not able to successfully manage these issues, the anticipated benefits and efficiencies of the acquisitions may not be realized fully or at all, or may take longer to realize than expected, and our ability to compete, our revenue and gross margins and our results of operations may be adversely affected. 24 Table of Contents We face significant competition from other technology companies.
We face significant competition from other technology companies. The service assurance, application performa nce management, network security, cybersecurity and business intelligence markets are highly competitive, rapidly evolving, and fragmented markets that have overlapping technologies and competitors, both large and small, and we expect competition on solutions offerings and pricing to increase.
The service assurance, application performance management, network security, cybersecurity and business intelligence markets are highly competitive, rapidly evolving, and fragmented markets that have overlapping technologies and competitors, both large and small, and we expect competition on solutions offerings and pricing to increase.
Specific components that are necessary for the hardware assembly of our instruments are obtained from separate sole source suppliers or a limited group of suppliers. These components include our network interface cards and proprietary hardware.
Specific components that are necessary for the hardware assembly of our instruments are obtained from separate sole source suppliers or a limited group of suppliers, including some with operations in locations with geopolitical uncertainty. These components include our network interface cards and proprietary hardware.
Any transition to one or more alternate manufacturers would likely result in delays, operational problems, and increased costs, and may limit our ability to deliver our products to our customers on time for such transition period.
Any transition to one or more alternate manufacturers could result in significant delays, operational problems, and increased costs, and may limit our ability to deliver our products to our customers on time for such transition period or, in extreme circumstances, at all.
Disruptions to, or our failure to effectively develop and manage, these partners and the processes and procedures that support them could adversely affect our ability to generate revenues from the sale of our products and services.
Our success depends, in part, on our ability to manage and leverage our distribution channels. Disruptions to, or our failure to effectively develop and manage, these partners and the processes and procedures that support them could adversely affect our ability to generate revenues from the sale of our products and services.
For instance, as has been the case with the COVID-19 pandemic, federal, state, local, and foreign governments may put in place quarantines, executive orders, shelter-in-place orders, and similar government orders and restrictions to reduce the rate of infection and control the spread of the disease.
For instance, federal, state, local, and foreign governments may put in place quarantines, executive orders, shelter-in-place orders, and similar government orders and restrictions to reduce the rate of infection and control the spread of the disease.
Given that cash is typically received over an extended period of time for many of our license and support agreements and given that a material portion of our revenue is generated outside of the United States, fluctuations in foreign exchange rates (including the Euro) against the U.S. dollar could result in substantial changes in reported revenues and operating results due to the foreign exchange impact upon translation of these transactions into U.S. dollars. 28 Table of Contents In the normal course of business, we employ various hedging strategies to partially mitigate these risks, including the use of derivative instruments.
Given that cash is typically received over an extended period of time for many of our license and support agreements and given that a material portion of our revenue is generated outside of the United States, fluctuations in foreign exchange rates (including the Euro) against the U.S. dollar could result in substantial changes in reported revenues and operating results due to the foreign exchange impact upon translation of these transactions into U.S. dollars.
We and the third parties upon which we rely collect, receive, use, store, generate, transfer, dispose of, transmit, share, and process sensitive, proprietary, and confidential information, including personal information, business data, trade secrets, intellectual property, and confidential third-party data.
In the ordinary course of business, we and the third parties with whom we work collect, receive, use, store, generate, transfer, dispose of, transmit, share, and process (collectively "process") sensitive, proprietary, and confidential information, including personal information, business data, trade secrets, intellectual property, and confidential third-party data (collectively "sensitive data").
Any failure to successfully implement or execute our operating strategy or the occurrence of any of the events or circumstances set forth in this "Risk Factors" section in this report could result in the actual operating results being different from our guidance, and the differences may be adverse and material.
Any failure to successfully implement or execute our operating strategy or the occurrence of any of the events or circumstances set forth in this "Risk Factors" section in this report could result in the actual operating results being different from our guidance, and the differences may be adverse and material. 27 Table of Contents Our effective tax rate may fluctuate, which could increase our income tax expense and reduce our net income.
Accordingly, our guidance is only an estimate of what management believes is realizable as of the date of release. Actual results may vary from our guidance and the variations may be material. In light of the foregoing, investors are urged not to rely solely upon our guidance in making an investment decision regarding our common stock.
Actual results may vary from our guidance and the variations may be material. In light of the foregoing, investors are urged not to rely solely upon our guidance in making an investment decision regarding our common stock.
In addition, the market for technology stocks and the stock markets in general have experienced extreme price and volume fluctuations. Stock prices of many technology companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have instituted securities class action litigation following periods of market volatility.
Stock prices of many technology companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have instituted securities class action litigation following periods of market volatility.
As a provider of security solutions, we may be a more attractive target for such attacks. Other individuals or entities, including personnel or vendors, may also intentionally or unintentionally provide unauthorized access to our IT environments.
As a provider of security solutions, we may be a more attractive target for such attacks. Other individuals or entities, including personnel or vendors, may also intentionally or unintentionally provide unauthorized access to our IT environments. We take steps to detect, mitigate, and remediate vulnerabilities in our information systems (such as hardware and/or software).
While we have generally been able to license required third-party technology to date, third-party licenses required in the future may not be available to us on commercially reasonable terms or at all.
We currently, and will in the future, license technology from third parties that we use to produce or embed in our products. While we have generally been able to license required third-party technology to date, third-party licenses required in the future may not be available to us on commercially reasonable terms or at all.
These claims, whether or not valid, could require us to spend significant sums in litigation, pay damages or royalties, delay product shipments, reengineer our products, rename our products and rebuild name recognition or acquire licenses to such third-party intellectual property. We may not be able to secure any required licenses on commercially reasonable terms or secure them at all.
These claims, whether or not valid, could require us to spend significant sums in litigation, pay damages or royalties, delay product shipments, reengineer our products, rename our products and rebuild name recognition or acquire licenses to such third-party intellectual property.
To the extent the COVID-19 pandemic or other future epidemic or pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this "Risk Factors" section, such as those relating to our quarterly revenue and operating results, the estimates made for our critical accounting policies, and the operation of internal controls over such estimates, as well as on our liquidity and on our ability to satisfy our indebtedness obligations and debt covenants.
To the extent future epidemic or pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this "Risk Factors" section, such as those relating to our quarterly revenue and operating results, the estimates made for our critical accounting policies, and the operation of internal controls over such estimates, as well as on our liquidity and on our ability to satisfy our indebtedness obligations and debt covenants. 21 Table of Contents Risks Related to Our Intellectual Property Necessary licenses for third-party technology may not be available to us on commercially reasonable terms or at all.
Recruiting and retaining qualified channel partners and training them in the use of our technology and services and ensuring that they comply with our legal and ethical requirements requires significant time and resources throughout the relationship.
Recruiting and retaining qualified channel partners and training them in the use of our technology and services and ensuring that they comply with our legal and ethical requirements requires significant time and resources throughout the relationship. Our business and operations, and the operations of our customers, partners, and/or suppliers, may be adversely affected by epidemics and pandemics.
Preparing for and complying with these obligations requires us to devote significant resources and may necessitate changes to our services, information technologies, systems, and practices and to those of any third parties that process personal information on our behalf.
For example, the EU GDPR and the United Kingdom's GDPR ("UK GDPR") impose strict requirements for processing personal information. Preparing for and complying with these obligations requires us to devote considerable resources and may necessitate changes to our services, information technologies, systems, and practices and to those of any third parties that process personal information on our behalf.
However, failure of supply, including as a result of a public health crisis or geopolitical situation, or failure to execute effectively on any of these programs could result in our inability to obtain adequate supply or deliveries or to ship our products on a timely basis.
However, failure of supply, including because of a public health crisis, a geopolitical situation, terrorism or war, sanctions or embargoes, or failure to execute effectively on any of our risk mitigation practices could result in our inability to obtain adequate supply or deliveries or to ship our products on a timely basis or at all.
The principal reason that we release guidance is to provide a basis for our management to discuss our business outlook with analysts and investors.
The principal reason that we release guidance is to provide a basis for our management to discuss our business outlook with analysts and investors. We are not responsible for any projections or reports published by any such analysts or investors.
If the third parties we rely on for hosted data solutions for our internal network and information systems are subject to a security breach or otherwise suffer disruptions that impact the services we utilize, the integrity and availability of our internal information could be compromised causing the loss of confidential or proprietary information, damage to our reputation and economic loss. 20 Table of Contents We or our suppliers may be affected by new regulations related to climate change, sustainability, and other environmental issues.
If the third parties we rely on for cloud-based or hosted data solutions for our internal network and information systems are subject to a security breach or otherwise suffer disruptions that affect the services we utilize, the integrity and availability of our internal information could be compromised causing the loss of confidential or proprietary information, damage to our reputation and economic loss.
In addition, we may be unable to transfer personal information from Europe and other jurisdictions to the United States or other countries due to data localization requirements or limitations on cross-border data flows. Europe and other jurisdictions have enacted laws requiring data to be localized or limiting the transfer of personal information to other countries.
In addition, we may be unable to transfer personal information from Europe and other jurisdictions to the United States or other countries due to data localization requirements or limitations on cross-border data transfers. In particular, the European Economic Area ("EEA") and the United Kingdom ("UK") have significantly restricted the transfer of personal information to the United States and other countries.
The regulatory framework for data privacy and security issues worldwide is rapidly evolving, and as a result, legal requirements and enforcement practices are likely to continue to evolve. In many jurisdictions, enforcement activities and consequences for noncompliance are rising.
The regulatory framework for data privacy and security issues worldwide has and will continue to evolve, and as a result, legal requirements and enforcement practices are likely to continue to impact business requirements regarding the collection, use, storage, protection, retention, or transfer of data. In many jurisdictions, enforcement activities and consequences for noncompliance are rising.
We are and may continue to be subject to claims by others, whether valid or not, that our products infringe on their intellectual property rights, patents, copyrights, or trademarks.
