NetScout Systems Annual Report 2022

Plain-text annual report

2 0 2 2 A N N U A L R E P O R T Securing and Assuring the Connected World Securing and Assuring The Connected World The complexity of our connected world is soaring at rates never before seen, creating risks (cid:68)(cid:81)(cid:71)(cid:3) (cid:83)(cid:85)(cid:82)(cid:69)(cid:79)(cid:72)(cid:80)(cid:86)(cid:3) (cid:87)(cid:75)(cid:68)(cid:87)(cid:3) (cid:68)(cid:85)(cid:72)(cid:3) (cid:76)(cid:81)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:76)(cid:81)(cid:74)(cid:79)(cid:92)(cid:3) (cid:71)(cid:76)(cid:909)(cid:70)(cid:88)(cid:79)(cid:87)(cid:3) (cid:87)(cid:82)(cid:3) (cid:907)(cid:81)(cid:71)(cid:17)(cid:3) (cid:44)(cid:81)(cid:3) (cid:87)(cid:82)(cid:71)(cid:68)(cid:92)(cid:518)(cid:86)(cid:3) (cid:70)(cid:82)(cid:81)(cid:81)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3) (cid:90)(cid:82)(cid:85)(cid:79)(cid:71)(cid:15)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:86)(cid:87)(cid:68)(cid:78)(cid:72)(cid:86)(cid:3) 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(cid:83)(cid:82)(cid:87)(cid:72)(cid:81)(cid:87)(cid:76)(cid:68)(cid:79)(cid:3) (cid:87)(cid:82)(cid:3) (cid:76)(cid:81)(cid:86)(cid:87)(cid:68)(cid:81)(cid:87)(cid:79)(cid:92)(cid:3) (cid:71)(cid:76)(cid:86)(cid:85)(cid:88)(cid:83)(cid:87)(cid:3) (cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3) (cid:86)(cid:87)(cid:68)(cid:79)(cid:79)(cid:3) (cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:15)(cid:3) (cid:72)(cid:85)(cid:82)(cid:71)(cid:72)(cid:3) (cid:83)(cid:85)(cid:82)(cid:907)(cid:87)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:15)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:75)(cid:68)(cid:85)(cid:80)(cid:3) (cid:85)(cid:72)(cid:83)(cid:88)(cid:87)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17)(cid:3) (cid:55)(cid:75)(cid:68)(cid:87)(cid:3) (cid:76)(cid:86)(cid:3) (cid:90)(cid:75)(cid:92)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:90)(cid:82)(cid:85)(cid:79)(cid:71)(cid:518)(cid:86)(cid:3) (cid:79)(cid:68)(cid:85)(cid:74)(cid:72)(cid:86)(cid:87)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:80)(cid:82)(cid:86)(cid:87)(cid:3) (cid:76)(cid:81)(cid:81)(cid:82)(cid:89)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3) (cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:3) (cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:85)(cid:86)(cid:15)(cid:3) (cid:72)(cid:81)(cid:87)(cid:72)(cid:85)(cid:83)(cid:85)(cid:76)(cid:86)(cid:72)(cid:86)(cid:15)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:74)(cid:82)(cid:89)(cid:72)(cid:85)(cid:81)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3) (cid:68)(cid:74)(cid:72)(cid:81)(cid:70)(cid:76)(cid:72)(cid:86)(cid:3) (cid:87)(cid:85)(cid:88)(cid:86)(cid:87)(cid:3) (cid:49)(cid:40)(cid:55)(cid:54)(cid:38)(cid:50)(cid:56)(cid:55)(cid:3) (cid:54)(cid:60)(cid:54)(cid:55)(cid:40)(cid:48)(cid:54)(cid:15)(cid:3) (cid:44)(cid:49)(cid:38)(cid:17)(cid:3) (cid:11)(cid:49)(cid:36)(cid:54)(cid:39)(cid:36)(cid:52)(cid:29)(cid:3) (cid:49)(cid:55)(cid:38)(cid:55)(cid:12)(cid:3) (cid:68)(cid:86)(cid:3) “Guardians of the Connected World” and its “Visibility Without Borders” solutions to help (cid:68)(cid:71)(cid:71)(cid:85)(cid:72)(cid:86)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:70)(cid:75)(cid:68)(cid:79)(cid:79)(cid:72)(cid:81)(cid:74)(cid:72)(cid:86)(cid:17) NETSCOUT helps secure networks against attacks that threaten availability or compromise critical business assets and assures the performance of networks and user experiences, (cid:90)(cid:75)(cid:76)(cid:79)(cid:72)(cid:3) (cid:80)(cid:68)(cid:91)(cid:76)(cid:80)(cid:76)(cid:93)(cid:76)(cid:81)(cid:74)(cid:3) (cid:71)(cid:76)(cid:74)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3) (cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:71)(cid:85)(cid:76)(cid:89)(cid:76)(cid:81)(cid:74)(cid:3) (cid:53)(cid:50)(cid:44)(cid:3) (cid:82)(cid:81)(cid:3) (cid:76)(cid:81)(cid:73)(cid:85)(cid:68)(cid:86)(cid:87)(cid:85)(cid:88)(cid:70)(cid:87)(cid:88)(cid:85)(cid:72)(cid:3) (cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:17)(cid:3) (cid:58)(cid:72)(cid:3) engineered our scalable deep packet inspection solutions, which include our patented (cid:54)(cid:80)(cid:68)(cid:85)(cid:87)(cid:3) (cid:39)(cid:68)(cid:87)(cid:68)(cid:3) (cid:87)(cid:72)(cid:70)(cid:75)(cid:81)(cid:82)(cid:79)(cid:82)(cid:74)(cid:92)(cid:3) (cid:88)(cid:86)(cid:72)(cid:71)(cid:3) (cid:76)(cid:81)(cid:3) (cid:82)(cid:88)(cid:85)(cid:3) (cid:86)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:92)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:89)(cid:76)(cid:86)(cid:76)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3) (cid:86)(cid:82)(cid:79)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3) (cid:87)(cid:82)(cid:3) (cid:86)(cid:72)(cid:70)(cid:88)(cid:85)(cid:72)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:68)(cid:86)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3) the countless layers of services, applications, and hybrid cloud servers that comprise digital (cid:68)(cid:85)(cid:70)(cid:75)(cid:76)(cid:87)(cid:72)(cid:70)(cid:87)(cid:88)(cid:85)(cid:72)(cid:86)(cid:17)(cid:3)(cid:36)(cid:86)(cid:3)(cid:68)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:15)(cid:3)(cid:90)(cid:72)(cid:3)(cid:70)(cid:68)(cid:81)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:3)(cid:86)(cid:72)(cid:68)(cid:80)(cid:79)(cid:72)(cid:86)(cid:86)(cid:3)(cid:89)(cid:76)(cid:86)(cid:76)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:76)(cid:81)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)(cid:15)(cid:3)(cid:68)(cid:89)(cid:68)(cid:76)(cid:79)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:15)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:92)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:86)(cid:3)(cid:68)(cid:70)(cid:85)(cid:82)(cid:86)(cid:86)(cid:3)(cid:68)(cid:81)(cid:92)(cid:3)(cid:81)(cid:72)(cid:87)(cid:90)(cid:82)(cid:85)(cid:78)(cid:15)(cid:3)(cid:68)(cid:81)(cid:92)(cid:3)(cid:71)(cid:68)(cid:87)(cid:68)(cid:3)(cid:70)(cid:72)(cid:81)(cid:87)(cid:72)(cid:85)(cid:15)(cid:3)(cid:68)(cid:81)(cid:92)(cid:3)(cid:70)(cid:79)(cid:82)(cid:88)(cid:71)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:80)(cid:82)(cid:85)(cid:72)(cid:17)(cid:3)(cid:55)(cid:75)(cid:85)(cid:82)(cid:88)(cid:74)(cid:75)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3) (cid:90)(cid:82)(cid:85)(cid:78)(cid:15)(cid:3) (cid:90)(cid:72)(cid:3) (cid:73)(cid:68)(cid:70)(cid:76)(cid:79)(cid:76)(cid:87)(cid:68)(cid:87)(cid:72)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:76)(cid:907)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:82)(cid:73)(cid:3) (cid:82)(cid:88)(cid:85)(cid:3) (cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:86)(cid:518)(cid:3) (cid:83)(cid:85)(cid:82)(cid:69)(cid:79)(cid:72)(cid:80)(cid:86)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3) (cid:83)(cid:85)(cid:72)(cid:70)(cid:76)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:68)(cid:79)(cid:79)(cid:82)(cid:90)(cid:3) (cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:69)(cid:79)(cid:72)(cid:80)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:69)(cid:72)(cid:3)(cid:86)(cid:82)(cid:79)(cid:89)(cid:72)(cid:71)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:70)(cid:82)(cid:81)(cid:907)(cid:71)(cid:72)(cid:81)(cid:70)(cid:72)(cid:17)(cid:3) Financial Performance Revenue (Non-GAAP, $ in millions) Income From Operations (Non-GAAP, $ in millions, except %) Diluted Net Income Per Share (Non-GAAP) Free Cash Flow1 ($ in millions) 21.0% 20.8% $831.3 $855.6 $172.8 $180.0 $1.70 $1.84 $197.4 $285.6 FY’21 FY’22 FY’21 FY’22 FY’21 FY’22 FY’21 FY’22 Op. Income Op. Margin 1 (cid:41)(cid:85)(cid:72)(cid:72)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:565)(cid:82)(cid:90)(cid:3)(cid:76)(cid:86)(cid:3)(cid:71)(cid:72)(cid:564)(cid:81)(cid:72)(cid:71)(cid:3)(cid:68)(cid:86)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:565)(cid:82)(cid:90)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:79)(cid:72)(cid:86)(cid:86)(cid:3)(cid:83)(cid:88)(cid:85)(cid:70)(cid:75)(cid:68)(cid:86)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:564)(cid:91)(cid:72)(cid:71)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:76)(cid:81)(cid:87)(cid:68)(cid:81)(cid:74)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:17) $ in millions except % and EPS FY’21 FY’22 GAAP Non-GAAP GAAP Non-GAAP Revenue Income from Operations Income from Operations % Net Income Diluted Net Income per Share Free Cash Flow $ 831.3 $ 37.1 4.5% $ 19.4 $ 0.26 $ 197.4 $ 831.3 $ 172.8 20.8% $ 125.8 $ 1.70 – $ 855.6 $ 855.6 $ 48.6 5.7% $ 35.9 $ 0.48 $ 285.6 $ 180.0 21.0% $ 138.4 $ 1.84 – A reconciliation of each non-GAAP metric with the applicable GAAP metric is available on page R-1. Connected for Good The connected world is only as strong as the people who protect it. We have a long tradition of supporting our communities through various charitable activities and contributions. Our employee Guardians, through their passion and desire to help those in need, are at the center (cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:72)(cid:909)(cid:82)(cid:85)(cid:87)(cid:3)(cid:87)(cid:75)(cid:85)(cid:82)(cid:88)(cid:74)(cid:75)(cid:3)(cid:87)(cid:75)(cid:72)(cid:76)(cid:85)(cid:3)(cid:83)(cid:68)(cid:85)(cid:87)(cid:76)(cid:70)(cid:76)(cid:83)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:76)(cid:81)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:522)(cid:43)(cid:72)(cid:68)(cid:85)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:42)(cid:76)(cid:89)(cid:76)(cid:81)(cid:74)(cid:523)(cid:3)(cid:83)(cid:85)(cid:82)(cid:74)(cid:85)(cid:68)(cid:80)(cid:17)(cid:3) (cid:58)(cid:72)(cid:3)(cid:68)(cid:79)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:72)(cid:3)(cid:68)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:564)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:83)(cid:75)(cid:76)(cid:79)(cid:68)(cid:81)(cid:87)(cid:75)(cid:85)(cid:82)(cid:83)(cid:92)(cid:3)(cid:85)(cid:72)(cid:86)(cid:82)(cid:88)(cid:85)(cid:70)(cid:72)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3) (cid:83)(cid:85)(cid:82)(cid:74)(cid:85)(cid:68)(cid:80)(cid:3)(cid:76)(cid:81)(cid:3)(cid:86)(cid:88)(cid:83)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:76)(cid:85)(cid:3)(cid:78)(cid:76)(cid:81)(cid:71)(cid:3)(cid:72)(cid:909)(cid:82)(cid:85)(cid:87)(cid:86)(cid:17)(cid:3) To learn more about our philanthropic activities, please visit www.netscout.com and go to the Corporate Responsibility page under the Company section of the site. 0 1 (cid:55)(cid:82)(cid:3)(cid:48)(cid:92)(cid:3)(cid:41)(cid:72)(cid:79)(cid:79)(cid:82)(cid:90)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:29) (cid:55)(cid:82)(cid:71)(cid:68)(cid:92)(cid:15)(cid:3) (cid:49)(cid:40)(cid:55)(cid:54)(cid:38)(cid:50)(cid:56)(cid:55)(cid:519)(cid:86)(cid:3) (cid:86)(cid:82)(cid:79)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3) (cid:68)(cid:85)(cid:72)(cid:3) (cid:80)(cid:82)(cid:85)(cid:72)(cid:3) (cid:76)(cid:80)(cid:83)(cid:82)(cid:85)(cid:87)(cid:68)(cid:81)(cid:87)(cid:3) (cid:87)(cid:75)(cid:68)(cid:81)(cid:3) (cid:72)(cid:89)(cid:72)(cid:85)(cid:17)(cid:3) (cid:42)(cid:76)(cid:89)(cid:72)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) current geopolitical landscape and macroeconomic climate, organizations are (cid:564)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3) (cid:76)(cid:87)(cid:3) (cid:68)(cid:69)(cid:86)(cid:82)(cid:79)(cid:88)(cid:87)(cid:72)(cid:79)(cid:92)(cid:3) (cid:76)(cid:80)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3) (cid:87)(cid:82)(cid:3) (cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3) (cid:80)(cid:82)(cid:85)(cid:72)(cid:3) (cid:72)(cid:605)(cid:70)(cid:76)(cid:72)(cid:81)(cid:87)(cid:79)(cid:92)(cid:3) (cid:90)(cid:75)(cid:76)(cid:79)(cid:72)(cid:3) (cid:83)(cid:85)(cid:82)(cid:87)(cid:72)(cid:70)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:68)(cid:74)(cid:68)(cid:76)(cid:81)(cid:86)(cid:87)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:85)(cid:76)(cid:86)(cid:72)(cid:3) (cid:76)(cid:81)(cid:3) (cid:70)(cid:92)(cid:69)(cid:72)(cid:85)(cid:86)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:92)(cid:3) (cid:87)(cid:75)(cid:85)(cid:72)(cid:68)(cid:87)(cid:86)(cid:17)(cid:3) (cid:36)(cid:86)(cid:3) (cid:522)(cid:42)(cid:88)(cid:68)(cid:85)(cid:71)(cid:76)(cid:68)(cid:81)(cid:86)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:81)(cid:81)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3) (cid:58)(cid:82)(cid:85)(cid:79)(cid:71)(cid:15)(cid:523)(cid:3) (cid:49)(cid:40)(cid:55)(cid:54)(cid:38)(cid:50)(cid:56)(cid:55)(cid:3) (cid:76)(cid:86)(cid:3) (cid:90)(cid:72)(cid:79)(cid:79)(cid:16)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:72)(cid:71)(cid:3) (cid:87)(cid:82)(cid:3) (cid:68)(cid:86)(cid:86)(cid:76)(cid:86)(cid:87)(cid:3) (cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:86)(cid:3) (cid:82)(cid:81)(cid:3) (cid:69)(cid:82)(cid:87)(cid:75)(cid:3) (cid:73)(cid:85)(cid:82)(cid:81)(cid:87)(cid:86)(cid:17)(cid:3)(cid:3) (cid:58)(cid:72)(cid:3) (cid:68)(cid:85)(cid:72)(cid:3) (cid:72)(cid:91)(cid:70)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3) (cid:68)(cid:69)(cid:82)(cid:88)(cid:87)(cid:3) (cid:82)(cid:88)(cid:85)(cid:3) (cid:70)(cid:82)(cid:85)(cid:72)(cid:3) (cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:3) (cid:68)(cid:86)(cid:86)(cid:88)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:39)(cid:39)(cid:82)(cid:54)(cid:3) (cid:86)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:92)(cid:3) (cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3) (cid:68)(cid:86)(cid:3) (cid:90)(cid:72)(cid:79)(cid:79)(cid:3) (cid:68)(cid:86)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:81)(cid:72)(cid:90)(cid:3) innovative solutions we have launched to address the new challenges of the digital world. Customers are advancing their digital transformations in the enterprise customer vertical and rolling out 5G in the service provider customer vertical while also dealing with a rapidly evolving threat landscape. Our new (cid:76)(cid:81)(cid:81)(cid:82)(cid:89)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:54)(cid:80)(cid:68)(cid:85)(cid:87)(cid:3)(cid:40)(cid:71)(cid:74)(cid:72)(cid:3)(cid:48)(cid:82)(cid:81)(cid:76)(cid:87)(cid:82)(cid:85)(cid:76)(cid:81)(cid:74)(cid:15)(cid:3)(cid:36)(cid:71)(cid:68)(cid:83)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:39)(cid:39)(cid:82)(cid:54)(cid:15)(cid:3)(cid:54)(cid:80)(cid:68)(cid:85)(cid:87)(cid:3)(cid:36)(cid:81)(cid:68)(cid:79)(cid:92)(cid:87)(cid:76)(cid:70)(cid:86)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:24)(cid:42)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:68)(cid:79)(cid:79)(cid:3)(cid:87)(cid:68)(cid:85)(cid:74)(cid:72)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:87)(cid:3) addressing these needs. We also are seeing new opportunities in cybersecurity, particularly in the area of network detection and response, with our new Omnis solution. Compared to today’s more traditional (cid:86)(cid:82)(cid:79)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:81)(cid:72)(cid:90)(cid:3)(cid:50)(cid:80)(cid:81)(cid:76)(cid:86)(cid:3)(cid:86)(cid:82)(cid:79)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:909)(cid:72)(cid:85)(cid:86)(cid:3)(cid:68)(cid:3)(cid:88)(cid:81)(cid:76)(cid:84)(cid:88)(cid:72)(cid:79)(cid:92)(cid:3)(cid:71)(cid:76)(cid:909)(cid:72)(cid:85)(cid:72)(cid:81)(cid:87)(cid:76)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:68)(cid:70)(cid:75)(cid:15)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:73)(cid:68)(cid:86)(cid:87)(cid:72)(cid:85)(cid:3)(cid:71)(cid:72)(cid:87)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3) investigation, and mitigation at a larger scale than most current alternatives. Our solutions, with our (cid:86)(cid:70)(cid:68)(cid:79)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:71)(cid:72)(cid:72)(cid:83)(cid:3)(cid:83)(cid:68)(cid:70)(cid:78)(cid:72)(cid:87)(cid:3)(cid:76)(cid:81)(cid:86)(cid:83)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:87)(cid:72)(cid:70)(cid:75)(cid:81)(cid:82)(cid:79)(cid:82)(cid:74)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:54)(cid:80)(cid:68)(cid:85)(cid:87)(cid:3)(cid:39)(cid:68)(cid:87)(cid:68)(cid:15)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:71)(cid:89)(cid:68)(cid:81)(cid:87)(cid:68)(cid:74)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:92)(cid:3) need to succeed in today’s digital world. Meeting Fiscal Year 2022 Objectives (cid:918)(cid:81)(cid:3)(cid:79)(cid:68)(cid:86)(cid:87)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:519)(cid:86)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:3)(cid:79)(cid:72)(cid:87)(cid:87)(cid:72)(cid:85)(cid:15)(cid:3)(cid:918)(cid:3)(cid:90)(cid:85)(cid:82)(cid:87)(cid:72)(cid:3)(cid:68)(cid:69)(cid:82)(cid:88)(cid:87)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:564)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:82)(cid:69)(cid:77)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:564)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:21)(cid:19)(cid:21)(cid:21)(cid:17)(cid:3) (cid:58)(cid:72)(cid:3)(cid:80)(cid:68)(cid:71)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:82)(cid:87)(cid:72)(cid:81)(cid:87)(cid:76)(cid:68)(cid:79)(cid:3)(cid:90)(cid:72)(cid:3)(cid:86)(cid:68)(cid:90)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:86)(cid:72)(cid:72)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:76)(cid:81)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:522)(cid:49)(cid:40)(cid:55)(cid:54)(cid:38)(cid:50)(cid:56)(cid:55)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:82)(cid:88)(cid:87)(cid:3)(cid:37)(cid:82)(cid:85)(cid:71)(cid:72)(cid:85)(cid:86)(cid:523)(cid:3)(cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:72)(cid:74)(cid:92)(cid:3)(cid:68)(cid:86)(cid:3)(cid:90)(cid:72)(cid:79)(cid:79)(cid:3)(cid:68)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:78)(cid:72)(cid:92)(cid:3)(cid:87)(cid:72)(cid:70)(cid:75)(cid:81)(cid:82)(cid:79)(cid:82)(cid:74)(cid:92)(cid:3)(cid:87)(cid:85)(cid:72)(cid:81)(cid:71)(cid:86)(cid:3)(cid:87)(cid:68)(cid:78)(cid:76)(cid:81)(cid:74)(cid:3)(cid:83)(cid:79)(cid:68)(cid:70)(cid:72)(cid:17)(cid:3)(cid:918)(cid:3)(cid:68)(cid:80)(cid:3)(cid:83)(cid:79)(cid:72)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3) (cid:90)(cid:72)(cid:3)(cid:68)(cid:70)(cid:75)(cid:76)(cid:72)(cid:89)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:82)(cid:69)(cid:77)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:80)(cid:82)(cid:85)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:564)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:21)(cid:19)(cid:21)(cid:21)(cid:17)(cid:3) (cid:918)(cid:81)(cid:3)(cid:564)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:21)(cid:19)(cid:21)(cid:21)(cid:15)(cid:3)(cid:90)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:72)(cid:3)(cid:82)(cid:81)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:522)(cid:49)(cid:40)(cid:55)(cid:54)(cid:38)(cid:50)(cid:56)(cid:55)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:82)(cid:88)(cid:87)(cid:3)(cid:37)(cid:82)(cid:85)(cid:71)(cid:72)(cid:85)(cid:86)(cid:523)(cid:3)(cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:72)(cid:74)(cid:92)(cid:17)(cid:3)(cid:58)(cid:72)(cid:3)(cid:76)(cid:81)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3) (cid:82)(cid:88)(cid:85)(cid:3) (cid:72)(cid:91)(cid:76)(cid:86)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:3) (cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:15)(cid:3) (cid:73)(cid:82)(cid:85)(cid:74)(cid:72)(cid:71)(cid:3) (cid:81)(cid:72)(cid:90)(cid:3) (cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:3) (cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:75)(cid:76)(cid:83)(cid:86)(cid:15)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:73)(cid:88)(cid:85)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3) (cid:68)(cid:71)(cid:89)(cid:68)(cid:81)(cid:70)(cid:72)(cid:71)(cid:3) (cid:82)(cid:88)(cid:85)(cid:3) cybersecurity agenda. These actions helped us to deliver a strong performance on multiple fronts, which included revitalizing revenue growth, enhancing margins, increasing diluted earnings per share, and (cid:74)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:86)(cid:87)(cid:85)(cid:82)(cid:81)(cid:74)(cid:3)(cid:73)(cid:85)(cid:72)(cid:72)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:565)(cid:82)(cid:90)(cid:17)(cid:3)(cid:36)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:87)(cid:82)(cid:83)(cid:3)(cid:79)(cid:76)(cid:81)(cid:72)(cid:15)(cid:3)(cid:87)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3)(cid:74)(cid:85)(cid:72)(cid:90)(cid:3)(cid:69)(cid:92)(cid:3)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:91)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:79)(cid:92)(cid:3)(cid:22)(cid:8)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:15)(cid:3) (cid:71)(cid:85)(cid:76)(cid:89)(cid:72)(cid:81)(cid:3) (cid:69)(cid:92)(cid:3) (cid:75)(cid:76)(cid:74)(cid:75)(cid:3) (cid:86)(cid:76)(cid:81)(cid:74)(cid:79)(cid:72)(cid:16)(cid:71)(cid:76)(cid:74)(cid:76)(cid:87)(cid:3) (cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:3) (cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3) (cid:74)(cid:85)(cid:82)(cid:90)(cid:87)(cid:75)(cid:17)(cid:3) (cid:36)(cid:71)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:79)(cid:92)(cid:15)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:3) (cid:80)(cid:76)(cid:91)(cid:3) (cid:76)(cid:81)(cid:3) (cid:82)(cid:88)(cid:85)(cid:3) (cid:87)(cid:85)(cid:68)(cid:81)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:87)(cid:82)(cid:3) software-centric solutions along with our disciplined cost management approach allowed us to enhance both our gross and operating margins. At the bottom line, non-GAAP diluted earnings per share grew at (cid:68)(cid:3)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:27)(cid:8)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:15)(cid:3)(cid:80)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:75)(cid:68)(cid:81)(cid:3)(cid:87)(cid:90)(cid:76)(cid:70)(cid:72)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:87)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3)(cid:74)(cid:85)(cid:82)(cid:90)(cid:87)(cid:75)(cid:3)(cid:85)(cid:68)(cid:87)(cid:72)(cid:17)(cid:3)(cid:36)(cid:86)(cid:3)(cid:68)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3) 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(cid:21)(cid:19)(cid:19)(cid:8)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:81)(cid:82)(cid:81)(cid:16)(cid:42)(cid:36)(cid:36)(cid:51)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)(cid:17)(cid:3)(cid:58)(cid:72)(cid:3)(cid:68)(cid:79)(cid:86)(cid:82)(cid:3)(cid:72)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:564)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:68)(cid:3)(cid:85)(cid:82)(cid:69)(cid:88)(cid:86)(cid:87)(cid:3)(cid:69)(cid:68)(cid:70)(cid:78)(cid:79)(cid:82)(cid:74)(cid:15)(cid:3) (cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:88)(cid:86)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:68)(cid:81)(cid:3)(cid:72)(cid:91)(cid:70)(cid:72)(cid:79)(cid:79)(cid:72)(cid:81)(cid:87)(cid:3)(cid:73)(cid:82)(cid:88)(cid:81)(cid:71)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:73)(cid:88)(cid:85)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3)(cid:74)(cid:85)(cid:82)(cid:90)(cid:87)(cid:75)(cid:3)(cid:76)(cid:81)(cid:3)(cid:564)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:21)(cid:19)(cid:21)(cid:22)(cid:17)(cid:3) Looking Ahead to Fiscal Year 2023 (cid:41)(cid:82)(cid:85)(cid:3) (cid:564)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3) (cid:92)(cid:72)(cid:68)(cid:85)(cid:3) (cid:21)(cid:19)(cid:21)(cid:22)(cid:15)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:83)(cid:85)(cid:72)(cid:89)(cid:76)(cid:82)(cid:88)(cid:86)(cid:79)(cid:92)(cid:3) (cid:80)(cid:72)(cid:81)(cid:87)(cid:76)(cid:82)(cid:81)(cid:72)(cid:71)(cid:3) (cid:82)(cid:83)(cid:83)(cid:82)(cid:85)(cid:87)(cid:88)(cid:81)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3) (cid:76)(cid:81)(cid:3) (cid:80)(cid:76)(cid:81)(cid:71)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:82)(cid:88)(cid:85)(cid:3) (cid:81)(cid:72)(cid:90)(cid:15)(cid:3) (cid:76)(cid:81)(cid:81)(cid:82)(cid:89)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3) solutions, we remain committed to maintaining our industry leadership, continuing to advance our 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Our (cid:68)(cid:80)(cid:83)(cid:79)(cid:72)(cid:3)(cid:86)(cid:88)(cid:83)(cid:83)(cid:79)(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:71)(cid:85)(cid:92)(cid:3)(cid:83)(cid:82)(cid:90)(cid:71)(cid:72)(cid:85)(cid:3)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:88)(cid:86)(cid:3)(cid:90)(cid:72)(cid:79)(cid:79)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:72)(cid:3)(cid:82)(cid:81)(cid:3)(cid:86)(cid:72)(cid:89)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:73)(cid:85)(cid:82)(cid:81)(cid:87)(cid:86)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:90)(cid:72)(cid:3)(cid:85)(cid:72)(cid:80)(cid:68)(cid:76)(cid:81)(cid:3)(cid:80)(cid:76)(cid:81)(cid:71)(cid:73)(cid:88)(cid:79)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3) (cid:70)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:68)(cid:79)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:72)(cid:74)(cid:76)(cid:72)(cid:86)(cid:17)(cid:3)(cid:918)(cid:81)(cid:3)(cid:48)(cid:68)(cid:92)(cid:3)(cid:21)(cid:19)(cid:21)(cid:21)(cid:15)(cid:3)(cid:90)(cid:72)(cid:3)(cid:71)(cid:72)(cid:70)(cid:76)(cid:71)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:79)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:72)(cid:3)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:91)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:79)(cid:92)(cid:3)(cid:7)(cid:22)(cid:19)(cid:19)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:72)(cid:91)(cid:70)(cid:72)(cid:86)(cid:86)(cid:3) (cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:90)(cid:82)(cid:3)(cid:564)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:87)(cid:85)(cid:68)(cid:81)(cid:86)(cid:68)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:564)(cid:85)(cid:86)(cid:87)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:85)(cid:72)(cid:83)(cid:88)(cid:85)(cid:70)(cid:75)(cid:68)(cid:86)(cid:72)(cid:3)(cid:7)(cid:20)(cid:24)(cid:19)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:82)(cid:81)(cid:3)(cid:86)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3)(cid:87)(cid:75)(cid:85)(cid:82)(cid:88)(cid:74)(cid:75)(cid:3) (cid:68)(cid:81)(cid:3)(cid:68)(cid:70)(cid:70)(cid:72)(cid:79)(cid:72)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3)(cid:85)(cid:72)(cid:83)(cid:88)(cid:85)(cid:70)(cid:75)(cid:68)(cid:86)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:74)(cid:85)(cid:68)(cid:80)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:72)(cid:70)(cid:82)(cid:81)(cid:71)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:85)(cid:72)(cid:83)(cid:68)(cid:92)(cid:3)(cid:7)(cid:20)(cid:24)(cid:19)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:82)(cid:88)(cid:87)(cid:86)(cid:87)(cid:68)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3) debt under our revolving credit facility. We have accounted for both of these transactions in our outlook (cid:73)(cid:82)(cid:85)(cid:3)(cid:564)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:21)(cid:19)(cid:21)(cid:22)(cid:17)(cid:3)(cid:50)(cid:88)(cid:85)(cid:3)(cid:69)(cid:82)(cid:68)(cid:85)(cid:71)(cid:3)(cid:68)(cid:79)(cid:86)(cid:82)(cid:3)(cid:75)(cid:68)(cid:86)(cid:3)(cid:68)(cid:88)(cid:87)(cid:75)(cid:82)(cid:85)(cid:76)(cid:93)(cid:72)(cid:71)(cid:3)(cid:68)(cid:3)(cid:81)(cid:72)(cid:90)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3)(cid:85)(cid:72)(cid:83)(cid:88)(cid:85)(cid:70)(cid:75)(cid:68)(cid:86)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:74)(cid:85)(cid:68)(cid:80)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:68)(cid:79)(cid:79)(cid:82)(cid:90)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3) (cid:85)(cid:72)(cid:83)(cid:88)(cid:85)(cid:70)(cid:75)(cid:68)(cid:86)(cid:72)(cid:3) (cid:82)(cid:73)(cid:3) (cid:68)(cid:81)(cid:3) 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(cid:49)(cid:40)(cid:55)(cid:54)(cid:38)(cid:50)(cid:56)(cid:55)(cid:3)(cid:80)(cid:82)(cid:85)(cid:72)(cid:3)(cid:69)(cid:85)(cid:82)(cid:68)(cid:71)(cid:79)(cid:92)(cid:17)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3) (cid:918)(cid:81)(cid:3) (cid:70)(cid:79)(cid:82)(cid:86)(cid:76)(cid:81)(cid:74)(cid:15)(cid:3) (cid:918)(cid:3) (cid:90)(cid:82)(cid:88)(cid:79)(cid:71)(cid:3) (cid:79)(cid:76)(cid:78)(cid:72)(cid:3) (cid:87)(cid:82)(cid:3) (cid:87)(cid:75)(cid:68)(cid:81)(cid:78)(cid:3) (cid:80)(cid:92)(cid:3) (cid:73)(cid:72)(cid:79)(cid:79)(cid:82)(cid:90)(cid:3) (cid:49)(cid:40)(cid:55)(cid:54)(cid:38)(cid:50)(cid:56)(cid:55)(cid:3) (cid:42)(cid:88)(cid:68)(cid:85)(cid:71)(cid:76)(cid:68)(cid:81)(cid:86)(cid:3) (cid:68)(cid:85)(cid:82)(cid:88)(cid:81)(cid:71)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:90)(cid:82)(cid:85)(cid:79)(cid:71)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:87)(cid:75)(cid:72)(cid:76)(cid:85)(cid:3) (cid:87)(cid:76)(cid:85)(cid:72)(cid:79)(cid:72)(cid:86)(cid:86)(cid:3) determination and dedication and our customers, partners, and other stakeholders for their continued (cid:86)(cid:88)(cid:83)(cid:83)(cid:82)(cid:85)(cid:87)(cid:17)(cid:3)(cid:3)(cid:58)(cid:76)(cid:87)(cid:75)(cid:3)(cid:80)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:75)(cid:68)(cid:81)(cid:3)(cid:87)(cid:75)(cid:85)(cid:72)(cid:72)(cid:3)(cid:71)(cid:72)(cid:70)(cid:68)(cid:71)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:85)(cid:76)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:75)(cid:72)(cid:85)(cid:72)(cid:3)(cid:68)(cid:87)(cid:3)(cid:49)(cid:40)(cid:55)(cid:54)(cid:38)(cid:50)(cid:56)(cid:55)(cid:15)(cid:3)(cid:918)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:69)(cid:72)(cid:3)(cid:76)(cid:81)(cid:86)(cid:83)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3) the work we are doing on a daily basis, and my pride and enthusiasm for the Company and our future (cid:85)(cid:72)(cid:80)(cid:68)(cid:76)(cid:81)(cid:86)(cid:3)(cid:68)(cid:86)(cid:3)(cid:86)(cid:87)(cid:85)(cid:82)(cid:81)(cid:74)(cid:3)(cid:68)(cid:86)(cid:3)(cid:72)(cid:89)(cid:72)(cid:85)(cid:17)(cid:3)(cid:58)(cid:72)(cid:3)(cid:72)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:81)(cid:72)(cid:90)(cid:3)(cid:564)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:68)(cid:3)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:3)(cid:73)(cid:82)(cid:88)(cid:81)(cid:71)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:87)(cid:82)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:3) growing and remain well-positioned to help our customers address the challenges and opportunities of the digital world. I look forward to sharing our progress and achievements with you over the course of (cid:564)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:21)(cid:19)(cid:21)(cid:22)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:69)(cid:72)(cid:92)(cid:82)(cid:81)(cid:71)(cid:17)(cid:3)(cid:3)(cid:3)(cid:3) (cid:54)(cid:76)(cid:81)(cid:70)(cid:72)(cid:85)(cid:72)(cid:79)(cid:92)(cid:15)(cid:3) h l i A n i l S i n g h a l i l (cid:38)(cid:82)(cid:16)(cid:41)(cid:82)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:15)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:605)(cid:70)(cid:72)(cid:85)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:68)(cid:76)(cid:85)(cid:80)(cid:68)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:37)(cid:82)(cid:68)(cid:85)(cid:71) (cid:50)(cid:88)(cid:85)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)(cid:40)(cid:54)(cid:42) (cid:40)(cid:81)(cid:89)(cid:76)(cid:85)(cid:82)(cid:81)(cid:80)(cid:72)(cid:81)(cid:87)(cid:68)(cid:79)(cid:15)(cid:3)(cid:54)(cid:82)(cid:70)(cid:76)(cid:68)(cid:79)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:42)(cid:82)(cid:89)(cid:72)(cid:85)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:76)(cid:86)(cid:3)(cid:76)(cid:81)(cid:72)(cid:91)(cid:87)(cid:85)(cid:76)(cid:70)(cid:68)(cid:69)(cid:79)(cid:92)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:87)(cid:90)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:80)(cid:76)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:89)(cid:76)(cid:86)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:72)(cid:81)(cid:72)(cid:87)(cid:86)(cid:17)(cid:3) (cid:55)(cid:75)(cid:76)(cid:86)(cid:3)(cid:75)(cid:68)(cid:86)(cid:3)(cid:69)(cid:72)(cid:72)(cid:81)(cid:98)(cid:49)(cid:40)(cid:55)(cid:54)(cid:38)(cid:50)(cid:56)(cid:55)(cid:519)(cid:86)(cid:3)(cid:80)(cid:76)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:86)(cid:76)(cid:81)(cid:70)(cid:72)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:69)(cid:72)(cid:74)(cid:76)(cid:81)(cid:81)(cid:76)(cid:81)(cid:74)(cid:15)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:79)(cid:79)(cid:82)(cid:90)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:86)(cid:3)(cid:515)(cid:3)(cid:79)(cid:72)(cid:68)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:85)(cid:86)(cid:15) (cid:72)(cid:81)(cid:87)(cid:72)(cid:85)(cid:83)(cid:85)(cid:76)(cid:86)(cid:72)(cid:86)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:74)(cid:82)(cid:89)(cid:72)(cid:85)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:74)(cid:72)(cid:81)(cid:70)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:70)(cid:85)(cid:82)(cid:86)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:74)(cid:79)(cid:82)(cid:69)(cid:72)(cid:3)(cid:515)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:70)(cid:70)(cid:72)(cid:79)(cid:72)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:564)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:81)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:90)(cid:82)(cid:85)(cid:79)(cid:71) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:79)(cid:72)(cid:86)(cid:86)(cid:3)(cid:71)(cid:76)(cid:86)(cid:85)(cid:88)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:76)(cid:85)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:76)(cid:85)(cid:3)(cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:86)(cid:17)(cid:3)(cid:58)(cid:72)(cid:3)(cid:69)(cid:72)(cid:79)(cid:76)(cid:72)(cid:89)(cid:72)(cid:3)(cid:68)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)(cid:40)(cid:54)(cid:42)(cid:3)(cid:76)(cid:86)(cid:3)(cid:68)(cid:81)(cid:3) important part of creating long-term business value. (cid:55)(cid:82)(cid:3)(cid:79)(cid:72)(cid:68)(cid:85)(cid:81)(cid:3)(cid:80)(cid:82)(cid:85)(cid:72)(cid:3)(cid:68)(cid:69)(cid:82)(cid:88)(cid:87)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:40)(cid:54)(cid:42)(cid:3)(cid:83)(cid:85)(cid:82)(cid:74)(cid:85)(cid:72)(cid:86)(cid:86)(cid:15)(cid:3)(cid:83)(cid:79)(cid:72)(cid:68)(cid:86)(cid:72)(cid:3)(cid:89)(cid:76)(cid:86)(cid:76)(cid:87)(cid:3)(cid:90)(cid:90)(cid:90)(cid:17)(cid:81)(cid:72)(cid:87)(cid:86)(cid:70)(cid:82)(cid:88)(cid:87)(cid:17)(cid:70)(cid:82)(cid:80)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:74)(cid:82)(cid:3)(cid:87)(cid:82)(cid:3) the Corporate Responsibility page under the Company section of the site. (cid:19) (cid:22) Key Technology Trends: (cid:38)(cid:92)(cid:69)(cid:72)(cid:85)(cid:86)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:92)(cid:15)(cid:3)(cid:39)(cid:76)(cid:74)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3) Transformation through Cloud Migration, and 5G (cid:68) (cid:70)(cid:70)(cid:72)(cid:72)(cid:72) (cid:86)(cid:86)(cid:82)(cid:82) (cid:88)(cid:88)(cid:87)(cid:87) (cid:68)(cid:81)(cid:81)(cid:70)(cid:70)(cid:72)(cid:72)(cid:72) (cid:86)(cid:86)(cid:82)(cid:82)(cid:79)(cid:88)(cid:88)(cid:87)(cid:87)(cid:76) (cid:81)(cid:81)(cid:70)(cid:70)(cid:72)(cid:72)(cid:72) (cid:86)(cid:86)(cid:82)(cid:82)(cid:79)(cid:88)(cid:88)(cid:87)(cid:87)(cid:76)(cid:82) (cid:79) (cid:76) (cid:49)(cid:40)(cid:55)(cid:54)(cid:38)(cid:50)(cid:56)(cid:55)(cid:519)(cid:86)(cid:3)(cid:70)(cid:92)(cid:69)(cid:72)(cid:85)(cid:86)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:3)(cid:68)(cid:86)(cid:86)(cid:88)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:86)(cid:82)(cid:79)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:72)(cid:81)(cid:68)(cid:69)(cid:79)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:90)(cid:82)(cid:85)(cid:79)(cid:71)(cid:519)(cid:86)(cid:3)(cid:79)(cid:68)(cid:85)(cid:74)(cid:72)(cid:86)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:80)(cid:82)(cid:86)(cid:87)(cid:3)(cid:76)(cid:81)(cid:81)(cid:82)(cid:89)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72) ttt kk organizations to protect their networks from attack, optimize their network performance, ensure delivery of , p aatttaacckk, aatttaacckkk (cid:87)(cid:75)(cid:72)(cid:76)(cid:85)(cid:3)(cid:80)(cid:76)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:16)(cid:70)(cid:85)(cid:76)(cid:87)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:83)(cid:83)(cid:79)(cid:76)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:74)(cid:68)(cid:76)(cid:81)(cid:3)(cid:76)(cid:81)(cid:86)(cid:76)(cid:74)(cid:75)(cid:87)(cid:3)(cid:76)(cid:81)(cid:87)(cid:82)(cid:3)(cid:72)(cid:81)(cid:71)(cid:16)(cid:88)(cid:86)(cid:72)(cid:85)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:85)(cid:76)(cid:72)(cid:81)(cid:70)(cid:72)(cid:86)(cid:3)(cid:68)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:92)(cid:3)(cid:81)(cid:68)(cid:89)(cid:76)(cid:74)(cid:68)(cid:87)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3) (cid:74) (cid:15) (cid:68)(cid:68)(cid:81)(cid:81)(cid:71)(cid:71) (cid:74) (cid:81)(cid:81)(cid:81) (cid:68)(cid:68)(cid:81)(cid:81)(cid:71)(cid:71) (cid:74) (cid:81)(cid:81) (cid:86) (cid:68)(cid:68)(cid:81)(cid:81)(cid:71)(cid:71) (cid:74)(cid:74) (cid:81)(cid:81) latest technology trendsdddsddddssdds. latest technology trends. (cid:86)(cid:72)(cid:72)(cid:70)(cid:70)(cid:88)(cid:88) (cid:87)(cid:87)(cid:92)(cid:92)(cid:92) (cid:68)(cid:68) (cid:71) (cid:72)(cid:70)(cid:70)(cid:88)(cid:88)(cid:85)(cid:85)(cid:76)(cid:87)(cid:87)(cid:92)(cid:92)(cid:92) (cid:68)(cid:68) (cid:72)(cid:72)(cid:70)(cid:70)(cid:88)(cid:88)(cid:85)(cid:85)(cid:76)(cid:87)(cid:87)(cid:92)(cid:92)(cid:92) (cid:68)(cid:68) (cid:76) ootteecctt tthheeir nne tt otteecctt tthheeir nn tt tthh i (cid:72)(cid:72)(cid:85)(cid:85)(cid:89)(cid:89)(cid:89)(cid:76)(cid:70)(cid:70)(cid:72)(cid:72)(cid:86)(cid:86)(cid:3)(cid:68)(cid:68) (cid:72)(cid:72)(cid:85)(cid:85)(cid:89)(cid:89)(cid:89)(cid:76)(cid:70)(cid:70)(cid:72)(cid:72)(cid:86)(cid:86) (cid:68)(cid:68)(cid:81) (cid:86)(cid:72)(cid:72)(cid:85) (cid:76)(cid:70)(cid:70)(cid:72)(cid:72)(cid:86)(cid:86) (cid:68)(cid:68)(cid:81) (cid:72)(cid:72) (cid:90) (cid:71) f oorrkk p ffoor o (cid:83)(cid:83)(cid:83) (cid:86)(cid:72)(cid:72)(cid:72)(cid:85)(cid:85) (cid:72)(cid:72)(cid:91)(cid:91)(cid:91)(cid:83)(cid:83)(cid:83)(cid:72)(cid:72)(cid:85)(cid:85)(cid:76)(cid:72)(cid:72) (cid:85) (cid:72)(cid:72)(cid:91)(cid:91)(cid:91)(cid:83)(cid:83)(cid:83)(cid:72)(cid:72)(cid:85)(cid:85)(cid:76)(cid:72) (cid:85) (cid:72)(cid:72) (cid:83)(cid:83) (cid:85) (cid:74) (cid:87) (cid:72)(cid:72)(cid:72) (cid:74)(cid:74) (cid:75)(cid:72)(cid:72)(cid:72) (cid:90)(cid:90)(cid:90)(cid:82) (cid:81)(cid:74)(cid:74)(cid:74) n Ente rprise (cid:40)(cid:81)(cid:87)(cid:72)(cid:85)(cid:83)(cid:85)(cid:76)(cid:86)(cid:72)(cid:86)(cid:3) (cid:90)(cid:82)(cid:85)(cid:79)(cid:71)(cid:90)(cid:76)(cid:71)(cid:72)(cid:3) (cid:68)(cid:85)(cid:72)(cid:3) (cid:68)(cid:70)(cid:70)(cid:72)(cid:79)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:80)(cid:68)(cid:77)(cid:82)(cid:85)(cid:3) (cid:71)(cid:76)(cid:74)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3) (cid:87)(cid:85)(cid:68)(cid:81)(cid:86)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:76)(cid:81)(cid:76)(cid:87)(cid:76)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:86)(cid:15)(cid:3) (cid:86)(cid:88)(cid:70)(cid:75)(cid:3) (cid:68)(cid:86)(cid:3) (cid:70)(cid:79)(cid:82)(cid:88)(cid:71)(cid:3) (cid:80)(cid:76)(cid:74)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3) (cid:87)(cid:82)(cid:3) streamline business continuity and contingency planning, to improve the delivery of new products and 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This holistic approach includes assurance across the physical and virtual, on-premises and (cid:82)(cid:909)(cid:16)(cid:83)(cid:85)(cid:72)(cid:80)(cid:76)(cid:86)(cid:72)(cid:86)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:83)(cid:85)(cid:76)(cid:89)(cid:68)(cid:87)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:83)(cid:88)(cid:69)(cid:79)(cid:76)(cid:70)(cid:3)(cid:70)(cid:79)(cid:82)(cid:88)(cid:71)(cid:86)(cid:17)(cid:3)(cid:58)(cid:72)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:68)(cid:86)(cid:3)(cid:522)(cid:57)(cid:76)(cid:86)(cid:76)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:58)(cid:76)(cid:87)(cid:75)(cid:82)(cid:88)(cid:87)(cid:3)(cid:37)(cid:82)(cid:85)(cid:71)(cid:72)(cid:85)(cid:86)(cid:523)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:69)(cid:72)(cid:79)(cid:76)(cid:72)(cid:89)(cid:72)(cid:3)(cid:76)(cid:87)(cid:3) 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S e r v ice Prov ide r (cid:36)(cid:70)(cid:85)(cid:82)(cid:86)(cid:86)(cid:3) (cid:564)(cid:91)(cid:72)(cid:71)(cid:3) (cid:79)(cid:76)(cid:81)(cid:72)(cid:15)(cid:3) (cid:22)(cid:42)(cid:15)(cid:3) (cid:23)(cid:42)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:81)(cid:82)(cid:90)(cid:3) (cid:24)(cid:42)(cid:3) (cid:81)(cid:72)(cid:87)(cid:90)(cid:82)(cid:85)(cid:78)(cid:3) (cid:68)(cid:85)(cid:70)(cid:75)(cid:76)(cid:87)(cid:72)(cid:70)(cid:87)(cid:88)(cid:85)(cid:72)(cid:86)(cid:15)(cid:3) (cid:49)(cid:40)(cid:55)(cid:54)(cid:38)(cid:50)(cid:56)(cid:55)(cid:519)(cid:86)(cid:3) (cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:3) (cid:68)(cid:86)(cid:86)(cid:88)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3) (cid:86)(cid:82)(cid:79)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3) (cid:68)(cid:85)(cid:72)(cid:3) helping digital service providers gain end-to-end, real-time, and reliable visibility into their networks and the services they deliver over them. 