To My Fellow Shareholders:

As we enter fiscal year 2025, NETSCOUT will celebrate its 40th anniversary, or what I like to refer to as “40 years of innovation.” As an innovative technology company in an ever-changing world, NETSCOUT has grown and evolved dramatically over the past four decades. We have transformed from a dual founder start-up operating from a garage to a public company and leading provider of service assurance and cybersecurity solutions offering a “Visibility without Borders” platform. We now generate over $800 million in revenue, serve more than 3,000 customers — many of which are the largest companies on the planet spanning six continents — and have more than 2,000 dedicated team members, or “Guardians” as we like to call them. At the same time, amidst all that has changed, several constants stand out. For one, as “Guardians of the Connected World,” we have consistently demonstrated our unwavering commitment to solving our customers’ most challenging problems and ensuring the connected world runs smoothly. For decades, we have leveraged our core scalable deep packet inspection (DPI) technology and embraced our “Lean But Not Mean” philosophy to navigate opportunities and challenges. It has been an amazing journey, and I am humbled and grateful for what we’ve accomplished together. It is also clear to me that our long history demonstrates that we understand how to navigate evolving landscapes and emerge even stronger while honoring our core tenets and values.

With this backdrop, let’s discuss our Fiscal Year 2024 performance and future direction.

Fiscal Year 2024 Financial Performance

In fiscal year 2024, NETSCOUT experienced strong double-digit growth in cybersecurity revenue as customers continued to prioritize cybersecurity spending amid heightened geopolitical tensions and an expanding cyber threat landscape. This growth was more than offset by the constrained customer spending environment affecting our service assurance offerings, primarily related to our domestic service provider customers. As a result, revenue declined 9% year-over-year to $830 million. Despite the revenue headwind, our diligent cost containment actions and flexible cost structure contributed to year-over-year growth in non-GAAP earnings per share of 1% to $2.20. We also generated solid free cash flow of more than $50 million in the fiscal year. From a capital allocation perspective, we returned approximately $50 million to our shareholders in the fiscal year through our share repurchase program. Finally, as of the fiscal year-end, we had substantial liquidity between our cash, cash equivalents, marketable securities, investments, and the undrawn capacity on our revolving credit facility which position us well to support our strategic endeavors.

Advancing our Strategic Priorities.

From a strategic perspective, we continue to deliver high-value solutions enabling our customers to succeed in today’s dynamic digital world. In the current high-activity threat landscape, we have enhanced our investments in cybersecurity. We believe the value proposition of our solutions will continue to resonate with customers, driving momentum for our core solutions as well as newer offerings such as Adaptive DDoS, Mobile Security, and Omnis Cyber Intelligence.

Within our service assurance offerings, we continue to support customers with our enterprise and service provider solutions. We see opportunities within the 5G cycle to support service providers’ infrastructure as well as in the enterprises to support their cloud initiatives and other business applications. We also see opportunities to move visibility to the edge as organizations expand their networks beyond the data center. Finally, in the area of artificial intelligence, we are beginning to facilitate the use of our Smart Data for AI use cases as we believe that high-performing AI must be built on a foundation of high-quality, curated, actionable, and enriched data sourced from across the entire enterprise.

Continued Commitment to Environmental, Social, and Governance (ESG) Efforts

We continue to advance our Environmental, Social, and Governance efforts that we believe contribute to long-term value creation for our stakeholders and align with our strategy and mission. We understand that ESG is not a one-size-fits-all approach, but rather a dynamic and evolving process. As our ESG program continues to develop, so too does our opportunity to address and mitigate risk; attract, retain, and motivate top talent; reduce costs; and drive growth. We will continue to do this by designing our ESG-related programs to align with our strategic initiatives. For example, during the past twelve months we have made significant progress in our sustainability efforts. This includes setting our first greenhouse gas emissions reduction goals and publishing the ESG Maturity Model, a guide for corporate ESG governance. We invite you to visit our website at www.netscout.com/corporate-social-responsibility to review our latest report and gain more information on NETSCOUT’s ESG progress.

Looking Ahead to Fiscal Year 2025 and Beyond

As we look forward to fiscal year 2025, we are encouraged by the momentum in our cybersecurity offerings. At the same time, we recognize the lingering headwinds in the domestic service provider vertical of our service assurance offering that we believe will likely negatively impact our fiscal year 2025 revenue. Considering these dynamics, we have taken further actions to enhance our focus on cybersecurity and align our cost structure with the current demand environment. Our goal is to execute our strategic priorities, protect earnings, and position NETSCOUT for long-term success.

Longer term, we are focused on returning to revenue growth while also enhancing our margins and continuing to deliver solid free cash flow generation. We are committed to driving our business objectives and advancing our strategy to ensure the performance, availability, and security of mission-critical infrastructure for organizations around the globe, anytime, anywhere.

In closing, I would like to thank my fellow NETSCOUT “Guardians” around the world for their contributions and dedication, and our customers, partners, and other stakeholders for their continued support over the past 40 years. Our work continuously ignites my inspiration, enhancing my pride and enthusiasm for the Company and our future opportunities. We are excited to keep you informed of our progress and accomplishments throughout fiscal year 2025 and beyond.

Sincerely,

Anil Singhal
Co-Founder, President, Chief Executive Officer and Chairman of the Board