We are and may continue to be subject to claims by others, whether valid or not, that our products infringe on their intellectual property rights, patents, copyrights, or trademarks. Further, intellectual property issues, such as ownership, copyright, and patentability, have not been fully settled with respect to AI technology.
We must, therefore, plan for and manage the succession of key executives due to retirement, illness, or competitive offers. Our disclosures, initiatives and goals related to environmental, social, and governance matters expose us to numerous risks, including risks to our reputation, business, financial performance and growth.
We must, therefore, plan for and manage the succession of key executives due to retirement, illness, or competitive offers. Our business is subject to evolving ESG laws, regulations and expectations that could expose us to numerous risks, including risks to our reputation, business, financial performance and growth.
This inability could have a material and adverse impact on our business, operating results, and financial condition. In addition, we must maintain and periodically increase the size of our sales force in order to increase our direct sales and support our indirect sales channels.
This inability could have a material and adverse impact on our business, operating results, and financial condition. In addition, we must maintain the size of our sales force to support our direct sales and indirect sales channels. Because our products are very technical, salespeople require a comparatively long period of time to become productive, typically three to twelve months.
We rely upon a combination of patent, copyright, trademark and trade secret laws and registrations and non-disclosure and other contractual and license arrangements to protect our intellectual property rights. The reverse engineering, unauthorized copying, or other misappropriation of our intellectual property could enable third parties to benefit from our technology without compensating us.
We rely upon a combination of patent, copyright, trademark and trade secret laws and registrations and non-disclosure and other contractual and license arrangements to protect our intellectual property rights.
To meet this challenge and remain competitive in the market, we must introduce new enhancements and additional form factors to our existing product lines and service offerings.
We must address demand from our customers for advancements in our products and services applications to support our customers' growing needs and requirements in complex networks. To meet this challenge and remain competitive in the market, we must introduce new enhancements and additional form factors to our existing product lines and service offerings.
Such orders or restrictions, or the perception that such orders or restrictions could occur, may result in business closures, work stoppages, slowdowns and delays, travel restrictions and cancellation of events, among other effects that could affect productivity and disrupt our operations and those of our suppliers, customers, and business partners.
Such orders or restrictions, may result in business closures, work stoppages, slowdowns and delays, travel restrictions and cancellation of events, that could affect productivity and disrupt our operations and those of our suppliers, customers, and business partners. In addition, we rely on third-party suppliers and manufacturers throughout the globe, which may be impacted by epidemics or pandemics.
The COVID-19 pandemic and future epidemics and pandemics risk disrupting and adversely affecting our business operations and financial results, as well as the markets and communities in which we and our customers, suppliers and other business partners operate.
Future epidemics and pandemics risk disrupting and adversely affecting our business operations and financial results, as well as the markets and communities in which we and our customers, suppliers and other business partners operate. We face risks related to epidemics, pandemics, and other outbreaks of communicable diseases that adversely affect global commercial activity, economies, financial markets, and companies.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn addition, we lease office and/or manufacturing space in other locations globally with some of the more significant locations from a cost or size perspective being in Allen, Texas; San Jose, California; Ann Arbor, Michigan; Colorado Springs, Colorado; Bangalore, India; Pune, India; and Shanghai, China. Item 3.
Biggest changeIn addition, we lease office and/or manufacturing space in other locations globally with some of the more significant locations from a cost or size perspective being in Allen, Texas; San Jose, California; Ann Arbor, Michigan; Colorado Springs, Colorado; Bangalore, India; Pune, India; and Shanghai, China.
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Legal Proceedings For information regarding legal proceedings, refer to Note 18, Commitments and contingencies to the Consolidated Financial Statements included in Part IV, Item 15 of this report. Item 4. Mine Safety Disclosures None. 31 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 31 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities 32 Item 6. [Reserved ] 34 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 35 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 50
Biggest changeItem 4. Mine Safety Disclosures 32 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities 33 Item 6. [Reserved ] 35 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 36 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 52

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeCOMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Assumes Initial Investment of $100 3/31/2018 3/31/2019 3/31/2020 3/31/2021 3/31/2022 3/31/2023 NetScout Systems, Inc. $ 100.00 $ 106.53 $ 89.83 $ 106.87 $ 121.73 $ 108.70 Nasdaq Composite – Total Returns $ 100.00 $ 110.63 $ 111.40 $ 193.16 $ 208.72 $ 181.00 Nasdaq Computer and Data Processing Index $ 100.00 $ 110.12 $ 122.32 $ 204.54 $ 215.57 N/A Nasdaq US Benchmark Computer Services TR Index $ 100.00 $ 105.66 $ 92.83 $ 145.15 $ 149.52 $ 125.68 Dividend Policy In fiscal years 2023 and 2022 , we did not declare any cash dividends.
Biggest changeCOMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Assumes Initial Investment of $100 3/31/2019 3/31/2020 3/31/2021 3/31/2022 3/31/2023 3/31/2024 NetScout Systems, Inc. $ 100.00 $ 84.32 $ 100.32 $ 114.27 $ 102.04 $ 77.78 Nasdaq Composite – Total Returns $ 100.00 $ 100.70 $ 174.60 $ 188.67 $ 163.62 $ 221.02 Nasdaq US Benchmark Computer Services TR Index $ 100.00 $ 87.86 $ 137.37 $ 141.52 $ 118.95 $ 150.43 Dividend Policy In fiscal years 2024 and 2023, we did not declare any cash dividends and do not anticipate declaring cash dividends in the foreseeable future.
In addition, the terms of our credit facility limit our ability to pay cash dividends on our capital stock. It is our intention to retain all future earnings for reinvestment to fund our expansion and growth, to pay down our debt, and to fund our stock buyback program further described under "Liquidity and Capital Resources" in Item 7.
In addition, the terms of our credit facility limit our ability to pay cash dividends on our capital stock. It is our intention to ret ain all future earnings for reinvestment to fund our expansion and growth, to pay down our debt, and to fund our stock buyback program further described under "Liquidity and Capital Resources" in Item 7.
The Stock Performance Graph set forth below compares the yearly change in the cumulative total stockholder return on our common stock during the five-year period from March 31, 2018 through March 31, 2023 with the cumulative total return of the Nasdaq Composite Index and the Nasdaq U.S. Benchmark Computer Services TR Index. The Nasdaq U.S.
The Stock Performance Graph set forth below compares the yearly change in the cumulative total stockholder return on our common stock during the five-year period from March 31, 2019 through March 31, 2024 with the cumulative total return of the Nasdaq Composite Index and the Nasdaq U.S. Benchmark Computer Services TR Index.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information Our common stock trades on the Nasdaq Global Select Market, under the symbol NTCT. Stockholders At May 8, 2023, we had 82 stockholders of record. We believe that the number of beneficial holders of our common stock exceeds 15,000.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information Our common stock trades on the Nasdaq Global Select Market, under the symbol NTCT. Stockholders At May 9, 2024, we had 74 stockholders of record. We believe that the number of beneficial holders of our common stock exceeds 21,000.
Such purchases reflected in the table do not reduce the maximum number of shares that may be purchased under our 25 million share repurchase program authorized on October 24, 2017 (2017 Share Repurchase Program) currently in effect, or the additional 25 million share repurchase program authorized on May 3, 2022 (2022 Share Repurchase Program).
Such purchases reflected in the table do not reduce the maximum number of shares that may be purchased under our 25 million share repurchase program authorized in May 2022 (2022 Share Repurchase Program).
Recent Sales of Unregistered Securities None. 33 Table of Contents Purchases of Equity Securities by the Issuer The following table provides information about purchases we made during the quarter ended March 31, 2023 of equity securities that are registered by us pursuant to Section 12 of the Exchange Act: Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet be Purchased Under the Program 1/1/2023 - 1/31/2023 1,483 $ 32.13 — 1,209,153 2/1/2023 - 2/28/2023 3,522 31.54 — 1,209,153 3/1/2023 - 3/31/2023 1,704 27.97 — 1,209,153 Total 6,709 $ 30.76 — 1,209,153 (1) We purchased an aggregate of 6,709 shares transferred to us from employees in satisfaction of tax withholding obligations associated with the vesting of restricted stock units during the period.
Recent Sales of Unregistered Securities None. 34 Table of Contents Purchases of Equity Securities by the Issuer The following table provides information about purchases we made during the quarter ended March 31, 2024 of equity securities that are registered by us pursuant to Section 12 of the Exchange Act: Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet be Purchased Under the Program 1/1/2024 - 1/31/2024 4,057 $ 21.87 — 24,385,484 2/1/2024 - 2/29/2024 4,737 21.05 — 24,385,484 3/1/2024 - 3/31/2024 726 21.62 — 24,385,484 Total 9,520 $ 21.44 — 24,385,484 (1) We purchased an aggregate of 9,520 shares transferred to us from employees in satisfaction of tax withholding obligations associated with the vesting of restricted stock units during the period.
Benchmark Computer Services TR Index, or the Nasdaq Computer and Data Processing Index, as applicable, and assumes reinvestment of dividends, if any. 32 Table of Contents The stock price performance shown on the graph below is not necessarily indicative of future price performance. Information used in the graph was obtained from Zacks Investment Research, Inc.
The comparison assumes $100 was invested on March 31, 2019 in our common stock or in the Nasdaq Composite Index, or the Nasdaq U.S. Benchmark Computer Services TR Index, as applicable, and assumes reinvestment of dividends, if any. 33 Table of Contents The stock price performance shown on the graph below is not necessarily indicative of future price performance.
Removed
Benchmark Computer Services TR Index replaces the Nasdaq Computer and Data Processing Index in this analysis and going forward, as the Nasdaq Computer and Data Processing Index data is no longer available. The Nasdaq Computer and Data Processing Index has been included with data through March 31, 2022.
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Information used in the graph was obtained from Zacks Investment Research, Inc.