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(cid:19) (cid:23) Reconciliation of GAAP to Non-GAAP Financial Measures (in millions, except % and EPS data) AAP revenue Product Service Total GAAP revenue Non-GAGG AAA P adjd ustmtt entstt Non-GAAP revenue Non-GAAP product Non-GAAP service Total non-GAAP revenue Total GAAP cost of revenue Non-GAGG AAA P adjd ustmtt entstt Total non-GAAP cost of revenue Gross proﬁt - GAAP Non-GAGG AAA P adjd ustmtt entstt Gross proﬁt - non-GAAP Non-GAGG AAA P grgg oss proﬁo t margrr igg n Total operating expenses - GAAP Non-GAGG AAA P adjd ustmtt entstt Total operating expenses - non-GAAP Income from operations - GAAP Non-GAGG AAA P adjd ustmtt entstt Income from operations - non-GAAP Non-GAGG AAA P income frff om operatitt ons margrr igg n Net income - GAAP Non-GAGG AAA P adjd ustmtt entstt Net income - non-GAAP Diluted net income per share - GAAP Share impact of non-GAAP adjustments identiﬁed above Diluted net income per share - non-GAAP Diluted weighted average common shares outstanding Net cash provided by operating activities Purchase of ﬁxed assets and intangible assets Free cash ﬂow Certain numbers may not total due to rounding. NETSCOUT FY’21 Reported NETSCOUT FY’22 Reported $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 377.7 453.6 831.3 0.0 377.7 453.6 831.3 222.1 (25.9) 196.2 609.2 25.9 635.1 76.4% 572.1 (109.8) 462.3 37.1 135.7 172.8 20.8% 19.4 106.4 125.8 0.26 1.44 1.70 73.8 213.9 (16.5) 197.4 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 410.1 455.5 855.6 - 410.1 445.5 855.6 214.2 (20.5) 193.7 641.4 20.5 661.8 77.4% 592.8 (110.9) 481.8 48.6 131.4 180.0 21.0% 35.9 102.5 138.4 0.48 1.36 1.84 75.1 296.0 (10.4) 285.6 Non-GAAP adjustments eliminate the GAAP eﬀects of: (i) acquisitions by adding back deferred revenue revaluation and removing expenses related to the amortization of acquired intangible assets; (ii) share-based compensation; (iii) acquisition related-depreciation; (iv) compensation for post-combination services; (v) business development and integration costs; (vi) expenses tied to implementing new accounting standards; (vii) restructuring costs; (viii) legal expenses related to a civil judgment; (ix) loss on extinguishment of debt; (x) change in fair value of contingent consideration; and (xi) income and expenses associated with transitional services agreements, all net of related income tax eﬀects. For the speciﬁc detail on the value of each non-GAAP adjustment, please refer to the Company’s quarterly earnings press releases available in the IR section of www.netscout.com. R-1 Detailed Reconciliation of Adjustments: GAAP to Non-GAAP Financial Measures $ $ $ $ $ $ $ $ FY’21 FY’22 831.3 0.0 831.3 37.1 0.0 51.9 80.2 0.0 0.3 0.1 0.2 2.8 0.2 135.7 172.8 19.4 0.0 51.9 80.2 0.0 0.3 0.1 0.2 2.8 - - (29.0) 106.4 125.8 0.26 1.44 1.70 73.8 $ $ $ $ $ $ $ $ 855.6 - 855.6 48.6 - 56.1 73.1 (0.0) 0.0 - 0.3 1.1 0.8 131.4 180.0 35.9 - 56.1 73.1 (0.0) 0.0 - 0.3 1.1 (0.8) 0.6 (27.8) 102.5 138.4 0.48 1.36 1.84 75.1 (in millions, except EPS data) GAAP revenue Total non-GAAP adjustments Non-GAAP revenue Income from operations - GAAP Service deferred revenue fair value adjustment Share-based compensation expense Amortization expense related to acquired intangible assets Business development and integration expense Compensation for post combination services Restructuring charges Acquisition-related depreciation expense Legal judgements expense Transitional service agreement income Total non-GAAP adjustments Income from operations - non-GAAP Net income - GAAP Service deferred revenue fair value adjustment Share-based compensation expense Amortization expense related to acquired intangible assets Business development and integration expense Compensation for post combination services Restructuring charges Acquisition-related depreciation expense Legal judgements expense Change in contingent consideration Loss on extinguishment of debt Income tax adjustments Total non-GAAP adjustments Net income - non-GAAP Diluted net income per share - GAAP Share impact of non-GAAP adjustments identiﬁed above Diluted net income per share - non-GAAP Diluted weighted average common shares outstanding Certain numbers may not total due to rounding. R-2 2022 Annual Report on Form 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ☐ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 TRARR NSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period frff om to For the fiff scal year ended March 31, 2022 OR Commission fiff le number 000-26251 NETSCOUT SYSTEMS, INC. (Exact name of registrant as specififf ed in its charter) Delaware (State or other jurisdiction of incorporation or organization) 04-2837575 (IRS Employer Identififf cation No.) 310 Littleton Road, Westforff d, MA 01886 (978) 614-4000 Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock, $0.001 par value per share Trading Symbol(s) NTCT Name of each exchange on which registered: Nasdaq Global Select Market Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defiff ned in RulRR e 405 of the Securities Act. Yes x No ¨ Indicate by check mark if the registrant is not required to fiff le reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x Indicate by check mark whether the registrant: (1) has fiff led all reports required to be fiff led by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or forff (2) has been subject to such fiff ling requirements forff the past 90 days. Yes x No ¨ such shorter period that the registrant was required to fiff le such reports), and Indicate by check mark whether the registrant has submitted electronically everyrr to RulRR e 405 of Regulation S-T (§ 232.405 of this chapta er) during the preceding 12 months (or forff required to submit such fiff les). Yes x No ¨ Interactive Data File required to be submitted pursuant such shorter period that the registrant was Indicate by check mark whether the registrant is a large accelerated fiff ler, an accelerated fiff ler, a non-accelerated fiff ler, a smaller reporting company, or an emerging growth company. See the defiff nitions of "large accelerated fiff ler," "accelerated fiff ler," "smaller reporting company," and "emerging growth company" in RulRR e 12b-2 of the Exchange Act. (Check one): Large accelerated fiff ler x Non-accelerated fiff ler ¨ Accelerated fiff ler Smaller reporting company Emerging growth company ¨ ☐ ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised fiff nancial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ Indicate by check mark whether the registrant has fiff led a report on and attestation to its management's assessment of the effff eff ctiveness of its internal control over fiff nancial reporting under Section 404(b) of the Sarbar nes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting fiff rm that prepared or issued its audit report.☒ Indicate by check mark whether the registrant is a shell company (as defiff ned in RulRR e 12b-2 of the Exchange Act). YES ☐ NO x The aggregate market value of common stock held by non-affff iff liates of the registrant as of September 30, 2021 (based on the last reported sale price on the Nasdaq Global Select Market as of such date) was appr 74,117,725 shares of the registrant's common stock outstanding. a oximately $1,925,751,516. As of May 9, 2022, there were Portions of the registrant's defiff nitive Proxy Statement forff the 2022 Annual Meeting of Stockholders to be fiff led with the U.S. Securities DOCUMENTS INCORPORARR TED BY REFERENCE and Exchange Commission pursuant to Regulation 14A not later than 120 days aftff er the end of the fiff scal year covered by this Annual Report on Form 10-K are incorpor ated by refeff rence in Part III, Items 10-14 of this Annual Report on Form 10-K. rr NETSCOUT SYSTEMS, INC. FORM 10-K FOR THE FISCAL YEAR ENDED MARCH 31, 2022 TABLE OF CONTENTS PART I Item 1. Business Item 1A. Risk Factors Item 1B. Unresolved Staff Comments Item 2. Item 3. Item 4. PART II Item 5. Item 6. Item 7. Properties Legal Proceedings Mine Safety Disclosures Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Selected Financial Data Management’s Discussion and Analysis of Financial Condition and Results of Operations Item 7A. Quantitative and Qualitative Disclosures About Market Risk Item 8. Item 9. Financial Statements and Supplementary Data Changes in and Disagreements With Accountants on Accounting and Financial Disclosure Item 9A. Controls and Procedures Item 9B. Other Information Item 9C. PART III Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Item 10. Directors and Executive Officers of the Registrant tem 11. Executive Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Item 13. Certain Relationships and Related Transactions Item 14. Principal Accountant Fees and Services PART IV Item 15. Exhibits and Financial Statement Schedules Item 16. Form 10-K Summary Signatures 4 15 31 31 31 31 32 33 34 50 51 51 51 51 51 52 52 52 52 52 53 56 57 Unless the context suggests otherwise, refeff rences in this Annual Report on Form 10-K (Annual Report) to "NetScout," the "Company," "we," "us," and "our" refeff r to NetScout Systems, Inc. and, where appr opriate, our consolidated subsidiaries. a NetScout, the NetScout logo, Adapta ive Service Intelligence and other trademarks or service marks of NetScout appe this Annual Report are the property of NetScout Systems, Inc. and/or its subsidiaries and/or affff iff liates in the United States and/or other countries. Any third-party trade names, trademarks and service marks appe aring in this Annual Report are the property of their respective holders. aring in a a Cautionary Statement Concerning Forward-Looking Statements This Annual Report contains forff ward-looking statements under Section 21E of the Exchange Act (as defiff ned below) and other feff deral securities laws. These statements relate to futff urt e events or our futff urt e fiff nancial perforff mance and are identififf ed by terminology such as "may," "will," "could," "should," "expects," "plans," "intends," "seeks," "anticipates," "believes," "estimates," "potential" or "continue," or the negative of such terms or other comparabla e terminology. These statements are only predictions. You should not place undue reliance on these forff ward-looking statements. Actuat materially. Factors that may cause such diffff eff rences include, but are not limited to, the faff ctors discussed under the heading "Risk Factors" and in our other fiff lings with the Securities and Exchange Commission (SEC). These faff ctors may cause our actuat l results to diffff eff r materially frff om any forff ward-looking statement. Moreover, we operate in a veryrr competitive and rapia dly changing environment. New risks emerge frff om time to time. It is not possible forff l we assess the impact of all faff ctors on our business or the extent to which any faff ctor, or combination of faff ctors, may cause actuat results to diffff eff r materially frff om those contained in any forff ward-looking statements we may make. our management to predict all risks, nor can l events or results may diffff eff r Except as required by law, we do not undertake any obligation to release publicly any revisions to these forff ward-looking statements aftff er completion of the fiff ling of this Annual Report to reflff ect later events or circumstances or the occurrence of unanticipated events. Risk Factor Summary Our operating results and fiff nancial condition have varied in the past and may varyrr signififf cantly in the futff urt e depending the historical inforff mation in this report, the matters contained in this report include forff ward- l results to on a number of faff ctors. Except forff looking statements that involve risk and uncertainties. The folff diffff eff r materially frff om those contained in or implied by forff ward-looking statements made in this report. These statements involve the risks and uncertainties identififf ed below as well as additional risks and uncertainties that are not yet identififf ed or that we currently think are immaterial but may also impact our business operations. Such faff ctors are among many that may have a material adverse impact upon our business, results of operations, liquidity, and fiff nancial condition. These risks are more fulff ly described in Part I, Item 1A. "Risk Factors". These risks include, but are not limited to, the folff lowing faff ctors are among many that could cause actuat lowing: • Our business and operations, and the operations of our customers, partners, and/or suppliers, may be adversely • • • • affff eff cted by epidemics and pandemics, such as the COVID-19 pandemic. Unfaff vorabla e conditions in our industryrr or the global economy, or reductions in inforff mation technology spending, could limit our abia lity to grow our business and negatively affff eff ct our results of operations. Potential product vulnerabia lities or critical security defeff cts, prioritization decisions regarding remedying vulnerabia lities or security defeff cts, or customers not deploying security releases or deciding not to upgrade products, services, or solutions could result in claims of liabia lity against us, damage our reputation, or otherwise harm our business. If we or third parties who we work with experience a security incident, or the confiff dentiality, integrity, or availabia lity of our inforff mation technology, softff ware, services, communications or data is compromised, our business or platforff m may be perceived as not being secure, our reputation may be harmed, demand forff we may incur signififf cant liabia lities. Our abia lity to quickly and successfulff could affff eff ct our abia lity to deliver our products and negatively impact our business reputation. If our products contain errors or quality issues, such issues may be costly to correct, revenue may be delayed, we could be sued, and our reputation could be harmed. If we faff il to introduce new products and solutions or enhance our existing products and solutions to keep up with rapia d technological change, demand forff Necessaryrr Our reliance on sole source suppliers could adversely impact our business. Increased customer demands on our technical support services may adversely affff eff ct our relationships with our customers and our fiff nancial results. The success of our business depends, in part, on the continued growth in the market forff demand forff Failure to manage growth properly and to implement enhanced automated systems could adversely impact our business. • Our growth could suffff eff r if the markets into which we sell our products and services experience cyclicality. • We or our suppliers may be affff eff cted by new regulations related to climate change or other environmental issues. third-party technology may not be availabla e to us on commercially reasonabla e terms or at all. ly recover frff om a disaster, public health crisis, or other business continuity event service assurance and network security solutions. our products and solutions may decline. our offff eff ring may be reduced, and service delivery,rr licenses forff and the continued commercial • • • • • • • 3 • • • • • Our success depends, in part, on our abia lity to manage and leverage our distribution channels. Disrupt ions to, or our faff ilure to effff eff ctively develop and manage, these partners and the processes and procedures that support them could adversely affff eff ct our abia lity to generate revenues frff om the sale of our products and services. Our success depends on our abia lity to protect our intellectuat Others may claim that we infrff inge on their intellectuat Our indebtedness may limit our operations and our use of our cash flff ow, and any faff ilure to comply with the covenants a that appl Any faff ilure to meet our debt obligations could damage our business. y to our indebtedness could adversely affff eff ct our liquidity and fiff nancial condition. l property rights. l property rights. r • • We may faff il to secure necessaryrr additional fiff nancing. • t and retain qualififf ed personnel and plan forff The faff ilure to recruir hinder our abia lity to successfulff position and operating results. Our disclosures, initiatives and goals related to environmental, social and governance (ESG) matters expose us to numerous risks, including risks to our reputation, business, fiff nancial perforff mance and growth. and manage the succession of key executives could ly manage our business, which could have a material adverse effff eff ct on our fiff nancial • We may not successfulff ly complete acquisitions or integrate acquisitions we do make, which could impair our abia lity to compete and could harm our operating results. • We faff ce signififf cant competition frff om other technology companies. • Uncertainties of regulation of the Internet and data traveling over the Internet could have a material and adverse impact on our fiff nancial condition and results of operations. • We are subject to stringent and changing laws, regulations, standards, contractuat l obligations, and other obligations l, alleged, or perceived faff ilure by us or the partners we related to privacy, data protection, and data security. The actuat work with to comply with such obligations could adversely affff eff ct our business, results of operations, and fiff nancial conditions. Foreign currency exchange rates may adversely affff eff ct our fiff nancial statements. If we violate the U.S. Foreign Corrupt icabla e anti-briberyrr Practices Act or appl comply with U.S. export controls and government contracting laws, our business could be harmed. The current economic and geopolitical environment may impact some specififf c industries into which we sell and may lead our customers to delay or forff go technology investments and could have other impacts, any of which could materially adversely affff eff ct our business, fiff nancial condition, operating results and cash flff ows. International economic, political, legal, compliance and business faff ctors could negatively affff eff ct our fiff nancial statements and growth. laws in other countries, or if we faff il to a rr • • • • ItII ett m 1. Businii ess Overview PART I We are an industryrr leader with over three decades of experience in providing service assurance and cybersecurity ises, including local, state and feff deral government agencies, rely on our solutions to achieve the visibility and to optimize network perforff mance, ensure the deliveryrr of high-quality, mission-critical appl solutions that are used by customers worldwide to protect their digital business services against disrupt and enterprr protection necessaryrr services, gain timely insight into the end user experience and protect their networks frff om attack. With our offff eff rings, customers can quickly, effff iff ciently and effff eff ctively identifyff and resolve issues that result in downtime, interrupt quality or compromised data, thereby reducing meantime-to-resolution of issues and driving compelling returt ns on their investments in their networks and broader technology initiatives. Some of the more signififf cant technology trends and catalysts forff environments, the rapia dly evolving cybersecurity threat landscapea 5G evolution in both the service provider and enterprr our business include the evolution of customers' digital transforff mation initiatives such as the migration to cloud , business intelligence and analytics advancements, and the ise customer verticals. ion. Service providers ications and ions to services, poor service a r rr Our operating results are inflff uenced by a number of faff ctors, including, but not limited to, the mix and quantity of products and services sold, pricing, costs and availabia lity of materials used in our products, growth in employee-related costs, including commissions, and the expansion of our operations. Factors that affff eff ct our abia lity to maximize our operating results include, but are not limited to, our abia lity to introduce new products and enhance existing products, the marketplt ace acceptance of those new or enhanced products, continued expansion into international markets, expansion into new or adjacent markets, development of strategic partnerships, competition, successfulff ts, and our abia lity to control costs and make improvements in a highly competitive industry.rr acquisition integration effff orff 4 Markets Our service assurance solutions are used by enterprrr ises (including government agencies) and service providers to optimize network perforff mance, quickly identifyff and resolve issues impacting appl into the end user experience. Our cybersecurity solutions are used by enterprr advanced, volumetric, and appl teams in rapia dly identifyiff ng, isolating, investigating, and resolving other advanced network threats. ication and service quality, and to gain insight a ises and service providers to identifyff and mitigate ise security ication-specififf c distributed denial of service (DDoS) attacks, as well as assist enterprr a EnEE tett rprrr t isii e MarMM kerr Within the enterprrr ise market, NetScout's nGeniusONE, ISNG, and Omnis offff eff rings enabla e IT organizations to support a growing range of perforff mance management and cybersecurity use cases including: • • • • • • MM ment - Our nGeniusONE analytics and our ISNG real-time inforff mation platforff m NeNN twtt orkrr Perfr orff mance Manage provide the necessaryrr insight to optimize network perforff mance, restore service and understand the quality of the users’ experience. By integrating certain acquired product lines and product feff aturt es into our core offff eff rings, our customers can benefiff t frff om a consistent view across their traditional wired network infrff astrucr and wireless networks (WiFi). turt es, remote offff iff ces, ication, server, and user communities' perforff mance. We proactively detect emerging issues with the abia lity to ment: Data CeCC nter TrTT ansfs orff mation and Cloud ComCC putm ing - We enabla e inforff mation turt e teams, to manage the deliveryrr l and physical environments, providing a comprehensive, unififf ed real-time view into network, MM ication Perfr orff mance Manage ApplA technology (IT) organizations, frff om their development operations to their infrff astrucrr of services across virtuat appl a help analyze both physical and virtuat organizations to optimize datacenter infrff astrucr operation of complex, multi-tier appl are oftff en used by enterprrr more cost-effff eff ctive accessibility to appl appl a enterprrr migrate appl hybrid cloud environment. ise customers extend their monitoring of appl a ications and the network. Our solutions portfolff io also includes a range of virtuat a a a l service deliveryrr environments within the data center which enabla es the ication environments in consolidated, state-of-ff the-art data centers. Our solutions turt e investments, protect against service degradations, and simplifyff ises to support private cloud computing environments that are aimed at enabla ing greater, ications without compromising the reliabia lity and security of those ications deeper into their traditional data centers, confiff dently a l appl iances that can help ications into public cloud environments and gain a comprehensive, cohesive view into the resulting UniUU fi iff ed ComCC munications (U(( CUU )C - We deliver deep appl ication-level unififf ed visibility into voice, data and video services side-by-side in order to understand the interrelationships of all UC services that traverse the network infrff astrucr turt e and assess quality and perforff mance of the deliveryrr of these services. As a result, our real-time, actionabla e intelligence helps customers to deliver a high-quality UC experience as users make calls, video confeff rence and engage in instant messaging. We also help desktop, network, telecom, and appl ication teams manage UC through a common platforff m across complex, geographi cally dispersed, and multi-vendor environments. a a a a MM ise customers with softff ware-as-a- l ications, and gauge the health of servers, routers and switches as well as wireless and virtuat Softff wtt are-as-a-Service and InfII rff astrtt ucture Perfr orff mance Manage active agent-based offff eff rings that can help them determine availabia lity and perforff mance levels forff service (SaaS) appl infrff astrucr infrff astrucr Deployed independently or as part of our broader service assurance solution, these products also play an important role in helping enterprr returt ns on their appl turt es. As a result, customers can continuously monitor the perforff mance of key business services and the turt e used to deliver them, regardless of how appl ises deliver a superior user experience, achieve outstanding service quality and drive better ications are deployed or where the user is located. ment - We also provide enterprrr ication and infrff astrucr turt e investments. a a ication and Desktkk op ViVV rtualizii ation - We provide clear and actionabla e insights that help customers fulff ApplA the operational benefiff ts associated with Application and Desktop Virtuat identifyff and resolve service problems. We offff eff r visibility across all virtuat including remote access, client, virtuat customers gain actionabla e metrics and insight frff om monitoring and analyzing the consumption and perforff mance of VDI services. l desktop infrff astrucr ication, and related databaa turt e (VDI) tiers se systems, and help lization, and reduce the time it takes to lization, web, frff ont-end appl ly realize a CyCC bersrr ecuritytt : DDDD oS Protection and Omnisii CyCC ber IntII elligei nce - Computer networks continue to be targeted forff ise’s abia lity to conduct its cyberattacks that are aimed at disrupt business or gaining unauthorized access to corpor provide a range of network security solutions under the NetScout Arbor networks frff om high-volume and appl network with traffff iff c or over-exercising specififf c func ications and restricting or stealing valuabla e inforff mation. We ises to protect their ication-specififf c DDoS attacks, which are aimed at either overwhelming the tions or feff aturt es of a website with the intention to disabla e those ing, damaging, or otherwise destroying an enterprrr brand that enabla e enterprrr a ate appl a r r r ff 5 tions or feff aturt es. We have also developed new cybersecurity solutions forff func ff products that provide greater deep-dive forff ensic capaa bia lities as well as analytics that can provide visibility into anomalous behavior on the network that may be indicative of an advanced threat. These security analytics enabla e existing enterprr ise customers to leverage their historical investments in NetScout's service assurance solutions by using the Adapta ive Service Intelligence (ASI) data already being generated to support service assurance as well as cybersecurity use cases. ises with our Omnis suite of enterprrr GovG ernment MarMM kerr tstt Considered as part of our enterprr ise customer vertical, we have built a strong position with feff deral, state and local government agencies, both in the United States and abra oad. Similar to our enterprr focff used on streamlining and transforff ming IT into more effff iff cient and more easily managed environments. To accomplish this, agencies are turt ning to IT solutions that will help simplifyff managing and assuring their IT environments as well as reduce costs. However, governmental markets diffff eff r frff om enterprrr by potential changes in government administrators, budgetaryrr priorities and allocated fundi ise markets primarily due to their purchasing cycles being inflff uenced ise customers, government agencies are key projects. ng forff ff TeTT lell communicatitt on SeSS rvice PrPP ovider MarMM kerr tstt Today's service providers are focff used on delivering a compelling set of services and ensuring a high-quality user experience, while also striving to minimize operational complexity, control costs and improve automation. This, coupled with the challenge of internet protocol (IP) transforff mation activities and complex technologies such as 5G, Long-Term Evolution (LTE), Network Functions Virtuat services drives the need forff Our service provider solutions support an expanding range of use cases including: lization (NFV), Internet Protocol Television (IP-TV), wireless network (WiFi) and cloud oach to managing service deliveryrr and the subscriber experience. a more automated and unififf ed appr a • • • ff mental transforff mation of the mobile data, voice and video-centric services and to consolidate and an optimal subscriber experience. NetScout’s service assurance solutions help service providers Service Assurance forff MobiMM le, FiFF xii ed Line and CablCC e OpeO ratorsrr - The funda network to all-IP enabla es mobile operators to build highly-scalabla e service deliveryrr environments to offff eff r new services to meet the growing subscriber demand forff simplifyff network operations. Mobile operators use our offff eff rings to gain real-time, detailed IP packet-level insight and core-to-access visibility, which enabla es them to ensure services offff eff red over the network and meet certain pre-defiff ned quality levels forff effff eff ctively manage capaa city, assess overall network quality, take proactive steps to modifyff impact subscribers, and quickly identifyff and troubleshoot network problems. In addition to improving the overall returt n on their network infrff astrucrr network quality and unique customer insights - both of which contribute to subscriber acquisition, retention, and monetization. The growing demand forff anywhere, IP-TV, on-demand video traffff iff c, new extended WiFi initiatives and carrier Ethernet services presents fiff xed line and cabla e multi-system operators with signififf cant revenue opportuni to convergence mechanism forff operations while reducing total cost of operations. For example, cabla e operators use our solutions to monitor and manage their local area WiFi connectivity services, ensure the high-quality deliveryrr of video to consumers outside of their homes as well as provide broadband and telephony services targeting small- and medium-sized businesses. access, distribution and core networks, enabla ing new service offff eff rings and simplifyiff ng network turt e investments, mobile operators using our solutions also benefiff t frff om improved high-bandwidth triple-play services, broadband connectivity, content ties. IP has become the de facff the network beforff e issues t Service Providersrr - Service providers strive to understand how the perforff mance of their Business IntII elligei nce forff networks impact customer experience, subscriber behavior and related usage trends. By combining network traffff iff c data with other inforff mation, including support requests, subscriber calling plans, demographi service providers can make more timely decisions about retain and furff subscribers, services, networks, and appl integrated into their data lakes and third-party analytic platforff ms. c data and other details, their offff eff rings and sales and marketing initiatives to acquire, ther monetize their subscribers. NetScout's analytics deliver timely insights into a service provider's ications, as well as easy export capaa bia lities so that this inforff mation can be a a a DDDD oS Protection - Over the past decade, Internet Service Providers (ISPs), including leading telecommunications providers, cabla e multi-service operators and cloud providers, have seen signififf cant increases in the sophistication, scale and frff equency of high-volume and appl aimed at disrupt over-exercising specififf c func NetScout Arbor networks against DDoS attacks, and to resell certain DDoS offff eff rings to their enterprrr tions or feff aturt es of a website with the intention to disabla e those func smart DDoS solutions are used by a wide range of ISPs around the world to help protect their ing the online services of an ISP's business customer by overwhelming the network with traffff iff c or by ication-specififf c DDoS attacks on their networks. DDoS attacks are tions or featurt es. ise customers. a ff r r ff 6 Products Overview Since our foundi ff ng in 1984, we have been an industryrr innovator in using IP-based network traffff iff c to help a ications over their networks, improve the end-user organizations manage and optimize the deliveryrr of services and appl experience and protect networks frff om unwanted cybersecurity threats. Using our patented ASI technology, our solutions instantaneously convert network traffff iff c data, oftff en refeff rred to as wire data, into high-value metadata, or "smart data". Our offff eff rings can help customers quickly identifyff and troubleshoot network and appl ication perforff mance issues, defeff nd their networks frff om DDoS and other cybersecurity attacks, and rapia dly fiff nd and isolate advanced network threats. Our solutions are typically deployed by customers as integrated hardware and softff ware, as softff ware only that is then integrated into commercial offff -ff the-shelf hardware, in a virtuat solutions help our customers meet the increasing demands and an ever-changing technology landscapea of IP networks, service, ther elevate our value proposition and address the near- and long- a appl term needs of customers and prospects, we have delivered maja or product upgrades across our product lines by integrating key func tionality frff om acquired product lines, increasing the deployment flff exibility of our solutions, and adding new feff aturt es and ff capaa bia lities that enabla e us to address a broader range of use cases. Our primaryrr products can be categorized as folff lized environment as softff ware only, or as a Softff ware as a Service (SaaS) forff m faff ctor. Our ications, and cybersecurity threats. In recent years, to furff lows: a SeSS rvice Assurance SolSS utitt ons forff NeNN twtt orkrr and ApplA ill catitt on PePP rfr orff mrr ance and Businii ess InII tett llll ill gei nce Analyll titt cs • • MM ment Softff wtt are and Analyll tic ModulMM es - Our nGeniusONE management softff ware is used to ise, and government customers enabla ing them to predict, preempt, and resolve turt es. Additionally, we market a range of specialized platforff ms and analytic modules that can enabla e our nGeniusONOO ENN Manage support our service provider, enterprrr network and service deliveryrr problems while faff cilitating the optimization and capaa infrff astrucr customers to analyze and troubleshoot traffff iff c in radio access network and WiFi networks, as well as gain timely insight into high-value services, appl network. nGeniusPULSE is an active testing tool that enabla es enterprrr and determine appl ication availabia lity, reliabia lity, and perforff mance. We also market our nGenius Business Analytics solution, which enabla es service providers to quickly and effff iff ciently analyze their network traffff iff c to gain greater and more timely insights into their subscribers, services, networks, and appl data into their data lakes and into third-party analytic platforff ms. ications and systems, and better understand the subscriber’s experience on the ises to identifyff ications, as well as easily export our smart city planning of their network infrff astrucr turt e perforff mance issues a a a )s - Our ISNG platforff m provides real-time collection and iance with integrated hardware and softff ware, as softff ware-only forff ViVV sii ibilitytt Productstt (P(( robes, Packekk t FlFF ow Sysyy tems and TapsTT analysis of inforff mation-rich, high-volume packet-flff ow data frff om across the network that is displayed through the nGeniusONE Service Assurance Solution. The ISNG is an advanced passive network probe that can be deployed as a a traditional appl hardware or in virtuat source, which is marketed as vSTREAM, can be deployed to support NFV environments as well as to cost-effff eff ctively monitor appl provide comprehensive packet flff ow systems (also called network packet brokers or network visibility faff bra ic switches), that deliver targeted network traffff iff c access to a range of monitoring and cybersecurity tools and systems, including the nGeniusONE Service Assurance platforff m. Additionally, we market a suite of test access points (TAPs) that enabla e fulff use in commercial-offff -ff the-shelf lized forff m faff ctor version of our intelligent data ication perforff mance in traditional data center, private cloud, and public cloud environments. We also ive access to network traffff iff c with multiple link type and speed options. lized or softff ware only forff m faff ctors. The virtuat l, non-disrupt a r CyCC bersrr ecuritii ytt SolSS utitt ons • • r r ises around the world brand. Dozens of service provider customers around 's solutions as a managed DDoS service to their enterprrr DDDD oS Protection – We provide cybersecurity solutions that enabla e service providers and enterprr to protect their networks against DDoS attacks under the Arbor the world also resell Arbor DDoS solutions offff eff rs complete deployment flff exibility spanning on-premise offff eff rings and cloud-based capaa bia lities to meet a broad array of customer needs, as well as specialized analytics and comprehensive threat intelligence inforff mation. Our smart DDoS offff eff rings forff detection, Arbor key network services and Arbor forff attacks and outbound quickly removes DDoS attack traffff iff c. We plan to furff enabla e greater adoption of our solutions by service provider and enterprr Sightline forff DDoS visibility and threat ion to advanced analytical and forff ensic inforff mation. Our smart DDoS offff eff rings Cloud, a global, cloud-based traffff iff c scrubbi ther enhance and expand these capaa bia lities in ways that will identifyiff ng and blocking incoming DDoS ng service that removing DDoS attack traffff iff c frff om the network without disrupt r ises include Arbor malicious communications, and Arbor Edge Defeff nse, a perimeter-based appl service providers include Arbor Threat Mitigation System forff ise customers. Our portfolff ise customers. Insight forff iance forff enterprrr io of a r r r rr rr r t Advanced ThrTT eat Detection – We are actively expanding our enterprr investment that our enterprr network traffff iff c via our probes, we can expand our value proposition by providing specialized analytics forff assurance and cybersecurity. We have introduced and will continue to advance solutions such as new packet forff ensic ise customers have made in our traditional service assurance solutions. By collecting ise cybersecurity offff eff rings to better leverage the both service 7 capaa bia lities, such as Omnis Cyber Intelligence, designed specififf cally forff anomalous behavior analytics that security teams can use to identifyff and investigate potential advanced network threats. Our Omnis suite of products is focff used on addressing cybersecurity use cases. security operations teams as well as new Integration with Third-Party Solutions To have greater operational impact on assuring perforff mance of appl a ications and service delivery,rr we have integrated our technology with third-party management consoles and business service management systems. This integration allows organizations to receive alarms on impending perforff mance problems and to link into the nGenius Service Assurance solution in order to perforff m detailed problem analysis and troubleshooting. The third-party solution providers that we have integrated our solutions with include Cisco Systems, Cisco Sourcefiff re, Citrix Systems, Dell Technologies, Hewlett-Packard Company, IBM Tivoli, and VMWare. In addition, we have embedded NetScout Arbor DDoS mitigation capaa bia lities on a blade within Cisco's market-leading ASR9000 router and will continue to evaluate partnership opportuni within other network equipment platforff ms. ties to integrate its smart DDoS capaa bia lities r t Growth Strategy The folff lowing are key elements in our growth strategy forff fiff scal year 2023: • • • • • • • ation - In order to support our customers' near-term and longer-term requirements, we plan to continue io. In particular, we continue to invest in research and II Drive Innov innovating by enhancing and expanding our product portfolff development, and leverage the strong technical and domain expertise across our organization. Our engineering teams are focff used on advancing technical innovation across our broad product portfolff experience with global enterprrr ise, service provider and government organizations with IP-based networks, we remain well positioned to cross-leverage our technology development across all maja or platforff ms and relevant technologies to address the evolving demands of current and prospective customers. io. By capia talizing on our extensive - By making our visibility products availabla e in multiple forff m faff ctors, including softff ware Deliver Pervasive ViVV sii ibilitytt that can be deployed with commercial offff -ff the-shelf servers and as virtuat more affff orff dabla e forff infrff astrucr entation options, we are well positioned to help existing and new customers gain greater visibility into more places across their end-to-end network environments and address an even broader range of service assurance and cybersecurity use cases. customers to deploy our technology more broadly across their hybrid network and IT turt es. By offff eff ring more cost-effff eff ctive instrumr iances, we believe that it is easier and a l appl ication perforff mance management, infrff astrucr ExEE tension into Adjacent MarMM krr ekk tstt - By enhancing and expanding our product portfolff io and driving product integration via internal development and acquisitions, we have expanded our reach into complementaryrr adjacent markets such as appl turt e perforff mance management, big data analytics, and cybersecurity. a We believe that this element of our strategy is integral to gaining access to larger budgets, increasing spending frff om existing customers, attracting new customers, and increasing our total addressabla e market. In particular, we are broadening our cybersecurity solutions beyond the DDoS market with enterprrr ise security offff eff rings that can help our customers extract more value frff om the network traffff iff c that we are already collecting to support service assurance use cases. x ExEE isii ting CusCC tomer Relatl ises that have purchased our products in support of maja or technology and network initiatives ForFF tifi yff and ExEE pand providers and enterprrr that they have implemented over the past decade. 