Service Assurance provider NetScout Systems reported weak fiscal first quarter 2018 revenues thanks to reduced spending from one of its Tier 1 carrier customers.
However, the company is bullish about new deals it has struck with customers stemming from a number of new products. The company expects these deals will “yield comparable or even higher revenue against prior year spends…” said Anil Singhal, NetScout president and CEO on the earnings call, according to a Seeking Alpha transcript.
The products incorporate its Adaptive Service Intelligence (ASI) technology combined with the technology NetScout acquired when it purchased Danaher Group’s communications business in 2015. These technologies include analytics for trace forensics, radio access network optimization, customer experience management, WiFi monitoring, infrastructure performance management, and security threat detection, Singhal said.
For example, last year the company launched the InfiniStreamNG analytics platform to help its service provider customers cut costs and improve orchestration of their networks.
“At the same time, these developments are typically negotiated as multiyear purchase agreements, which helps us fortify our incumbency, while also providing us with improved revenue visibility,” Singhal said on the call. The company claims that when customers standardize on this new platform, they are more likely to purchase complementary products from NetScout.
As the number of service providers adopting this platform increases, the company expects the software-only version of this platform to represent between 8 percent to 10 percent of its product revenue in fiscal 2018.
During the past several months, NetScout launched a range of other new offerings aimed at improving application assurance for apps running in physical or virtual data centers. “Although, it will take time for these activities to build momentum, we are confident that our value proposition will resonate in the marketplace over the coming quarters,” Singhal said on the call.
NetScout highlighted the traction these new technologies have gained with its service provider customers. The company claims that it landed a multiyear deal with a “major mobile operator” in the Asia-Pacific region, which it expects will generate more than $5 million in revenue per year.
In addition, last quarter the company announced a multiyear agreement with Vodafone Group in Europe. NetScout will serve as Vodafone’s service assurance provider across 13 countries in Europe using its InfiniStreamNG platform.
Running the Numbers
For the first quarter of fiscal 2018 the company reported revenue of $225.8 million, compared with $269 million in the same period a year ago — an 18 percent decrease. Although the company didn’t provide exact numbers, NetScout officials said this was in line with prior guidance.
GAAP net loss for the first quarter of fiscal 2018 was $24.2 million, or $0.27 per diluted share, compared to a GAAP net loss of $9 million, or $0.10 per diluted share during the same period a year ago. For the first quarter of fiscal 2018 NetScout reported non-GAAP net income of $7.6 million, or $0.08 per diluted share, compared with non-GAAP net income of $26.3 million, or $0.28 per diluted share for the its first quarter a year ago.
Looking into the rest of fiscal 2018, NetScout expects to see relatively flat revenue on a non-GAAP basis compared with fiscal 2017. It expects 60 percent of non-GAAP net revenue for fiscal 2018 to be generated during the second half of the year.