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The comparison assumes $100 was invested on March 31, 2018 in our common stock or in the Nasdaq Composite Index, the Nasdaq U.S.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFurthermore, management believes that the presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures provides useful information to management and investors regarding present and future business trends relating to our financial condition and results of operations. 36 Table of Contents The following table reconciles revenue, gross profit, income from operations, net income and net income per share on a GAAP and non-GAAP basis for the fiscal years ended March 31, 2023, 2022 and 2021: Fiscal Year Ended March 31, (Dollars in Thousands, Except per Share Data) 2023 2022 2021 GAAP revenue $ 914,530 $ 855,575 $ 831,282 Service deferred revenue fair value adjustment — — 6 Non-GAAP revenue $ 914,530 $ 855,575 $ 831,288 GAAP gross profit $ 691,432 $ 641,389 $ 609,185 Service deferred revenue fair value adjustment — — 6 Share-based compensation expense 8,415 7,042 6,861 Amortization of acquired intangible assets 9,284 13,385 19,058 Acquisition related depreciation expense 22 24 23 Non-GAAP gross profit $ 709,153 $ 661,840 $ 635,133 GAAP income from operations $ 77,664 $ 48,634 $ 37,130 Service deferred revenue fair value adjustment — — 6 Share-based compensation expense 61,986 56,074 51,892 Amortization of acquired intangible assets 64,674 73,126 80,189 Business development and integration expense — (5) 2 Compensation for post-combination services — 2 251 Restructuring charges 1,782 — 62 Acquisition related depreciation expense 241 254 242 Transitional service agreement expense — 814 215 Legal judgments expense 476 1,100 2,804 Non-GAAP income from operations $ 206,823 $ 179,999 $ 172,793 GAAP net income $ 59,648 $ 35,874 $ 19,352 Service deferred revenue fair value adjustment — — 6 Share-based compensation expense 61,986 56,074 51,892 Amortization of acquired intangible assets 64,674 73,126 80,189 Business development and integration expense — (5) 2 Compensation for post-combination services — 2 251 Restructuring charges 1,782 — 62 Acquisition-related depreciation expense 241 254 242 Loss on extinguishment of debt — 596 — Change in fair value of contingent consideration — (837) — Change in fair value of derivative instrument 1,380 — — Legal judgments expense 476 1,100 2,804 Income tax adjustments (30,626) (27,796) (28,977) Non-GAAP net income $ 159,561 $ 138,388 $ 125,823 37 Table of Contents Fiscal Year Ended March 31, (Dollars in Thousands, Except per Share Data) 2023 2022 2021 GAAP diluted net income per share $ 0.82 $ 0.48 $ 0.26 Per share impact of non-GAAP adjustments identified above 1.36 1.36 1.44 Non-GAAP diluted net income per share $ 2.18 $ 1.84 $ 1.70 GAAP income from operations $ 77,664 $ 48,634 $ 37,130 Previous adjustments to determine non-GAAP income from operations 129,159 131,365 135,663 Non-GAAP income from operations 206,823 179,999 172,793 Depreciation excluding acquisition related 21,003 22,404 25,397 Non-GAAP EBITDA from operations $ 227,826 $ 202,403 $ 198,190 Critical Accounting Policies and Estimates We consider accounting policies and estimates related to revenue recognition, and valuation of goodwill, intangible assets and other acquisition accounting items to be critical in fully understanding and evaluating our financial results.
Biggest changeThe following table reconciles gross profit, income (loss) from operations, net income (loss) and net income (loss) per share on a GAAP and non-GAAP basis for the fiscal years ended March 31, 2024, 2023 and 2022, respectively (dollars in thousands, except for per share data): Fiscal Year Ended March 31, 2024 2023 2022 Revenue (GAAP and non-GAAP) $ 829,455 $ 914,530 $ 855,575 GAAP gross profit $ 642,043 $ 691,432 $ 641,389 Share-based compensation expense 10,229 8,415 7,042 Amortization of acquired intangible assets 6,549 9,284 13,385 Acquisition related depreciation expense 12 22 24 Non-GAAP gross profit $ 658,833 $ 709,153 $ 661,840 GAAP income (loss) from operations $ (149,826) $ 77,664 $ 48,634 Share-based compensation expense 70,799 61,986 56,074 Amortization of acquired intangible assets 56,886 64,674 73,126 Business development and integration expense — — (5) Compensation for post-combination services — — 2 Restructuring charges — 1,782 — Goodwill impairment 217,260 — — Acquisition related depreciation expense 119 241 254 Transitional service agreement expense — — 814 Gain on divestiture of a business (3,806) — — Legal (benefit) expense related to civil judgments (4,380) 476 1,100 Non-GAAP income from operations $ 187,052 $ 206,823 $ 179,999 GAAP net income (loss) $ (147,734) $ 59,648 $ 35,874 Share-based compensation expense 70,799 61,986 56,074 Amortization of acquired intangible assets 56,886 64,674 73,126 Business development and integration expense — — (5) Compensation for post-combination services — — 2 Restructuring charges — 1,782 — Goodwill impairment 217,260 — — Acquisition-related depreciation expense 119 241 254 Gain on divestiture of a business (3,806) — — Loss on extinguishment of debt — — 596 Change in fair value of contingent consideration — — (837) Legal (benefit) expense related to civil judgments (4,380) 476 1,100 Change in fair value of derivative instrument (206) 1,380 — Income tax adjustments (29,828) (30,626) (27,796) Non-GAAP net income $ 159,110 $ 159,561 $ 138,388 38 Table of Contents Fiscal Year Ended March 31, 2024 2023 2022 GAAP diluted net income (loss) per share $ (2.07) $ 0.82 $ 0.48 Per share impact of non-GAAP adjustments identified above 4.27 1.36 1.36 Non-GAAP diluted net income per share $ 2.20 $ 2.18 $ 1.84 GAAP income (loss) from operations $ (149,826) $ 77,664 $ 48,634 Previous adjustments to determine non-GAAP income from operations 336,878 129,159 131,365 Non-GAAP income from operations 187,052 206,823 179,999 Depreciation excluding acquisition related 17,981 21,003 22,404 Non-GAAP EBITDA from operations $ 205,033 $ 227,826 $ 202,403 Critical Accounting Policies and Estimates We consider accounting policies and estimates related to revenue recognition, and valuation of goodwill, intangible assets and other acquisition and divestiture accounting items to be critical in fully understanding and evaluating our financial results.
Service providers and enterprises, including local, state and federal government agencies, rely on our solutions to achieve the visibility and protection necessary to optimize network performance, ensure the delivery of high-quality, mission-critical applications and services, gain timely insight into the end user experience and protect their networks from attack.
Service providers and enterprises, including local, state and federal government agencies, rely on our solutions to achieve the visibility and protection necessary to optimize network performance, ensure the delivery of high-quality, mission-critical applications and services, gain timely insight into the end user experience and to protect their networks from attack.
Factors that affect our ability to maximize our operating results include, but are not limited to, our ability to introduce and enhance existing products, the marketplace acceptance of those new or enhanced products, continued expansion into international markets, expansion into new or adjacent markets, development of strategic partnerships, competition, successful acquisition integration efforts, and our ability to control costs and make improvements in a highly competitive industry.
Factors that affect our ability to maximize our operating results include, but are not limited to, our ability to introduce and enhance existing products, the marketplace acceptance of those new or enhanced products, continued expansion into international markets, expansion into new or adjacent markets, development of strategic partnerships, competition, successful acquisition and integration efforts, and our ability to control costs and make improvements in a highly competitive industry.
The loans and other obligations under the credit facility are (a) guaranteed by each of our wholly-owned material domestic restricted subsidiaries, subject to certain exceptions, and (b) are secured by substantially all of the assets of us and the subsidiary guarantors, including a pledge of all the capital stock of material subsidiaries held directly by the Borrower and the subsidiary guarantors (which pledge, in the case of any foreign subsidiary, is limited to 65% of the voting stock), subject to certain customary exceptions and limitations.
The loans and other obligations under the credit facility are (a) guaranteed by each of our wholly-owned material domestic restricted subsidiaries, subject to certain exceptions, and (b) are secured by substantially all of the assets of us and the subsidiary guarantors, including a pledge of all the capital stock of material subsidiaries held directly by us and the subsidiary guarantors (which pledge, in the case of any foreign subsidiary, is limited to 65% of the voting stock), subject to certain customary exceptions and limitations.
With limited exceptions, our return policy does not allow product returns for a refund. Returns have been insignificant to date. In addition, we have a history of successfully collecting receivables from our resellers and distributors. Valuation of Goodwill, Intangible Assets and Other Acquisition Accounting Items We amortize acquired definite-lived intangible assets over their estimated useful lives.
With limited exceptions, our return policy does not allow product returns for a refund. Returns have been insignificant to date. In addition, we have a history of successfully collecting receivables from our resellers and distributors. Valuation of Goodwill, Intangible Assets and Other Acquisition and Divestiture Accounting Items We amortize acquired definite-lived intangible assets over their estimated useful lives.
Use of Non-GAAP Financial Measures We supplement the United States generally accepted accounting principles (GAAP) financial measures we report in quarterly and annual earnings announcements, investor presentations and other investor communications by reporting the following non-GAAP measures: non-GAAP revenue, non-GAAP gross profit, non-GAAP income from operations, non-GAAP net income, non-GAAP net income per share (diluted) and non-GAAP earnings before interest and other expense, income taxes, depreciation, and amortization (EBITDA) from operations.
Use of Non-GAAP Financial Measures We supplement the United States generally accepted accounting principles (GAAP) financial measures we report in quarterly and annual earnings announcements, investor presentations and other investor communications by reporting the following non-GAAP measures: non-GAAP gross profit, non-GAAP income from operations, non-GAAP net income, non-GAAP net income per share (diluted) and non-GAAP earnings before interest and other expense, income taxes, depreciation, and amortization (EBITDA) from operations.
Some of the more significant technology trends and catalysts for our business include the evolution of customers' digital transformation initiatives such as the migration to cloud environments, the rapidly evolving cybersecurity threat landscape, business intelligence and analytics advancements, and the 5G evolution in both the service provider and enterprise customer verticals.