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 identifyff new opportuni support new network, cybersecurity, and broader technology projects. - We have an expansive, global customer base of service ionshipsi ties to t x our CusCC tomer Base - The investments we have made over the past several years to expand our product ExEE pand portfolff c io and support greater deployment flff exibility also positions us to win new customers in establa ished geographi markets where we can leverage our global direct sales organization and an extensive network of value-added resellers and systems integrators. a rease MarMM krr ekk t Relevance and Awareness - We plan to continue to implement marketing campaigns aimed at IncII generating high-quality sales opportuni customers, promoting thought leadership and building the NetScout brand. ties with both current and prospective enterprr ise and service provider t ExEE tend our TeTT chnology Partnett complementaryrr solutions providers that can help us support a larger, more global and more diverse customer base. r Alliance Ecosys syy tem - We plan to continue to develop and forff tifyff alliances with 8 We also plan to continue to enhance our technology value, product capaa bia lities and customer relevance through the continued integration of our products into technology partner products. Pursrr ue Strt ategie c Acquisii itions - We have completed many acquisitions since our inception that have helped broaden our capaa bia lities, enhance our products and technologies, enabla e us to expand into adjacent markets and better position us to meet the needs of a larger base of customers and prospects. ImII prm ove CosCC t Strtt ucture and Drive EfE fff iff ciencies - We plan to balance our investments in key technology, product development, sales and marketing, and other initiatives that will enabla e us to drive long-term profiff tabla e growth with an ongoing focff us on managing costs and driving effff iff ciencies. • • Support Services Customer satisfaff ction is a key driver of our success. Our support programs offff eff r customers various levels of high-quality support services to assist in the deployment and use of our solutions. We have support personnel strategically deployed across the globe to deliver 24/7 support to our premium customers. Certain support services, such as on-site support activities, are provided by qualififf ed third-party support partners. In addition, many of our certififf ed resellers provide Partner Enabla ed Support to our end users. This is especially prevalent in international locations where time zones and language, among other faff ctors, make it more effff iff cient forff our softff ware and fiff rmware at no additional charge, if and when such updates are developed and made generally availabla e to our commercial customer base. If ordered, support commences upon shipment or expiration of the standard warranty forff softff ware. For softff ware, which also includes fiff rmware, the standard warranty commences upon shipment and expires 60 to 90 days thereaftff er. With regard to hardware, the standard warranty commences upon shipment and expires 60 days to 12 months thereaftff er. We believe our warranties are consistent with commonly accepted industryrr standards. We expect to continue to provide support services forff ther simplifyff and standardize our support obligations over the coming years. the acquired platforff ms under existing agreements and plan to explore opportuni end users to have the reseller provide initial support func tions. Our support also includes updates to ties to furff ff t Manufacff turing Our manufaff cturt ing operations consist primarily of fiff nal product assembly, confiff guration, and testing. We purchase t our hardware products in accordance with NetScout standard components and subassemblies frff om suppliers and construcrr specififf cations. We inspect, test and use process controls to ensure the quality and reliabia lity of our products. We maintain an ISO 9001 quality systems registration, a certififf cation showing that our corpor comply with standards forff registration, a certififf cation showing that our corpor customer satisfaff ction. quality assurance and process control. We also maintain an ISO 9001:2000 quality systems ate procedures comply with standards forff ate procedures and manufaff cturt continuous improvement and ing faff cilities r rr We generally use standard parts and components forff our products, which can be sourced frff om various suppliers. We have generally been abla e to obtain adequate supplies of components in a timely manner frff om current suppliers. While certain components, such as computer network interfaff ce cards, are currently purchased frff om a single supplier, we have identififf ed alternate suppliers that we believe can be qualififf ed relatively quickly to fulff supplier. We continue to monitor the impact of the COVID-19 pandemic, the geopolitical environment, and other faff ctors on our supply chain. Although we have been abla e to manage supply challenges in the past, there is no guarantee that we will be abla e to continue to manage these challenges without signififf cant impacts to our business if our supply chain becomes increasingly strained. Our reliance on single source suppliers and impacts on our supply chain are furff Factors." fiff ll our needs should an issue arise with the existing ther described in Item 1A "Risk We manufaff cturt e our products based upon near-term demand estimates resulting frff om sales forff ecasts and historical fiff llment inforff mation. However, since these forff ecasts have a high degree of variabia lity because of faff ctors that include time of fulff year, overall economic conditions and sales employee incentives, we believe it is prude advance of receipt of fiff rm orders to ensure that we have suffff iff cient stock to satisfyff system has thus faff r enabla ed us to minimize the effff eff cts of the disrupt supply chain perspective. The potential impact of the COVID-19 pandemic and potential supply chain disrupt business are furff ther described in Item 1A "Risk Factors." ion caused by the global COVID-19 pandemic frff om a ions on our r incoming orders. Our inventoryrr management nt to maintain inventoryrr levels in r rr Sales and Marketing SalSS ell s We sell our products, support and services through a direct sales forff ce and an indirect reseller and distribution channel. Our direct sales forff ce generally uses a "high-touch" sales model that consists of faff ce-to-faff ce or virtuat l meetings with customers to understand and identifyff although more diffff iff cult, our sales teams have been successfulff their unique business challenges and requirements. In the global pandemic environment, lly to understand their requirements in engaging customers virtuat 9 and effff eff ctively design solutions. Our sales teams translate our customers' requirements into tailored business solutions that allow the customer to maximize the perforff mance of its infrff astrucrr of the systems and the capia tal expenditurt es involved, our sales cycles typically take between three and twelve months. We build strategic relationships with our customers by continually enhancing our solution to help them address their evolving service deliveryrr management challenges. In addition to providing a comprehensive solution to meet these needs, we continually provide softff ware enhancements to our customers as part of their maintenance contracts with us. These enhancements are designed to provide additional and ongoing value to our existing customers to promote loyalty and the expansion of their deployment of our products. Existing customer growth is also driven by the expansion and changes in their networks as they add new infrff astrucrr ications, experience increasing service traffff iff c volumes or encounter incremental cyber threats. turt e and service deliveryrr environment. Due to the complexity turt e elements, new users, new locations, new appl a We also maintain an indirect reseller and distribution channel. Sales to customers outside the United States are primarily ise, service provider and government customers. Historically and currently, we have used indirect distribution channels export sales through channel partners. Our channel partners assist us by improving our reach to customers, extending our presence in new markets, and marketing and selling our products to a broad array of organizations globally. We sell through a range of channel partners including value-added resellers, value-added distributors, resellers, and system integrators, to our enterprrr principally as intermediaries on contractuat with end user customers to present our products and solutions, conduct demonstrations, provide evaluation equipment, recommend detailed product solutions, develop product deployment designs and timelines, and assist in establa ishing fiff nancial and other justififf cations forff end customer and us, may be brought in to faff cilitate the transaction and to provide fulff international channel partners, those services usually also include currency translation and support. In the U.S., fulff services are usually limited to invoicing and cash collection. Under this appr partners forff contractuat the maja or elements of the selling process. In many cases, there are multiple channel partners with the required l relationships, so dependence on any single channel partner is not signififf cant. the proposed solution. During this selling process, a channel partner, who has contracts with both the customers with whom we do not have a contract. Our sales forff ce meets oach, we have limited dependence upon channel fiff llment services. In the case of l terms forff fiff llment a During the fiff scal years e dndedd Marchh 31, 2022, 2021 a dnd 2020 no direct customers or indirect channel partners accounted , forff more than 10% of our total revenue. MarMM kerr titt nii g Our marketing organization drives our market research, strategy, product positioning and messaging, and produces and manages a variety of programs such as customer forff umr social media, direct mail, seminars and webinars, sales promotions and other online marketing programs. These programs are focff used on promoting the sale and acceptance of our solutions to furff cybersecurity products within the marketplt ace. s, trade shows, industryrr events, advertising, public and analyst relations, ther build the NetScout brand forff our service assurance and Key elements of our marketing strategy focff us on thought leadership, market positioning, market education, go to market strategies, reputation management, demand generation, and the acceleration of our strategic selling relationships with local and global resellers, systems integrators, and our technology alliance partners. During fiff scal year 2022, 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 fiff scal year 2023. Research and Development Our continued success depends signififf cantly on our abia lity to anticipate and create solutions that will meet emerging customer requirements. We work closely with our largest enterprr address their near-term and longer-term requirements. By better understanding the key, time-sensitive needs of our global customer base, we believe our development programs will continue to result in enhanced products that are abla e to meet the increasing challenges of an increasingly complex and dynamic global network environment. ise and service provider customers to better understand and We have invested signififf cant fiff nancial resources and personnel into the development of our products and technology. Our ial to our business and our continued success in the market. We have continued investment in research and development is crucrr assembled a team of highly skilled engineers with expertise in various technologies associated with our business and the technologies being deployed by our customers. We plan to continue to enhance and expand our product offff eff rings and capaa bia lities in the near futff urt e while integrating key capaa bia lities frff om acquired product lines as appr to continue to invest and dedicate signififf cant resources to our research and development activities forff service provider customers. opriate. As a result, we plan both our enterprrr ise and a We predominantly develop our products internally, with some limited third-party contracting. We have also acquired developed technology through business acquisitions. To promote industryrr standards and manifeff st technology leadership, we 10 participate in and support the activities and recommendations of industryrr standards bodies, and we also engage in close and regular dialogue with our key customers and alliance partners. These activities provide early insight into the direction of a network and appl technologies. ication perforff mance requirements and the changing cybersecurity landscapea that impacts current and emerging Seasonality We have experienced, and expect to continue to experience, quarterly variations in our order bookings as a result of a number of faff ctors, including the length of the sales cycle, complexity of customer environments, new product introductions and their market acceptance and seasonal faff ctors affff eff cted by customer projects and typical IT buying cycles. Due to these faff ctors, we historically have experienced stronger bookings during our fiff scal third and four quarters. th quarters than in our fiff scal fiff rst and second ff Customers We sell our products to enterprr medium-sized high-speed IP computer networks. Our enterprrr services, technology, manufaff cturt associated agencies. Our telecommunications service provider customer group includes mobile operators, wireline operators, cabla e operators, internet service providers, and cloud providers. ing, healthcare, utilities, education, transportation and retail as well as government and ises, service providers and local, state, and feff deral governmental agencies with large-and ise customers cover a wide variety of industries, such as fiff nancial Backlog We produce our products on the basis of our forff ecast of near-term demand and maintain inventoryrr in advance of receipt of fiff rm orders frff om customers. We confiff gure our products to customer specififf cations and generally deliver products shortly aftff er receipt of the purchase order. Service engagements are also included in certain orders. Customers generally may reschedule or cancel orders with little or no penalty. We believe that our backlog at any particular time is generally not meaningfulff because it is not necessarily indicative of futff urt e sales levels. Our combined product backlog at March 31, 2022 was $92.8 million compared to $27.9 million at March 31, 2021. A maja ority of the backlog relates to orders that were received late in the quarter and radio frff equency propagation modeling projects. In some cases, we have begun these projects but have not yet hit billabla e milestones. A radio frff equency propagation modeling project order received in the third quarter of fiff scal year 2022 allowed NetScout to bill forff the entire project based upon partial delivery.rr At March 31, 2022, defeff rred revenue and accounts receivabla e each contained a gross balance of $19.9 million related to this radio frff equency propagation modeling project. A maja ority of revenue forff any radio frff equency propagation modeling billings ahead of deliveryrr were immaterial. these projects is expected to be recognized into revenue throughout fiff scal year 2023. At March 31, 2021 Competition a We compete with many companies in the markets we serve. The service assurance market, including the infrff astrucr ication perforff mance management markets, is highly competitive, rapia dly evolving, and frff agmented with ng technologies and a wide range of competitors, both large and small, who may deliver certain elements of our network, and appl overlappi a solution. Consequently, there are a number of companies who have greater name recognition and substantially greater fiff nancial, management, marketing, service, support, technical, distribution and other resources than we do. Additionally, certain competitors, either due to their size and resources or due to their technological strengths, may be abla e to respond more effff eff ctively than we can to new or changing opportuni ties, technologies, standards and customer requirements. turt e, t Principal competitive faff ctors in our service assurance market include scalabia lity; abia lity to address a large number of ications, locations and users; product perforff mance; the abia lity to easily deploy into existing network environments; the lized solutions; and the abia lity to administer and manage the solution. appl a abia lity to offff eff r virtuat While we faff ce multiple competitors within the service assurance industry,rr we believe that we compete faff vorabla y on the basis of the folff lowing faff ctors: • • • we provide a comprehensive service deliveryrr management solution that is capaa bla e of addressing the needs of both enterprrr deliveryrr environments; ise and service provider customers and can be scaled to meet the challenges of today's dynamic service we believe that our solutions provide superior data and compete faff vorabla y on a broad range of metrics including the abia lity to recognize and track a large number of appl ications; a we believe our solutions possess the scalabia lity to support high and increasing levels of data and network traffff iff c; 11 • • our solutions look at both data and control plane traffff iff c across an entire network; and our ASI technology is optimized to provide real-time inforff mation about emerging service problems whereas traditional solutions are inherently latent, supporting only forff ensic-trouble shooting aftff er an issue has occurred. service perforff mance and real-time alerts to a In the enterprrr ise market, our competitors include companies who provide network perforff mance management, appl a ication turt e perforff mance management and other related solutions such as CA Technologies (a perforff mance management, infrff astrucrr sta, Keysight, Viavi, Gigamon, New Broadcom Inc. business), Cisco Systems, Dynatrace, Datadog, ExtraHop, IBM, Infovi Relic, Riverber d Technology, Splunk and SolarWinds. In addition, we both compete with and partner with large enterprrr ise management vendors, such as HP and IBM, who offff eff r perforff mance management solutions. We also compete with smaller, privately held competitors who oftff en focff us on specififf c vertical markets. ff In the service provider market, we compete with traditional probe vendors, network equipment manufaff cturt ers, big data lization vendors. These vendors include Anritsu, Cisco, Ericsson, Dell Technologies, EXFO, sta, Niksun, Elisa Polystar, Radcom, Splunk, Nokia and Viavi. We faff ce additional competitive threats and new entrants that seek to offff eff r innovative solutions in an industryrr characterized by rapia d technological and analytics vendors, and virtuat Huawei, IBM, Infovi ff t frff om startups change. In the cybersecurity market, we faff ce a range of competitors, including those that may have greater name recognition and substantially greater fiff nancial, management, marketing, service, support, technical, distribution and other resources than we do. We believe that the scalabia lity of our solutions, flff exible deployment, and price-perforff mance of our cybersecurity solutions positions us well to compete against both larger network equipment and security companies and smaller niche security solutions vendors. In the service provider DDoS solutions market, we compete under the NetScout Arbor r brand with a broad range of vendors including Radware, Akamai, F5 Networks, A10 Networks, Fortinet, Fastly, Cloudflff are and Corero Network Security. In the enterprr traffff iff c analysis, and packet forff ensics 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, Viavi, Symantec, Cisco, and other specialist providers. ise market forff Network Detection and Response (NDR) solutions that utilize specialized threat analysis, Our abia lity to sustain a competitive advantage depends on our abia lity to deliver continued technology innovation and to meet the evolving needs of our customers. Competitive faff ctors in our industryrr are furff ther described in Item 1A "Risk adapta Factors." Intellectual Property Rights We rely on patent, copyright, trademark, and trade secret laws and contract rights to establa ish and maintain our rights in l property rights are an important element in our success, our business as a l property our technology and products. While our intellectuat whole does not depend on any one particular patent, trademark, copyright, trade secret, license, or other intellectuat right. We use contracts, statutt oryrr laws, domestic and forff eign intellectuat l property registration processes, and international io and rights frff om infrff ingement. From a l property portfolff l property treaties to police and protect our intellectuat l perspective, we use license agreements and non-disclosure agreements to control the use of our intellectuat intellectuat contractuat and protect our trade secrets frff om unauthorized use and disclosure. In addition to license agreements, we rely on U.S. and international copyright law to protect against unauthorized copying of softff ware programs in the U.S. and abra oad. We have obtained U.S. and forff eign trademark registrations to preserve and protect certain trademarks and trade names. We have also fiff led and obtained U.S. patents and international counterpar unlawfulff that we will be abla e to obtain patents covering all of our products, or that we will be abla e to license, if needed, patents fromff other companies on faff vorabla e terms or at all. Our proprietaryrr Item 1A "Risk Factors." ly exploited by other parties. However, there is no assurance that pending or futff urt e patent appl rts to protect certain unique NetScout inventions frff om being rights are subject to other risks and uncertainties described under ications will be granted, l property a 12 Human Capital Management NetScout strives to remain a team of entrepreneurs, with the agility of a start-up and the heftff of a global technology company. We believe that our culturt e is critical to our success and growth. Our Lean But Not Mean culturt e complements and acts as a multiplier to our technology, exceptional talent, and forff ward-thinking innovation. "Lean" decision-making puts the tough calls up frff ont and puts employees and the long-term success of the company fiff rst. We believe our commitment to education, engagement, and communication has motivated our employees around the world and keeps our spirit thriving, and rr everyone , regardless of role, brings value to the organization. EmEE plm oyll ees As of March 31, 2022, we had 2,331 employees worldwide – over 99% of whom were fulff l time employees. Our employees are in over 35 countries with 64% of our employees located in the United States. Diversrr itii ytt ,yy Equitii ytt & InII clusion a Diversity, equity, and inclusion (DEI) are the cornerstones of our organizational excellence and complement our core ation, and innovation. We embrace and encourage our employees' values of perforff ming with integrity, compassion, collabor diffff eff rences in age, color, disabia lity, ethnicity, faff mily or marital statust physical and mental abia lity, political affff iff liation, race, religion, sexual orientation, socio-economic statust other characteristics that make our employees unique. 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. In addition, we have a designated DEI program team, reporting to the Chief Human Resources Offff iff cer, to fosff transparent and equitabla e processes in employee engagement, onboarding, learning and development, policymaking, and career planning. , gender identity or expression, language, national origin, , veteran statust , and ter ating with industryrr and university partners to enhance our diversity. We A cornerstone of our DEI strategy is collabor work with industryrr partners, including third-party recruir ting 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. We also partner with universities with diverse stude nt enrollment to recruir t our summer interns. a t TalTT ell nt Developmll ent opportuni • NetScout invests in the ongoing development of its employees across the globe. As part of that program, we offff eff r t leaders and develop and support all employees, including: ties to identifyff Career path development – to document increasing levels of leadership responsibility, creating a transparent process, so that all employees have access to inforff mation necessaryrr to build a career plan at NetScout. • Management and leadership development – to support an inclusive workplace and fosff ter consistent management • practices across the globe. Strengthen high-perforff ming teams – For selected leaders, we partner with the Center forff Higher Ambition Leadership to offff eff r programs that strengthen high-perforff ming teams. CuCC ltll ure & ValVV ues We believe that our company culturt e is critical to our success and growth. Our culturt e complements and acts as a multiplier to our technology, exceptional talent, and forff ward-thinking innovation. As a result of our philosophy, we have pledged to be considerate, loyal and appr strategies that result in effff iff cient business outcomes. eciative of our employees while also enacting decision-making processes and business a We take seriously our mission as Guardians of the Connected World. In 2021, we launched our internal NETSCOUT WITHOUT BORDERS initiative, of which a key component is an employee engagement program 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 focff us groups, and folff connected with all employees, and to ensure everyone aligned with our vision, mission and goals. is equipped with the knowledge and tools so all their effff orff low-on development programs. This is a signififf cant investment to stay ts can be rr 13 COCC VIVV DII -19 Respons se NetScout's Environment, Health, and Safeff ty (EHS) Council is responsible forff EHS policy, managing and coordinating EHS regulatoryrr compliance, and tracking goals and results. The EHS Council reports to senior executives and its results are reported to the Nominating and Corpor comprehensive review of corpor ate Governance Committee of the Board of Directors as part of the committee's ate responsibility and ESG. r r During the COVID-19 pandemic, our top priority has been the safeff ty and well-being of our employees and their faff milies to ensure that they continue to be productive and keep our customers and the world connected. As the severity and scope of the pandemic became known in early calendar year 2020, we curtailed travel and required all employees, in all locations, to work frff om home, with only a limited number of employees with business-critical tasks provided access to our faff cilities. For those employees who needed to be on-site, we establa ished multiple protective measures to ensure the safeff ty of our employees. We have begun allowing our employees to returt n to work on-sites, in accordance with feff deral, state, and local government guidelines, as well as in accordance with forff eign government guidelines in the countries in which we operate. Furthermore, the processes that we have implemented to enabla e our employees to returt n to work on-site are in accordance with prevailing health and science guidance, and in a manner that seeks to protect our employees, contractors, customers, suppliers, and our local communities. Throughout the course of the COVID-19 pandemic, we were abla e to maintain our unique culturt e, support our employees with well-being programs and uninterrupt superior service levels to our customers. ed salaryrr and benefiff ts, and maintain our market presence and unfaff ilingly rr ComCC pem nsatitt on and Benefe iff tii stt We offff eff r a competitive compensation and benefiff ts package to attract, retain and motivate our employees. Our compensation package includes market-competitive pay, cash and equity incentive compensation, an Employee Stock Purchase Plan, retirement benefiff ts, health benefiff ts, paid time offff and leave benefiff ts. Our Compensation Committee oversees our key human capia tal management strategies and programs. Environmental Social Governance We believe our commitment to ESG is an important part of creating long-term business value. As set out in its Charter, rr rr ate Governance Committee of NetScout's Board of Directors oversees NetScout's ESG program. ate Governance Committee meets regularly and reviews and advises on ESG strategy and appr a l Board, which also considers NetScout’s ESG program and strategy as well as its alignment with the Company’s the Nominating and Corpor The Nominating and Corpor the fulff mission. Relatedly, the Audit Committee also regularly reviews ESG-related topics such as enterprr anticorrupt cybersecurity and data privacy. ion program, ethics and compliance issues, supply chain issues including human rights protections, and ise risk management, our rr ises The ESG Steering Committee, under the strategic direction of the Chief Executive Offff iff cer and chaired by NetScout's General Counsel, is responsible forff key business func stakeholder perspectives, identifyff areas forff programs designed to accelerate ESG initiatives. ff the development and implementation of the ESG program. With representation across all tions, the mandate of the ESG Steering Committee is to consider our existing ESG effff orff improvement that align with our business, and work collabor a ts, understand atively to support We have adopted four ff ESG pillars that lay out our current top ESG priorities, under pinned by a strong governance focff us: 1. Demonstrating product leadership through sustainabia lity by design and helping our customers reduce their int, through reducing electricity requirements of our products. environmental foot prt ff 2. Reducing electricity use in our faff cilities, with emphasis on our engineering labsa 3. Furthering our diversity, equity, and inclusion effff orff 4. Supporting community digital inclusion programs that improve underserved communities’ participation in the ts alongside our employee engagement programs. . connected world. NetScout's global ESG program encompasses a broad range of areas, including environmental sustainabia lity, responsible management of our supply chain, human capia tal, ethical business practices, and data privacy and security. NetScout continues to seek opportuni ties to align ESG with our core business strategy and more thoroughly integrate ESG into our operations. t Inforff mation Security NetScout is vigilant in protecting personal data and complying with the highest standards of privacy and security. We take a layered defeff nse appr a oach to protect confiff dentiality and prevent data compromise and breaches, including, among other 14 employees and audits of our systems and enhanced training forff ate data and the systems storing this inforff mation. Our ISP also includes annual inforff mation security awareness training steps, technology safeff guards, organizational safeff guards including training and awareness programs, and physical safeff guards. We maintain a robust Inforff mation Security Program (ISP) to help ensure the confiff dentiality, integrity, and availabia lity of rr corpor forff phishing email simulations forff and responsiveness to such possible threats. Our ISP also includes review and assessment by external, independent third parties, and we achieved ISO 27001 certififf cation demonstrating our adherence to ISP best practices, including risk assessment, protection against threats, legal compliance, and incident response and mitigation. Our ISP also includes a data security incident response plan that provides controls and procedures forff timely and accurate reporting of any material cybersecurity incident. all employees and all contractors with access to corpor specialized personnel, and we have institutt ed regular ate email systems to enhance awareness r NetScout is committed to managing its legal and contractuat l compliance obligations with respect to security and privacy laws, including the EU General Data Privacy Regulation and the Califorff nia Consumer Privacy Act. We have devoted considerabla e resources to ensuring compliance with appl providing regular security training to employees. We review cybersecurity and data privacy issues regularly with the independent Audit Committee and with the fulff some of whom have work experience related to inforff mation security issues or oversight. In the last three years, the expenses we have incurred frff om inforff mation security breach incidences, including penalties and settlements, of which there were none, were immaterial. l Board. The Audit Committee is comprised entirely of independent directors, icabla e data privacy laws and developing our privacy policy and a We take our customers' inforff mation security and privacy commitments just as seriously. The security feff aturt es of our tion, use, modififf cation, or disclosure. products are designed to mitigate data risks, such as loss or unauthorized access, destrucr NetScout products allow customers to customize a security strategy in several ways, frff om the operating system and between system communications to access control of individual modules, role-based data visibility, and packet and data storage confiff gurations. We have feff aturt es in our products that allow masking of sensitive data, and, where possible, minimization through aggregation and measures to control data access. Our nGeniusONE and Omnis products are based on hardened Linux operating systems and updated softff ware packages to reduce security vulnerabia lities, and administrators can furff ther secure the server and appl ing drives. NETSCOUT Arbor a DDoS virtuat iance hardware through such options as purchasing appl l and physical solutions provide similar operational protection. iances with self-ff encrypt a r rr Corporate Inforff mation Our corpor r ate headquarters are located at 310 Littleton Road, Westforff d, Massachusetts, and our telephone number is (978) 614-4000. We were incorpor r ated in Delaware in 1984. Our internet address is http:t //// www.NetScout.com. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports fiff led pursuant to Sections 13(a) and 15(d) of the Exchange Act, are made availabla e frff ee of charge on or through our website at ir.netscout.com as soon as reasonabla y practicabla e aftff er such reports are fiff led with, or furff nished to, the SEC. None of the inforff mation posted on our website is incorpor Report. ated by refeff rence into this rr We webcast our earnings calls and certain events we participate in or host with members of the investment community. They are made availabla e on our investor relations website at ir.netscout.com//// investors/events-and-presentations/events- calendar/rr defaff ult.aspx. Additionally, we provide notififf cations of news or announcements regarding our fiff nancial perforff mance, including SEC fiff lings, investor events, press and earnings releases, as part of our investor relations website. The contents of these sections of our investor relations website are not intended to be incorpor report or document we fiff le with the SEC. ated by refeff rence into this report or in any other rr ItII ett m 1A. Risii k FacFF tortt srr . In addition to the other inforff mation in this report, the folff lowing faff ctors should be considered carefulff ly in evaluating NetScout and our business. You should carefulff ly consider the risks and uncertainties described below, together with the inforff mation included elsewhere in this Annual Report on Form 10-K and other documents we fiff le with the SEC. The risks and uncertainties described below are those that we have identififf ed as material but are not the only risks and uncertainties faff cing us. Our business is also subject to general risks and uncertainties that affff eff ct many other companies. Additional risks and uncertainties not currently known to us or that we currently believe are immaterial also may impair our business, including our results of operations, liquidity, and fiff nancial condition. 