NetScout Systems helps network administrators stay prepared. The company provides systems that monitor and report on the performance of software applications and the networks on which they run. Its probes -- monitoring appliances that can be placed throughout a network -- allow administrators to collect information about traffic flow and to optimize application and network performance. Its nGenius Service Assurance Solution monitors systems ranging from VoIP communications to customer relationship management applications. NetScout sells directly and through resellers and distributors to corporate and government customers. Founded in 1984, NetScout's technology is used by more than 90% of Fortune 100 companies.
Massachusetts-based NetScout Systems rings up about three-quarters of its sales in the US. Europe accounts for more than 10% of sales, while countries in Asia represent most of the rest.
Sales and Marketing
Generating about 50% of its revenue through indirect sales channels, the network monitoring technology company primarily markets to midsized and large corporate customers, including more than 90 FORTUNE 100 companies and about 40 from the FORTUNE Global 200 list. Target industries include financial services, health care, Internet, manufacturing, retail, technology, telecommunications, and utilities. Advertising expenses totaled $2.4 million, $1.1 million, and $273,000 in fiscal 2014, 2013, and 2012, respectively.
In the public sector, NetScout provides professional services for its federal government customers to help them meet the Security Technical Implementation Guides and Trusted Internet Connection specifications.
NetScout's revenue increased 13% in fiscal 2014 (ended March) versus the prior year, to $396.6 million. Net income rose 21% over the same period to $49.1 million. The double-digit uptick in sales was primarily driven by higher product revenue (up 18% year over year) in the US. Sales in Asia and Europe also rose, but not as dramatically. Profits rose on higher sales of products and services, and the absence of restructuring charges in fiscal 2014. Fiscal 2014 marked the fourth consecutive year of increasing sales and the continued steady rise in profits (with the exception of fiscal 2012) as the firm gains market share amid strong demand from the enterprise and wireless service provider markets.
Cash flow from operations rose for the second consecutive year in fiscal 2014 on a substantial increase in accounts receivable.
Mergers and Acquisitions
In 2014, NetScout agreed to buy portions of Danaher's communications unit for $2.6 billion. NetScout will acquire Tektronix, Fluke Networks, and Arbor Networks. The deal is to improve NetScout's capability to compete with bigger competitors who offer a wider array of products, especially in cyber security and communications services. Not part of the deal are Fluke's data cabling tools and carrier service provider tools businesses.
In late 2012 NetScout acquired privately held, New Jersey-based ONPATH Technologies for about $41 million in a strategic move to aggressively expand its leadership position in the network monitoring switch market. (The ONPATH deal built upon NetScout's acquisition and integration of Virginia-based monitoring and switching technology company Simena LLC in late 2011.) In July 2012, NetScout bought voice services and technology assets from Italy's Accanto Systems, S.r.l. for $15 million in cash. The technology acquired from Accanto includes all of the Pantera hardware probes and middleware and session analysis applications to help identify poorly performing devices, network quality issues by cell site, and service outages.
Previously, NetScout acquired IP voice, video, and telepresence technology provider Psytechnics in 2011 to boost its unified service delivery management operations, which includes NGenius.