Some of the more significant technology trends and catalysts for our business include the evolution of customers' digital transformation initiatives such as the migration to cloud environments, the rapidly evolving cybersecurity threat landscape, artificial intelligence and business analytics advancements, and the 5G technology evolution in both the service provider and enterprise customer verticals.
We expect net cash provided by operations combined with cash, cash equivalents and marketable securities and borrowing availability under our revolving credit facility to provide sufficient liquidity to fund current obligations, capital spending, debt service requirements and working capital requirements over at least the next twelve months.
We expect net cash provided by operations combined with cash, cash equivalents, marketable securities and investments and borrowing availability under our revolving credit facility to provide sufficient liquidity to fund current obligations, capital spending, debt service requirements and working capital requirements over at least the next twelve months.
Our consolidated net leverage ratio is the ratio of our Consolidated Total Debt minus the lesser of unrestricted cash and 125% of adjusted consolidated EBITDA compared to our adjusted consolidated EBITDA. The Company’s maximum consolidated net leverage ratio is 4.00 to 1.00. These covenants and limitations are more fully described in the Second Amended and Restated Credit Agreement.
Our consolidated net leverage ratio is the ratio of our Consolidated Total Debt minus the lesser of unrestricted cash and 125% of adjusted consolidated EBITDA compared to our adjusted consolidated EBITDA. Our maximum consolidated net leverage ratio is 4.00 to 1.00. These covenants and limitations are more fully described in the Second Amended and Restated Credit Agreement.
In addition, on September 8 and 9, 2021, in proceedings initiated by third parties that did not involve NetScout, the Patent Trial and Appeal Board (PTAB) invalidated all the patent claims that were also asserted against NetScout in this case.
On September 8 and 9, 2021, in proceedings initiated by third parties that did not involve NetScout, the Patent Trial and Appeal Board (PTAB) invalidated all the patent claims that were also asserted against NetScout in this case.
In March 2021, NetScout filed a petition for a writ of certiorari to the United States Supreme Court, which was subsequently denied, challenging, among other issues, the basis for enhanced damages and the patentability of the claimed technology.
In March 2021, NetScout filed a petition for a writ of certiorari to the United States Supreme Court, which was denied, challenging, among other issues, the basis for enhanced damages and the patentability of the claimed technology.
Sources of Cash and Cash Requirements Credit Facility On July 27, 2021, we amended and extended our existing credit facility (Second Amended and Restated Credit Agreement) with a syndicate of lenders by and among: the Company; JPMorgan Chase Bank, N.A.
Sources of Cash and Cash Requirements Credit Facility On July 27, 2021, we amended and extended our existing credit facility (as amended, the Second Amended and Restated Credit Agreement) with a syndicate of lenders by and among: the Company; JPMorgan Chase Bank, N.A.
For the period from the delivery of our financial statements for the quarter ended December 31, 2022, until we have delivered financial statements for the quarter ended March 31, 2023, the applicable margin will be 1.00% per annum for Term Benchmark Revolving loans and 0% per annum for Alternate Base Rate loans, and thereafter the applicable margin will vary depending on our consolidated gross leverage ratio, ranging from 1.00% per annum for Alternate Base Rate loans and 2.00% per annum for Term Benchmark Revolving loans if our consolidated gross leverage ratio is greater than 3.50 to 1.00, down to 0% per annum for Alternate Base Rate loans and 1.00% per annum for Term Benchmark Revolving loans if our consolidated gross leverage ratio is equal to or less than 1.50 to 1.00.
For the period from the delivery of our financial statements for the quarter ended December 31, 2023, until we have delivered financial statements for the quarter ended March 31, 2024, the applicable margin will be 1.00% per annum for Term Benchmark Revolving loans and 0% per annum for Alternate Base Rate loans, and thereafter the applicable margin will vary depending on our consolidated gross leverage ratio, ranging from 1.00% per annum for Alternate Base Rate loans and 2.00% per annum for Term Benchmark Revolving loans if our consolidated gross leverage ratio is greater than 3.50 to 1.00, down to 0% per annum for Alternate Base Rate loans and 1.00% per annum for Term Benchmark Revolving loans if our consolidated gross leverage ratio is equal to or less than 1.50 to 1.00.
Macroeconomic conditions, including rising interest rates and volatility in the capital markets, may make it difficult for us to secure additional financing on favorable terms or at all. Any sale of additional equity or debt securities could r esult in additional dilution to our stockholders.
Macroeconomic conditions, including high interest rates and volatility in the capital markets, may make it difficult for us to secure additional financing on favorable terms or at all. Any sale of additional equity or debt securities could r esult in additional dilution to our stockholders.
Letter of credit 47 Table of Contents participation fees are payable to each lender providing the letter of credit sub-facility on the amount of such lender's letter of credit exposure, during the period from the closing date of the Second Amended and Restated Credit Agreement to, but excluding, the date which is the later of (i) the date on which such lender's commitment terminates or (ii) the date on which such lender ceases to have any letter of credit exposure, at a rate per annum equal to the applicable margin for term SOFR loans assuming such loans were outstanding during the period.
Letter of credit participation fees are payable to each lender providing the letter of credit sub-facility on the amount of such lender's letter of credit exposure, during the period from the closing date of the Second Amended and Restated Credit Agreement to, but excluding, the date which is the later of (i) the date on which such lender's commitment terminates or (ii) the date on which such lender ceases to have any letter of credit exposure, at a rate per annum equal to the applicable margin for term SOFR loans assuming such loans were outstanding during the period.
For the period from the delivery of the Company's financial statements for the quarter ended December 31, 2022, until we have delivered financial statements for the quarter ended March 31, 2023, the commitment fee will be 0.15% per annum, and thereafter the commitment fee will vary depending on our consolidated gross leverage ratio, ranging from 0.30% per annum if our consolidated gross leverage ratio is greater than 2.75 to 1.00, down to 0.15% per annum if our consolidated gross leverage ratio is equal to or less than 1.50 to 1.00.
For the period from the delivery of our financial statements for the quarter ended December 31, 2023, until we have delivered financial statements for the quarter ended March 31, 2024, the commitment fee will be 0.15% per annum, and thereafter the commitment fee will vary depending on our consolidated gross leverage ratio, ranging from 0.30% per annum if our consolidated gross leverage ratio is greater than 2.75 to 1.00, down to 0.15% per annum if our consolidated gross leverage ratio is equal to or less than 1.50 to 1.00.
Recent Accounting Standards For information with respect to recent accounting pronouncements on our consolidated financial statements, See Note 2 contained in the "Notes to Consolidated Financial Statements" included in Part IV of this Annual Report on Form 10-K. 49 Table of Contents
Recent Accounting Standards For information with respect to recent accounting pronouncements on our consolidated financial statements, See Note 2 contained in the "Notes to Consolidated Financial Statements" included in Part IV of this Annual Report on Form 10-K. 51 Table of Contents
However, when contracts are closely interrelated and dependent on each other, it may be necessary to account for two or more contracts as one to reflect the substance of the group of contracts. 38 Table of Contents Bundled arrangements are concurrent customer purchases of a combination of our product and service offerings that may be delivered at various points in time.
However, when contracts are closely interrelated and dependent on each other, it may be necessary to account for two or more contracts as one to reflect the substance of the group of contracts. Bundled arrangements are concurrent customer purchases of a combination of our product and service offerings that may be delivered at various points in time.
At March 31, 2023, the total accrual of our retirement obligation for our chairman and CEO was $1.1 million. The payment stream for this retirement obligation is based upon the retirement date which is currently not determinable.
At March 31, 2024, the total accrual of our retirement obligation for our chairman and CEO was $1.1 million. The payment stream for this retirement obligation is based upon the retirement date which is currently not determinable.
Management believes these non-GAAP financial measures will enhance the reader's overall understanding of our current financial performance and our prospects for the future by providing a higher degree of transparency for certain financial measures and providing a level of disclosure that helps investors understand how we plan and measure our business.
Management believes these non-GAAP financial measures will enhance the reader's overall understanding of our current financial performance and our prospects for the future by providing a higher degree of transparency for certain financial 37 Table of Contents measures and providing a level of disclosure that helps investors understand how we plan and measure our business.
These withholding transactions do not fall under the repurchase program described above, and therefore do not reduce the amount that is available for repurchase under that program. During the fiscal year ended March 31, 2023, we repaid $250.0 million of borrowings under the Second Amended and Restated Credit Agreement.
These withholding transactions do not fall under the repurchase program described above, and therefore do not reduce the amount that is available for repurchase under that program. 48 Table of Contents During the fiscal year ended March 31, 2023, we repaid $250.0 million of borrowings under the Second Amended and Restated Credit Agreement.
Overview We are an industry leader with over three decades of experience in providing service assurance and cybersecurity solutions that are based on our pioneering deep packet inspection technology at scale, which is used by many fortune 500 companies to protect their digital business services against disruption.
Overview We are an industry leader with nearly four decades of experience in providing service assurance and cybersecurity solutions that are based on our pioneering deep packet inspection technology at scale, which is used by many Fortune 500 companies to protect their digital business services against disruption.
Additionally, we will pay a fronting fee to each issuing bank in amounts to be agreed to between us and the applicable issuing bank. Interest on Alternate Base Rate loans is payable at the end of each calendar quarter.
Additionally, we will pay a fronting fee to each issuing bank in amounts to be agreed to between us and the applicable issuing bank. 49 Table of Contents Interest on Alternate Base Rate loans is payable at the end of each calendar quarter.
For a discussion of (i) our consolidated statement of operations data for the fiscal year ended March 31, 2021 including results as a percentage of revenue for that period, as well as (ii) our liquidity and capital resources for the fiscal year ended March 31, 2021, see "Comparison of Years Ended March 31, 2022 and 2021" and "Liquidity and Capital Resources" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended March 31, 2022, filed with the SEC on May 19, 2022 (our 2022 Annual Report).
For a discussion of (i) our consolidated statement of operations data for the fiscal year ended March 31, 2022 including results as a percentage of revenue for that period, as well as (ii) our liquidity and capital resources for the fiscal year ended March 31, 2022, see "Comparison of Years Ended March 31, 2023 and 2022" and "Liquidity and Capital Resources" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended March 31, 2023, filed with t he SEC on May 16, 2023 (our 2023 Annual Report).