15 Because of the folff lowing faff ctors, as well as other variabla es affff eff cting our results of operations, past fiff nancial perforff mance may not be a reliabla e indicator of futff urt e perforff mance, and historical trends should not be used to anticipate results or trends in futff urt e periods. Risks Related to Our Business and Industryy Our business and operations, and the operations of our customers, partners, and/or suppliers, may be adversely affff eff cted by epidemics and pandemics, such as the COVID-19 pandemic. The COVID-19 pandemic and fuff ture epidemics and pandemics risk disrupting and adversely affff eff cting our business operations and fiff nancial results, as well as the markets and communities in which we and our customers, suppliers and other business partners operate. We faff ce risks related to epidemics, pandemics, and other outbrt eaks of communicabla e diseases that adversely affff eff ct global commercial activity, economies, fiff nancial markets, and companies. The outbrt eak of COVID-19 was declared a "pandemic" by the World Health Organization on March 11, 2020. An epidemic or pandemic or other outbrt eak of communicabla e diseases, such as the current COVID-19 pandemic, poses the risk that we or our customers, suppliers, and other business partners may be r disrupt uncertain, and may otherwise experience signififf cant impairments of business activities. ed or prevented frff om conducting normal business activities forff certain periods of time, the durations of which are In response to the COVID-19 pandemic, many state, local, and forff eign governments have put in place, and others in the futff urt e may put in place or continue, quarantines, executive orders, shelter-in-place orders, and similar government orders and restrictions to reduce the rate of infeff ction and control the spread of the disease. Such orders or restrictions, or the perception that such orders or restrictions could occur, may continue to result in business closures, work stoppages, slowdowns and delays, travel restrictions and cancellation of events, among other effff eff cts that could affff eff ct productivity and disrupt those of our suppliers, customers, and business partners. our operations and r To protect our employees, contractors, customers, suppliers, and our local communities, and limit the effff eff ct of the COVID-19 pandemic on our operations, many of our employees at our locations globally have been working remotely forff past two years, with limited exceptions forff site-essential personnel (with protective measures and protocols in place). the Similar to other companies, we have begun allowing our employees to returt n to work on-sites, in accordance with feff deral, state, and local government guidelines, as well as in accordance with forff eign government guidelines in the countries in which we operate. Furthermore, the processes that we have implemented to enabla e our employees to returt n to work on-site are in accordance with prevailing health and science guidance, and in a manner that seeks to protect our employees, contractors, customers, suppliers, and our local communities. We expect that on-site and work-frff om-home requirements and other restrictions on our employees, suppliers, customers, and business partners will change over time, whether becoming more or less restrictive, as the pandemic and global responses progress. We may take furff ther actions that could alter our operations as may be required by feff deral, state, or local authorities, or by forff eign governments in countries in which we operate, or which we determine are in the best interests of our employees, suppliers, customers, business partners, and stockholders. As part of our existing business continuity planning, we had establa ished infrff astrucr turt e and protocols to enabla e our r ions to our business operations resulting frff om quarantines, self-ff isolations, or other employees to work frff om home. While we believe that the maja ority of our employees are abla e to and can continue to effff eff ctively work remotely, it is possible that disrupt movement and restrictions on the abia lity of our employees to perforff m their jobs could affff eff ct our abia lity to develop and design our products and services in a timely manner or meet required milestones or customer commitments, and that this could have an adverse effff eff ct on our revenue and operating results. In addition, although we have been abla e to adequately staffff our facilities with site-critical personnel with specififf c health and safeff ty protocols, to satisfyff our manufaff cturt customers, it is possible that we or others may determine that it is necessaryrr and support refrff ain frff om working on-site forff revenue and operating results. ing and support obligations to our ing an indeterminate period of time, and that this could have an adverse effff eff ct on our to direct that employees engaged in manufaff cturt Furthermore, global travel has been sharplr y curtailed, and in some cases prohibited. Our sales personnel oftff en meet with customers or prospective customers in person to provide greater personalized service. While our employees and customers have adjusted to virtuat l meetings, the inabia lity of our sales personnel to meet with customers or prospective customers at a customer faff cility could have an adverse effff eff ct on our revenue and operating results. In addition, we rely on third-party suppliers and manufaff cturt ers throughout the globe. The COVID-19 pandemic has resulted in the extended shutdown of certain businesses and the closure of international borders throughout the world, which may result in disrupt r manufaff cturt er faff cilities, interrupt import of products into countries in which we operate. Although we have attempted to minimize the effff eff cts of these disrupt ions in product supply or restrictions on the export or shipment of our products, as well as the ions to our supply chain. These may include disrupt ions frff om temporaryrr closure of third-party supplier and ions, rr rr r 16 it is possible that these attempts will be insuffff iff cient, and that these disrupt operating results. rr ions could have an adverse effff eff ct on our revenues and To the extent the COVID-19 pandemic adversely affff eff cts our business and fiff nancial results, it may also have the effff eff ct 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 forff estimates, as well as on our liquidity and on our abia lity to satisfyff our indebtedness obligations, including the compliance with the covenants that appl our critical accounting policies, and the operation of internal controls over such y to our indebtedness. a ff Unfavor able conditions in our industry or the global economy, or reductions in inforff mation technology spending, could limit our ability to grow our business and negatively affff eff ct our results of operations. Our results of operations may varyrr based on the impact of unfaff vorabla e changes in our industryrr or the global economy on us or our customers and potential customers. Unfaff vorabla e conditions in the economy both in the United States and abra oad, including conditions resulting frff om fiff nancial and credit market flff uctuat relations, political turt moil, naturt al catastrophes, outbrt eaks of contagious diseases, warfaff re and terrorist attacks on the United States, Europe, the Asia Pacififf c region or elsewhere, could cause a decrease in business investments, including spending on inforff mation technology, and negatively affff eff ct the growth of our business and our results of operations. Our competitors, many of whom are larger and have greater fiff nancial resources than we do, may respond to challenging market conditions by lowering prices in an attempt to attract our customers and may be less dependent on key industryrr events to generate sales forff products. In addition, the increased pace of consolidation in certain industries may result in reduced overall spending on our products and solutions. We cannot predict the timing, strength, or duration of any economic slowdown, instabia lity, or recovery,rr generally or how any such event may impact our business. tions, elevated or prolonged inflff ation, international trade their Potential product vulnerabilities or critical security defeff cts, prioritization decisions regarding remedying vulnerabilities or security defeff cts, or customers not deploying security releases or deciding not to upgrade products, services, or solutions could result in claims of liability against us, damage our reputation, or otherwise harm our business. The products and services we sell to customers, and our cloud-based solutions, may contain vulnerabia lities or critical security defeff cts which have not been identififf ed or remedied. We may also make prioritization decisions in determining which vulnerabia lities or security defeff cts to fiff x, and the timing of these fiff xes, which could result in an exploit that compromises security. Customers also sometimes need to test security releases beforff e they can be deployed, which can delay implementation. In addition, we rely on third-party providers of softff ware and cloud-based services, and we cannot control the rate at which they remedy vulnerabia lities. Customers may also not deploy a security release or decide not to upgrade to the latest versions of our products, services, or cloud-based solutions containing the release, leaving them vulnerabla e. If we or the third parties who we work with or rely on experience a security incident, or the confiff dentiality, integrity, or availability of our inforff mation technology, softff ware, services, communications or data is compromised, our business or platforff m may be perceived as not being secure, our reputation may be harmed, demand forff may be reduced, and we may incur signififf cant liabilities. our offff eff ring fff iff ng, effff orff or confiff dential. Security incidents es, social engineering (including phishing), ransomware, supply chain attacks, ts by individuals or groups of hackers and sophisticated organizations, errors or malfeff asance of our In the regular course of our business, we collect, use, store, transmit and process data, which can include inforff mation our customers, employees, and others and which may be sensitive, proprietary,rr about a compromising the confiff dentiality, integrity, and availabia lity of this inforff mation or our systems could result frff om a wide variety of cyberattacks, computer malware, virusr credential stuft personnel (such as theftff or misuse), security vulnerabia lities in the softff ware or systems on which we rely, cyber extortion, and denial of service attacks. Such incidents have become more prevalent in our industry,rr unauthorized, unlawfulff and confiff dential inforff mation that we handle. Threat actors, nation-states, and nation-state-supported actors now engage, and are expected to continue to engage, in cyber-attacks, including forff operations. During times of war and other maja or conflff icts, we and the third parties upon which we rely may be vulnerabla e to heightened risk of these attacks, including cyber-attacks that could materially disrupt and abia lity to produce, sell and distribute our goods and services. Additionally, due to the ongoing COVID-19 pandemic, certain func and may in the futff urt e result in the opriate access to, inabia lity to access, disclosure of,ff or loss of the sensitive, proprietary,rr tional areas of our workforff ce remain in a remote work environment, which imposes additional risks to our business, geopolitical reasons and in connection with militaryrr conflff icts and our systems and operations, supply chain, , or inappr a ff rr 17 including increased risk of industrial espionage, phishing, and other cybersecurity attacks, and unauthorized dissemination of sensitive, proprietary,rr or confiff dential inforff mation. We also rely on third parties to operate some of our business systems and process the sensitive, proprietary,rr and confiff dential inforff mation that we handle. These third parties may not have adequate security measures and could experience a security incident that compromises the confiff dentiality, integrity, or availabia lity of the systems they operate forff inforff mation they process on our behalf.ff Cybercrime and hacking techniques are constantly evolving, and we or third parties who we work with may be unabla e to anticipate attempted security breaches, react in a timely manner, or implement adequate preventative measures, particularly given increasing use of hacking techniques designed to circumvent controls, avoid detection, and remove or hide forff ensic inforff mation. We cannot be certain that our appl will adequately limit our data security-related liabia lity to them or be suffff iff cient to allow us to obtain indemnififf cation or recoveryrr frff om them forff data security-related liabia lities that they cause us to incur. icabla e contracts with these third parties us or the a 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 suffff iff cient to protect against unauthorized access to our IT networks, softff ware and systems. Malicious attack effff orff techniques used to obtain access or sabot implement adequate preventative measures, or stop security breaches that may arise frff om such techniques. As a provider of such attacks. Other individuals or entities, including personnel or security solutions, we may be a more attractive target forff vendors, may also intentionally or unintentionally provide unauthorized access to our IT environments. age networks change frff equently and we may be unabla e to anticipate such techniques, ts operate on a large-scale and sometimes offff eff r targeted attacks as a paid-forff service. In addition, the a If we or the third-parties who we work with were to experience a security incident or other incident that results in the r or compromise of the confiff dentiality, integrity, or availabia lity of our sensitive inforff mation or the sensitive, proprietary,rr confiff dential inforff mation we process, we or our customers may experience system disrupt ions or slowdowns, security vulnerabia lities of our products could be exploited, the inforff mation stored on our networks or those of our third-party service opriated, deleted, altered, lost, or stolen, all of which could providers or partners could be accessed, publicly disclosed, misappr subject us to liabia lity and cause us fiff nancial harm. Any actuat l, alleged or perceived security breach or incident affff eff cting us, our partners or our industryrr as a whole could result in damage to our reputation, negative publicity, loss of partners, customers and sales, increased costs to remedy any problems and otherwise respond to any incident, regulatoryrr investigations and enforff cement actions, costly litigation, and other liabia lity. In addition, we could incur substantial costs and liabia lities, including but not limited to, expenses attributabla e to investigating, remediating and rectifyiff ng a security breach, cyberattack or other incident (including the cost of repairing any damage to our or our customers' systems, paying a ransom, or restoring data frff om backups), liabia lity forff stolen assets or inforff mation, lost revenue and income resulting frff om any system or product downtime, increased costs forff cybersecurity protection, and costs to comply with any notififf cation obligations resulting frff om any security incidents (including notifyiff ng affff eff cted individuals or relevant regulatoryrr authorities). Such outcomes could damage our reputation, cause customers and possibly investors to lose confiff dence in us, and adversely affff eff ct our business or operating results. a Additionally, effff orff ts by hackers or others could cause interrupt r modififf cation of our softff ware, which could cause us to lose existing or potential customers. If these effff orff third party obtains unauthorized access to our or our customers' IT environments, our business operations, and those of our customers could be adversely affff eff cted, losses or theftff of data could occur, our reputation and futff urt e sales could be harmed, governmental regulatoryrr action or private or governmental litigation could be commenced against us and our business, and our fiff nancial condition, operating results and cash flff ows could be materially adversely affff eff cted. and a ions, delays or cessation of our product licensing, or ts are successfulff We are required to comply with laws, rulr es, industryrr standards, and regulations that require us to maintain the security of personal inforff mation. We may also have contractuat incidents. Such notififf cations are costly, could lead to negative publicity, may cause our customers to lose confiff dence in the effff eff ctiveness of our security measures and not use our services, and require us to expend signififf cant capia tal and other resources to respond to and/or alleviate problems caused by the actuat l, alleged or perceived security incident. l and other legal obligations to notifyff relevant stakeholders of security Our ability to quickly and successfuff lly recover frff om a disaster, public health crisis, or other business continuity event could affff eff ct our ability to deliver our products and negatively impact our business reputation. The occurrence of a naturt al disaster, public health crisis or an act of terrorism, or a decision or need to close any of our faff cilities without adequate notice or time forff making alternative arrangements could result in interrupt products and services. Our central business func development, manufaff cturt other technology systems and operations, some of which are operated or hosted by third parties. ing and customer support depend on the proper func ff r ff tions, including administration, human resources, fiff nance services, legal, tioning of our computer, telecommunication and ions in the deliveryrr of our 18 While we have business continuity programs in place, a disrupt r ion or faff ilure of these 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 abia lity to complete sales and provide the highest level of service to our customers. In addition, we could have diffff iff culty producing accurate fiff nancial statements on a timely basis, which could have an impact on our abia lity to make timely disclosures and could adversely affff eff ct the trading value of our stock. Although we endeavor to ensure there is redundancy in these systems and that they are regularly backed-up, there is no guarantee that data recoveryrr effff iff cient manner. Our operations are dependent upon our abia lity to protect our technology infrff astrucrr business continuity events that could have a signififf cant disrupt adverse interrupt ions to our operations or deliveryrr of services to our clients in a disaster recoveryrr scenario. ive effff eff ct on our operations. We could experience material in the event of a disaster would be effff eff ctive or occur in an turt e against damage frff om rr r If our products contain errors or quality issues, such issues may be costly to correct, revenue may be delayed, we could be sued, and our reputation could be harmed. Our products are inherently complex, and, despite our quality assurance processes and testing by our customers and us, ff in our products aftff er commencement of commercial shipments, especially when products errors or quality issues may be found are fiff rst introduced or when new versions are released. These errors may result frff om components supplied by third parties incorpor the ated into our products, which makes us dependent upon the cooperation and expertise of such third parties forff rr diagnosis and correction of such errors. If errors are discovered, we may not be abla e to correct them in a timely manner or at all. In addition, we may need to make signififf cant expenditurt es to eliminate errors and faff ilures. Errors and faff ilures in our products could result in loss of or delay in market acceptance of our products and could damage our reputation. Regardless of the source of these defeff cts or errors, we may need to divert the attention of our engineering personnel frff om our product development effff orff assert warranty and other contractuat provisions relating to warranty disclaimers and liabia lity limitations, which may not be upheld. Defeff nding a lawsuit, regardless of its merit, is costly and may divert management's attention and harm the market's perception of us and our products. In addition, if our business liabia lity insurance coverage proves inadequate or futff urt e coverage is unavailabla e on acceptabla e terms or at all, our business, operating results, and fiff nancial condition could be adversely impacted. ts to address the detection and correction of these errors and defeff cts. If one or more of our products faff il, a customer may substantial damages against us. Our contracts with customers contain l claims forff The occurrence or discoveryrr of these types of errors or faff ilures could have a material and adverse impact on our business, operating results, and fiff nancial condition. Any such errors, defeff cts, or security vulnerabia lities could also adversely affff eff ct the market's perception of our products and business. If we faiff l to introduce new products and solutions or enhance our existing products and solutions to keep up with rapid technological change, demand forff our products and solutions may decline. The market forff a appl ication and network perforff mance management, service assurance, cybersecurity solutions, and a ication technologies, new security risks and the emergence of new industryrr standards. In addition, new business intelligence is highly competitive and characterized by rapia d changes in technology, evolving industryrr standards, changes in customer requirements, a current high level of and increasing competition, and frff equent product introductions and enhancements. Our success is dependent upon our abia lity to meet our customers' needs, which are driven by changes in technologies, new appl technologies may shorten the lifeff cycle forff services less competitive or obsolete. We must address demand frff om our customers forff services appl in the market, we must introduce new enhancements and additional forff m faff ctors to our existing product lines and service offff eff rings. If we are unabla e to develop, introduce and communicate new network and appl ication perforff mance management and service assurance products, network security products, business intelligence products, and solutions or enhancements to existing products in a timely and successfulff manner, this inabia lity could have a material and adverse impact on our business, operating results and fiff nancial condition. our products and solutions or could render our existing or planned products and advancements in our products and ications to support our customers' growing needs and requirements. To meet this challenge and remain competitive a a As our success depends in part on our abia lity to develop product enhancements and new products and solutions that keep pace with continuing changes in technology, cyber risk and customer prefeff rences, we must devote signififf cant resources to research and development, development and introduction of new products and enhancements on a timely basis, and obtaining market acceptance forff our existing products and new products. We have introduced and intend to continue to introduce new products and solutions, including increased migration to "softff ware as a service" and softff ware-deployed products as well as cybersecurity products. If the introduction of these products and solutions is signififf cantly delayed or if we are unsuccessfulff bringing these products and solutions to market, our business, operating results, and fiff nancial condition could be materially and adversely impacted. We are developing and are already deploying a number of new products as well as enhancements to our existing products and offff eff rings, including our new Omnis cybersecurity suite as well as softff ware only solutions and products availabla e in multiple forff m faff ctors forff most of our existing solutions. in 19 We must invest in research and development to remain competitive in our industry.rr 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. The process of developing new solutions is complex and uncertain; we must commit signififf cant resources to developing new services or feff aturt es without knowing whether our investments will result in services or feff aturt es the market will accept. If our research and development expenses increase without a corresponding increase in our revenues, it could have a material adverse effff eff ct on our operating results. Also, we may not be abla e to successfulff timely manner. If we faff il to develop and deploy new products and product enhancements on a timely basis, or if we faff il to gain market acceptance of our new products, our revenues will likely decline, and we may lose market share to our competitors. ly complete the development and market introduction of new products or product enhancements in a Necessary licenses forff third-party technology may not be available to us on commercially reasonable terms or at all. We currently and will in the futff urt e license technology frff om third parties that we use to produce or embed in our products. While we have generally been abla e to license required third-party technology to date, third-party licenses required in the futff urt e may not be availabla e to us on commercially reasonabla e terms or at all. Third parties who hold exclusive rights to technology that we seek to license may include our competitors. If we are unabla e to obtain any necessaryrr third-party licenses, we would be required to redesign our product or obtain substitutt e technology, which may not perforff m as well, be of lower quality or be more costly. The loss of these licenses or the inabia lity to maintain any of them on commercially acceptabla e terms could delay development of futff urt e products or the enhancement of existing products. We may also choose to pay a premium price forff license in certain circumstances where continuity of the licensed product would outweigh the premium cost of the license. The unavailabia lity of these licenses or the necessity of agreeing to commercially unreasonabla e terms forff materially adversely affff eff ct our business, fiff nancial condition, operating results, and cash flff ows. such licenses could such a Our reliance on sole source suppliers could adversely impact our business. Specififf c components that are necessaryrr forff the hardware assembly of our instrumrr ents are obtained frff om separate sole a ing oaches, establa ishing buffff eff r supply requiring suppliers to maintain adequate stocks of materials, bonding certain technologies. Where possible, we use widely availabla e offff the shelf hardware and work with large source suppliers or a limited group of suppliers. These components include our network interfaff ce cards and proprietaryrr hardware. Our reliance on sole or limited suppliers involves several risks, including a lack of control over the manufaff cturt process and inventoryrr management and potential inabia lity to obtain an adequate supply of required components and the inabia lity to exercise control over pricing, quality and timely deliveryrr of components. For most of our products, we do not have the internal manufaff cturt ing capaa bia lities to meet our customers' demands. It is our practice to mitigate these risks by partnering with key suppliers, including distributors, to establa ish a variety of supply continuity practices. These practices may include, among other appr agreements with distributors, and use-based and kanban programs to set supply thresholds. We also enter into escrow arrangements forff suppliers with multiple faff ctories and other risk management practices. However, faff ilure of supply or faff ilure to execute effff eff ctively on any of these programs, including as a result of a public health crisis or geopolitical situat inabia lity to obtain adequate deliveries or the occurrence of any other circumstance that would require us to seek alternative sources of supply forff these components would impact our abia lity to ship our products on a timely basis. Moreover, if we are unabla e to continue to acquire frff om these suppliers on acceptabla e terms, or should any of these suppliers cease to supply us with components forff any reason, we may not be abla e to identifyff and integrate an alternative source of supply in a timely faff shion or at the same costs. Any transition to one or more alternate manufaff cturt ers would likely result in delays, operational problems, and increased costs, and may limit our abia lity to deliver our products to our customers on time forff risks could damage relationships with our current and prospective customers, cause shortfaff lls in expected revenue, and could materially and adversely impact our business, operating results and fiff nancial condition. such transition period. These tion could result in our Increased customer demands on our technical support services may adversely affff eff ct our relationships with our customers and our fiff nancial results. We offff eff r technical support services with many of our products. We may be unabla e to respond quickly enough to support services. We also may be unabla e to modifyff accommodate short-term increases in customer demand forff our support services to compete with changes in support services provided by competitors. Our customers depend on our support organization to resolve issues relating to our products deployed on their networks. A high level of support is critical forff continued relationships with our customers. If we or our channel partners do not effff eff ctively assist our customers in deploying our products, succeed in helping our customers quickly resolve post-deployment issues, and provide effff eff ctive ongoing support, it would adversely affff eff ct our abia lity to sell our products to existing customers and would harm our reputation with existing and potential customers. Any faff ilure to maintain high quality support and services would harm our operating results and reputation. Further, if customers demand these services, and we cannot adequately meet their demand, or if we cannot realize revenues in the format of 20 connection with our provision of services related to product support, it could have a material and adverse impact on our fiff nancial condition and results of operations. The success of our business depends, in part, on the continued growth in the market forff and the continued commercial demand forff service delivery, service assurance and network security solutions. We derive nearly all our revenue frff om the sale of products and services that are designed to allow our customers to assure futff urt e products to address the market, the optimal distribution strategy, and the futff urt e changes to the the deliveryrr of services through management of the perforff mance and network security of appl have actively expanded our operations in the past through acquisitions and organic growth and may continue to expand them in the futff urt e to gain share in the evolving market in which we operate. Thereforff e, we must be abla e to predict the appr feff aturt es and prices forff competitive environment. For us to be successfulff appl ications a and, in particular, adopt our management solutions. Any faff ilure of this market to continue to be viabla e would materially and adversely impact our business, operating results, and fiff nancial condition. Additionally, businesses may choose to outsource the operations and management of their networks to managed service providers. Our business may depend on our abia lity to continue to develop relationships with these service providers and successfulff ication management and network security solutions, decide to invest in the management of their networked appl , our potential customers must recognize the value of more sophisticated ications across IP networks. We ly market our products to them. opriate a a a Failure to manage growth properly and to implement enhanced automated systems could adversely impact our business. The growth in size and complexity of our business and our customer base has been and will continue to be a challenge to our management and operations. Additional growth will place signififf cant demands on our management, infrff astrucrr other resources. To manage furff ther growth effff eff ctively, we must hire, integrate, and retain highly skilled personnel qualififf ed to manage our expanded operations. We will also need to continue to improve our fiff nancial and management controls, reporting systems, and procedures. If we are unabla e to manage our growth effff eff ctively, our costs, the quality of our products, the effff eff ctiveness of our sales organization, attraction and retention of key personnel, our business, our operating results and fiff nancial condition could be materially and adversely impacted. To manage our growth effff eff ctively, we may need to implement new or enhanced automated infrff astrucr turt e technology and systems. turt e, and Any disrupt r ions or ineffff eff ctiveness relating to our systems implementations and enhancements could adversely affff eff ct our abia lity to process customer orders, ship products, provide services and support to our customers, bill and track our customers, fulff l obligations, and otherwise runrr fiff ll contractuat our business. Most of our employees are based outside of our headquarters. If we are unabla e to appr a opriately increase management depth and enhance succession planning, we may not be abla e to achieve our fiff nancial or operational goals. It is also important to our continued success that we hire qualififf ed employees, properly train them and manage out poorly perforff ming personnel, all while maintaining our corpor operations could be adversely affff eff cted. ate culturt e and spirit of innovation. If we are not successfulff ts, our growth and at these effff orff r As our business evolves, we must also expand and adapta our inforff mation technology (IT) and operational infrff astrucrr turt e. Our business relies on our data systems, billing systems and other operational and fiff nancial reporting and control systems. All these systems have become increasingly complex due to the diversififf cation and complexity of our business and acquisitions of new businesses with diffff eff rent systems. To manage our technical support infrff astrucr effff iff ciency, we will need to continue to upgrade and improve our data systems, billing systems, ordering processes, customer relationship management systems, and other operational and fiff nancial systems, procedures and controls. These upgrades and improvements may be diffff iff cult and costly, and they may require employees to dedicate a signififf cant amount of time to implement. If we are unabla e to adapta our systems and organization in a timely, effff iff cient, and cost-effff eff ctive manner to hosted data accommodate changing circumstances, our business may be adversely affff eff cted. If the third parties we rely on forff ions that rr solutions forff impact the services we utilize, the integrity and availabia lity of our internal inforff mation could be compromised causing the loss of confiff dential or proprietaryrr our internal network and inforff mation systems are subject to a security breach or otherwise suffff eff r disrupt inforff mation, damage to our reputation and economic loss. turt e effff eff ctively and improve our sales Our growth could suffff eff r if the markets into which we sell our products and services experience cyclicality. Our growth will depend in part on the growth of the markets which we serve. We serve certain industries that have historically been cyclical and have experienced periodic downturt ns that have had a material adverse impact on demand forff the products, softff ware, and services that we offff eff r. Any of these faff ctors could adversely affff eff ct the business, fiff nancial condition, and results of operations of the company in any given period. For example, as a result of a signififf cant downturt n in domestic and 21 global travel at the onset of the COVID-19 pandemic, our customers in the travel industryrr experienced decreases in revenue and, as a result, spent less on our products and our revenue in this sector declined. We or our suppliers may be affff eff cted by new regulations related to climate change and other environmental issues. We or our suppliers may become subject to new laws enacted with regards to climate change and other environmental issues. If new laws are enacted, or current laws are modififf ed in countries in which we or our suppliers operate, we could faff ce increased costs to comply with these laws. These costs may be incurred across various levels of our supply chain to comply with new environmental regulations, as well as by us in connection with our manufaff cturt to incorpor addition, we may be unabla e to service existing products if certain materials are no longer compliant with new regulations, which could cause us to incur increased costs to satisfyff service obligations to customers. Additionally, our flff ow of product may be impacted which could delay the recognition of revenue and have a materially adverse effff eff ct on our business. ation of substitutt e materials and other product re-design costs, as well as costs associated with product recalls. In ing of products, including costs related r Our success depends, in part, on our ability to manage and leverage our distribution channels. Disruptions to, or lure to effff eff ctively develop and manage, these partners and the processes and procedures that support them could our faiff adversely affff eff ct our ability to generate revenues frff om the sale of our products and services. Managing these distribution channels and relationships requires experienced personnel, and lack of suffff iff cient expertise could lead to a decrease in sales of our products and services, which could cause our operating results to suffff eff r. Our futff urt e success may require us to increase the number and use of our indirect sales effff orff ts 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 frff om us. Some of our distribution and channel partners also distribute and sell competitive products and services and the reduction in sales by these partners could materially reduce our revenues. In addition, they could internally develop products that compete with our solutions or partner with our competitors and bundle or resell competitors' solutions, possibly at lower prices. The potential inabia lity 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 effff eff ctively or the loss of existing partnerships could have a material and adverse impact on our business, operating results and fiff nancial condition. Our international operations, including our operations in the United Kingdom, mainland Europe, India, Asia-Pacififf c and other regions, are generally also subject to the risk of longer sales cycles through our international distribution channels. Sales to customers outside the United States accounted forff the fiff scal years ended March 31, 2022, 2021 and 2020, respectively. 