Fiscal Year Ended March 31, (Dollars in Thousands) Change 2023 2022 % of Revenue % of Revenue $ % Income tax expense $ 8,767 1 % $ 7,018 1 % $ 1,749 25 % Commitment and Contingencies We account for claims and contingencies in accordance with authoritative guidance that requires us to record an estimated loss from a claim or loss contingency when information available prior to issuance of our consolidated financial statements indicates that it is probable that a liability has been incurred at the date of the consolidated financial statements and the amount of the loss can be reasonably estimated.
Fiscal Year Ended March 31, (Dollars in Thousands) Change 2024 2023 % of Revenue % of Revenue $ % Income tax expense $ 3,224 — % $ 8,767 1 % $ (5,543) (63) % Commitment and Contingencies We account for claims and contingencies in accordance with authoritative guidance that requires us to record an estimated loss from a claim or loss contingency when information available prior to issuance of our consolidated financial statements indicates that it is probable that a liability has been incurred at the date of the consolidated financial statements and the amount of the loss can be reasonably estimated.
As of March 31, 2023, we were in compliance with all covenants, including the specified total consolidated net leverage ratio range of 4.00 to 1.00.
At March 31, 2024, we were in compliance with all covenants, including the specified total consolidated net leverage ratio range of 4.00 to 1.00.
The unamortized capitalized debt issuance costs balance of $1.1 million was included as prepaid expenses and other current assets and a balance of $2.6 million was included as other assets in our consolidated balance sheet at March 31, 2023.
The unamortized capitalized debt issuance costs balance of $1.1 million was included as prepaid expenses and other current assets and a balance of $1.5 million was included as other assets in our consolidated balance sheet at March 31, 2024.
In connection with the delivery of common shares upon vesting of restricted stock units, we have withheld 562,360 shares for $19.4 million, and 546,053 shares for $15.7 million related to minimum statutory tax withholding requirements on these restricted stock units during the fiscal years ended March 31, 2023 and 2022, respectively.
In connection with the delivery of common shares upon vesting of restricted stock units, we have withheld 653,645 shares for $19.4 million, and 562,360 shares for $19.4 million related to minimum statutory tax withholding requirements on these restricted stock units during the fiscal years ended March 31, 2024 and 2023, respectively.
We did not complete any acquisitions during the three years ended March 31, 2023, 2022, and 2021. 39 Table of Contents Comparison of Years Ended March 31, 2023 and 2022 The sections that follow discuss our consolidated statement of operations data for the fiscal years ended March 31, 2023 and March 31, 2022 including results as a percentage of revenue for those periods.
We did not complete any acquisitions and completed one divestiture during the three years ended March 31, 2024. 40 Table of Contents Comparison of Years Ended March 31, 2024 and 2023 The sections that follow discuss our consolidated statement of operations data for the fiscal years ended March 31, 2024 and March 31, 2023 including results as a percentage of revenue for those periods.
During the fiscal year ended March 31, 2023, one direct customer, Verizon, accounted for more than 10% of our total revenue, while no indirect channel partners accounted for more than 10% of our total revenue. During the fiscal year ended March 31, 2022, no direct customer or indirect channel partner accounted for more than 10% of our total revenue.
D uring the fiscal year ended March 31, 2023, one direct customer, Verizon, accounted for more than 10% of our total revenue, while no indirect channel partners accounted for more than 10% of our total revenue.
We had unamortized capitalized debt issuance costs, net of $3.7 million at March 31, 2023, which are being amortized over the life of the revolving credit facility.
We had unamortized capitalized debt issuance costs, net of $2.6 million at March 31, 2024, which are being amortized over the life of the revolving credit facility.
Global and Macroeconomic Conditions We continue to closely monitor current global and macroeconomic conditions, including the impact of the war in Ukraine, global geopolitical tension, stock market volatility, exchange rate fluctuations, rising inflation and interest rates, and the risk of a recession, including the manner and extent to which they have impacted and could continue to impact our customers, employees, supply chain, and distribution network.
Global and Macroeconomic Conditions We continue to closely monitor current global and macroeconomic conditions, including the impacts of the ongoing war in Ukraine and hostilities in the Middle East, global geopolitical tension, stock market volatility, industry-specific capital spending trends, exchange rate fluctuations, inflation, interest rates, and the risk of a recession, including the manner and extent to which they have impacted and could continue to impact our business, customers, employees, supply chain, and distribution network.
Contractual Obligations Our contractual obligations at March 31, 2023 consisted mainly of (i) principal and interest related to our long-term debt obligations (see Long-Term Debt, Note 11 to the Consolidated Financial Statements), (ii) operating lease obligations (see Leases, Note 17 to the Consolidated Financial Statements), (iii) unconditional purchase obligations, primarily under purchase orders to purchase inventory as well as commitments for products and services used in the normal course of business (see Commitments and Contingencies, Note 18 to the Consolidated Financial Statements), and (iv) pension benefit plan (see Pension Benefit Plans, Note 15 to the Consolidated Financial Statements).
Contractual Obligations Our contractual obligations at March 31, 2024 consisted mainly of (i) principal and interest related to our long-term debt obligations (see Long-Term Debt, Note 12 to the Consolidated Financial Statements), (ii) operating lease obligations (see Leases, Note 18 t o the Consolidated Financial Statements), (iii) unconditional purchase obligations, primarily under purchase orders to purchase inventory as well as commitments for products and services used in the normal course of business (see Commitments and Contingen cies, Note 19 to the Consolidated Financial Statements), and (iv) pension benefit plan (see Pension Benefit Plans, Note 16 to the C onsolidated Financial Statements).
Non-GAAP income from operations removes the aforementioned adjustments and also removes business development and integration expense, compensation for post-combination services, legal expenses related to a civil judgment, restructuring charges, and transitional service agreement expenses.
Non-GAAP income from operations removes the aforementioned adjustments and also removes business development and integration expense, compensation for post-combination services, legal (benefit) expense related to civil judgments, goodwill impairment charges, gain on the divestiture of a business, restructuring charges, and transitional service agreement expenses.
Though we continue to monitor these impacts, we believe our current cash reserves and access to capital through our revolving credit facility leave us well-positioned to manage our business in today's environment.
Though we continue to monitor the impacts of evolving global and macroeconomic conditions on our business, we believe our current cash reserves and access to capital through our revolving credit facility leave us well-positioned to manage our business in today's environment.
The product gross profit percentage increased by one percentage point to 79% during the fiscal year ended March 31, 2023 as compared to the same period in the prior year.
The gross profit percentage increased by one percentage point to 77% during the fiscal year ended March 31, 2024 compared to the same period in the prior year.
At March 31, 2023, we had cash, cash equivalents, and marketable securities (current and non-current) of $427.9 million. This represents a decrease of $275.3 million compared to the fiscal year ended March 31, 2022.
At March 31, 2024, we had cash, cash equivalents, and marketable securities and investments (current and non-current) of $424.1 million. This represents a decrease of $3.8 million compared to the fiscal year ended March 31, 2023.
Net cash inflows relating to the purchase and sales of marketable securities increased $83.7 million relating to the amount of investments held at each respective balance sheet date, from an outflow of $57.8 million during the fiscal year ended March 31, 2022 to an inflow of $25.9 million during the fiscal year ended March 31, 2023.
Net cash inflows relating to the purchase and sales of marketable securities and investments decreased $14.0 million relating to the amount of investments held at each respective balance sheet date, from an inflow of $25.9 million during the fiscal year ended March 31, 2023 to an inflow of $12.0 million during the fiscal year ended March 31, 2024.
We consult with legal counsel on those issues related to litigation and seek input from other experts and advisors with respect to matters in the ordinary course of business. 43 Table of Contents Legal - From time to time, we are subject to legal proceedings and claims in the ordinary course of business.
Accounting for claims and contingencies requires us to use our judgment. We consult with legal counsel on those issues related to litigation and seek input from other experts and advisors with respect to matters in the ordinary course of business. Legal - From time to time, we are subject to legal proceedings and claims in the ordinary course of business.
We also consider our overall pricing objectives and practices across different sales channels and geographies, and market conditions. Generally, we have established SSP for a majority of our service performance obligations based on historical standalone sales. In certain instances, we have established SSP for services based upon an estimate of profitability and the underlying cost to fulfill those services.
Generally, we have established SSP for a majority of our service performance obligations based on historical standalone sales. In certain instances, we have established SSP for services based upon an estimate of profitability and the underlying cost to fulfill those services.
Amortization of acquired intangible assets consists primarily of amortization of customer relationships, and definite-lived trademark and tradenames related to our acquisition of Danaher Corporation's communication business (Comms Transaction) and the acquisitions of Simena, LLC, Network General Corporation, Avvasi Incorporated and Efflux Systems, Inc.
Amortization of acquired intangible assets consists primarily of amortization of customer relationships, definite-lived trademark and trade names, and leasehold interests related to our acquisition of 43 Table of Contents Danaher Corporation's communication business (Comms Transaction), Network General Corporation, Avvasi Incorporated and Efflux Systems, Inc.
These increases were partially offset by a $0.8 million decrease in depreciation expense, and a $0.6 million decrease in so ftware license expense. Sales and marketing. Sales and marketing expenses consist primarily of personnel expenses and commissions, overhead and other expenses associated with selling activities and marketing programs such as trade shows, seminars, advertising, and new product launch activities.
These decreases were partially offset by a $0.7 million increase in rent and other facilities related expense. Sales and marketing. Sales and marketing expenses consist primarily of personnel expenses and commissions, overhead and other expenses associated with selling activities and marketing programs such as trade shows, seminars, advertising, and new product launch activities.
We expect net cash provided by operating activities combined with cash, cash equivalents, and marketable securities and borrowing availability under our revolving credit facility will provide sufficient liquidity to fund current obligations, capital spending, debt service requirements and working capital requirement over at least the next twelve months.
We expect net cash provided by operating activities combined with cash, cash equivalents, marketable securities and investments and borrowing availability under our revolving credit facility will provide sufficient liquidity to fund current obligations, capital spending, debt service requirements and working capital requirement over at least the next twelve months. 50 Table of Contents We believe we will meet longer-term expected future cash requirements and obligations through a combination of cash flows from operating activities, available cash balances, and our revolving credit facility.
Cash and cash equivalents were impacted by the following: Fiscal Year Ended March 31, (Dollars in Thousands) 2023 2022 Net cash provided by operating activities $ 156,650 $ 296,013 Net cash provided by (used in) investing activities $ 15,304 $ (68,353) Net cash used in financing activities $ (419,430) $ (54,165) Net cash from operating activities Fiscal year 2023 compared to fiscal year 2022 Net cash provided by operating activities was $156.7 million during the fiscal year ended March 31, 2023, compared to $296.0 million of net cash provided by operating activities during the fiscal year ended March 31, 2022.
Cash and cash equivalents were impacted by the following: Fiscal Year Ended March 31, (Dollars in Thousands) 2024 2023 Net cash provided by operating activities $ 58,811 $ 156,650 Net cash provided by investing activities $ 13,358 $ 15,304 Net cash used in financing activities $ (69,352) $ (419,430) Net cash from operating activities Fiscal year 2024 compared to fiscal year 2023 Net cash provided by operating activities was $58.8 million during the fiscal year ended March 31, 2024, compared to $156.7 million of net cash provided by operating activities during the fiscal year ended March 31, 2023.
During the fiscal year ended March 31, 2023, we repurchased 4,549,329 shares of our common stock under an ASR program for $150.0 million. During the fiscal year ended March 31, 2022, we repurchased 1,330,678 shares of our common stock for $35.6 million.
During the fiscal year ended March 31, 2023, we repurchased 4,549,329 shares of our common stock under an ASR program for $150.0 million. Purchases during the fiscal year ended March 31, 2023 were under the 2017 Share Repurchase Program.
We may also agree from time to time to provide other forms of indemnification to partners or direct customers, such as indemnification that would obligate us to defend and pay any damages awarded to a third party against a partner or direct customer based on a lawsuit alleging that such third party has suffered personal injury or tangible property damage legally determined to have been caused by negligently designed or manufactured products. 44 Table of Contents We have agreed to indemnify our directors and officers and our subsidiaries' directors and officers if they are made a party or are threatened to be made a party to any proceeding (other than an action by or in the right of NetScout) by reason of the fact that the indemnified are agents of NetScout.
We may also agree from time to time to provide other forms of indemnification to partners or direct customers, such as indemnification that would obligate us to defend and pay any damages awarded to a third party against a partner or direct customer based on a lawsuit alleging that such third party has suffered personal injury or tangible property damage legally determined to have been caused by negligently designed or manufactured products.
Goodwill and other indefinite-lived intangible assets are not amortized but subject to annual impairment tests; more frequently if events or circumstances occur that would indicate a potential decline in their fair value. We perform the assessment annually during the fourth quarter and on an interim basis if potential impairment indicators arise.
Goodwill is not amortized but subject to annual impairment tests; more frequently if events or circumstances occur (a "triggering event") that would indicate the fair value of our reporting unit is below its carrying value. We perform the assessment annually during the fourth quarter and on an interim basis if potential impairment indicators arise.
The 7%, or $4.4 million, decrease in amortization of acquired intangible assets for the fiscal year ended March 31, 2023 compared to the fiscal year ended March 31, 2022 was p rimarily due to a decrease in the amortization of intangible assets related to the Comms Transaction. Restructuring charges.
The 9%, or $5.1 million, decrease in amortization of acquired intangible assets for the fiscal year ended March 31, 2024 compared to the fiscal year ended March 31, 2023 was p rimarily due to a decrease in the amortization of intangible assets acquired as part of the Comms Transaction and the Network General Corporation transaction. Restructuring charges.
Net cash from financing activities Fiscal Year Ended March 31, (Dollars in Thousands) 2023 2022 Cash used in financing activities included the following: Issuance of common stock under stock plans $ 2 $ 2 Treasury stock repurchases (150,039) (35,653) Tax withholding on restricted stock units (19,393) (15,691) Payment of debt issuance costs — (3,660) Repayment of long-term debt (250,000) (350,000) Proceeds from issuance of long-term debt — 350,000 Collection of contingent consideration — 837 $ (419,430) $ (54,165) Net cash used in financing activities increased $365.3 million to $419.4 million during the fiscal year ended March 31, 2023, compared to $54.2 million of net cash used in financing activities during the fiscal year ended March 31, 2022.
Net cash from financing activities Fiscal Year Ended March 31, (Dollars in Thousands) 2024 2023 Cash used in financing activities included the following: Issuance of common stock under stock plans $ 3 $ 2 Treasury stock repurchases, including accelerated share repurchases (50,000) (150,039) Tax withholding on restricted stock units (19,355) (19,393) Repayment of long-term debt — (250,000) $ (69,352) $ (419,430) Net cash used in financing activities decreased $350.0 million to $69.4 million during the fiscal year ended March 31, 2024, compared to $419.4 million of net cash used in financing activities during the fiscal year ended March 31, 2023.
In September 2018, the Court entered judgment and "enhanced" the jury verdict in the amount of $2.8 million as a result of a jury finding. The judgment also awarded pre- and post-judgment interest, and a running royalty on the G10 and GeoBlade products until the expiration of the patents at issue, the last date being June 2022.
The judgment also awarded pre- and post-judgment interest, and a running royalty on the G10 and GeoBlade products until the expiration of the patents at issue, the last date being June 2022.
Accounts receivable days sales outstanding was 58 days at March 31, 2023 compared to 64 days at March 31, 2022. 45 Table of Contents Net cash from investing activities Fiscal Year Ended March 31, (Dollars in Thousands) 2023 2022 Cash provided by (used in) investing activities included the following: Purchase of marketable securities $ (114,513) $ (78,367) Proceeds from maturity of marketable securities 140,462 20,569 Purchase of fixed assets (10,487) (10,350) Purchase of intangible assets (161) (50) Decrease (increase) in deposits 3 (155) $ 15,304 $ (68,353) Net cash provided by investing activities increased by $83.7 million to $15.3 million during the fiscal year ended March 31, 2023, compared to $68.4 million of net cash used in investing activities during the fiscal year ended March 31, 2022.
Accounts receivable days sales outstanding was 81 days at March 31, 2024 compared to 58 days at March 31, 2023. 47 Table of Contents Net cash from investing activities Fiscal Year Ended March 31, (Dollars in Thousands) 2024 2023 Cash provided by investing activities included the following: Purchase of marketable securities and investments $ (52,774) $ (114,513) Proceeds from sales and maturity of marketable securities 64,728 140,462 Purchase of fixed assets (6,337) (10,487) Purchase of intangible assets — (161) Proceeds from divestiture of a business 7,766 — (Increase) decrease in deposits (25) 3 $ 13,358 $ 15,304 Net cash provided by investing activities decreased by $1.9 million to $13.4 million during the fiscal year ended March 31, 2024, compared to $15.3 million of net cash provided by investing activities during the fiscal year ended March 31, 2023.
The 3%, or $5.0 million, increase in res earch and development expenses for the fiscal year ended March 31, 2023 compared to the same period last year was primarily due to a $3.8 million increase in employee-related costs due to an increase in variable incentive compensation, a $1.2 million increase in travel expenses primarily attributable to the lifting of COVID-19 related restrictions, a $0.6 million increase in overhead costs, and a $0.5 million increase in expenses related to other events.
The 8%, or $15.0 million, decrease in res earch and development expenses for the fiscal year ended March 31, 2024 compared to the same period last year was primarily due to an $11.5 million decrease in employee-related costs due to a decrease in variable incentive compensation, a $1.6 million decrease in contractor fees, and a $1.6 million decrease in depreciation expense.
The commitments under the Second Amended and Restated Credit Agreement will expire on July 27, 2026, and any outstanding loans will be due on that date.
The commitments under the Second Amended and Restated Credit Agreement will expire on July 27, 2026, and any outstanding loans will be due on that date. During the fiscal year ended March 31, 2023, we repaid $250.0 million of borrowings under the Second Amended and Restated Credit Agreement.
We allocate the transaction price among the performance obligations in an amount that depicts the relative standalone selling prices (SSP) of each obligation. Judgment is required to determine the SSP for each distinct performance obligation. We use a range of amounts to estimate SSP for each of the products and services sold, based primarily on the performance obligation's historical pricing.
We allocate the transaction price among the performance obligations in an amount that 39 Table of Contents depicts the relative standalone selling prices (SSP) of each obligation. Judgment is required to determine the SSP for each distinct performance obligation.
Non-GAAP revenue eliminates the GAAP effects of acquisitions by adding back revenue related to deferred revenue revaluation. Non-GAAP gross profit removes the aforementioned revenue adjustments and also removes expenses related to the amortization of acquired intangible assets, share-based compensation, and acquisition-related depreciation.
Non-GAAP gross profit removes expenses related to the amortization of acquired intangible assets, share-based compensation expense, and acquisition-related depreciation expense.
The 5%, or $12.7 million, increase in total sales and marketing expenses for the fiscal year ended March 31, 2023 compared to the same period last year was prima rily due to a $12.1 million increase in expenses related to trade shows, user conferences and other events, a $6.7 million increase in travel expense primarily attributable to the lifting of COVID-19 related restrictions, a $3.0 million increase in other marketing related expenses, and a $1.3 million increas e in overhead costs.
The 2%, or $5.9 million, decrease in total sales and marketing expenses for the fiscal year ended March 31, 2024 compared to the same period last year was prima rily due to a $5.5 million decrease in expenses related to trade shows, user conferences and other events, a $3.4 million decrease in advertising expense, a $1.6 million decrease in commissions expense, a $0.8 million decrease in recruitment expense, and a $0.5 million decrease in other marketing related expenses.