41%, 42%, and 39% of our total revenue forff The need to develop such relationships can be particularly acute in areas outside of the U.S. Recruir ting and retaining qualififf ed 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 signififf cant time and resources throughout the relationship. y Risks Related to Our Intellectual Property p Our success depends on our ability to protect our intellectual property rights. Our business is heavily dependent on our intellectuat l property. We rely upon a combination of patent, copyright, l and license arrangements to protect l property rights. The reverse engineering, unauthorized copying, or other misappr trademark and trade secret laws and registrations and non-disclosure and other contractuat our intellectuat l opriation of our intellectuat property could enabla e third parties to benefiff t frff om our technology without compensating us. Furthermore, the laws of some forff eign jurisdictions do not offff eff r the same protections forff subject to unauthorized use of our products in those countries. Legal proceedings to enforff ce our intellectuat could be burdensome and expensive and could involve a high degree of uncertainty. In addition, legal proceedings may divert management's attention frff om growing our business. There can be no assurance that the steps we have taken to protect our inforff mation, or that we will be abla e to intellectuat detect unauthorized use by third parties and take appr copying or use of our products or proprietaryrr operating results. opriation of proprietaryrr opriate steps to enforff ce our intellectuat inforff mation could result in reduced sales of our products and eventuat l property rights. The unauthorized lly harm our l property rights will be adequate to deter misappr rights as the laws of the United States, and we may be l property rights our proprietaryrr a a a Others may claim that we infrff inge on their intellectual property rights. We are and may continue to be subject to claims by others, whether valid or not, that our products infrff inge on their intellectuat signififf cant sums in litigation, pay damages or royalties, delay product shipments, reengineer our products, rename our products l property rights, patents, copyrights, or trademarks. These claims, whether or not valid, could require us to spend 22 and rebuild name recognition or acquire licenses to such third-party intellectuat required licenses on commercially reasonabla e terms or secure them at all. In some cases, we may have agreed to contract terms that indemnifyff our customers and partners if our products or technology infrff inge or misappr intellectuat partners if our products or technology are the subject of such allegations. Any of these claims or resulting events could have a material and adverse impact on our business, operating results, and fiff nancial condition. opriate specififf ed third party l property rights; thereforff e, we could become involved in litigation or claims brought against our customers or l property. We may not be abla e to secure any a Risks Related to Our Liquidity and Financial Condition q y Our indebtedness may limit our operations and our use of our cash flff ow, and any faiff lure to comply with the covenants that apply to our indebtedness could adversely affff eff ct our liquidity and fiff nancial condition. On July 27, 2021, we amended and extended our existing credit faff cility (Second Amended and Restated Credit r es (including to fiff nance the repurchase of common stock). The Agreement) with a syndicate of lenders. The Second Amended and Restated Credit Agreement provides forff a fiff ve-year $800.0 million senior secured revolving credit faff cility, including a letter of credit sub-faff cility of up to $75.0 million. We may elect to use the new credit faff cility forff working capia tal purpos 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. As of the date of this report, we had $200.0 million in outstanding indebtedness under the Second Amended and Restated Credit Agreement. Our debt level can have negative consequences, including exposing us to futff urt e interest rate risk. We may incur signififf cantly more debt in the futff urt e, and there can be no assurance that our cost of fundi not substantially increase. Our current revolving credit faff cility also imposes certain restrictions on us; forff a more detailed description please refeff r to "Management's Discussion and Analysis of Financial Condition and Results of Operations." Upon an example, the administrative agent, with the consent of,ff or at the request of,ff the holders of more than 50% in event of defaff ult, forff principal amount of the loans and commitments, may terminate the commitments and accelerate the maturt outstanding under the Second Amended and Restated Credit Agreement and enforff ce certain other remedies under the Second Amended and Restated Credit Agreement and other loan documents, which would adversely affff eff ct our liquidity and fiff nancial condition. If we take on additional indebtedness, the risks described above could increase. ity of the loans ng will a ff At our election, revolving loans under the Second Amended and Restated Credit Agreement bear interest at either (a) an Alternate Base Rate per annum equal to the greatest of (1) the Wall Street Journal prime rate; (2) the New York Federal Reserve Bank (NYFRB) rate plus 0.50% or (3) an adjusted one month LIBO rate plus 1%; or (b) a Term Benchmark Borrowing the interest period selected by us, subject to customaryrr provisions regarding succession frff om LIBO rate to SOF rate in rate (forff anticipation of the upcoming discontinuation of the LIBO rate), in each case plus an appl icabla e margin. a On July 27, 2017, the U.K. Financial Conduct Authority (FCA), which regulates LIBOR, announced that it will no longer the calculation of LIBOR aftff er 2021. Further, on March 5, 2021, the Intercontinental Exchange require banks to submit rates forff Benchmark Administration, the FCA-regulated and authorized administrator of LIBOR, announced, and the FCA confiff rmed, that one-week and two-month USD LIBOR settings would cease on December 31, 2021, and that the USD LIBOR panel forff all other tenors will cease on June 30, 2023. There is no assurance that the administrator of LIBOR and/or regulators will not take ther action that could impact the availabia lity, composition or characteristics of LIBOR or the currencies and/or tenors forff furff which LIBOR is published. There is uncertainty as to the perforff mance of LIBOR during the transition period, the timing of the remaining transition frff om LIBOR and the perforff mance of alternative interest rates. Such uncertainties could result in pricing, operational and legal implementation risks. In anticipation of the upcoming discontinuation of LIBOR, the Second Amended and Restated Credit Agreement includes customaryrr provisions regarding succession frff om LIBOR to the Secured Overnight Financing Rate (SOFR) or certain other agreed upon replacement benchmark rates. Such provisions require the consent of certain parties, such as the administrative agent and the lenders, under certain circumstances. There is no guarantee that the necessaryrr consents will be obtained. If such consents are not obtained, pricing, operational and legal implementation risks may also arise. If the methods of calculating a benchmark rate under the Second Amended and Restated Credit Agreement change frff om current methods forff any reason, or if such benchmark rate ceases to perforff m as it historically has, or if we select an alternative benchmark rate, our interest expense and other costs associated with our outstanding indebtedness or any futff urt e indebtedness we incur under the Second Amended and Restated Credit Agreement may increase. 23 Any faiff lure to meet our debt obligations could damage our business. Our abia lity to meet our obligations under the Second Amended and Restated Credit Agreement will depend on market conditions and our futff urt e perforff mance, which is subject to economic, fiff nancial, competitive, and other faff ctors beyond our control. If we are unabla e to remain profiff tabla e, or if we use more cash than we generate in the futff urt e, our level of indebtedness at such time could adversely affff eff ct our operations by limiting or prohibiting our abia lity to obtain fiff nancing forff r expenditurt es, acquisitions and general corpor under the Second Amended and Restated Credit Agreement, we would be in defaff ult under the terms of the loans, which could seriously harm our business. If we incur signififf cantly more debt, this could intensifyff es. In addition, if we are unabla e to make payments as required . the risks described above ate and other purpos additional capia tal a r We may faiff l to secure necessary additional fiff nancing. Our futff urt e success may depend in part on our abia lity to obtain additional fiff nancing to support our continued growth and operations and any downgrades in our credit rating could affff eff ct our abia lity to obtain additional fiff nancing in the futff urt e or may affff eff ct the terms of any such fiff nancing. If our existing sources of liquidity are insuffff iff cient to satisfyff our operating requirements, we may need to seek to raise capia tal by one or more of the folff lowing: • • • • issuing additional common stock or other equity instrumr acquiring additional bank debt; issuing debt securities; or obtaining lease fiff nancings. ents; However, we may not be abla e to obtain additional capia tal when we want or need it, or capia tal may not be availabla e on satisfaff ctoryrr as new fiff nancial or operating covenants, or that may result in dilution to our stockholders. terms. Furthermore, any additional capia tal may have terms and conditions that adversely affff eff ct our business, such We expect that existing cash, cash equivalents, marketabla e securities, cash provided frff om operations and our bank credit faff cilities will be suffff iff cient to meet ongoing cash requirements. However, our faff ilure to generate suffff iff cient cash as our debt becomes due or to renew credit lines prior to their expiration could materially adversely affff eff ct our business, fiff nancial condition, operating results, and cash flff ows. Risks Related to ESG Matters The faiff lure to recruit and retain qualififf ed personnel and plan forff and manage the succession of key executives could hinder our ability to successfuff lly manage our business, which could have a material adverse effff eff ct on our fiff nancial position and operating results. We operate in businesses where there is intense competition forff experienced personnel in all our global markets and have, recruir in some instances, experienced attrition of our employees to direct and indirect competitors. We depend on our abia lity to identify,ff t, hire, train, develop and retain qualififf ed and effff eff ctive profeff ssionals and to attract and retain talent needed to execute our business strategy. Our futff urt e success depends in large part upon our abia lity to attract, train, motivate and retain highly skilled employees, particularly executives, sales and marketing personnel, softff ware engineers, and technical support personnel. The complexity of our products, processing func profeff ssionals. While we presently have a sophisticated, dedicated and experienced team of employees who have a deep understanding of our business lines, the labor limited number of people availabla e with the necessaryrr the highly skilled technical personnel that are integral to our sales, marketing, product development and technical support teams, the rate at which we can generate sales and develop new products or product enhancements may be limited. This inabia lity could have a material and adverse impact on our business, operating results, and fiff nancial condition. these individuals has historically been veryrr competitive due to the technical skills and understanding. If we are unabla e to attract and retain tionality, softff ware systems and services require highly trained market forff a ff In addition, we must maintain and periodically increase the size of our sales forff ce in order to increase our direct sales and technical, salespeople require a comparatively long period of support our indirect sales channels. Because our products are veryrr time to become productive, typically three to twelve months. This lag in productivity, as well as the challenge of attracting qualififf ed candidates, may make it diffff iff cult to meet our sales forff ce growth targets. Further, we may not generate suffff iff cient sales to offff sff et the increased expense resulting frff om growing our sales forff ce. If we are unabla e to maintain and periodically expand our sales capaa bia lity, our business, operating results and fiff nancial condition could be materially and adversely impacted. Loss of key personnel could adversely impact our business. Our futff urt e success depends to a signififf cant degree on the ts of Anil Singhal, our President, Chief Executive Offff iff cer, and co-founde skills, experience and effff orff r, and our other key executive offff iff cers and senior managers to work effff eff ctively as a team. Effff eff ctive succession planning is also important forff ff our 24 long-term success. Failure to ensure effff eff ctive transfeff rs of knowledge and smooth transitions involving key employees could hinder our strategic planning and execution. The loss of one or more of our key personnel could have a material and adverse and manage the succession of impact on our business, operating results, and fiff nancial condition. We must, thereforff e, plan forff key executives due to retirement, illness, or competitive offff eff rs elsewhere. Our disclosures, initiatives and goals related to ESG matters expose us to numerous risks, including risks to our reputation, business, fiff nancial perforff mance and growth. As we identifyff ESG topics forff disclosures in these areas. Statements about standards forff measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the futff urt e. If our ESG-related data, processes and reporting are incomplete or inaccurate, or if we faff il to achieve progress with respect to our ESG goals on a timely basis, or at all, our reputation, business, fiff nancial perforff mance and growth could be adversely affff eff cted. voluntaryrr disclosure, we have expanded and, in the futff urt e, may continue to expand our our ESG initiatives and goals, and progress against those goals, may be based on a Other Risks Related to Our Business We may not successfuff lly complete acquisitions or integrate acquisitions we do make, which could impair our ability to compete and could harm our operating results. We may choose to acquire complementaryrr businesses, products, or technologies to remain competitive or expand our business. We investigate and evaluate potential acquisitions of complementaryrr businesses, products, and technologies in the ordinaryrr course of business. We may compete forff acquisition opportuni than we have. As a result, we may not succeed in acquiring some or all businesses, products, or technologies that we seek to acquire. Our inabia lity to effff eff ctively consummate acquisitions on faff vorabla e terms could signififf cantly impact our abia lity to compete effff eff ctively in our targeted markets and could negatively affff eff ct our results of operations. ties with entities having signififf cantly greater resources t Acquisitions that we do complete could adversely impact our business. The potential adverse consequences frff om acquisitions include: • • • • • the potentially dilutive issuance of common stock or other equity instrumrr 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 signififf cant costs and expenses to complete the acquisition and integrate the acquired business; and the potentially negative impact of poor perforff mance of an acquisition on our earnings per share. ents; Acquisition transactions also involve numerous business risks. These risks frff om acquisitions include: • • • • • • acquisitions that may limit other potential uses of our cash, including stock repurchases and diffff iff culties in assimilating the acquired operations, technologies, personnel and products; diffff iff culties in assimilating diverse fiff nancial reporting and management inforff mation systems as well as diffeff ordering processes and customer relationship management systems; use of cash to pay forff repayment of outstanding indebtedness; substantial accounting charges forff development, impairment of goodwill, amortization or impairment of intangible assets and share-based compensation expense; the potential loss of key employees, customers, distributors or suppliers; and the inabia lity to generate suffff iff cient revenue to offff sff et acquisition or investment costs. ing and related expenses, write-offff of in-process research and restrucr ring turt If we are not abla e to successfulff ly manage these issues, the anticipated benefiff ts and effff iff ciencies of the acquisitions may ly or at all, or may take longer to realize than expected, and our abia lity to compete, our revenue and gross not be realized fulff margins and our results of operations may be adversely affff eff cted. We facff e signififf cant competition frff om other technology companies. a ication perforff mance managgement, networkk securiityy, cybeybersecuriityy a dnd bbusiiness iintelllliiggence The service assurance, appl markkets are hihighlghlyy competiitiive, ra ipia dldlyy e botbothh llargge a dnd smallll, a dnd we expect competiitiion on s lolutiions offff eff rii gngs a dnd priicii gng to iincrease. We bbelliieve customers makke ser ivice managgement syystem, networkk securiityy, cybeybersecuriityy a dnd bbusiiness iintelllliiggence purchhasii gng ddeciisiions bbasedd priimariillyy upon thhe f lolff a lvol ivi gng, a dnd frff aggmentedd markkets thhat hhave overlla ippi hnologiogies a dnd competiitors, llowii gng faff ctors: gng tech l 25 • • • • • • • • tiionalliityy a dnd priice; ff ciityy; ppr doduct a dnd ser ivice perforff mance, func tiimelliiness of new pr doduct a dnd ser ivice iintr doductiions; networkk capaa ease of iinstallllatiion, iinteggratiion, a dnd use; customer ser ivice a dnd tech ihnicall support; name a dnd reputatiion of ve dndor; qualliityy a dnd vallue of thhe pr doduct a dnd ser ivices; andnd alllliiances wiithh ii dndustryyrr partners. We compete wiithh a llargge a dnd ggrowii gng numbber of pr a iovidders of ser ivice assurance, a lppl iicatiion perforff mance managgement a iquipment, networkk securiityy a dnd ser ivice assurance a dnd a lppl s lolutiions, networkk securiityy offff eff rii gngs a dnd networkk traffff iiff c anallyyzers a dnd pr bobes, as wellll as wiithh pr ser ivices. In addidditiion, lleadidi gng networkk e hnol gyogy ve dndors offff eff r thheiir own managgement s lolutiions, iincll diudi gng pr doducts whihichh thheyy lliicense frff om othher competitors. Some of our current and potential competitors have greater name recognition and substantially greater fiff nancial, management, marketing, service, support, technical, distribution and other resources than we do. In addition, some of our customers develop their own in-house solutions to meet their technologicall needds. Furthher, iin recent yyears some of our competiitors hhave bbeen ac compa inies thhat are seekiki gng to enter or expa dnd iin thhe markkets iin whihichh we operate. We expect thihis tre dnd to contiinue as compa inies attempt to stre gngthhen or maiintaiin thheiir markket posiitiions iin an e a dnd ggreater resources, our competiitors mayy bbe ablbla e to res tech lhnologiogies, sta dndardds a dnd customer re t pond more effff eff ctiivellyy thhan we can to new or chhangingi gng opport iuni lvol ivi gng ii dndustryy.rr Thhereforff e, gigiven thheiir llargger siize iovidders of bbusiiness iintelllliiggence l iquiredd byby llargger iquirements. iicatiion tech tiies, d l As a res lult of thhe competiitiive faff ctors hihighlghliightghtedd iin thihis sectiion a dnd iin othher riiskk faff ctors, iincll diudi gng thhe iintr doductiion of iive tech hnologiogies, we mayy not bbe ablbla e to compete effff eff ctiivellyy wiithh our current or futff urt e competiitors. If we are unablbla e to didisrupt r antiiciipate or react to thhese competiitiive chhalllle gnges or iif e ixistii gng or new competiitors ggaiin markket shhare iin a yny of our markkets, our competiitiive posiitiion c operatii gng res lults. Thihis competiitiion c markketii gng expenses, a dnd faff iillure to iincrease, or thhe lloss of markket shhare, a yny of whihichh w louldd lliikkellyy hhave a materiiall a dnd addverse iimpact on our bbusiiness, operatii gng res lults a dnd fiiff nanciiall c di louldd res lult iin iincreasedd priicii gng pressure, redducedd profiiff t margigins, iincreasedd salles a dnd louldd experiience a ddeclliine iin our salles thhat c louldd addversellyy affff eff ct our bbusiiness a dnd louldd weakken a dnd we c onditiion. Uncertainties of regulation of the Internet and data traveling over the Internet could have a material and adverse impact on our fiff nancial condition and results of operations. We could be materially adversely affff eff cted by increased regulation of the Internet and Internet commerce in any countryrr where we operate, as well as access to or commerce conducted on the Internet. Further, governments may furff restrict the sales, licensing, distribution, and export or import of certain technologies to certain countries. The adoption of additional regulation of the Internet and Internet commerce could decrease demand forff increase the cost of selling our products, which could have a material and adverse effff eff ct on our fiff nancial condition and results of operations. our products, and, at the same time, ther regulate or We are subject to stringent and changing laws, regulations, standards, contractual obligations, and other obligations related to privacy, data protection, and data security. The actual, alleged, or perceived faiff lure by us or the partners we work with to comply with such obligations could adversely affff eff ct our business, results of operations, and fiff nancial conditions. frff amework forff We are subject to numerous domestic and forff eign laws and other obligations relating to privacy, data protection, and data privacy, data protection, and data security issues worldwide is rapia dly evolving, and as a security. The regulatoryrr result, legal requirements and enforff cement practices are likely to continue to evolve. In many jurisdictions, enforff cement activities and consequences forff response to rulrr es and regulations promulgated under the authority of feff deral agencies, state attorneys general, states' legislation, and consumer protection agencies. In addition, privacy advocates and industryrr groups in the United States have regularly proposed, and may propose in the futff urt e, self-ff regulatoryrr security standards with which we may be required to comply. If we fail to folff low these standards, we may incur signififf cant fiff nes or experience a signififf cant increase in costs. noncompliance are rising. In the United States, these activities include enforff cement actions in Many states have enacted laws regulating the online collection, use, and disclosure of personal inforff mation and requiring that companies implement reasonabla e data security measures, such as the Califorff nia Consumer Privacy Act of 2018. Virginia and Colorado also recently passed comprehensive privacy laws that take effff eff ct in 2023 and similar laws are being considered in other states and at the feff deral level. Additionally, laws in all states and U.S. territories require businesses to notifyff affff eff cted individuals, governmental entities, and/or credit reporting agencies of certain security breaches affff eff cting personal inforff mation. 26 Compliance with these laws in the event of a widespread data breach is complex and costly and additional compliance measures will require investment and potential changes to our business process. The data protection landscapea is also rapia dly evolving internationally, and we expect there will continue to be new and a y to privacy and data security in other forff eign proposed laws, regulations, and industryrr standards concerning privacy, data protection, and data security. We are subject to an increasing number of laws, regulations, and industryrr standards that appl jurisdictions in which we operate including the European Union’s General Data Protection Regulation, Brazil’s General Data Protection Law, Canada’s Personal Inforff mation Protection and Electronic Documents Act, and China’s Personal Inforff mation Protection Law, which all impose strict requirements forff processing the personal data of individuals. Complying with forff eign and domestic data protection laws may cause us to incur additional operational costs or require us to change our business practices. If we or the third parties we rely on to operate our business and deliver our services faff il to comply, or are perceived as faff iling to comply, with our legal, contractuat l, or other obligations relating to privacy, data protection, or data security, or our policies and documentation relating to personal inforff mation, we could faff ce governmental enforff cement action; litigation with our customers, individuals or others, fiff nes and civil or criminal penalties forff offff eff ring our services or to substantially modifyff publicity and harm to our brand and reputation, and reduced overall demand forff adversely affff eff ct our business, fiff nancial condition, and results of operations. them in ways that make them less effff eff ctive in certain jurisdictions, negative us or company offff iff cials, obligations to cease our services. Such developments could Foreign currency exchange rates may adversely affff eff ct our fiff nancial statements. A material portion of our revenue is derived frff om international operations. Our consolidated fiff nancial results are reported in U.S. dollars. Most of the revenue and expenses of our forff eign subsidiaries are denominated in local currencies. Given that cash is typically received over an extended period of time forff many of our license agreements and given that a material and increasing portion of our revenue is generated outside of the United States, flff uctuat Euro) against the U.S. dollar could result in substantial changes in reported revenues and operating results due to the forff eign exchange impact upon translation of these transactions into U.S. dollars. tions in forff eign exchange rates (including the In the normal course of business, we employ various hedging strategies to partially mitigate these risks, including the use ents. These strategies may not be effff eff ctive in fulff tions frff om of derivative instrumrr movements in forff eign exchange rates, including the increased volatility in forff eign exchange rates relating to the COVID-19 pandemic, the conflff ict between RusRR sia and Ukraine and futff urt e global pandemics and other events. Fluctuat exchange rates could materially adversely affff eff ct our business, fiff nancial condition, operating results, and cash flff ow. ly protecting us against the effff eff cts of flff uctuat tions of the forff eign Additionally, sales and purchases in currencies other than the U.S. dollar expose us to flff uctuat tions in forff eign currencies relative to the U.S. dollar and may adversely affff eff ct our fiff nancial statements. Increased strength of the U.S. dollar increases the effff eff ctive price of our products sold in U.S. dollars into other countries, which may require us to lower our prices or adversely affff eff ct sales to the extent we do not increase local currency prices. Decreased strength of the U.S. dollar could adversely affeff ct the cost of materials, products, and services we purchase overseas. Sales and expenses of our non-U.S. businesses are also translated into U.S. dollars forff unfaff vorabla e translation effff eff cts. In addition, we may invoice customers in a currency other than the func business, and movements in the invoiced currency relative to the func effff eff cts. We also faff ce exchange rate risk frff om our investments in subsidiaries owned and operated in forff eign countries. ff tional currency could also result in unfaff vorabla e translation es and the strengthening or weakening of the U.S. dollar could result in tional currency of our reporting purpos r ff l If we violate the U.S. Foreign Corrupt Practices Act or applicable anti-bribery laws in other countries, or if we faiff to comply with U.S. export controls and government contracting laws, our business could be harmed. We earn a material portion of our total revenues frff om international sales. As a result, we must comply with complex forff eign and U.S. laws and regulations, such as the U.S. Foreign Corrupt laws prohibiting corrupt r payments to government offff iff cials and others, as well as anti-competition regulations. Practices Act, the U.K. Briberyrr Act, and other local r The U.S. Foreign Corrupt rr Practices Act (FCPA), generally prohibits U.S. companies and their intermediaries frff om r payments to forff eign offff iff cials forff a making corrupt treatment and requires companies to maintain appr the transactions of the company. Under the FCPA, U.S. companies may be held liabla e forff partners or representatives. In addition, regulators may seek to hold us liabla e forff by companies which we acquire. We are also subject to the U.K. Briberyrr Act and may be subject to certain anti-corrupt of other countries in which we do business. e of obtaining or keeping business or otherwise obtaining faff vorabla e opriate record-keeping and internal accounting practices to accurately reflect successor liabia lity FCPA violations committed ion laws actions taken by agents or local the purpos r rr In addition to anti-briberyrr and anti-corrupt r ion laws, we are also subject to the export and re-export control laws of the U.S., including the U.S. Export Administration Regulations (EAR) and the offff iff ce of Foreign Asset Control (OFAC), as well as 27 to U.S. government contracting laws, rulr es and regulations, and may be subject to government contracting laws of other countries in which we do business. If we or our distributors, resellers, agents, or other intermediaries faff il to comply with the ion, export or governmental contracting laws FCPA, the EAR, OFAC or U.S. government contracting laws, or the anti-corrupt 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 effff eff ct on our business, results of operations, fiff nancial conditions and cash flff ows. rr Violations of these laws and regulations could result in fiff nes and penalties, criminal sanctions, restrictions on our business conduct and on our abia lity to offff eff r our products and services in one or more countries. Such violations could also adversely affff eff ct our reputation with existing and prospective customers, which could negatively impact our operating results and growth prospects. The current economic and geopolitical environment may impact some specififf c industries into which we sell and may lead our customers to delay or forff go technology investments and could have other impacts, any of which could materially adversely affff eff ct our business, fiff nancial condition, operating results and cash flff ows. Many of our customers are concentrated in certain industries, including fiff nancial services, public sector, healthcare, and the service provider market. Certain industries may be more acutely affff eff cted by economic, geopolitical, and other faff ctors, including public heath crises, and changes in U.S. trade policy, than other sectors. Our public sector customers are affff eff cted by feff deral, state, and local budget decisions. To the extent that one or more of the sectors in which our customer base operates is adversely impacted, whether as a result of general conditions affff eff cting all sectors or as a result of conditions affff eff cting only those particular sectors, our business, fiff nancial condition and results of operations could be materially and adversely impacted. If companies in our target markets reduce capia tal expenditurt es, we may experience a reduction in sales, longer sales cycles, slower adoption of new technologies as well as downward pressure on the price of our products. There can be no assurance that any decrease in sales resulting frff om the COVID-19 pandemic will be offff sff et by increased sales in subsequent periods. Although the magnitude spread of COVID-19 or the occurrence of other epidemics and the imposition of related public health measures and travel and business restrictions could adversely impact our business, fiff nancial condition, operating results and cash flff ows. of the impact of the COVID-19 pandemic on our business and operations remains uncertain, the continued t International economic, political, legal, compliance and business facff tors could negatively affff eff ct our fiff nancial statements and growth. We expect to continue to develop our sales and presence outside the U.S. Our international business (and particularly our business in high-growth markets) is subject to risks that are customarily encountered in non-U.S. operations, any of which could negatively affff eff ct our business, fiff nancial condition, and results of operations. General Risk Factors Our actual operating results may diffff eff r signififf cantly frff om our guidance. We generally release guidance regarding our futff urt e perforff mance on our quarterly earnings confeff rence calls, quarterly earnings releases, and otherwise. Such guidance, which includes forff ward-looking statements, reflff ects our management’s estimates as of the date of release and is based on projections prepared by our management. We may also decide not to release, or to defeff r, issuing guidance, where such guidance might not be appr clarity to issue such guidance. In those situat of guidance. opriate or when we do not have suffff iff cient visibility or tions, we expect to communicate our reasons forff not releasing or defeff rring release a Projections are based upon a number of assumptions and estimates that, while presented with numerical specififf city, are inherently subject to signififf cant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and are based upon specififf c assumptions with respect to futff urt e business decisions, some of which will change. The principal reason that we release guidance is to provide a basis forff and investors. We are not responsible forff any projections or reports published by any such analysts or investors. our management to discuss our business outlook with analysts Guidance is necessarily speculative in naturt e, and it can be expected that some or all of the assumptions underlying the l results. Accordingly, our guidance is only an guidance furff nished by us will not materialize or will varyrr signififf cantly frff om actuat frff om our guidance and the l results may varyrr estimate of what management believes is realizabla e as of the date of release. Actuat variations may be material. In light of the forff egoing, investors are urged not to rely upon our guidance in making an investment decision regarding our common stock. 28 Any faff ilure to successfulff ly implement our operating strategy or the occurrence of any of the events or circumstances set l operating results being diffff eff rent frff om our guidance, th in this "Risk Factors" section in this report could result in the actuat forff and the diffff eff rences may be adverse and material. Our effff eff ctive tax rate may flff uctuate, which could increase our income tax expense and reduce our net income. Our effff eff ctive tax rate or the taxes we owe could be adversely affff eff cted by several faff ctors, many of which are outside of our control, including: • • • • • • • • changes in the relative proportions of revenues and income beforff e taxes in the various jurisdictions in which we operate that have diffff eff ring statutt oryrr tax rates; ings; changing tax laws, regulations, and interprr etations in multiple jurisdictions in which we operate as well as the requirements of certain tax rulrr changes in the research and development tax credit laws; earnings being lower than anticipated in jurisdictions where we have lower statutt oryrr anticipated in jurisdictions where we have higher statutt oryrr the valuation of generated and acquired defeff rred tax assets and the related valuation allowance on these assets; transfeff r pricing adjustments; the tax effff eff cts of purchase accounting forff reporting periods; and tax assessments or any related tax interest or penalties that could signififf cantly affff eff ct our income tax expense forff period in which the settlements take place. ing charges that may cause flff uctuat rates and being higher than acquisitions and restrucr rates; turt tions between the We are subject to income taxes in the United States and in numerous forff eign jurisdictions. From time to time, we may receive notices that a tax authority in a particular jurisdiction believes that we owe a greater amount of tax than we have reported to such authority. While we regularly assess the likelihood of adverse outcomes frff om such examinations and the adequacy of our provision income taxes, there can be no assurance that such provision is suffff iff cient and that a determination by a tax authority will not forff have an adverse effff eff ct on our results of operations. An adverse change in our effff eff ctive tax rate could have a material and adverse effff eff ct on our fiff nancial condition and results of operations and the price of our common stock could decline if our fiff nancial results are materially affff eff cted by an adverse change in our effff eff ctive tax rate. 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 are also subject to the examination of our tax returt ns and other tax matters by the Internal Revenue Service and other tax authorities and governmental bodies. We regularly assess the likelihood of an adverse outcome resulting frff om these examinations to determine the adequacy of our provision forff a may negatively impact our operating results. There can be no assurance as to the outcome of these examinations. Fluctuat tax rates and duties, changes in tax legislation or regulation or adverse outcomes of these examinations could have a material adverse effff eff ct on our results of operations, fiff nancial condition, and cash flff ows. ication of import and excise duties and or sales taxes or VAT taxes. Additionally, changes in or the improper appl tions in There is increased uncertainty with respect to tax policy and trade relations between the U.S. and other countries. Maja or developments in tax policy or trade relations, such as the imposition of unilateral tariffff sff on imported products, could have a material adverse effff eff ct on our results of operations, fiff nancial condition, and cash flff ows. Our estimates and judgments related to critical accounting policies could be inaccurate. We consider accounting policies related to revenue recognition, and valuation of goodwill, intangible assets and other a ly understanding and evaluating our fiff nancial results. Management makes acquisition accounting items to be critical in fulff judgments and creates estimates when appl ying these policies. These estimates and judgments affff eff ct, among other things, the reported amounts of our assets, liabia lities, revenue and expenses, the amounts of charges accruer d by us, and related disclosure of contingent assets and liabia lities. We base our estimates on historical experience and on various other assumptions that we believe to be reasonabla e under the circumstances and at the time they are made. If our estimates or the assumptions underlying them are not correct, actuat additional charges or impair assets that could adversely impact our business. As a result, our operating results and fiff nancial condition could be materially and adversely impacted in futff urt e periods. l results may diffff eff r materially frff om our estimates and we may need to, among other things, accruer 29 Our disclosure controls and procedures and internal control over fiff nancial reporting may not be effff eff ctive. Our disclosure controls and procedures and internal control over fiff nancial reporting may not prevent all material errors and intentional misrepresentations. Any system of internal control can only provide reasonabla e assurance that all control objectives are met. Some of the potential risks involved could include, but are not limited to, management judgments, simple errors or mistakes, misinterprr etation, and willfulff misconduct regarding controls. Under Section 404 of the Sarbar nes-Oxley Act, we are required to evaluate and determine the effff eff ctiveness of our internal control over fiff nancial reporting. Compliance with this provision requires management's attention and expense. Management's assessment of our internal control over fiff nancial reporting may or may not identifyff weaknesses that need to be addressed in our internal control system. If we are unabla e to conclude that our internal control over fiff nancial reporting is effff eff ctive, investors could lose confiff dence in our reported fiff nancial inforff mation which could have an adverse effff eff ct on the market price of our stock or impact our borrowing abia lity. In addition, changes in operating conditions and changes in compliance with policies and procedures currently in place may result in inadequate disclosure controls and procedures and internal control over fiff nancial reporting in the futff urt e. Our stock price has been subject to flff uctuations, and will likely continue to be subject to flff uctuations, which may be volatile and due to facff tors beyond our control. The market price of our common stock is subject to wide flff uctuat tions in response to various faff ctors, some of which are beyond our control. In addition to the faff ctors discussed in this "Risk Factors" section and elsewhere in this report, faff ctors that could cause flff uctuat tions in the market price of our common stock include the folff lowing: • • • • • • • • • • • • in particular; l or anticipated developments in our business or our competitors’ businesses or the competitive landscapea ratings changes by any securities analysts who folff low our company; announcements by us or our competitors of signififf cant technical innovations, acquisitions, strategic partnerships, joint venturt es, or capia tal commitments; changes in operating perforff mance and stock market valuations of other technology companies generally, or those in our industryrr changes in accounting standards, policies, guidelines, interprr etations, or principles; actuat generally; developments or disputes concerning our intellectuat proprietaryrr 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 offff iff cers, directors, or other stockholders; and other events or faff ctors, including those resulting frff om public health crises, war, incidents of terrorism, or responses to these events. l property or our products and platforff m capaa bia lities, or third-party rights; In addition, the market forff technology stocks and the stock markets in general have experienced extreme price and tions. Stock prices of many technology companies have flff uctuat lowing periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial volume flff uctuat the operating perforff mance of those companies. In the past, stockholders have institutt ed securities class action litigation folff costs, divert resources and the attention of management frff om our business, and adversely affff eff ct our business, results of operations, fiff nancial condition, and cash flff ows. A decline in the value of our common stock, including as a result of one or more faff ctors set forff ted in a manner unrelated or disproportionate to , may result in substantial losses forff our stockholders. a th above 30 ItII ett m 1B. UnUU resolvll ed StSS aftt fff ComCC mentstt None. ItII ett m 2. PrPP opertitt es Our headquarters are located in Westforff d, MA, in appr a September 2030. In addition, we lease offff iff ce and/or manufaff cturt signififf cant locations frff om a cost or size perspective being in in Allen, Texas; San Jose, Califorff nia; Ann Arbor Berkeley, Califorff nia; Colorado Springs, CO; Bangalore, India; Pune, India; and Shanghai, China. r , Michigan; oximately 175,000 square feff et of space under a lease expiring in ing space in other locations globally with some of the more IItII ett m 3. Legalgal e PrPP oceedidinii ggs For inforff mation regarding legal proceedings, refeff r to Note 19, Commitments and contingencies to the Consolidated Financial Statements included in Part IV, Item 15 of this report. ItII ett m 4. MiMM nii e SafSS eff tytt Disii closll ures None. 31 ItII ett m 5. MarMM kerr t forff Regie sii trtt ant's' ComCC mon Equitii ytt ,yy Relatll ett d StSS octt kholdell r MatMM ttt ett rsrr ,s and IsII suer Purchases of Equitii ytt SeSS curitii itt es PART II Market Inforff mation Our common stock trades on the Nasdaq Global Select Market, under the symbol NTCT. Stockholders At May 9, 2022, we had 89 stockholders of record. We believe that the number of benefiff cial holders of our common stock exceeds 14,000. Stock Perforff mance Graph This perforff mance grapha shall not be deemed "fiff led" forff rr purpos es of Section 18 of the Exchange Act or otherwise subject to the liabia lities under that Section, and shall not be deemed to be incorpor the Exchange Act or the Securities Act of 1933, as amended. rr ated by refeff rence into any fiff ling of NetScout under The Stock Perforff mance Grapha set forff th below compares the yearly change in the cumulative total stockholder returt n on our common stock during the fiff ve-year period frff om March 31, 2017 through March 31, 2022 with the cumulative total returt n of the Nasdaq Composite Index and the Nasdaq Computer & Data Processing Index. The comparison assumes $100 was invested on March 31, 2017 in our common stock or in the Nasdaq Composite Index and the Nasdaq Computer & Data Processing Index and assumes reinvestment of dividends, if any. The stock price perforff mance shown on the grapha below is not necessarily indicative of futff urt e price perforff mance. Inforff mation used in the grapha was obtained frff om Research Data Group, Inc. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Assumes Initial Investment of $100 $300 $250 $200 $150 $100 $50 $0 3/17 3/18 3/19 3/20 3/21 3/22 NetScout Systems, Inc. NASDAQ Composite – Total Returns NASDAQ Computer and Data Processing NetScout Systems, Inc. Nasdaq Composite – Total Returt ns Nasdaq Computer and Data Processing 3/31/2017 3/31/2018 3/31/2019 3/31/2020 3/31/2021 3/31/2022 $ $ $ 100.00 100.00 100.00 $ $ $ 69.43 120.76 122.19 $ $ $ 73.97 133.60 134.55 $ $ $ 62.37 134.52 149.46 $ $ $ 74.20 233.26 249.93 $ $ $ 84.53 252.05 263.41 32 Dividend Policy In fiff scal yyears 2022 a dnd 2021 we did not declare any cash dividends and do not anticipate declaring cash dividends in the , forff eseeabla e futff urt e. In addition, the terms of our credit faff cility limit our abia lity to pay cash dividends on our capia tal stock. It is our intention to retain all futff urt e earnings forff our stock buyback program furff declaration will be at the discretion of our Board of Directors and will depend upon, among other things, our futff urt e earnings, general fiff nancial conditions, capia tal requirements, existing bank covenants and general business conditions. ther described under Item 7 "Liquidity and Capia tal Resources." Any futff urt e cash dividend our expansion and growth, to pay down our debt, and to fund reinvestment to fund ff ff Recent Sales of Unregistered Securities None. Purchases of Equity Securities by the Issuer The folff lowing tabla e provides inforff mation about a purchases we made during the quarter ended March 31, 2022 of equity securities that are registered by us pursuant to Section 12 of the Exchange Act: 1/1/2022 - 1/31/2022 2/1/2022 - 2/28/2022 3/1/2022 - 3/31/2022 Total Total Number of Shares Purchased (1) Average Price Paid per Share 1,321 $ 11,664 1,343 14,328 $ 30.68 31.14 31.18 31.10 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 — — — — 5,758,482 5,758,482 5,758,482 5,758,482 (( )1) We purchhasedd an aggregate of 14,328 shares transfeff rred to us frff om employees in satisfaff ction of tax withholding obligations associated with the vesting of restrictedd stockk ddo not redduce thhe ma iximum numbber of shhares thhat mayy bbe purchhasedd authhoriizedd on Oct bober 24, 2017. iunits ddurii gng thhe perii dod. Suchh purchhases refllff ectedd iin thhe tablbla e dunder our 25 million share repurchase pr gogram ItII ett m 6. SeSS lell ctett d FiFF nii ancial Datatt Inforff mation required by Item 6 of Form 10-K is omitted pursuant to the SEC's adoption of amendments to Regulation S- K effff eff ctive Februar ryrr 10, 2021. 33 ItII ett m 7. ManMM agement's' Disii cussion and Analyll sisii of FiFF nii ancial ConCC ditii itt on and Resultll stt of OpeOO ratitt ons The folff lowing inforff mation should be read in conjunction with the audited consolidated fiff nancial inforff mation and the notes thereto included in this Annual Report on Form 10-K. In addition to historical inforff mation, the folff lowing discussion and other parts of this Annual Report contain forff ward-looking statements that involve risks and uncertainties. You should not place undue reliance on these forff ward-looking statements. Actuat and other faff ctors discussed in Item 1A. "Risk Factors" and elsewhere in this Annual Report. These faff ctors may cause our actuat l results to diffff eff r materially frff om any forff ward-looking statement. See the section titled "Cautionaryrr Statement Concerning ars at the beginning of this Annual Report. Forward-Looking Statements" that appe l events or results may diffff eff r materially due to competitive faff ctors a Overview We are an industryrr leader with over three decades of experience in providing service assurance and cybersecurity ises, including local, state and feff deral government agencies, rely on our solutions to achieve the visibility and to optimize network perforff mance, ensure the deliveryrr of high-quality, mission-critical appl solutions that are used by customers worldwide to protect their digital business services against disrupt and enterprr protection necessaryrr services, gain timely insight into the end user experience and protect their networks frff om attack. With our offff eff rings, customers can quickly, effff iff ciently and effff eff ctively identifyff and resolve issues that result in downtime, interrupt quality or compromised data, thereby reducing meantime-to-resolution of issues and driving compelling returt ns on their investments in their networks and broader technology initiatives. Some of the more signififf cant technology trends and catalysts forff environments, the rapia dly evolving cybersecurity threat landscapea 5G evolution in both the service provider and enterprr our business include the evolution of customers' digital transforff mation initiatives such as the migration to cloud , business intelligence and analytics advancements, and the ise customer verticals. ion. Service providers ications and ions to services, poor service a r rr Our operating results are inflff uenced by a number of faff ctors, including, but not limited to, the mix and quantity of products and services sold, pricing, costs and availabia lity of materials used in our products, growth in employee-related costs, including commissions, and the expansion of our operations. Factors that affff eff ct our abia lity to maximize our operating results include, but are not limited to, our abia lity to introduce and enhance existing products, the marketplt ace acceptance of those new or enhanced products, continued expansion into international markets, expansion into new or adjacent markets, development of strategic partnerships, competition, successfulff improvements in a highly competitive industry.rr ts, and our abia lity to control costs and make acquisition integration effff orff In response to the RusRR sian militaryrr operations in Ukraine, we have ceased business operations in RusRR sia, including sales, support on existing contracts and profeff ssional services. The United States and other countries have imposed sanctions on RusRR sia that could impact our futff urt e revenue streams. These events have not had a material impact on our fiff scal year 2022 fiff nancial statements. We will continue to monitor the impact of these events on all aspects of our business. COCC VIVV DII -19 ImII pacm t In March 2020, the World Health Organization declared the novel strain of coronavirusr (COVID-19) a global pandemic and recommended containment and mitigation measures worldwide. The pandemic and these containment and mitigation measures have led to adverse impacts on the U.S. and global economies. While we have begun the process of reopening at some of our faff cilities, we remain focff used on protecting the health and well-being of our employees and continue to support work frff om home flff exibility where necessaryrr and feff asible. The extent of furff ther impact of the COVID-19 pandemic on our operational and fiff nancial perforff mance will depend on certain developments, including the duration of the pandemic, its impact on our customers and suppliers and the range of governmental and community reactions to the pandemic, which continue to evolve and cannot be fulff We will continue to proactively respond to the situat required by governmental authorities, or that we determine are in the best interests of our stakeholders. ther actions that could alter our business operations if ly predicted at this time. tion and may take furff We continue to closely monitor the impact of the COVID-19 pandemic on all aspects of our business, including how it has impacted and could continue to impact our customers, employees, supply chain, and distribution network. During fiff scal year 2021, the COVID-19 pandemic and resulting challenging macro-economic environment caused elongated purchasing cycles that impacted our revenue. However, the revenue impact in fiff scal year 2021 was offff sff et by a reduction in our operating expenses as a result of our cost control measures and COVID-19 related restrictions on travel and events. For fiff scal year 2022, to a "new normal", we observed that technology and project as people in the world began to get immunized and started to adapta spending resumed and we focff used on advancing our products, growing revenue, enhancing earnings per share, and generating frff ee cash flff ow. We believe our current cash reserves and access to capia tal through our revolving credit faff cility leaves us well-positioned to manage our business as the pandemic continues and as a recoveryrr slowly occurs. We expect net cash provided by operations 34 combined with cash, cash equivalents and marketabla e securities and borrowing availabia lity under our revolving credit faff cility to provide suffff iff cient liquidity to fundff requirements over at least the next twelve months. We continue to take actions to manage costs and increase productivity throughout our company but will invest in areas that advance our business forff equivalents, based on covenant levels, we had as of March 31, 2022 an incremental $450 million availabla e to us under our revolving credit faff cility. current obligations, capia tal spending, debt service requirements and working capia tal the futff urt e, as necessary.rr In addition to our cash On March 27, 2020, the Coronavirusrr Aid, Relief and Economic Security Act (the CARES Act) was enacted. The CARES Act, among other things, includes provisions relating to refunda , modififf cations to the net interest payments, net operating loss carryba rr deduction limitations and technical corrections to tax depreciation methods forff qualififf ed improvement property. We have elected to defeff r the employer-paid portion of social security taxes. As of March 31, 2022, we had defeff rred $4.5 million of employer payroll taxes which is required to be deposited by December 2022. ck periods, alternative minimum tax credit refunds bla e payroll tax credits, defeff rment of employer social security ff ff Resultll stt Overview Total revenue increased forff the fiff scal year ended March 31, 2022 as compared to total revenue forff the fiff scal year ended March 31, 2021 primarily due to an increase in revenue frff om the product portion of our network perforff mance management offff eff rings frff om enterprrr ise customers, and an increase in revenue frff om the service portion frff om our DDoS offff eff rings. Our gross profiff t percentage increased by two percentage points to 75% during the fiff scal year ended March 31, 2022 as compared with the fiff scal year ended March 31, 2021. Net income forff the fiff scal year ended March 31, 2022 was $35.9 million, as compared with income forff the fiff scal year ended March 31, 2021 of $19.4 million, an increase of $16.5 million. The increase in net income was primarily due to a $24.3 million increase in revenue, a $7.2 million decrease in amortization of intangible assets, a $5.3 million decrease in forff eign exchange expense, a $2.8 million decrease in interest expense, a $2.4 million decrease in expenses related to trade shows, user confeff rences and other events, a $2.3 million decrease in depreciation expense, a $1.9 million decrease in cost of materials used to support customers under service contracts, and a $1.9 million decrease in costs to deliver radio frff equency propagation modeling projects. These increases in net income were partially offff sff et by an $8.0 million increase in commissions expense, a $6.5 million increase in contractor feff es, a $4.6 million increase in advertising and other marketing related costs, a $4.1 million increase in income tax expense, a $3.4 million increase in legal-related expenses and penalties, a $3.0 million increase in travel expenses attributabla e to the liftff ing of some COVID-19 related restrictions, a $2.4 million increase in obsolescence charges, and a $2.4 million increase in the provision forff allowance in credit losses. At March 31, 2022, we had cash, cash equivalents, and marketabla e securities (current and non-current) of $703.2 million. This represents an increase of $226.7 million compared to the fiff scal year ended March 31, 2021. This increase was primarily due to $296.0 million in cash provided by operations during the fiff scal year ended March 31, 2022. During the fiff scal year ended March 31, 2022, we collected $0.8 million of contingent consideration which represented earnout payments that were contingent upon achieving certain milestones related to the divestiturt e of our handheld network test (HNT) tools business in September 2018. These increases were partially offff sff et by $35.7 million used in treasuryrr stock repurchases, $15.7 million used forff tax withholdings on restricted stock units, $10.4 million used forff of debt issuance costs during the fiff scal year ended March 31, 2022. capia tal expenditurt es, and $3.7 million used forff the payment UsUU e of NonNN -GAGG AP FiFF nii ancial MeMM asures We supplement the United States generally accepted accounting principles (GAAP) fiff nancial measures we report in quarterly and annual earnings announcements, investor presentations and other investor communications by reporting the folff lowing non-GAAP measures: non-GAAP revenue, non-GAAP gross profiff t, non-GAAP income frff om operations, non-GAAP net income, non-GAAP net income per share (diluted) and non-GAAP earnings beforff e interest and other expense, income taxes, depreciation, and amortization (EBITDA) frff om operations. Non-GAAP revenue eliminates the GAAP effff eff cts of acquisitions by adding back revenue related to defeff rred revenue revaluation. Non-GAAP gross profiff t includes the aforff ementioned revenue adjustments and also removes expenses related to the amortization of acquired intangible assets, share-based compensation, and acquisition-related depreciation. Non-GAAP income frff om operations includes the aforff ementioned adjustments and also removes business development and integration expense, new standard implementation expense, compensation forff post- combination services, legal expenses related to a civil judgment, restrucr expenses. Non-GAAP net income includes the forff egoing adjustments related to non-GAAP income frff om operations, and also removes loss on extinguishment of debt and change in faff ir value of contingent consideration, net of related income tax effff eff cts. Non-GAAP EBITDA frff om operations includes the aforff ementioned items related to non-GAAP income frff om operations and also removes non-acquisition related depreciation expense. ing charges, and transitional service agreement turt 35 These non-GAAP measures are not in accordance with GAAP, should not be considered an alternative forff measures prepared in accordance with GAAP (revenue, gross profiff t, operating margin, net income (loss) and diluted net income (loss) per share), and may have limitations because they do not reflff ect all our results of operations as determined in accordance with GAAP. These non-GAAP measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. The presentation of non-GAAP inforff mation is not meant to be considered superior to, in isolation frff om, or as a substitutt e forff results prepared in accordance with GAAP. Management believes these non-GAAP fiff nancial measures will enhance the reader's overall understanding of our current the futff urt e by providing a higher degree of transparency forff fiff nancial perforff mance and our prospects forff measures and providing a level of disclosure that helps investors understand how we plan and measure our business. We believe that providing these non-GAAP measures affff orff ds investors a view of our operating results that may be more easily compared to peer companies and also enabla es investors to consider our operating results on both a GAAP and non-GAAP basis during and folff lowing the integration period of our acquisitions. Presenting the GAAP measures on their own, without the supplemental non-GAAP disclosures, might not be indicative of our core operating results. Furthermore, management believes that the presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures provides usefulff inforff mation to management and investors regarding present and futff urt e business trends relating to our fiff nancial condition and results of operations. certain fiff nancial 36 The folff share on a GAAP and non-GAAP basis forff lowing tabla e reconciles revenue, gross profiff t, income frff om operations, net income (loss) and net income (loss) per the fiff scal years ended March 31, 2022, 2021 and 2020: GAAP revenue Service defeff rred revenue faff ir value adjustment Non-GAAP revenue GAAP gross profiff t Service defeff rred revenue faff ir value adjustment Share-based compensation expense Amortization of acquired intangible assets Acquisition related depreciation expense Non-GAAP gross profiff t GAAP income frff om operations Service defeff rred revenue faff ir value adjustment Share-based compensation expense Amortization of acquired intangible assets Business development and integration expense New standard implementation expense Compensation forff post-combination services Restrucrr turt ing charges Acquisition related depreciation expense Transitional service agreement expense Legal judgments expense Non-GAAP income frff om operations GAAP net income (loss) Service defeff rred revenue faff ir value adjustment Share-based compensation expense Amortization of acquired intangible assets Business development and integration expense New standard implementation expense Compensation forff turt Restrucrr ing charges post-combination services Acquisition-related depreciation expense Loss on extinguishment of debt Change in faff ir value of contingent consideration Legal judgments expense Income tax adjustments Non-GAAP net income GAAP diluted net income (loss) per share Per share impact of non-GAAP adjustments identififf ed above a 37 Fiscal Year Ended March 31, (Dollars in Thousands, Except per Share Data) 2022 2021 2020 $ $ $ $ $ $ $ $ $ 855,575 — 855,575 641,389 — 7,042 13,385 24 661,840 48,634 — 56,074 73,126 (5) — 2 — 254 814 1,100 179,999 35,874 — 56,074 73,126 (5) — 2 — 254 596 (837) 1,100 (27,796) 138,388 0.48 1.36 $ $ $ $ $ $ $ $ $ 831,282 6 831,288 609,185 6 6,861 19,058 23 635,133 37,130 6 51,892 80,189 2 — 251 62 242 215 2,804 172,793 19,352 6 51,892 80,189 2 — 251 62 242 — — 2,804 (28,977) 125,823 0.26 1.44 891,820 192 892,012 649,628 192 6,843 24,974 31 681,668 17,638 192 50,861 89,479 373 5 578 2,674 312 1,212 — 163,324 (2,754) 192 50,861 89,479 373 5 578 2,674 312 — 762 — (23,415) 119,067 (0.04) 1.61 $ $ $ $ $ $ $ $ $ Non-GAAP diluted net income per share GAAP income frff om operations Previous adjustments to determine non-GAAP income frff om operations Non-GAAP income frff om operations Depreciation excluding acquisition related Non-GAAP EBITDA frff om operations $ $ $ $ 1.84 48,634 131,365 179,999 22,404 $ $ 1.70 37,130 135,663 172,793 25,397 1.57 17,638 145,686 163,324 26,313 $ 202,403 $ 198,190 $ 189,637 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 fulff signififf cant judgment and create estimates when appl a ying these policies. y ly understanding and evaluating our fiff nancial results. We appl a Revenue Recognitii itt on We exercise judgment and use estimates in connection with determining the amounts of product and service revenues to be recognized in each accounting period. We derive revenues primarily frff om the sale of network management tools and security solutions forff ise customers, which include hardware, softff ware, and service offff eff rings. Our product sales consist of softff ware only service provider and iances with embedded softff ware that are essential to providing customers enterprrr offff eff rings and offff eff rings which include hardware appl the intended func tionality of the solutions. a ff We account forff revenue once a legally enforff ceabla e contract with a customer has been appr related promises to transfeff r products or services have been identififf ed. A contract is defiff ned by us as an arrangement with commercial substance identifyiff ng payment terms, each party’s rights and obligations regarding the products or services to be transfeff rred and the amount we deem probabla e of collection. Customer contracts may include promises to transfeff r multiple products and services to a customer. Determining whether the products and services are considered distinct perforff mance obligations that should be accounted forff judgment. Revenue is recognized when control of the products or services are transfeff rred to our customers, in an amount that reflff ects the consideration we expect to be entitled to in exchange forff separately or as one combined perforff mance obligation may require signififf cant oved by the parties and the products and services. a Product revenue is typically recognized upon shipment, provided a legally enforff ceabla e contract exists, control has passed fiff lled. Our service offff eff rings include installation, integration, extended warranty and maintenance to the customer, and in the case of softff ware products, when the customer has the rights and abia lity to access the softff ware, and collection of the related receivabla e is probabla e. If any signififf cant obligations to the customer remain post-delivery,rr involving obligations relating to installation and acceptance by the customer, revenue recognition is defeff rred until such obligations have been fulff services, post-contract customer support, stand-ready softff ware-as-a-service (SAAS) and other profeff ssional services including consulting and training. We generally provide softff ware and/or hardware support as part of product sales. Revenue related to the initial bundled softff ware and hardware support is recognized ratabla y over the support period. In addition, customers can elect to purchase extended support agreements forff periods aftff er the initial softff ware/hardware warranty expiration. Support services generally include rights to unspecififf ed upgrades (when and if availabla e), telephone and internet-based support, updates, bug fiff xes and hardware repair and replacement. Consulting services are recognized upon deliveryrr or completion of perforff mance depending on the terms of the underlying contract. Reimbursements of out-of-ff pocket expenditurt es incurred in connection with providing consulting services are included in services revenue, with the offff sff etting expense recorded in cost of service revenue. Training services include on-site and classroom training. Training revenues are recognized upon deliveryrr of the training. typically Generally, our contracts are accounted forff to account forff on each other, it may be necessaryrr individually. However, when contracts are closely interrelated and dependent two or more contracts as one to reflff ect the substance of the group of contracts. Bundled arrangements are concurrent customer purchases of a combination of our product and service offff eff rings that may be delivered at various points in time. We allocate the transaction price among the perforff mance obligations in an amount that depicts the relative standalone selling prices (SSP) of each obligation. Judgment is required to determine the SSP forff distinct perforff mance obligation. We use a range of amounts to estimate SSP when we sell each of the products and services separately based primarily on the perforff mance obligation's historical pricing. We also consider our overall pricing objectives and practices across diffff eff rent sales channels and geographi es, and market conditions. Generally, we have establa ished SSP forff maja ority of our service perforff mance obligations based on historical standalone sales. In certain instances, we have establa ished SSP forff services based upon an estimate of profiff tabia lity and the underlying cost to fulff fiff ll those services. SSP has primarily been each a a 38 a product perforff mance obligations as the average or median selling price the perforff mance obligation was recently , whether sold alone or sold as part of a bundle transaction. We review sales of the product perforff mance obligations on a establa ished forff sold forff quarterly basis and update, when appr experience. Our products are distributed through our direct sales forff ce and indirect distribution channels through alliances with resellers and distributors. Revenue arrangements with resellers and distributors are recognized on a sell-in basis; that is, when control of the product transfeff rs to the reseller or distributor. We record consideration given to a customer as a reduction of revenue to the extent we have recorded revenue frff om the customer. With limited exceptions, our returt n policy does not allow product returt ns forff ly collecting ff a refund. receivabla es frff om our resellers and distributors. Returt ns have been insignififf cant to date. In addition, we have a historyrr of successfulff such perforff mance obligations to ensure that it reflff ects recent pricing opriate, SSP forff ValVV uatitt on of Goodw G ilii lll ,ll InII tantt gibli ell Assetstt and Othtt er Acquisii itii itt on Accountitt nii g ItII ett ms We amortize acquired defiff nite-lived intangible assets over their estimated usefulff lives. Goodwill and other indefiff nite- lived intangible assets are not amortized but subject to annual impairment tests; more frff equently if events or circumstances occur that would indicate a potential decline in their faff ir value. We perforff m the assessment annually during the four and on an interim basis if potential impairment indicators arise. ff th quarter Reporting units are determined based on the components of a company's operating segments that constitutt e a business forff which fiff nancial inforff mation is availabla e and forff which operating results are regularly reviewed by segment management. We have one reporting unit. To test impairment, we fiff rst assess qualitative faff ctors to determine whether the existence of events and circumstances indicate that it is more likely than not that the intangible asset is impaired. If based on our qualitative assessment it is more likely than not that the faff ir value of the intangible asset is less than its carryirr ng amount, quantitative impairment testing is required. However, if we conclude otherwise, quantitative impairment testing is not required. We perforff med our annual impairment analysis forff more likely than not that the faff ir value of the reporting unit exceeded its carryirr ng value. goodwill at Januaryrr 31, 2022 using the qualitative (Step 0) assessment, and we concluded that it was Indefiff nite-lived intangible assets are tested forff impairment at least annually, or on an interim basis if an event occurs or circumstances change that would, more likely than not, reduce the faff ir value of the indefiff nite-lived intangible assets below its carryirr ng value. To test impairment, we fiff rst assess qualitative faff ctors to determine whether the existence of events and circumstances indicate that it is more likely than not that the indefiff nite-lived intangible is impaired. If based on our qualitative assessment, we conclude that it is more likely than not that the faff ir value of the indefiff nite-lived asset is less than its carryirr ng amount, quantitative impairment testing is required. However, if we conclude otherwise, quantitative impairment testing is not required. We completed two acquisitions during the three-year period ended March 31, 2022. The acquisition method of accounting requires an estimate of the faff ir value of the assets and liabia lities acquired as part of these transactions. In order to estimate the faff ir value of acquired intangible assets, we use either an income, market or cost method appr oach. a The contingent purchase consideration related to the two acquisitions represent amounts deposited into escrow accounts, which were establa ished to cover damages NetScout may have suffff eff red related to any liabia lities that NetScout did not agree to assume or as a result of the breach of representations and warranties of the sellers as described in the acquisition agreements. The contingent purchase consideration of $0.7 million related to the Gigavation Incorpor to the seller in Februarr (Eastwind) acquisition was paid to the seller in April 2020. ryrr 2021. The contingent purchase consideration of $1.0 million related to the Eastwind Networks, Inc. ated (Gigavation) acquisition was paid r 39 Comparison of Years Ended March 31, 2022 and 2021 The sections that folff low discuss our consolidated statement of operations data forff the fiff scal years ended March 31, 2022 and March 31, 2021 including results as a percentage of revenue forff statement of operations data forff period, as well as (ii) our liquidity and capia tal resources forff Ended March 31, 2021 and 2020" and "Liquidity and Capia tal Resources" in Part II, Item 7 of our Annual Report on Form 10-K forff those periods. For a discussion of (i) our consolidated the fiff scal year ended March 31, 2020 including results as a percentage of revenue for that the fiff scal year ended March 31, 2021, fiff led with the SEC on May 20, 2021 (our 2021 Annual Report). the fiff scal year ended March 31, 2020, see "Comparison of Years Results of Operations Revenue Product revenue consists of sales of our hardware products and licensing of our softff ware products. Service revenue consists of customer support agreements, consulting, training and stand-ready softff ware as a service offff eff rings. During the fiff scal years ended March 31, 2022 and 2021, no direct customer or indirect channel partner accounted forff more than 10% of our total revenue. Fiscal Year Ended March 31, (Dollars in Thousands) 2022 2021 Change % of Revenue % of Revenue $ % $ $ 410,121 445,454 855,575 48 % $ 377,721 52 453,561 45 % $ 32,400 55 (8,107) 100 % $ 831,282 100 % $ 24,293 9 % (2)% 3 % Revenue: Product Service Total revenue Product. The 9%, or $32.4 million, increase in product revenue compared with the same period last year was primarily due to an increase in revenue frff om network perforff mance management offff eff rings forff enterprrr ise customers. Service. The 2%, or $8.1 million, decrease in service revenue compared with the same period last year was primarily driven by non-renewals associated with service provider consolidation and discontinued product lines. Total revenue by geographya was as folff lows: Fiscal Year Ended March 31, (Dollars in Thousands) 2022 2021 Change % of Revenue % of Revenue $ % $ 501,043 59 % $ 484,129 58 % $ 16,914 3 % United States International: Europe Asia Rest of the world Subtotal international 165,190 64,968 124,374 354,532 19 8 14 41 160,372 56,562 130,219 347,153 19 7 16 42 4,818 8,406 (5,845) 7,379 3 % 15 % (4)% 2 % 3 % Total revenue $ 855,575 100 % $ 831,282 100 % $ 24,293 United States revenue increased 3%, or $16.9 million, primarily due to an increase in revenue frff om network perforff mance enterprr management offff eff rings forff customers. These increases in revenue were partially offff sff et by a decrease in revenue frff om DDoS offff eff rings forff service provider customers. International revenue increased 2%, or $7.4 million, primarily driven by higher revenue frff om network perforff mance management and DDoS offff eff rings in Europe and Asia. ise and service provider customers, as well as an increase in revenue frff om DDoS enterprrr ise 40 Cost of Revenue and Gross Profiff t Cost of product revenue consists primarily of material components, personnel expenses, packaging materials, overhead and amortization of capia talized softff ware, acquired developed technology and core technology. Cost of service revenue consists primarily of personnel, material, overhead and support costs. Fiscal Year Ended March 31, (Dollars in Thousands) 2022 2021 Change % of Revenue % of Revenue $ % Cost of revenue: Product Service $ 90,730 123,456 Total cost of revenue $ 214,186 11 % $ 95,965 14 126,132 25 % $ 222,097 12 % $ (5,235) 15 (2,676) 27 % $ (7,911) Gross profiff t: Product $ $ 319,391 37 % $ 281,756 34 % $ 37,635 Product gross profiff t % 78 % 75 % 3 % Service $ $ 321,998 38 % $ 327,429 39 % $ (5,431) Service gross profiff t % 72 % Total gross profiff t $ $ 641,389 Total gross profiff t % 75 % 72 % $ 609,185 73 % — % $ 32,204 2 % (5)% (2)% (4)% 13 % (2)% 5 % Product. The 5%, or $5.2 million, decrease in cost of product revenue forff the fiff scal year ended March 31, 2022 compared to the same period last year was primarily due to a $5.8 million decrease in the amortization of intangible assets, and a $1.9 million decrease in costs related to the deliveryrr of radio frff equency propagation modeling projects. These decreases were partially offff sff et by a $2.4 million increase in obsolescence charges. The product gross profiff t percentage increased by three percentage points to 78% during the fiff scal year ended March 31, 2022 as compared to the same period in the prior year. The 13%, or $37.6 million, increase in product gross profiff t, corresponds with the 9%, or $32.4 million, increase in product revenue, and the 5%, or $5.2 million, decrease in cost of product revenue. Service. The 2%, or $2.7 million, decrease in cost of service revenue forff the fiff scal year ended March 31, 2022 compared to the same period last year was primarily due to a $4.2 million decrease in employee-related expenses associated with a reduction in headcount as well as a decrease associated with the timing of certain projects, and a $1.9 million decrease in cost of materials used to support customers under service contracts. These decreases were partially offff sff et by a $2.9 million increase in contractor feff es. The service gross profiff t percentage remained flff at at 72% during the fiff scal year ended March 31, 2022 compared to the same period in the prior year. The 2%, or $5.4 million, decrease in service gross profiff t corresponds with the 2%, or $8.1 million, decrease in service revenue, partially offff sff et by the 2%, or $2.7 million, decrease in cost of services revenue. Gross profiff t. Our gross profiff t increased 5%, or $32.2 million, forff the fiff scal year ended March 31, 2022 compared to the same period last year. This increase is attributabla e to the 3%, or $24.3 million, increase in revenue, and the 4%, or $7.9 million, decrease in cost of revenue. The gross margin percentage increased by two percentage points to 75% during the fiff scal year ended March 31, 2022 compared to the same period in the prior year. 41 Operating Expenses Fiscal Year Ended March 31, (Dollars in Thousands) 2022 2021 Change % of Revenue % of Revenue $ % Research and development $ 171,131 Sales and marketing General and administrative Amortization of acquired intangible assets Restrucrr turt ing charges 264,191 97,692 59,741 — 20 31 11 7 — $ 179,163 22 % $ (8,032) 242,730 88,969 61,131 62 29 11 7 — 21,461 8,723 (1,390) (62) Total operating expenses $ 592,755 69 % $ 572,055 69 % $ 20,700 (4)% 9 % 10 % (2)% (100)% 4 % RResearchh dand ddevellopment. Researchh a dnd ddevellopment expenses consiist priimariillyy of personnell expenses, feff es forff outsiidde cons lultants, overhheadd a dnd rellatedd expenses associiatedd wiithh thhe ddevellopment of new pr doducts a dnd thhe e hnhancement of e ixistii gng ppr doducts. Thhe 4%, or $$8.0 miilllliion, ddecrease iin research and development expenses forff the fiff scal year ended March 31, 2022 compared to the same period last year was primarily due to a $6.8 million decrease in employee-related expenses associated with a reduction in headcount and a decrease in variabla e incentive compensation, and a $1.1 million decrease in depreciation expense. Sales and markrr ekk ting. 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. The 9%, or $21.5 million, iincrease iin totall salles a dnd markketii gng expenses forff thhe fiiff scall yyear e dndedd Marchh 31, 2022 comparedd to thhe same perii dod llast yyear was priimarily due to an $8.0 million increase in commissions expense, a $7.4 million increase in employee-related expenses largely due to an increase in variabla e incentive compensation, a $4.6 million increase in advertising and other marketing related expenses, a $2.2 million increase in travel expense primarily attributabla e to the liftff ing of tment feff es, partially offff sff et COVID-19 related restrictions, a $1.4 million increase in contractor feff es, and a $0.6 million in recruirr by a $2.4 million decrease in expenses related to trade shows, user confeff rences and other events, and a $1.0 million decrease in depreciation. General and adminisii trtt ative. General and administrative expenses consist primarily of personnel expenses forff executive, fiff nancial, legal, and human resource employees, overhead, and other corpor rr ate expenditurt es. The 10%, or $8.7 million, increase in general and administrative expenses forff the fiff scal year ended March 31, 2022 compared to the same period last year was primarily due to a $3.4 million increase in legal-related expenses and penalties, a $2.7 million increase in employee-related expenses largely due to an increase in variabla e incentive compensation, and a $2.4 million increase in the provision forff allowance in credit losses. Amortizii ation of acquired intangible assetstt . Amortization of acquired intangible assets consists primarily of amortization of customer relationships, and defiff nite-lived trademark and tradenames related to our acquisition of Danaher Corpor communication business (Comms Transaction) and the acquisitions of ONPATH Technologies, Inc., Simena, LLC, Psytechnics, Ltd, Network General Corpor ated and Effff lff ux Systems, Inc. ation, Avvasi Incorpor r rr r ation's The 2%, or $1.4 million, decrease in amortiizatiion of ac iquiredd iintangingiblble assets comparedd to thhe fiiff scall yyear e dndedd Marchh 31, 2022 was priimarily due to a decrease in the amortization of intangible assets related to the Comms Transaction, partially offff sff et by an increase in the amortization of the defiff nite-lived trade name. 42 Interest and Other Expense, Net Interest and other expense, net includes interest earned on our cash, cash equivalents and marketabla e securities, interest expense and other non-operating gains or losses. Fiscal Year Ended March 31, (Dollars in Thousands) 2022 2021 Change % of Revenue % of Revenue $ % Interest and other expense, net $ (5,742) (1)% $ (14,826) (2)% $ 9,084 61 % The 61%, or $9.1 million, ddecrease in interest and other expense, net was primarily due to a $5.3 million decrease in forff eign exchange expense, a $2.8 million decrease in interest expense due to debt repayments on the credit faff cility as well as a decrease in the average interest rate partially offff sff et by a loss on the extinguishment of debt, and a $0.6 million increase in transitional services agreement income related to the HNT tools business divestiturt e. Income Tax Expense The annual effff eff ctive tax rate forff fiff scal income tax rate primarily due to state income year 2021. Generally, the effff eff ctive tax rate diffff eff rs frff om the U.S. feff deral statutt oryrr taxes, forff eign withholding taxes, and earnings in jurisdictions subject to tax rates higher than the U.S. feff deral statutt oryrr income tax rate, partially offff sff et by the tax benefiff t associated with forff eign derived intangible income deduction, forff eign tax credits, and research and development tax credits. fiff scal year 2022 was 16.4%, compared to an annual effff eff ctive tax rate of 13.2% forff The effff eff ctive tax rate forff the twelve months ended March 31, 2022 is higher than the effff eff ctive rate forff the twelve months ended March 31, 2021, primarily due to a signififf cant increase in pre-tax income as compared to the prior year. Fiscal Year Ended March 31, (Dollars in Thousands) 2022 2021 Change % of Revenue % of Revenue $ % Income tax expense $ 7,018 1 % $ 2,952 — % $ 4,066 138 % Commitment and Contingencies We account forff claims and contingencies in accordance with authoritative guidance that requires us to record an estimated loss frff om a claim or loss contingency when inforff mation availabla e prior to issuance of our consolidated fiff nancial statements indicates that it is probabla e that a liabia lity has been incurred at the date of the consolidated fiff nancial statements and the amount of the loss can be reasonabla y estimated. If we determine that it is reasonabla y possible, but not probabla e, that an asset has been impaired or a liabia lity has been incurred, or if the amount of a probabla e loss cannot be reasonabla y estimated, then, in accordance with the authoritative guidance, we disclose the amount or range of estimated loss if the amount or range of estimated loss is material. Accounting forff counsel on those issues related to litigation and seek input frff om other experts and advisors with respect to matters in the ordinaryrr course of business. claims and contingencies requires us to use our judgment. We consult with legal e Legal - From time to time, we are subject to legal proceedings and claims in the ordinaryrr course of business. 