The 4%, or $4.8 million, increase in cost of service revenue for the fiscal year ended March 31, 2023 compared to the same period last year was primarily due to a $3.6 million increase in employee-related expenses largely due to costs associated with the timing of certain projects as well as an increase in variable incentive compensation, a $0.7 million increase in travel expense primarily attributable to the lifting of COVID-19 restrictions, and a $0.6 million incre ase in overhead costs.
The 4%, or $4.9 million, decrease in cost of service revenue for the fiscal year ended March 31, 2024 compared to the same period last year was primarily due to a $5.4 million decrease in employee-related expenses largely due to a decrease in variable incentive compensation partially offset by an increase in employee-related costs associated with the timing of certain projects.
In October 2017, the jury rendered a verdict finding in favor of the Plaintiff and that Plaintiff was entitled to $3.5 million for pre-suit damages and $2.3 million for post-suit damages. The jury indicated that the awarded damages amounts were intended to reflect a running royalty.
In October 2017, a jury rendered a verdict finding in favor of the Plaintiff and that Plaintiff was entitled to $3.5 million for pre-suit damages and $2.3 million for post-suit damages. In September 2018, the Court entered judgment and "enhanced" the jury verdict in the amount of $2.8 million as a result of a jury finding.
Our investments in property and equipment consist primarily of computer equipment, demonstration units, office equipment and facility improvements. We plan to continue to invest in capital expenditures to support our infrastructure in our fiscal year 2024.
There was a $7.8 million increase in proceeds from the divestiture of the Test Optimization business during the fiscal year ended March 31, 2024. Our investments in property and equipment consist primarily of computer equipment, demonstration units, office equipment and facility improvements. We plan to continue to invest in capital expenditures to support our infrastructure in our fiscal year 2025.
Net income for the fiscal year ended March 31, 2023 was $59.6 million, as compared with income for the fiscal year ended March 31, 2022 of $35.9 million, an increase of $23.7 million.
Net loss for the fiscal year ended March 31, 2024 was $147.7 million, as compared with net income for the fiscal year ended March 31, 2023 of $59.6 million, a decrease in net income (loss) of $207.3 million.
On February 22, 2023, we entered into a First Amendment Agreement (First Amendment) of our Second Amended and Restated Credit Agreement with our syndicate of lenders.
At March 31, 2024, $100 million was outstanding under the Second Amended and Restated Credit Agreement. On May 13, 2024, we repaid $25.0 million of borrowings under the Second Amended and Restated Credit Agreement. On February 22, 2023, we entered into a First Amendment Agreement (First Amendment) of our Second Amended and Restated Credit Agreement with a syndicate of lenders.
The 5%, or $4.1 million, increase in cost of product revenue for the fiscal year ended March 31, 2023 compared to the same period last year was primarily due to a $16.4 million increase in costs related to the delivery of radio frequency propagation modeling projects, and a $0.8 million increase in overhead costs.
The 32%, or $30.8 million, decrease in cost of product revenue for the fiscal year ended March 31, 2024 compared to the same period last year was primarily due to a $23.7 million decrease in costs related to the delivery of radio frequency propagation modeling projects, a $2.8. million decrease in the amortization of intangible assets, a $1.6 million decrease in employee-related costs associated with the timing of certain projects, a $1.3 million decrease in direct material costs, and a $0.8 million decrease in obsolescence charges.
The 4%, or $18.3 million, increase in service revenue compared with the same period last year was primarily due to an increase in revenue from maintenance contracts.
This decrease in revenue was partially offset by an increase in revenue from cybersecurity offerings from both service provider and enterprise customers. Service. The 1%, or $5.3 million, increase in service revenue compared with the same period last year was primarily due to an increase in revenue from maintenance contracts and professional service contracts.
Results of Operations Revenue Product revenue consists of sales of our hardware products and licensing of our software products. Service revenue consists of customer support agreements, consulting, training and stand-ready software as a service offerings.
Results of Operations Revenue Product revenue consists of sales of our hardware products and licensing of our software products. Service revenue consists of customer support agreements, consulting, training and stand-ready software as a service offerings. During the fiscal year ended March 31, 2024, no direct customer or indirect channel partner accounted for more than 10% of our total revenue.
In the opinion of management, the amount of ultimate expense with respect to any current legal proceedings and claims, if determined adversely, will not have a material adverse effect on our financial condition, results of operations or cash flows.
In the opinion of management, the amount of ultimate expense with respect to any current legal proceedings and claims, if determined adversely, will not have a material adverse effect on our financial condition, results of operations or cash flows. 45 Table of Contents As previously disclosed, in March 2016, Packet Intelligence LLC (Packet Intelligence or Plaintiff) filed a Complaint against NetScout and two subsidiary entities in the United States District Court for the Eastern District of Texas asserting infringement of five United States patents.
Fiscal Year Ended March 31, (Dollars in Thousands) Change 2023 2022 % of Revenue % of Revenue $ % Interest and other expense, net $ (9,249) (1) % $ (5,742) (1) % $ (3,507) (61) % The 61%, or $3.5 million, change in interest and other expense, net was primarily due to a $2.6 million increase in foreign exchange expense, and a $2.2 million increase in interest expense on the credit facility due to an increase in the average interest rate during the fiscal year ended March 31, 2023 when compared to the fiscal year ended March 31, 2022, partially offset by a loss on the extinguishment of debt recorded during the fiscal year ended March 31, 2022, a $1.4 million decrease from the change in fair value of a derivative instrument, a $0.8 million decrease in transitional services agreement income related to the divestiture of the Company's handheld network test (HNT) tools business in September 2018, and a $0.8 million increase from the change in fair value of contingent consideration.
Fiscal Year Ended March 31, (Dollars in Thousands) Change 2024 2023 % of Revenue % of Revenue $ % Interest and other income (expense), net $ 5,316 1 % $ (9,249) (1) % $ 14,565 157 % The 157%, or $14.6 million, change in interest and other income (expense), net was primarily due to a $7.2 million increase in the fair value of the equity investment in Napatech A/S (Napatech), a $4.7 million increase in interest income, and a $1.6 million decrease in interest expense due to debt repayments on the credit facility in March 2023, partially offset by an increase in the average interest rate on the credit facility during the fiscal year ended March 31, 2024 when compared to the fiscal year ended March 31, 2023.
These decreases were partially offset by $156.7 million of net cash provided by operations during the fiscal year ended March 31, 2023.
These decreases were partially offset by $58.8 million of net cash provided by operating activities, and $7.8 million in proceeds from the divestiture of the Test Optimization business during the fiscal year ended March 31, 2024.
T hese increases were partially offset by a $5.6 million decrease in commissions expense, a $2.4 million decrease in employee-related expenses largely due to a decrease in variable incentive compensation, a $1.2 million decrease in advertising expense, and a $0.8 million decreas e in contractor fees. General and administrative.
These decreases were partially offset by a $4.0 million increase in employee-related expenses largely due to an increase in variable incentive compensation as well as an increase in headcount, and a $1.8 million increase in travel expense. General and administrative.
NetScout filed an Answer denying Plaintiff's allegations and asserting that Plaintiff's patents were, among other things, invalid, not infringed, and unenforceable due to inequitable conduct. In October 2017, a jury trial was held to address the parties' claims and counterclaims regarding infringement of three patents by the G10 and GeoBlade products, invalidity of these patents, and damages.
Plaintiff's Complaint alleged that legacy Tektronix GeoProbe products, including the G10 and GeoBlade products, infringed these patents. NetScout filed an Answer denying Plaintiff's allegations and asserting that Plaintiff's patents were, among other things, invalid, not infringed, and unenforceable due to inequitable conduct.
Total revenue by geography was as follows: Fiscal Year Ended March 31, (Dollars in Thousands) 2023 2022 Change % of Revenue % of Revenue $ % United States $ 583,482 64 % $ 501,043 59 % $ 82,439 16 % International: Europe 145,678 16 165,190 19 (19,512) (12) % Asia 61,685 7 64,968 8 (3,283) (5) % Rest of the world 123,685 13 124,374 14 (689) (1) % Subtotal international 331,048 36 354,532 41 (23,484) (7) % Total revenue $ 914,530 100 % $ 855,575 100 % $ 58,955 7 % United States revenue increased 16%, or $82.4 million, compared with the same period last year primarily due to an increase in revenue from service assurance offerings, including radio frequency propagation modeling projects.
Total revenue by geography was as follows: Fiscal Year Ended March 31, (Dollars in Thousands) 2024 2023 Change % of Revenue % of Revenue $ % United States $ 470,338 57 % $ 583,482 64 % $ (113,144) (19) % International: Europe 146,915 18 145,678 16 1,237 1 % Asia 65,396 8 61,685 7 3,711 6 % Rest of the world 146,806 17 123,685 13 23,121 19 % Subtotal international 359,117 43 331,048 36 28,069 8 % Total revenue $ 829,455 100 % $ 914,530 100 % $ (85,075) (9) % United States revenue decreased 19%, or $113.1 million, compared with the same period last year primarily due to a decrease in revenue from service assurance offerings from both enterprise and service provider customers, including radio frequency propagation modeling projects.
The 10%, or $40.7 million, increase in product revenue compared with the same period last year was primarily due to an increase in revenue from our radio frequency propagation modeling projects from service provider customers, partially offset by a decrease in revenue from other service assurance offerings. Service.
The 20%, or $90.3 million, decrease in product revenue compared with the same period last year was due to a decrease in revenue from service assurance offerings from both service provider and enterprise customers, including radio frequency propagation modeling projects, as a result of industry-specific capital spending constraints.
We believe that these factors will allow us to meet our anticipated funding requirements.
Cash Requirements We are actively managing the business to generate cash flow and believe that we currently have adequate liquidity. We believe that these factors will allow us to meet our anticipated funding requirements.
The 11%, or $36.5 million, increase in product gross profit, corresponds with the 10%, or $40.7 million, increase in product revenue, partially offset by the 5%, or $4.1 million, increase in cost of product revenue. Service.
The 3%, or $10.1 million, increase in service gross profit 42 Table of Contents corresponds with the 1%, or $5.3 million, increase in service revenue and the 4%, or $4.9 million, decrease in cost of services revenue. Gross profit.
These decreases were partially offset by a $23.8 million increase from the change in net income, an $18.0 million increase from prepaid expenses and other assets, a $17.0 million increase from inventories, a $9.7 million increase from accrued compensation and other expenses, a $5.9 million increase from share-based compensation, a $3.3 million increase from income taxes payable, a $1.4 million increase from the change in fair value of a derivative instrument, and a $0.8 million increase from the change in fair value of contingent consideration during the fiscal year ended March 31, 2023 as compared with the fiscal year ended March 31, 2022.
These decreases were partially offset by a $217.3 million goodwill impairment charge, a $15.4 million increase from deferred revenue, an $8.8 million increase from share-based compensation, an $8.1 million increase from deferred income taxes, and a $3.7 million increase from accounts payable during the fiscal year ended March 31, 2024 as compared with the fiscal year ended March 31, 2023.
The 6%, or $5.8 million, increase in general and administrative expenses for the fiscal year ended March 31, 2023 compared to the same period last year was primarily due to a $2.8 million increase in employee-related costs largely due to an increase in variable incentive compensation, a $1.1 million increase in contractor fees, a $1.1 million increase in business taxes, a $0.7 million increase in travel expenses primaril y attributable to the lifting of COVID-19 related restrictions, a $0.6 million increase in rent and other facilities related expenses, and a $0.6 million incre ase in overhead costs .
The 7%, or $7.6 million, decrease in general and administrative expenses for the fiscal year ended March 31, 2024 compared to the same period last year was primarily due to a $6.0 million decrease in legal-related expenses mainly due to a favorable decision related to the Packet Intelligence LLC appeal, a $1.6 million decrease in employee-related costs largely due to a decrease in variable incentive compensation, a $1.3 million decrease in business taxes, and a $0.8 million decrease in depreciation expense.
This increase is attributable to the 7%, or $59.0 million, increase in revenue, partially offset by the 4%, or $8.9 million, increase in cost of revenue. The gross margin percentage increased by one percentage point to 76% during the fiscal year ended March 31, 2023 compared to the same period in the prior year.
Our gross profit decreased 7%, or $49.4 million, for the fiscal year ended March 31, 2024 compared to the same period last year. This decrease is attributable to the 9%, or $85.1 million, decrease in revenue, partially offset by the 16%, or $35.7 million, decrease in cost of revenue.
This represents a decrease of $275.3 million from $703.2 million at March 31, 2022. This decrease was primarily due to $250.0 million used to repay long-term debt, $150.0 million used in treasury stock repurchases under an ASR program, $19.4 million used for tax withholdings on restricted stock units, and $10.5 million used for capital expenditures.
This represents a decrease of $3.8 million from $427.9 million at March 31, 2023. This decrease was primarily due to $50.0 million used to repurchase shares of our common stock, $19.4 million used for tax withholdings on restricted stock units, and $6.3 million used for capital expenditures.
International revenue decreased 7%, or $23.5 million, compared to the same period last year primarily driven by lower revenue from service assurance offerings. 40 Table of Contents Total revenue by product line was as follows: Fiscal Year Ended March 31, (Dollars in Thousands) 2023 2022 Change % of Revenue % of Revenue $ % Revenue: Service assurance $ 678,709 74 % $ 622,957 73 % $ 55,752 9 % Cybersecurity 235,821 26 232,618 27 3,203 1 % Total revenue $ 914,530 100 % $ 855,575 100 % $ 58,955 7 % The 9%, or $55.8 million, increase in revenue from the service assurance product line was largely due to an increase in revenue from radio frequency propagation modeling projects from service provider customers.
International revenue increased 8%, or $28.1 million, compared to the same period last year primarily driven by higher revenue from both enterprise and service provider customers from cybersecurity offerings. 41 Table of Contents Total revenue by product line was as follows: Fiscal Year Ended March 31, (Dollars in Thousands) 2024 2023 Change % of Revenue % of Revenue $ % Revenue: Service assurance $ 557,626 67 % $ 678,709 74 % $ (121,083) (18) % Cybersecurity 271,829 33 235,821 26 36,008 15 % Total revenue $ 829,455 100 % $ 914,530 100 % $ (85,075) (9) % The 18%, or $121.1 million, decrease in revenue from the service assurance product line included a decrease in revenue from radio frequency propagation modeling projects from service provider customers as well as industry-specific capital spending constraints among both service provider and enterprise customers.
The one-time termination benefits were paid in full during the fiscal year ended March 31, 2023. Interest and Other Expense, Net Interest and other expense, net includes interest earned on our cash, cash equivalents and marketable securities, interest expense and other non-operating gains or losses.
During the fiscal year ended March 31, 2024, we recorded a $3.8 million gain on the divestiture of the Test Optimization business. 44 Table of Contents Interest and Other Income (Expense), Net Interest and other income (expense), net includes interest earned on our cash, cash equivalents and marketable securities, interest expense and other non-operating gains or losses.
These increases to net income were partially offset by a $16.4 million increase in costs to deliver radio frequency propagation modeling projects, a $12.1 million increase in expenses related to trade shows, user conferences and other events, a $9.4 million increase in travel expense attributable to the lifting of COVID-19 related restrictions, an $8.3 million increase in employee-related expenses, a $3.0 million increase in other marketing related expenses, a $2.6 million increase in foreign exchange expense, a $2.2 million increase in interest expense, a $1.8 million increase in restructuring expense, a $1.7 million increase from income tax expense, a $1.4 million increase from the change in fair value of a derivative instrument, and a $1.1 million increase in business tax expenses.
These decreases in net income (loss) were partially offset by a $23.7 million decrease in costs to deliver radio frequency propagation modeling projects, a $17.1 million decrease in employee-related expenses associated with a decrease in variable incentive compensation, a $7.9 million decrease in amortization expense, a $7.2 million increase in the fair value of an equity investment, a $6.0 million decrease in legal fees mainly due to a favorable decision related to the Packet Intelligence LLC appeal, a $5.5 million decrease in expenses related to trade shows, user conferences and other events, a $5.5 million decrease in income tax expense, a $4.7 million increase in interest income, a $3.8 million gain on the divestiture of the Test Optimization business, a $3.4 million decrease in advertising expense, a $2.8 million decrease from depreciation expense, a $1.8 million decrease in restructuring expense, a $1.7 million decrease in recruiting expenses, a $1.6 million decrease in commissions expense, a $1.6 million decrease in interest expense, a $1.3 million decrease in direct material costs, and a $1.1 million decrease in business taxes.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−1 removed7 unchanged
Biggest changeThe current exposures arise primarily from expenses denominated in foreign currencies. We currently engage in foreign currency hedging activities in order to limit these exposures. We do not use derivative financial instruments for speculative trading purposes.
Biggest changeThe current exposures arise primarily from expenses denominated in foreign currencies. We currently engage in foreign currency hedging activities in order to limit these exposures. We do not use derivative financial instruments for speculative trading purposes. At March 31, 2024, we had foreign currency forward contracts designated as hedging instruments with notional amounts totaling $11.7 million.
The valuation of outstanding foreign currency forward contracts (both designated and not designated as hedging instruments) at March 31, 2023 resulted in a liability balance of $49 thousand, reflecting unfavorable contract rates in comparison to current market rates at this date and an asset balance of $59 thousand, reflecting favorable rates in comparison to current market rates.
The valuation of outstanding foreign currency forward contracts (both designated and not designated as hedging instruments) at March 31, 2023 resulted in a liability balance of $49 thousand, reflecting unfavorable contract rates in comparison to current market rates and an asset balance of $59 thousand, reflecting favorable rates in comparison to current market rates at this date.
The effect of a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have a material impact on our historical consolidated financial statements. As our international operations grow, we will continue to reassess our approach to manage our risk relating to fluctuations in currency rates. 50 Table of Contents Item 8.
The effect of a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have a material impact on our historical consolidated financial statements. As our international operations grow, we will continue to reassess our approach to manage our risk relating to fluctuations in currency rates. 52 Table of Contents Item 8.
Our cash equivalents and marketable securities consist primarily of U.S government and municipal obligations, commercial pap er, corporate bonds, certificate o f deposits, and money market instruments. At March 31, 2023 and periodically throughout the year, we have maintained cash balances in various operating accounts in excess of federally insured limits.
Our cash equivalents and marketable securities consist primarily of U.S government and municipal obligations, corporate bonds, commercial pap er, certificates o f deposit, and money market instruments. At March 31, 2024 and periodically throughout the year, we have maintained cash balances in various operating accounts in excess of federally insured limits.
Should the current weighted average interest rate increase or decrease by 10%, the resulting annual increase or decrease to interest expense would be approximately $591 thousand as of March 31, 2023. Credit Risk .
Should the current weighted average interest rate increase or decrease by 10%, the resulting annual increase or decrease to interest expense would be approximately $643 thousand as of March 31, 2024. Credit Risk .
The valuation of outstanding foreign currency forward contracts at March 31, 2022 resulted in a liability balance of $78 thousand, reflecting unfavorable contract rates in comparison to current market rates and an asset balance of $20 thousand, reflecting favorable rates in comparison to current market rates at this date.
The valuation of outstanding foreign currency forward contracts at March 31, 2024 resulted in a liability balance of $74 thousand, reflecting unfavorable contract rates in comparison to current market rates at this date and an asset balance of $11 thousand, reflecting favorable rates in comparison to current market rates.
At March 31, 2023, we owed $100 million on this loan with an interest rate of 5.91%. A sensitivity analysis was performed on the outstanding portion of our debt obligation as of March 31, 2023.
At March 31, 2024, we owed $100 million on this loan with an interest rate of 6.43%. A sensitivity analysis was performed on the outstanding portion of our debt obligation as of March 31, 2024.
Removed
At March 31, 2022, we had foreign currency forward contracts designated as hedging instruments with notional amounts totaling $5.6 million.

Other NTCT 10-K year-over-year comparisons