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 effff eff ct on our fiff nancial condition, results of operations or cash flff ows. As previously disclosed, in March 2016, Packet Intelligence LLC (Packet Intelligence or Plaintiffff )ff fiff led a Complaint against NetScout and two subsidiaryrr entities in the United States District Court forff infrff ingement of fiff ve United States patents. Plaintiffff 'ff s Complaint alleged that legacy Tektronix GeoProbe products, including the G10 and GeoBlade products, infrff inged these patents. NetScout fiff led an Answer denying Plaintiffff 'ff s allegations and asserting that Plaintiffff 'ff s patents were, among other things, invalid, not infrff inged, and unenforff ceabla e due to inequitabla e conduct. In October trial was held to address the parties' claims and counterclaims regarding infrff ingement of three patents by the G10 2017, a juryrr rendered a verdict fiff nding in faff vor of the Plaintiffff and GeoBlade products, invalidity of these patents, and damages. The juryrr and that Plaintiffff was entitled to $3,500,000 forff post-suit damages. The juryrr the awarded damages amounts were intended to reflff ect a runni ng royalty. In September 2018, the Court entered judgment and the Eastern District of Texas asserting pre-suit damages and $2,250,000 forff indicated that rr 43 r a the fiff nding. The judgment also awarded pre- and post- aled, and in July 2020, the Court of Appeals forff a writ of certiorari to the United States Supreme Court, which was subsequently ng royalty on the G10 and GeoBlade products until the expiration of the patents at issue, the last "enhanced" the juryrr verdict in the amount of $2.8 million as a result of a juryrr judgment interest, and a runni date being June 2022. Following the entryrr of fiff nal judgment, NetScout appe Federal Circuit (Federal Circuit) issued a decision vacating the $3,500,000 pre-suit damages award, affff iff rming the $2,250,000 post-suit damages award, and remanding to the district court to determine what, if any, enhancement should be awarded. In March 2021, NetScout fiff led a petition forff enhanced damages and the patentabia lity of the claimed technology. In denied, challenging, among other issues, the basis forff 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. After the PTAB decisions were issued, NetScout moved, among other things, to dismiss the case and enter judgment in its faff vor on the grounds that the PTAB decisions invalidating the asserted claims precluded Plaintiffff frff om continuing to assert its patent infrff ingement causes of action and frff om seeking damages frff om NetScout. The District Court recently denied NetScout’s motion with respect to its request to dismiss the case and enter judgment in its faff vor, but in response to alternative requests forff requested by NetScout, vacated $1.7 million of the "enhanced" juryrr verdict amount of $2.8 million and also lowered the ongoing royalty rate on the G10 and GeoBlade products. The District Court entered an amended fiff nal judgment awarding Plaintiffff $2.25 million in post-suit damages, $1.1 million in enhanced damages, pre- and post-j- udgment interest, and a runni ng royalty on the G10 and GeoBlade products until the expiration of the patents at issue, the last expiration date being June 2022. NetScout has time remaining with respect to its right to appe current circumstances, and if the post-suit and enhanced damages award along with the associated interest and royalties survives the recent PTAB invalidation decisions and any appe loss associated with such damages award remains "probabla e" in accounting terms, and that the risk of loss associated with pre- suit damages is remote. al frff om the entryrr of the amended fiff nal judgment. In view of the al NetScout may take, NetScout has concluded that the risk of relief a a r WarWW rantytt and InII demnifi iff catitt on- We warrant that our softff ware and hardware products will substantially conforff m to the documentation accompanying such products on their original date of shipment. For softff ware, which also includes fiff rmware, the standard warranty commences upon shipment and generally expires 60 to 90 days thereaftff er. With regard to hardware, the standard warranty commences upon shipment and generally expires 60 days to 12 months thereaftff er. Additionally, this warranty is subject to various exclusions which include, but are not limited to, non-conforff mance resulting frff om modififf cations made to the softff ware or hardware by a party other than NetScout; customers' faff ilure to folff instrucr and workmanlike manner. We believe that our product and support service warranties are consistent with commonly accepted industryrr standards. Warranty cost inforff mation is presented and no material warranty costs are accruer d since service revenue associated with warranty is defeff rred at the time of sale and recognized ratabla y over the warranty period. low our installation, operation or maintenance tions; and events outside of our reasonabla e control. We also warrant that all support services will be perforff med in a good Contracts that we enter into in the ordinaryrr course of business may contain standard indemnififf cation provisions. Pursuant to these agreements, we may agree to defeff nd third party claims brought against a partner or direct customer claiming infrff ingement of such third party’s (i) U.S. patent and/or European Union (EU), or other selected countries' patents, (ii) Berne convention member countryrr copyright, and/or (iii) U.S., EU, and/or other selected countries’ trademark or intellectuat l property rights. Moreover, this indemnity may require us to pay any damages awarded against the partner or direct customer in such type of lawsuit as well as reimburse the partner or direct customer forff reasonabla e attorney's feff es incurred by them frff om the lawsuit. We may also agree frff om time to time to provide other forff ms of indemnififf cation to partners or direct customers, such as indemnififf cation that would obligate us to defeff nd 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 suffff eff red personal injuryrr or tangible property damage legally determined to have been caused by negligently designed or manufaff cturt ed products. We have agreed to indemnifyff our directors and offff iff cers and our subsidiaries' directors and offff iff cers 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 faff ct that the indemnififf ed are agents of NetScout. The indemnity is forff (including but not limited to, judgments, fiff nes and amounts paid in settlement) reasonabla y incurred by the directors or offff iff cers in connection with the investigation, defeff nse, settlement or appe al of such proceeding, provided they acted in good faff ith. any and all expenses and liabia lities of any type a 44 Liquidity and Capital Resources Cash, cash equivalents and marketabla e securities consist of the folff lowing (in thousands): Cash and cash equivalents Short-term marketabla e securities Long-term marketabla e securities Cash, cash equivalents and marketabla e securities tt CasCC h, cash equivalell ntstt and markerr tabl ell securitii itt es At March 31, (Dollars in Thousands) 2022 2021 $ $ 636,161 $ 467,176 67,037 — 9,277 — 703,198 $ 476,453 At March 31, 2022, cash, cash equivalents and marketabla e securities (current and non-current) totaled $703.2 million. This represents an increase of $226.7 million frff om $476.5 million at March 31, 2021. This increase was primarily due to $296.0 million in cash provided by operating activities, partially offff sff et by $35.7 million used in treasuryrr stock repurchases, $15.7 million used forff forff the payment of debt issuance costs during the fiff scal year ended March 31, 2022. tax withholdings on restricted stock units, $10.4 million used forff capia tal expenditurt es, and $3.7 million used At Marchh 31, 2022, cashh, shhort-term a dnd ll gong-term iinvestments in the United States were $508.8 million, while cash held outside of the United States was appr a oximately $194.4 million. Cash and cash equivalents were impacted by the folff lowing: Net cash provided by operating activities Net cash (used in) provided by investing activities Net cash used in fiff nancing activities Fiscal Year Ended March 31, (Dollars in Thousands) 2022 2021 $ $ $ 296,013 $ (68,353) $ (54,165) $ 213,921 24,698 (118,307) NeNN t cash frff om operatitt nii g actitt vitii itt es FiFF sii cal year 2022 comparm ed to fiff sii cal year 2021 Cash provided by operating activities was $296.0 million during the fiff scal year ended March 31, 2022, compared to $213.9 million of cash provided by operating activities during the fiff scal year ended March 31, 2021. This $82.1 million increase was due in part to a $93.4 million increase frff om defeff rred revenue, a $32.4 million increase frff om accounts receivabla e, a $16.5 million increase frff om net income, an $11.1 million increase frff om defeff rred income taxes, a $5.9 million increase frff om accounts payabla e, and a $4.2 million increase frff om share-based compensation. These increases were partially offff sff et by a $29.6 million decrease frff om accruer d compensation and other expenses, a $24.5 million decrease frff om prepaid expenses and other assets, a $10.0 million decrease frff om depreciation and amortization, a $9.8 million decrease frff om income taxes payabla e, a $6.0 million decrease frff om inventories, and a $1.8 million decrease frff om operating lease liabia lities during the fiff scal year ended March 31, 2022 as compared with the fiff scal year ended March 31, 2021. Accounts receivabla e days sales outstanding was 64 days at March 31, 2022 compared to 75 days at March 31, 2021. 45 NeNN t cash frff om inii vestitt nii g actitt vitii itt es Cash (used in) provided by investing activities included the folff Purchase of marketabla e securities lowing: Proceeds frff om maturt ity of marketabla e securities Purchase of fiff xed assets Purchase of intangible assets (Increase) decrease in deposits Fiscal Year Ended March 31, (Dollars in Thousands) 2022 2021 $ $ (78,367) $ 20,569 (10,350) (50) (155) (68,353) $ (15,673) 56,806 (11,986) (4,537) 88 24,698 Cash used in investing activities increased by $93.1 million to $68.4 million during the fiff scal year ended March 31, 2022, compared to $24.7 million of cash provided by investing activities during the fiff scal year ended March 31, 2021. Net cash outflff ows relating to the purchase and sales of marketabla e securities increased $98.9 million relating to the amount of investments held at each respective balance sheet date, frff om an inflff ow of $41.1 million during the fiff scal year ended March 31, 2021 to an outflff ow of $57.8 million durd ing the fiff scal year ended March 31, 2022. During the fiff scal year ended March 31, 2021, we entered into an agreement to acquire technology licenses forff $4.5 million. Our investments in property and equipment consist primarily of computer equipment, demonstration units, offff iff ce equipment and faff cility improvements. We plan to continue to invest in capia tal expenditurt es to support our infrff astrucrr fiff scal year 2023. turt e in our NeNN t cash frff om fiff nii ancinii g actitt vitii itt es Cash used in fiff nancing activities included the folff lowing: Issuance of common stock under stock plans Payment of contingent consideration Treasuryrr stock repurchases Tax withholding on restricted stock units Payment of debt issuance costs Repayment of long-term debt Proceeds frff om issuance of long-term debt Collection of contingent consideration Fiscal Year Ended March 31, (Dollars in Thousands) 2022 2021 $ $ 2 — (35,653) (15,691) (3,660) (350,000) 350,000 837 2 (1,748) (3,275) (13,286) — (100,000) — — $ (54,165) $ (118,307) Cash used in fiff nancing activities decreased $64.1 million to $54.2 million during the fiff scal year ended March 31, 2022, compared to $118.3 million of cash used in fiff nancing activities during the fiff scal year ended March 31, 2021. During the fiff scal year ended March 31, 2021, we paid $1.7 million of contingent purchase consideration related to the Eastwind and Gigavation acquisitions. During the fiff scal years ended March 31, 2022, and 2021, we repurchased 1,330,678 shares and 154,271 shares of our common stock forff $35.6 million and $3.3 million under our twenty-fiff ve million share repurchase program. In connection with the deliveryrr of common shares upon vesting of restricted stock units, we have withheld $15.7 million, and 506,917 shares forff 546,053 shares forff requirements on these restricted stock units during the fiff scal years ended March 31, 2022 and 2021, respectively. These withholding transactions do not faff ll under the repurchase program described above is availabla e forff $13.3 million related to minimum statutt oryrr repurchase under that program. tax withholding , and thereforff e do not reduce the amount that a 46 During the fiff scal year ended March 31, 2021, we repaid $100.0 million of borrowings under the Amended Credit Agreement, respectively. During the fiff scal year ended March 31, 2022, we paid $3.7 million in debt issuance costs related to the execution of our Second Amended and Restated Credit Agreement. During the fiff scal year ended March 31, 2022, we collected $0.8 million of contingent consideration which represented earnout payments that were contingent upon achievement of certain milestones related to the HNT tools business divestiturt e in September 2018. SouSS rces of CasCC h and CasCC h Requirii ementstt CrCC editii FacFF ilii ill tii ytt On Januaryrr 16, 2018, we amended and expanded our existing credit agreement (Amended Credit Agreement), which a fiff ve-year, $1.0 billion senior secured revolving credit faff cility, including a letter of credit sub-faff cility of up to provided forff $75.0 million. The commitments under the Amended Credit Agreement were set to expire on Januaryrr 16, 2023, and any outstanding loans were due on that date. On July 27, 2021, we amended and extended the Amended Credit Agreement (Second Amended and Restated Credit Agreement) with a syndicate of lenders by and among: the Company; JPMorgan Chase Bank, N.A. (JPMorgan), as administrative agent and collateral agent; JPMorgan, Wells Fargo Securities, LLC, BofAff Securities Inc., RBC Capia tal Markets, PNC Capia tal Markets LLC and Mizuho Bank, Ltd., as joint lead arrangers and joint bookrunne Bank National Association, Fiftff h Third Bank National Association, Silicon Valley Bank and TD Bank, N.A., as co- documentation agents; and the lenders party thereto. rs; Santander Bank, N.A., U.S. rr The Second Amended and Restated Credit Agreement provides forff a fiff ve-year, $800.0 million senior secured revolving credit faff cility, including a letter of credit sub-faff cility of up to $75.0 million. We may elect to use the credit faff cility for general corpor es (including to fiff nance the repurchase of shares of our common stock). The commitments under the Second rr Amended and Restated Credit Agreement will expire on July 27, 2026, and any outstanding loans will be due on that date. ate purpos r In connection with the Second Amended and Restated Credit Agreement, we paid offff the outstanding balance of $350 million under the Amended Credit Agreement on July 27, 2021 by borrowing the same amount under the Second Amended and Restated Credit Agreement. Additionally, we recorded a loss on the extinguishment of debt of $0.6 million, representing the write offff of unamortized defeff rred fiff nancing costs, which was included in interest expense in the consolidated statements of operations forff Amended and Restated Credit Agreement. the fiff scal year ended March 31, 2022. At March 31, 2022, $350 million was outstanding under the Second At our election, revolving loans under the Second Amended and Restated Credit Agreement bear interest at either (a) an the interest period selected by NetScout, subject to customaryrr provisions regarding succession frff om LIBO icabla e margin. For Alternate Base Rate per annum equal to the greatest of (1) the Wall Street Journal prime rate; (2) the New York Federal Reserve Bank (NYFRB) rate plus 0.50%, or (3) an adjusted one month LIBO rate plus 1%; or (b) a Term Benchmark Borrowing rate (forff rate to SOF rate in anticipation of the upcoming discontinuation of the LIBO rate), in each case plus an appl the period frff om the deliveryrr of the Company's fiff nancial statements forff delivered fiff nancial statements forff Benchmark Revolving loans and 0.25% per annum forff Alternate Base Rate loans, and thereaftff er the appl depending on our consolidated gross leverage ratio, ranging frff om 1.00% per annum forff Alternate Base Rate loans and 2.00% per annum forff Term Benchmark Revolving loans if our consolidated gross leverage ratio is greater than 3.50 to 1.00, down to 0.00% per annum forff Alternate Base Rate loans and 1.00% per annum forff Term Benchmark Revolving loans if our consolidated gross leverage ratio is equal to or less than 1.50 to 1.00. icabla e margin will be 1.25% per annum forff Term a the quarter ended December 31, 2021, until we have the quarter ended March 31, 2022, the appl icabla e margin will varyrr a a Our consolidated gross leverage ratio is the ratio of our total funde d debt compared to our consolidated EBITDA as defiff ned in the Second Amended and Restated Credit Agreement (adjusted consolidated EBITDA). Adjusted consolidated EBITDA includes certain adjustments, including, without limitation, adjustments relating to extraordinary,rr recurring charges, certain restrucr adjustments in connection with material acquisitions and dispositions, all as set forff th in detail in the Second Amended and Restated Credit Agreement. Our secured 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 secured net leverage ratio is 4.00 to 1.00. ing charges, non-cash charges, certain transaction costs and expenses and certain pro forff ma unusual or non- turt ff on the daily unused amount of the credit faff cility. For the period frff om the deliveryrr of the Commitment feff es will accruer the quarter ended December 31, 2021, until we have delivered fiff nancial statements forff Company's fiff nancial statements forff quarter ended March 31, 2022, the commitment feff e will be 0.20% per annum, and thereaftff er the commitment feff e will varyrr the 47 depending on our consolidated gross leverage ratio, ranging frff om 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. Letter of credit participation feff es are payabla e to each lender providing the letter of credit sub-faff cility on the amount of such lender's letter of credit exposure, during the period frff om 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 the appl icabla e rate that would be used to determine the interest rate appl Additionally, we will pay a frff onting feff e to each issuing bank in amounts to be agreed to between us and the appl bank. icabla e to Term Benchmark Revolving loans assuming such loans were outstanding during the period. icabla e issuing a a a Interest on Alternate Base Rate loans is payabla e at the end of each calendar quarter. Interest on Term Benchmark Revolving loans is payabla e at the end of each interest rate period or at the end of each three-month interval within an interest rate period if the period is longer than three months. We may also prepay loans under the Second Amended and Restated Credit Agreement at any time, without penalty, subject to certain notice requirements. The loans and other obligations under the credit faff cility 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 subsidiaryrr guarantors, including a pledge of all the capia tal stock of material subsidiaries held directly by the Borrower and the subsidiaryrr guarantors (which pledge, in the case of any forff eign subsidiary,rr is limited to 65% of the voting stock), subject to certain customaryrr exceptions and limitations. The Second Amended and Restated Credit Agreement generally prohibits any other liens on the assets of NetScout and our restricted subsidiaries, subject to certain exceptions as described in the Second Amended and Restated Credit Agreement. The Second Amended and Restated Credit Agreement contains certain covenants appl a icabla e to us and our restricted subsidiaries, including, without limitation, limitations on additional indebtedness, liens, various funda and distributions, investments (including acquisitions), transactions with affff iff liates, asset sales, including sale-leaseback transactions, speculative hedge agreements, payment of junior fiff nancing, changes in business and other limitations customaryrr senior secured credit faff cilities. The Second Amended and Restated Credit Agreement requires us to maintain a certain consolidated net leverage ratio and removes the previous requirement under the Amended Credit Agreement that we maintain a minimum consolidated interest coverage ratio. These covenants and limitations are more fulff Amended and Restated Credit Agreement. As of March 31, 2022, we were in compliance with these covenants, including the specififf ed total consolidated net leverage ratio range of 4.00 to 1.00. ly described in the Second mental changes, dividends in ff The Second Amended and Restated Credit Agreement provides that events of defaff ult will exist in certain circumstances, including faff ilure to make payment of principal or interest on the loans when required, faff ilure to perforff m certain obligations under the Second Amended and Restated Credit Agreement and related documents including a faff ilure to meet the maximum total secured net leverage ratio covenant, defaff ults under certain other indebtedness, certain insolvency events, certain events arising under ERISA, a change of control and certain other events. Upon an event of defaff ult, the administrative agent with the consent of,ff or at the request of,ff the holders of more than 50% in principal amount of the loans and commitments, may terminate the commitments and accelerate the maturt Restated Credit Agreement and the other loan documents. ity of the loans and enforff ce certain other remedies under the Second Amended and We had unamortized capia talized debt issuance costs, net of $$4.8 miilllliion at Marchh 31, 2022, whihichh are bbeii gng amortiizedd over thhe lliifeff of thhe re iincll dudedd as prepaiidd expenses a dnd othher current assets a dnd a bballance of $$3.7 miilllliion was iincluded as other assets in our consolidated balance sheet at March 31, 2022. lvol ivi gng credidit faff ciilliityy. Thhe unamortiizedd ca ipia talliizedd ddebbt iissuance costs bballance of $$1.1 miilllliion was ConCC trtt actual Oblill gat itt ons i Our contractuat l obligations at March 31, 2022 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 to the Consolidated Financial Statements), (iii) unconditional purchase obligations, primarily under purchase orders to purchase inventoryrr as well as commitments forff Commitments and Contingencies, Note 19 to the Consolidated Financial Statements), and (iv) pension benefiff t plan (see Pension Benefiff t Plans, Note 16 to the Consolidated Financial Statements). products and services used in the normal course of business (see At March 31, 2022, the total accruar l of our retirement obligation forff our chairman and CEO was $1.4 million. The payment stream forff this retirement obligation is based upon the retirement date which is currently not determinabla e. 48 At March 31, 2022, the total amount of net unrecognized tax benefiff ts forff the related interest was $0.7 million. We are unabla e to make a reliabla e estimate when cash settlement, if any, will occur with a tax authority as the timing of examinations and ultimate resolution of those examinations is uncertain. uncertain tax positions and the accruar l forff EExpeEE ctattt iitt ons fforff FiiFF sii c lal YeYY ar 2023 We are actiivellyy managigi gng thhe bbusiiness to ggenerate cashh fllff ow a dnd bbelliieve thhat we currentllyy hhave addequate llii iquididityy. We ff bebelliieve thhat thhese faff ctors wiillll allllow us to meet our antiiciipatedd f undi di gng re iquirements. We expect net cashh pr ioviddedd byby operatii gng actii ivitiies combibinedd wiithh cashh, cashh e iquivallents, a dnd markketablbla e securiitiies a dnd dunder our re borborrowii gng avaiillabibia lliityy spe dindi gng, ddebbt ser ivice re meet ll gonger-term expectedd futff urt e cashh re actii ivitiies, avaiillablbla e cashh bballances, a dnd our re lvol ivi gng credidit faff ciilliityy to pr iquirements a dnd workiki gng ca ipia tall re iovidde suffff iiff ciient llii dund iquirement over at lleast thhe next twellve monthhs. We bbelliieve we wiillll current blobliiggatiions, ca ipia tall ff iquididityy to f iquirements a dnd blobliiggatiions thhrough ough a combibinatiion of cashh fllff ows frff om operatii gng lvol ivi gng credidit faff ciilliityy. Addidditiionallllyy, a portiion of our cashh mayy bbe usedd to ac tech hnologiogies, to repayy bborrowii gngs l thhe riightght to use com lplementaryyrr or to repurchhase shhares of our common stockk thhrough of bbusiiness, we evalluate potentiiall ac are iinsuffff iiff ciient to satiisfyyff our llii addidditiionall e iquityy or ddebbt securiitiies c iquididityy re dunder our Sec dond Ame dndedd a dnd Restatedd Credidit Aggreement, ough our stockk repurchhase pr gograms. From tiime to tiime, iin thhe ordidinaryyrr course iquididityy iquisiitiions of suchh bbusiinesses, pr doducts or tech l hnologiogies. If our e ixistii gng sources of llii iquityy or ddebbt securiitiies. Thhe salle of iquirements, we mayy seekk to sellll addidditiionall e louldd res lult iin addidditiionall didillutiion to our stockh l kholdders. iquire or iinvest iin com lplementaryyrr bbusiinesses or pr doducts, to bobtaiin Recent Accounting Standards For inforff mation with respect to recent accounting pronouncements on our consolidated fiff nancial 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 ItII ett m 7A. Quantitt tii attt itt ve and Qualill tii attt itt ve Disii closll ures About MarMM kerr t Risii k IntII erest Rate Risii k. We hold our cash, cash equivalents and investments forff working capia tal purpos r es. Some of the te. To minimize this risk, we maintain our portfolff securities we invest in are subject to market risk. This means that a change in prevailing interest rates may cause the principal amount of the investment to flff uctuat investments in a variety of securities, including money market funds flff uctuat ting interest rates is limited to our investment portfolff we do not have any material exposure to changes in the faff ir value of our investment portfolff rates. Declines in interest rates, however, would reduce futff urt e interest income. The effff eff ct of a hypothetical 10% increase or decrease in overall interest rates would not have had a material impact on our operating results or the total faff ir value of the portfolff and government debt securities. The risk associated with io. Due to the short-term naturt e of these instrumrr io as a result of changes in interest io of cash, cash equivalents and io. ff ents, we believe that We are exposed to market risks related to flff uctuat tions in interest rates related to our credit faff cility. At March 31, 2022, we owed $350 million on this loan with an interest rate of 1.71%. A sensitivity analysis was perforff med on the outstanding portion of our debt obligation as of March 31, 2022. Should the current weighted average interest rate increase or decrease by 10%, the resulting annual increase or decrease to interest expense would be appr oximately $599 thousand as of March 31, 2022. a CrCC edit Risii k. Our cash equivalents and marketabla e securities consist primarily of money market instrumr ents, U.S. Treasuryrr bills, certififf cates of deposit, commercial papea rr r, corpor ate bonds and municipal obligations. At March 31, 2022 and periodically throughout the year, we have maintained cash balances in various operating accounts ion by evaluating the in excess of feff derally insured limits. We limit the amount of credit exposure with any one fiff nancial institutt ions with which we invest. creditworthiness of the fiff nancial institutt ForFF eigni CurCC rencyc ExEE change Risii k. As a result of our forff eign operations, we faff ce exposure to movements in forff eign currency exchange rates, primarily the Euro, British Pound, Canadian Dollar and Indian RupeRR primarily frff om expenses denominated in forff eign currencies. We currently engage in forff eign currency hedging activities in order to limit these exposures. We do not use derivative fiff nancial instrumr e. The current exposures arise speculative trading purpos ents forff es. r At March 31, 2022, we had forff eign currency forff ward contracts designated as hedging instrumr ents with notional amounts totaling $5.6 million. The valuation of outstanding foff reign currency forff ward contracts at March 31, 2022 resulted in a liabia lity balance of $78 thousand, reflff ecting unfaff vorabla e contract rates in comparison to current market rates at this date and an asset balance of $20 thousand, reflff ecting faff vorabla e rates in comparison to current market rates. At March 31, 2021, we had forff eign currency forff ward contracts designated as hedging instrumr currency forff ward contracts not designated as hedging instrumr outstanding forff eign currency forff ward contracts (both designated and not designated as hedging instrumrr ents) at March 31, 2021 resulted in a liabia lity balance of $191 thousand, reflff ecting unfaff vorabla e contract rates in comparison to current market rates and an asset balance of $57 thousand, reflff ecting faff vorabla e rates in comparison to current market rates at this date. The effff eff ct of a a hypothetical 10% change in forff eign currency exchange rates appl historical consolidated fiff nancial statements. As our international operations grow, we will continue to reassess our appr manage our risk relating to flff uctuat ents with notional amounts totaling $11.0 million and forff eign ents with a notional amount of $6.4 million. The valuation of icabla e to our business would not have a material impact on our tions in currency rates. oach to a 50 ItII ett m 8. FiFF nii ancial StSS attt ett mentstt and Supplu ell mentartt yr Datatt Our Consolidated Financial Statements and Schedule and Report of Independent Registered Public Accounting Firm a appe ar beginning on page F-1 attached to this report. ItII ett m 9. ChCC anges inii and Disii agreementstt witii htt Accountantt tstt on Accountitt nii g and FiFF nii ancial Disii closll ure There have been no changes in or disagreements with accountants on accounting or fiff nancial disclosure matters. ItII ett m 9A. ConCC trtt olsll and PrPP ocedures Evaluation of Disii closure ContCC rt olsll and Procedures As of March 31, 2022, NetScout, under the supervision and with the participation of our management, including our principal executive offff iff cer and principal fiff nancial offff iff cer, evaluated the effff eff ctiveness of the design and operation of our disclosure controls and procedures pursuant to RulRR e 13a-15(b) promulgated under the Exchange Act. Based upon that evaluation, our principal executive offff iff cer and principal fiff nancial offff iff cer concluded that, as of March 31, 2022 our disclosure controls and procedures were effff eff ctive in ensuring that material inforff mation relating to NetScout, including its consolidated subsidiaries, required to be disclosed by NetScout in the reports that it fiff les or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specififf ed in the SEC’s rulr es and forff ms, including ensuring that such material inforff mation is accumulated and communicated to our management, including our principal executive offff iff cer and principal fiff nancial offff iff cer, as appr opriate, to allow timely decisions regarding required disclosure. a CC Change s in IntII ernal ContCC rt ol over FiFF nancial Repor e ting During the quarter e dndedd Marchh 31, 2022, thhere were no chha gnges iin our iinternall contr lol over fiiff nanciiall reportii gng thhat hhave materiiallllyy affff eff ctedd, or are reasonablbla yy lliikkellyy to materiiallllyy affff eff ct, our iinternall contr lol over fiiff nanciiall reportii gng. Management’s Report on Internal Control Over Financial Reporting Our management is responsible forff establa ishing and maintaining adequate internal control over fiff nancial reporting as such term is defiff ned in Exchange Act RulRR e 13a-15(f)ff . Our internal control over fiff nancial reporting was designed to provide reasonabla e assurance regarding reliabia lity of fiff nancial reporting and the preparation of fiff nancial statements forff external purpos in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over fiff nancial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effff eff ctiveness to futff urt e periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our management assessed the effff eff ctiveness of our internal control over financial reporting as of March 31, 2022. In making this assessment, our management used the criteria set forff th by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework in 2013. Based on our assessment, we concluded that our internal control over fiff nancial reporting was effff eff ctive as of March 31, 2022. r es The effff eff ctiveness of our internal control over fiff nancial reporting as of March 31, 2022 has been audited by a PricewaterhouseCoopers LLP, an independent registered public accounting fiff rm, as stated in their report which appe ars herein. ItII ett m 9B. Othtt er InII fn orff mrr atitt on None. ItII ett m 9C.CC Disii closll ure Regar e dinii g ForFF eigni Jurisii dictitt ons thtt at PrPP event InII spes ctitt ons a Not appl icabla e. 51 ItII ett m 10. Dirii ectortt srr ,s ExeEE cutitt ve OfO fff iff cersrr and CorCC por rr PART III atett GovG ernance The inforff mation required by this Item 10 will be included under the capta ions "Directors and Executive Offff iff cers," "Proposal 1 Election of Directors," "Delinquent Section 16(a) Reports," "Corpor of Directors and its Committees" and "Corpor Annual Meeting of Stockholders to be fiff led with the SEC no later than 120 days aftff er the end of the fiff scal year covered by this Annual Report and is incorpor ate Governance" in our defiff nitive Proxy Statement with respect to our 2022 ate Governance -- Code of Ethics," "The Board ated herein by refeff rence. r rr r We have adopted a written code of business conduct that appl a ies to all of our employees, offff iff cers and directors, including our principal executive offff iff cer, principal fiff nancial offff iff cer and principal accounting offff iff cer. The code of business conduct and ethics is availabla e on our corpor Materials" in the "Corpor grant any of our directors or executive offff iff cers any waiver, including any implicit waiver, frff om a provision of our code of business conduct and ethics, we will disclose the naturt e of the amendment or waiver on our website or in a Current Report on Form 8-K. ate Governance" menu. If we make any substantive amendments to our code of business conduct or ate website at ir.netscout.com under the section entitled "Governance Overview & Related r rr ItII ett m 11. ExeEE cutitt ve ComCC pem nsatitt on The inforff mation required by this Item 11 will be included under the capta ion "Compensation and Other Inforff mation Concerning Directors and Executive Offff iff cers" in our defiff nitive Proxy Statement with respect to our 2022 Annual Meeting of Stockholders to be fiff led with the SEC not later than 120 days aftff er the end of the fiff scal year covered by this Annual Report and is incorpor ated herein by refeff rence. r ItII ett m 12. SeSS curitii ytt Ownersrr hipii of CeCC rtaitt nii Benefe iff cial Ownersrr and ManMM agement and Relatll ett d StSS octt kholdell r MatMM ttt ett rsrr The inforff mation required by this Item 12 will be included under the capta ions "Security Ownership of Certain Benefiff cial Owners and Management" and "Compensation and Other Inforff mation Concerning Directors and Executive Offff iff cers -- Equity Compensation Plan Inforff mation" in our defiff nitive Proxy Statement with respect to our 2022 Annual Meeting of Stockholders to be fiff led with the SEC not later than 120 days aftff er the end of the fiff scal year covered by this Annual Report and is incorpor herein by refeff rence. ated rr ItII ett m 13. CeCC rtaitt nii Relatll itt onshipsii and Relatll ett d TrTT ansactitt ons,s and Dirii ectortt InII depeee ndence The inforff mation required by this Item 13 will be included, as appl ate Governance -- Director Independence," "Compensation and Other Inforff mation Concerning Directors and Executive Offff iff cers -- Employment and Other Agreements" and "Transactions with Related Persons" in our defiff nitive Proxy Statement with respect to our 2022 Annual Meeting of Stockholders to be fiff led with the SEC not later than 120 days aftff er the end of the fiff scal year covered by this Annual Report and is incorpor icabla e, under the capta ions "Corpor ated herein by refeff rence. a r rr ItII ett m 14. PrPP inii cipal ii Accountantt t FeFF es and SeSS rvices The inforff mation required by this Item 14 will be included under the capta ions "Auditors Fees and Services" and "Auditors Fees and Services -- Policy on Audit Committee Pre-appr Statement with respect to our 2022 Annual Meeting of Stockholders to be fiff led with the SEC not later than 120 days aftff er the end of the fiff scal year covered by this Annual Report and is incorpor oval of Audit and Non-Audit Services" in our defiff nitive Proxy ated herein by refeff rence. a r 52 PART IV ItII ett m 15. ExhEE ibii tii stt and FiFF nii ancial StSS attt ett ment ScSS hedulell s (a) 1. Consolidated Financial Statements. Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets at March 31, 2022 and 2021 Consolidated Statements of Operations for the Years Ended March 31, 2022, 2021 and 2020 F-2 F-4 F-5 Consolidated Statements of Comprehensive Income for the Years Ended March 31, 2022, 2021 and 2020 F-6 Consolidated Statements of Stockholders' Equity for the Years Ended March 31, 2022, 2021 and 2020 Consolidated Statements of Cash Flows for the Years Ended March 31, 2022, 2021 and 2020 Notes to Consolidated Financial Statements 2. Financial Statement Schedule. Valuation and Qualifying Accounts for the Years Ended March 31, 2022, 2021 and 2020 F-7 F-8 F-9 S-1 No other fiff nancial statement schedules have been included because they are either not appl inforff mation is in the consolidated fiff nancial statements. a icabla e or the 3. Exhibits listed in the accompanying Index to Exhibits are fiff led or incorpor report. r ated by refeff rence as part of this (b) (c) . We hereby fiff le as part of this Annual Report on Form 10-K the exhibits listed in Item 15(a)(3) above a We hereby fiff le as part of this Annual Report on Form 10-K the fiff nancial statement schedule listed in . Item 15(a)(2) above a 53 3.1, 4.1 3.2, 4.2 4.3 4.4 10.1* 10.2 10.3* 10.4* 10.5* 10.6* 10.7* 10.8* 10.9* 10.10* NetScout Systems, Inc. Index to Exhibits Composite conforff med copy of Third Amended and Restated Certififf cate of Incorpor amended) (fiff led as Exhibit 3.2 to NetScout’s current report on Form 8-K, SEC File No. 000-26251, fiff led on September 21, 2016, and incorpor ated herein by refeff rence). ation of NetScout (as r r Amended and Restated By-laws of NetScout (fiff led as Exhibit 3.1 to NetScout’s current Report on Form 8- K, SEC File No. 000-26251, fiff led on May 11, 2020 and incorpor ated herein by refeff rence). r Specimen Certififf cate forff Report on Form 10-K forff 2001, and incorpor r ated herein by refeff rence). shares of NetScout’s Common Stock (fiff led as Exhibit 4.3 to NetScout’s Annual the fiff scal year ended March 31, 2001, SEC File No. 000-26251, fiff led on June 29, Description of Common Stock (fiff led as Exhibit 4.4 to NetScout's Annual Report on Form 10-K forff fiff scal year ended March 31, 2020, SEC File No. 000-26251, fiff led on May 20, 2020 and incorpor by refeff rence). rr the ated herein Form of Amended and Restated Indemnififf cation Agreement between NetScout and each director and the quarterly executive offff iff cer fiff led as Exhibit 10.1 to NetScout's Quarterly Report on Form 10-Q forff period ended December 31, 2013, SEC File No. 000-26251, fiff led Januaryrr 28, 2014, and incorpor ated herein by refeff rence). r Lease between Arturt o J. Gutierrez and John A. Cataldo, Trusr dated April 27, 2000 and recorded with the Middlesex North Registryrr of Deeds in Book 10813, Page 38 and NetScout forff Westforff d Technology Park West, as amended (fiff led as Exhibit 10.26 to NetScout’s Annual Report on Form 10-K forff June 29, 2001, and incorpor the fiff scal year ended March 31, 2001, SEC File No. 000-26251, fiff led on tees of Nashoba Westforff d Realty Trusr ated herein by refeff rence). t, u/d/t r Agreement Relating to Employment, dated Januaryrr 3, 2007, by and between NetScout and Anil K. Singhal (fiff led as Exhibit 10.2 to NetScout’s Current Report on Form 8-K, SEC File No. 000-26251, fiff led on Januaryrr 5, 2007 and incorpor ated herein by refeff rence). r Amendment No. 1, dated Februar ryrr 2, 2007, to Agreement Relating to Employment by and between the Company and Anil K. Singhal (fiff led as exhibit 10.1 to NetScout’s Quarterly Report on Form 10-Q forff quarterly period ended December 31, 2006, SEC File No. 000-26251, fiff led Februar r incorpor ated herein by refeff rence). ryrr 5, 2007 and the Amendment No. 2, dated December 22, 2008, to Agreement Relating to Employment by and between the the Company and Anil K. Singhal (fiff led as exhibit 10.1 to NetScout’s Quarterly Report on Form 10-Q forff quarterly period ended December 31, 2008, SEC File No. 000-26251, fiff led Februar r incorpor ated herein by refeff rence). ryrr 6, 2009 and Amendment No. 3, dated May 28, 2012, to Agreement Relating to Employment, by and between the Company and Anil K. Singhal (fiff led as Exhibit 10.3 to NetScout’s Current Report on Form 8-K, SEC File No. 000-26251, fiff led on June 1, 2012 and incorpor ated herein by refeff rence). r NetScout Systems, Inc. 2007 Equity Incentive Plan, as amended (fiff led as Appendix A to the Registrant’s Defiff nitive Proxy Statement on Schedule 14A, SEC File No. 000-26251, fiff led with the Commission on July 28, 2015 and incorpor ated herein by refeff rence). rr NetScout Form of Restricted Stock Unit Agreement with respect to the NetScout 2007 Equity Incentive Plan (fiff led as Exhibit 99.2 to NetScout’s Registration Statement on Form S-8, SEC File No. 333-148364, fiff led on December 27, 2007 and incorpor ated herein by refeff rence). r Form of Amended and Restated Severance Agreement forff Named Executive Offff iff cers (other than the CEO and CFO) (fiff led as Exhibit 10.1 to NetScout’s Current Report on Form 8-K, SEC File No. 000-26251, fiff led on June 1, 2012 and incorpor ated herein by refeff rence). rr Amended and Restated Severance Agreement, dated May 28, 2012, by and between the Company and Jean Bua (fiff led as Exhibit 10.2 to NetScout’s Current Report on Form 8-K, SEC File No. 000-26251, fiff led on June 1, 2012 and incorpor ated herein by refeff rence). r 54 10.11 10.12* 10.13* 10.14 10.15* 10.16* 10.17* 21 23 31.1 31.2 32.1† 32.2† 101.INS 101.SCH 101.CAL 101.DEF 101.LAB 101.PRE 104 Third Amendment Agreement, dated August 10, 2010, to that certain Lease, dated August 17, 2000, as amended, between the Company and Westforff d West I Limited Partnership, as successor to Arturt o J. Gutierrez and John A. Cataldo, Trusr (fiff led as Exhibit 10.1 to NetScout’s Quarterly Report on Form 10-Q forff September 30, 2010, SEC File No. 000-26251, fiff led November 9, 2010 and incorpor refeff rence). the quarterly period ended ated herein by tees of Nashoba Westforff d Realty Trusr t, u/d/t dated April 27, 2000 r NetScout Systems, Inc. Amended and Restated 2011 Employee Stock Purchase Plan (fiff led as Exhibit 10.1 to NetScout’s Current Report on Form 8-K, SEC File No. 000-26251, fiff led on September 13, 2018 and r incorpor ated herein by refeff rence). Form of Amendment to Amended and Restated Severance Agreement forff Executive Offff iff cers (fiff led as Exhibit 10.9 to NetScout’s Quarterly Report on Form 10-Q forff 2014, SEC File No. 000-26251, fiff led on Januaryrr 27, 2015 and incorpor the quarterly period ended December 31, ated herein by refeff rence). r Second Amendment and Restatement Agreement, dated as of July 27, 2021, to the Amended and Restated Credit Agreement, dated as of Januaryrr 16, 2018, by and among NetScout Systems, Inc., as borrower; certain subsidiaries of NetScout Systems, Inc., as loan parties; the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent attaching the Second Amended and Restated Credit Agreement, dated as of July 27, 2021, by and among NetScout Systems, Inc., as borrower; JPMorgan Chase Bank, N.A., as administrative agent and collateral agent; JPMorgan Chase Bank, N.A., Wells Fargo Securities, LLC, BofAff Securities Inc., RBC Capia tal Markets, PNC Capia tal Markets LLC and Mizuho Bank, Ltd., as joint lead arrangers and joint bookrunne National Association, Fiftff h Third Bank, National Association, Silicon Valley Bank and TD Bank, N.A. as co-documentation agents; and the lenders and issuing banks party thereto (fiff led as Exhibit 10.5 to NetScout's current report on Form 8-K, SEC File No. 000-26251, fiff led on July 27, 2021 and incorpor rr herein by refeff rence). rs; Santander Bank, N.A., U.S. Bank ated rr Summaryrr of Non-Employee Director Compensation (fiff led as Exhibit 10.2 to NetScout's Quarterly Report on Form 10-Q forff November 4, 2021 and incorpor the quarterly period ended September 30, 2021, SEC File No. 000-26251, fiff led on ated herein by refeff rence. r NetScout Systems, Inc. 2019 Equity Incentive Plan, as amended and restated (fiff led as Exhibit 99.1 to NetScout’s Registration Statement on Form S-8, SEC File No. 333-248786, fiff led on September 14, 2020 and incorpor ated herein by refeff rence). rr Form of Restricted Stock Unit Agreement with respect to the NetScout Systems, Inc. 2019 Equity Incentive Plan (fiff led as Exhibit 10.1 to NetScout’s Quarterly Report on Form 10-Q forff ended December 31, 2019, SEC File No. 000-26251, fiff led on Februar refeff rence). ryrr 6, 2020 and incorpor the quarterly period ated herein by r Subsidiaries of NetScout (fiff led herewith). Consent of PricewaterhouseCoopers LLP (fiff led herewith). Certififf cation Pursuant to Section 302 of the Sarbar nes-Oxley Act of 2002 (fiff led herewith). Certififf cation Pursuant to Section 302 of the Sarbar nes-Oxley Act of 2002 (fiff led herewith). Certififf cation Pursuant to Section 906 of the Sarbar nes–Oxley Act of 2002 (furff nished herewith). Certififf cation Pursuant to Section 906 of the Sarbar nes–Oxley Act of 2002 (furff nished herewith). XBRL Instance Document - the instance document does not appe a XBRL tags are embedded within the Inline XBRL document. ar in the Interactive Data File because its XBRL Taxonomy Extension Schema Document. XBRL Taxonomy Extension Calculation Linkbase Document. XBRL Taxonomy Extension Defiff nition Linkbase Document. XBRL Taxonomy Extension Labea l Linkbase Document. XBRL Taxonomy Extension Presentation Linkbase Document. The cover page frff om the Company's Annual Report on Form 10-K forff 2022 forff matted in Inline XBRL the fiff scal year ended March 31, 55 * † Indicates a management contract or compensatoryrr plan or arrangement. Exhibit has been furff nished, is not deemed fiff led and is not to be incorpor Company's fiff lings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, irrespective of any general incorpor ation language contained in any such fiff ling ated by refeff rence into any of the r r ItII ett m 16. ForFF mrr 10-K- Summaryr Not provided. 56 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SIGNATURES NETSCOUT SYSTEMS, INC. By: /S/ ANIL K. SINGHAL Anil K. Singhal President, Chief Executive Offff iff cer, and Chairman Date: May 19, 2022 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the folff lowing persons on behalf of the registrant and in the capaa cities and on the dates indicated. Signature g Title(s)( ) Date /S/ ANIL K. SINGHAL Anil K. Singhal President, Chief Executive Offff iff cer, and Chairman (Principal Executive Offff iff cer) /S/ JEANAA BUA Jean Bua Executive Vice President and Chief Financial Offff iff cer (Principal Financial Offff iff cer and Principal Accounting Offff iff cer) May 19, 2022 May 19, 2022 /S/ MICHAEL SZABADOS Chief Operating Offff iff cer and Vice Chairman May 19, 2022 Michael Szabados /S/ ROBERT E. DONAHUE Director Robert E. Donahue /S/ JOHN R. EGANAA John R. Egan Director /S/ ALFRED GRAR SSO Director Alfrff ed Grasso /S/ JOSEPH G. HADZIMA, JR. Director Joseph G. Hadzima, Jr. /S/ CHRISTOPHER PERRETTA Director Christopher Perretta /S/ SUSANAA L. SPRAR DLEY Director Susan L. Spradley /S/ VIVIANAA VITALE Director Vivian Vitale 57 May 19, 2022 May 19, 2022 May 19, 2022 May 19, 2022 May 19, 2022 May 19, 2022 May 19, 2022 This page intentionallyl left blank. NetScout Systems, Inc. Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB ID 238) Consolidated Balance Sheets at March 31, 2022 and 2021 Consolidated Statements of Operations for the Years Ended March 31, 2022, 2021 and 2020 Consolidated Statements of Comprehensive Income (Loss) for the Years Ended March 31, 2022, 2021 and 2020 Consolidated Statements of Stockholders' Equity for the Years Ended March 31, 2022, 2021 and 2020 Consolidated Statements of Cash Flows for the Years Ended March 31, 2022, 2021 and 2020 Notes to Consolidated Financial Statements F-2 F-4 F-5 F-6 F-7 F-8 F-9 F-1 Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of NetScout Systems, Inc. OpiOO nii ions on thtt e FiFF nii ancial StSS attt ett mentstt and InII tett rnrr al ConCC trtt ol over FiFF nii ancial Repor ee titt nii g We have audited the accompanying consolidated balance sheets of NetScout Systems, Inc. and its subsidiaries (the "Company") as of March 31, 2022 and 2021, and the related consolidated statements of operations, comprehensive income (loss), stockholders' equity and cash flff ows forff and fiff nancial statement schedule listed in the index appe fiff nancial statements"). We also have audited the Company's internal control over fiff nancial reporting as of March 31, 2022, based on criteria establa ished in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). each of the three years in the period ended March 31, 2022, including the related notes aring under Item 15(a)(2) (collectively refeff rred to as the "consolidated a In our opinion, the consolidated fiff nancial statements refeff rred to above position of the Company as of March 31, 2022 and 2021, and the results of its operations and its cash flff ows forff years in the period ended March 31, 2022 in conforff mity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effff eff ctive internal control over fiff nancial reporting as of March 31, 2022, based on criteria establa ished in Internal Control - Integrated Framework (2013) issued by the COSO. present faff irly, in all material respects, the fiff nancial a each of the three Basisii forff OpiOO nii ions these consolidated fiff nancial statements, forff maintaining effff eff ctive internal its assessment of the effff eff ctiveness of internal control over fiff nancial reporting, included The Company's management is responsible forff control over fiff nancial reporting, and forff in Management's Report on Internal Control Over Financial Reporting appe express opinions on the Company's consolidated fiff nancial statements and on the Company's internal control over fiff nancial reporting based on our audits. We are a public accounting fiff rm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. icabla e rulr es and regulations of the Securities and Exchange Commission and the PCAOB. feff deral securities laws and the appl aring under Item 9A. Our responsibility is to a a We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perforff m the audits to obtain reasonabla e assurance about whether the consolidated fiff nancial statements are frff ee of material misstatement, whether due to error or frff aud, and whether effff eff ctive internal control over fiff nancial reporting was maintained in all material respects. a Our audits of the consolidated fiff nancial statements included perforff ming procedures to assess the risks of material misstatement of the consolidated fiff nancial statements, whether due to error or frff aud, and perforff ming procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated fiff nancial statements. Our audits also included evaluating the accounting principles used and signififf cant estimates made by management, as well as evaluating the overall presentation of the consolidated fiff nancial statements. Our audit of internal control over fiff nancial reporting included obtaining an understanding of internal control over fiff nancial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effff eff ctiveness of internal control based on the assessed risk. Our audits also included perforff ming such other procedures as we considered necessaryrr circumstances. We believe that our audits provide a reasonabla e basis forff our opinions. in the Defe iff nii itii itt on and Limii itii attt itt ons of InII tett rnrr al ConCC trtt ol over FiFF nii ancial Repor ee titt nii g A company's internal control over fiff nancial reporting is a process designed to provide reasonabla e assurance regarding the reliabia lity of fiff nancial reporting and the preparation of fiff nancial statements forff es in accordance with generally accepted accounting principles. A company’s internal control over fiff nancial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonabla e detail, accurately and faff irly reflff ect the transactions and dispositions of the assets of the company; (ii) provide reasonabla e assurance that transactions are recorded as necessaryrr preparation of fiff nancial statements in accordance with generally accepted accounting principles, and that receipts and expenditurt es of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonabla e assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effff eff ct on the fiff nancial statements. external purpos r to permit F-2 Because of its inherent limitations, internal control over fiff nancial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effff eff ctiveness to futff urt e periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. CrCC itii itt cal Auditii MatMM ttt ett rsrr The critical audit matter communicated below is a matter arising frff om the current period audit of the consolidated fiff nancial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated fiff nancial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated fiff nancial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue frff om ContCC rt actstt withtt CusCC tomersrr - IdeII ntifi iff cation of Disii tinct Perfr orff mance Obligat i ions As described in Note 3 to the consolidated fiff nancial statements, the Company derives revenues primarily frff om the sale of network management tools and security solutions forff ise customers, which include hardware, softff ware and service offff eff rings. Customer contracts may include promises to transfeff r multiple products and services to a customer. Determining whether the products and services are considered distinct perforff mance obligations that should be accounted forff March 31, 2022, the Company recognized revenue frff om contracts with customers of $855.6 million. separately or as one combined perforff mance obligation may require signififf cant judgment. During the year ended service provider and enterprr our determination that perforff ming procedures relating to revenue frff om contracts with The principal considerations forff customers, specififf cally the identififf cation of distinct perforff mance obligations, is a critical audit matter are the signififf cant judgment by management in determining whether the products and services are considered distinct perforff mance obligations that should be accounted forff judgment, subjectivity and effff orff obligations. separately or as one combined perforff mance obligation, which in turt n led to a high degree of auditor t in perforff ming procedures to evaluate management’s identififf cation of distinct performance Addressing the matter involved perforff ming procedures and evaluating audit evidence in connection with forff ming our overall opinion on the consolidated fiff nancial statements. These procedures included testing the effff eff ctiveness of controls relating to the revenue recognition process, including controls over the identififf cation of distinct perforff mance obligations. These procedures also included, among others, (i) testing management’s process forff evaluating the revenue recognition impact of contractuat l terms and conditions by examining customer contracts on a test basis. identifyiff ng distinct perforff mance obligations, and (ii) /s/ PricewaterhouseCoopers LLP Boston, Massachusetts May 19, 2022 We have served as the Company’s auditor since 1993. F-3 NetScout Systems, Inc. Consolidated Balance Sheets (In thousands, except share and per share data) doubtfulff accounts of $1,649 and Assets Current assets: Cash and cash equivalents Marketabla e securities Accounts receivabla e and unbilled costs, net of allowance forff $416 at March 31, 2022 and 2021, respectively Inventories and defeff rred costs Prepaid income taxes Prepaid expenses and other current assets Total current assets Fixed assets, net Operating lease right-of-ff use assets Goodwill Intangible assets, net Defeff rred income taxes Other assets Total assets Liabilities and Stockholders' Equity Current liabia lities: Accounts payabla e Accruer d compensation Accruer d other Income taxes payabla e Defeff rred revenue and customer deposits Current portion of operating lease liabia lities Total current liabia lities Other long-term liabia lities Defeff rred tax liabia lity Accruer d long-term retirement benefiff ts Long-term defeff rred revenue and customer deposits Operating lease liabia lities, net of current portion Long-term debt Total liabia lities Commitments and contingencies (Note 19) Stockholders’ equity: Prefeff rred stock, $0.001 par value: 5,000,000 shares authorized; no shares issued or outstanding at March 31, 2022 and 2021 Common stock, $0.001 par value: 300,000,000 shares authorized; 126,425,383 and 124,197,974 shares issued and 74,102,293 and 73,751,615 shares outstanding at March 31, 2022 and 2021, respectively Additional paid-in capa ital Accumulated other comprehensive income (loss) Treasuryrr stock at cost, 52,323,090 and 50,446,359 shares at March 31, 2022 and 2021, respectively Retained earnings Total stockholders’ equity Total liabia lities and stockholders’ equity March 31, 2022 March 31, 2021 $ 636,161 67,037 $ 467,176 9,277 $ $ $ $ 148,245 28,220 9,349 32,927 921,939 41,337 54,996 1,723,156 433,419 6,883 12,979 3,194,709 21,959 75,788 32,064 4,353 330,585 11,411 476,160 7,470 78,899 34,737 133,121 53,927 350,000 1,134,314 197,717 22,813 1,906 23,583 722,472 48,474 61,512 1,717,554 511,866 8,096 15,064 3,085,038 17,964 83,057 21,127 7,025 269,748 12,354 411,275 21,641 92,287 39,479 103,310 61,267 350,000 1,079,259 — — 126 3,023,403 141 124 2,955,400 (1,940) (1,373,840) 410,565 2,060,395 3,194,709 $ (1,322,496) 374,691 2,005,779 3,085,038 $ The accompanying notes are an integral part of these consolidated fiff nancial statements. F-4 NetScout Systems, Inc. Consolidated Statements of Operations (In thousands, except per share data) Revenue: Product Service Total revenue Cost of revenue: Product Service Total cost of revenue Gross profiff t Operating expenses: Research and development Sales and marketing General and administrative Amortization of acquired intangible assets Restrucr turt ing charges Total operating expenses Income frff om operations Interest and other expense, net: Interest income Interest expense Other income (expense), net Total interest and other expense, net Income beforff e income tax expense Income tax expense Net income (loss) Basic net income (loss) per share Diluted net income (loss) per share Weighted average common shares outstanding used in computing: Net income (loss) per share—basic Net income (loss) per share—diluted Fiscal Year Ended March 31, 2022 2021 2020 $ 410,121 $ 377,721 $ 445,454 855,575 90,730 123,456 214,186 641,389 171,131 264,191 97,692 59,741 — 592,755 48,634 297 (8,048) 2,009 (5,742) 42,892 7,018 35,874 0.48 0.48 74,019 75,084 $ $ $ $ $ $ 453,561 831,282 95,965 126,132 222,097 609,185 179,163 242,730 88,969 61,131 62 572,055 37,130 646 (10,879) (4,593) (14,826) 22,304 2,952 19,352 0.26 0.26 73,103 73,822 $ $ $ 438,341 453,479 891,820 122,832 119,360 242,192 649,628 188,294 276,523 99,994 64,505 2,674 631,990 17,638 4,528 (20,597) 355 (15,714) 1,924 4,678 (2,754) (0.04) (0.04) 75,162 75,162 The accompanying notes are an integral part of these consolidated fiff nancial statements. F-5 NetScout Systems, Inc. Consolidated Statements of Comprehensive Income (Loss) (In thousands) Net income (loss) Other comprehensive income (loss): Cumulative translation adjustments Recognition of actuat post-retirement plans, net of tax (benefiff t) of $824, ($657), and $590 rial net gains (losses) frff om pension and other Changes in market value of investments: Changes in unrealized (losses) gains, net of (benefiff t) tax of ($9), ($41), and $39 Total net change in market value of investments Changes in market value of derivatives: Changes in market value of derivatives, net of tax (benefiff t) of $19, $66, and ($25) Reclassififf cation adjustment forff income (loss), net of (benefiff t) tax of ($13), ($73), and $7 net (loss) gain included in net Total net change in market value of derivatives Other comprehensive income (loss) Total comprehensive income (loss) Fiscal Year Ended March 31, 2022 2021 2020 $ 35,874 $ 19,352 $ (2,754) 153 2,926 (1,644) 1,937 (1,548) 1,054 (29) (29) 63 (43) 20 2,081 (130) (130) 208 (236) (28) 1,220 $ 37,955 $ 20,572 $ 126 126 (78) 21 (57) (521) (3,275) The accompanying notes are an integral part of these consolidated fiff nancial statements. F-6 NetScout Systems, Inc. Consolidated Statements of Stockholders' Equity (In thousands, except share data) Common stock Voting Shares Par Value Additional Paid In Capital Accumulated Other Comprehensive Income (Loss) Treasury stock Shares Stated Value Retained Earnings Total Stockholders' Equity Balance, March 31, 2019 119,760,132 $ 120 $2,828,922 $ (2,639) 42,149,771 $(1,119,063) $ 358,093 (2,754) $ 2,065,433 (2,754) Net loss Unrealized net investment gains ents Unrealized net losses on derivative fiff nancial instrumrr Cumulative translation adjustments Recognition of actuat frff om pension and other post- retirement plan rial net gains Issuance of common stock pursuant to vesting of restricted stock units Stock-based compensation expense forff restricted stock units granted to emplp oyey es Issuance of common stock under employee stock purchase plan Repurchase of treasuryrr stock Balance, March 31, 2020 Net income Unrealized net investment losses ents Unrealized net losses on derivative fiff nancial instrumrr Cumulative translation adjustments Recognition of actuat rial net losses frff om pension and other post- retirement plan Issuance of common stock pursuant to vesting of restricted stock units Stock-based compensation expense forff restricted stock units granted to emplp oyey es Issuance of common stock under employee stock purchase plan Repurchase of treasuryrr stock Balance, March 31, 2021 Net income Unrealized net investment losses Unrealized net gains on derivative fiff nancial instrumrr Cumulative translation adjustments Recognition of actuat frff om pension and other post- retirement plan rial net gains ents Issuance of common stock pursuant to vesting of restricted stock units Stock-based compensation expense forff restricted stock units granted to emplp oyey es Issuance of common stock under employee stock purchase plan Repurchase of treasuryrr stock Balance, March 31, 2022 126 (57) (1,644) 1,054 1,651,284 2 594,661 48,404 14,227 122,006,077 122 2,891,553 (3,160) 49,785,171 (1,305,935) 7,635,400 (186,872) 355,339 19,352 (130) (28) 2,926 (1,548) 1,630,228 2 561,669 49,418 14,429 124,197,974 124 2,955,400 (1,940) 50,446,359 (1,322,496) 661,188 (16,561) 374,691 35,874 (29) 20 153 1,937 1,728,994 2 498,415 53,421 14,582 1,876,731 (51,344) 126 (57) (1,644) 1,054 2 48,404 14,227 (186,872) 1,937,919 19,352 (130) (28) 2,926 (1,548) 2 49,418 14,429 (16,561) 2,005,779 35,874 (29) 20 153 1,937 2 53,421 14,582 (51,344) 126,425,383 $ 126 $3,023,403 $ 141 52,323,090 $(1,373,840) $ 410,565 $ 2,060,395 The accompanying notes are an integral part of these consolidated fiff nancial statements. F-7 NetScout Systems, Inc. Consolidated Statements of Cash Flows (In thousands) Cash flff ows frff om operating activities: Net income (loss) Adjustments to reconcile net income (loss) to cash provided by operating activities, net of the effff eff cts of acquisitions: Depreciation and amortization Loss on extinguishment of debt Operating lease right-of-ff use assets Loss on disposal of fiff xed assets Share-based compensation expense associated with equity awards Net change in faff ir value of contingent and contractuat Accretion of contingent consideration Defeff rred income taxes Other gains Changes in assets and liabia lities l liabia lities Accounts receivabla e and unbilled costs Inventories Prepaid expenses and other assets Accounts payabla e Accruerr d compensation and other expenses Operating lease liabia lities Income taxes payabla e Defeff rred revenue Net cash provided by operating activities ity of marketabla e securities Cash flff ows frff om investing activities: Purchase of marketabla e securities Proceeds frff om maturt Purchase of fiff xed assets Purchase of intangible assets Acquisition of businesses, net of cash acquired (Increase) decrease in deposits Collection of contingent consideration Net cash (used in) provided by investing activities Cash flff ows frff om fiff nancing activities: Issuance of common stock under stock plans Payment of contingent consideration Treasuryrr stock repurchases Tax withholding on restricted stock units Payment of debt issuance costs Repayment of long-term debt Proceeds frff om issuance of long-term debt Collection of contingent consideration Net cash used in fiff nancing activities Effff eff ct of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents and restricted cash, beginning of year Cash and cash equivalents and restricted cash, end of year Supplemental disclosures of cash flff ow inforff mation: Cash paid forff Cash paid forff Non-cash transactions: interest income taxes to fiff xed assets Transfeff rs of inventoryrr Additions to property, plant and equipment included in accounts payabla e Issuance of common stock under employee stock purchase plans Contingent consideration related to acquisition, included in accruerr d other Fiscal Year Ended March 31, 2021 2020 2022 $ 35,874 $ 19,352 $ (2,754) 95,784 596 10,292 5 56,074 (837) — (12,681) (11) 49,322 (7,996) (13,001) 4,211 2,391 (12,060) (3,087) 91,137 296,013 (78,367) 20,569 (10,350) (50) — (155) — (68,353) 2 — (35,653) (15,691) (3,660) (350,000) 350,000 837 (54,165) $ (4,510) 168,985 467,176 636,161 $ 4,962 31,702 $ $ 2,657 197 14,582 $ $ $ — $ 105,828 — 10,004 236 51,892 — — (23,804) (196) 16,878 (2,043) 11,483 (1,734) 31,955 (10,307) 6,684 (2,307) 213,921 (15,673) 56,806 (11,986) (4,537) — 88 — 24,698 2 (1,748) (3,275) (13,286) — (100,000) — — (118,307) $ 6,627 126,939 340,237 467,176 $ 7,685 11,472 $ $ 1,530 333 14,429 $ $ $ — $ 116,104 — 10,504 16 50,861 798 (36) (9,821) (152) 21,472 1,501 13,839 (4,288) 32,812 (13,077) (919) 8,163 225,023 (117,383) 144,322 (19,922) — (11,347) (31) 52 (4,309) 2 — (175,000) (11,872) — (100,000) — — (286,870) (3,427) (69,583) 409,820 340,237 17,644 13,061 2,290 255 14,227 1,800 $ $ $ $ $ $ $ $ The accompanying notes are an integral part of these consolidated fiff nancial statements. F-8 NetScout Systems, Inc. Notes to Consolidated Financial Statements NOTE 1 – NATURE OF BUSINESS NetScout Systems, Inc., or NetScout or the Company, has been a technology innovator forff ng in 1984. The Company's solutions, based on patented Adapta ive Service Intelligence (ASI) technology, help customers ication perforff mance issues, defeff nd their networks frff om denial of service (DDoS) attacks, and rapia dly ff foundi identifyff network and appl fiff nd and isolate advanced network threats. As a result, customers can quickly resolve issues that cause business disrupt downtime, poor service quality or compromised security, thereby driving compelling returt ns on their investments in their network and broader inforff mation technology (IT) initiatives. three-plus decades since its ions, a rr NOTE 2 – SUMMARYR OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated fiff nancial statements include the accounts of NetScout and its wholly owned subsidiaries. Inter-company transactions and balances have been eliminated in consolidation. Segment Reporting The Company's operating segments are determined based on the units that constitutt e a business forff which fiff nancial inforff mation is availabla e and forff which operating results are regularly reviewed by the Chief Operating Decision Maker (CODM). The Company reports revenue and income in one reportabla e segment. Use of Estimates The preparation of fiff nancial statements in conforff mity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affff eff ct the reported amounts of assets and liabia lities and disclosures of contingent assets and liabia lities at the date of the consolidated fiff nancial statements and the reported amounts of revenues and expenses during the reporting period. Signififf cant estimates in these fiff nancial statements include those involving revenue recognition, valuation of goodwill and acquired assets and liabia lities, valuation of the pension obligation, valuation of contingent consideration and share-based compensation. These items are continuously monitored and analyzed by management forff changes in faff cts and circumstances and material changes in these estimates could occur in the futff urt e. The Company considered the impact of the COVID-19 pandemic on the use of estimates and assumptions used forff l extent to which the COVID-19 pandemic will directly or indirectly impact the Company's business, fiff nancial reporting. The fulff results of operations and fiff nancial condition, including sales, expenses, reserves and allowances, manufaff cturt development costs and employee-related amounts, will depend on futff urt e developments that are highly uncertain, including as a result of new inforff mation that may emerge concerning COVID-19 and the actions taken to contain it or treat COVID-19, as well as the economic impact on local, regional, national and international customers and markets. The Company has made estimates within the fiff nancial statements and there may be changes to those estimates in futff urt e periods. Actuat l results may diffff eff r frff om these estimates. ing, research and COVID-19 Risks and Uncertainties The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of its business. The futurt e impacts of the pandemic and any resulting economic impact on the Company's operations are evolving. It is possible that the COVID-19 pandemic, the measures taken by the governments of countries affff eff cted and the resulting economic impact may materially and adversely affff eff ct the Company's futff urt e results of operations, cash flff ows and fiff nancial position as well as its customers. The Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about a its abia lity to meet its futff urt e fiff nancial obligations as they become due within one year aftff er the date that the fiff nancial statements are issued. The Company has and continues to take precautionaryrr actions to manage costs and spending across the organization. This includes managing discretionaryrr spending and hiring activities. In addition, based on covenant levels, the Company had as of March 31, 2022 an incremental $450 million availabla e under the revolving credit faff cility. On March 27, 2020, the Coronavirusrr Aid, Relief and Economic Security Act (the CARES Act) was enacted. The CARES Act, among other things, includes provisions relating to refunda bla e payroll tax credits, defeff rment of employer social security ff F-9 NetScout Systems, Inc. Notes to Consolidated Financial Statements—(Continued) rr payments, net operating loss carryba deduction limitations and technical corrections to tax depreciation methods forff has elected to defeff r the employer-paid portion of social security taxes. As of March 31, 2022, the Company had defeff rred $4.5 million of employer payroll taxes, which is required to be deposited by December 2022. The balance of $4.5 million was included as accruer d other in the Company's consolidated balance sheet at March 31, 2022. , modififf cations to the net interest qualififf ed improvement property. The Company ck periods, alternative minimum tax credit refunds ff The Company expects net cash provided by operations combined with cash, cash equivalents, and marketabla e securities current obligations, capia tal and borrowing availabia lity under the revolving credit faff cility to provide suffff iff cient liquidity to fund spending, debt service requirements and working capia tal requirements over at least the next twelve months. ff Cash and Cash Equivalents and Marketable Securities Under authoritative guidance, NetScout has classififf ed its investments as "availabla e-forff -sale" which are carried at faff ir value associated unrealized gains or losses are recorded as a separate component of stockholders’ equity until realized. NetScout considers all highly liquid investments purchased with an original maturt ity of three months or less to be cash equivalents and those investments with original maturt ities greater than three months to be marketabla e securities. At March 31, 2022 and periodically throughout the year, NetScout has maintained cash balances in various operating accounts in excess of feff derally insured limits. NetScout limits the amount of credit exposure by investing only with credit worthy institutt ions which the Company believes are those institutt ions with an investment grade rating forff deposits. Revenue Recognition The Company accounts forff ther discussion of the Company's accounting policies related to revenue see Note 3, "Revenue Recognition." revenue in accordance with ASC 606, Revenue frff om Contracts with Customers (Topic 606). For furff Commission Expense Sales commissions are recorded as an asset when the initial contract's duration is longer than 12 months and amortized to expense ratabla y over the remaining perforff mance periods of the related contracts. Uncollected Defeff rred Revenue Because of NetScout's revenue recognition policies, there are circumstances forff which the Company does not recognize revenue relating to sales transactions that have been billed, but the related account receivabla e has not been collected. While the receivabla e represents an enforff ceabla e obligation, the Company does not believe its right to payment is unconditional, thereforff e forff and no amounts appe has not transfeff rred. The aggregate amount of unrecognized accounts receivabla e and defeff rred revenue was $9.4 million and $7.1 million at March 31, 2022 and 2021, respectively. es, the Company has not recognized the defeff rred revenue or the related account receivabla e such transactions because control of the underlying deliverabla e ar in the consolidated balance sheets forff balance sheet presentation purpos a r Concentration of Credit Risk Financial instrumr ents that potentially subject the Company to concentration of credit risk consist primarily of investments, trade accounts receivabla e and accounts payabla e. NetScout's cash, cash equivalents, and marketabla e securities are placed with fiff nancial institutt ions with high credit standings. At March 31, 2022, the Company had no direct customers or indirect channel partners which accounted forff more than 2021 the Company had one direct customer who accounted forff more 10% of the accounts receivabla e balance. At Marchh 31, than 10% of the accounts receivabla e balance, while no indirect channel partners accounted forff more than 10% of the accounts receivabla e balance. , During the fiff scal years e dndedd Marchh 31, 2022, 2021 a dnd 2020 respectiivellyy, no didirect customers or ii dindirect chhannell ppartners accountedd forff more thhan 10% of totall re ev nue. Historically, the Company has not experienced any signififf cant faff ilure of its customers to meet their payment obligations nor does the Company anticipate material non-perforff mance by its customers in the futff urt e; accordingly, the Company does not require collateral frff om its customers. However, if the Company’s assumptions are incorrect, there could be an adverse impact on its allowance forff accounts. doubtfulff F-10 NetScout Systems, Inc. Notes to Consolidated Financial Statements—(Continued) Trade Receivable Valuations Accounts receivabla e are stated at their net realizabla e value. The allowance against gross trade receivabla es reflff ects the best estimate of probabla e losses inherent in the receivabla es portfolff allowances forff known troubled accounts and other currently availabla e inforff mation. io determined on the basis of historical experience, specififf c Inventories Inventories are stated at the lower of actuat l cost or net realizabla e value. Cost is determined by using the fiff rst-in, fiff rst-out (FIFO) method. Fixed Assets Fixed assets are stated at cost and depreciated using the straight-line method over the estimated usefulff lives of the assets. lifeff of the Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or anticipated usefulff improvement. Gains and losses upon asset disposal are recognized in the year of disposition. Expenditurt es forff replacements and building improvements are capia talized, while expenditurt es forff maintenance and repairs are charged against earnings as incurred. Leases The Company has operating leases forff administrative, research and development, sales and marketing and manufaff cturt ing faff cilities and equipment under various non-cancelabla e lease agreements. Lease commencement occurs on the date the Company takes possession or control of the property or equipment. The Company's lease terms may include options to extend or terminate the lease where it is reasonabla y certain that the Company will exercise those options. The Company considers several economic faff ctors when making this determination, including but not limited to, the signififf cance of leasehold improvements incurred in the offff iff ce space, the diffff iff culty in replacing the asset, underlying contractuat unique to a particular lease. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. For furff ther discussion of the Company's policies related to leases see Note 18, "Leases." l obligations, or specififf c characteristics Valuation of Goodwill, Intangible Assets and Other Acquisition Accounting Items The Company amortizes acquired defiff nite-lived intangible assets over their estimated usefulff lives. Goodwill and other indefiff nite-lived intangible assets are not amortized but subject to annual impairment tests; more frff equently if events or circumstances occur that would indicate a potential decline in their faff ir value. The Company perforff ms the assessment annually durd ing the four th quarter and on an interim basis if potential impairment indicators arise. ff Reporting units are determined based on the components of a Company's operating segments that constitutt e a business forff which fiff nancial inforff mation is availabla e and forff which operating results are regularly reviewed by segment management. The Company has one reporting unit. To test impairment, the Company fiff rst assesses qualitative faff ctors to determine whether the existence of events and circumstances indicate that it is more likely than not that the intangible asset is impaired. If based on the Company's qualitative assessment it is more likely than not that the faff ir value of the intangible asset is less than its carryirr ng amount, quantitative impairment testing is required. However, if the Company concludes otherwise, quantitative impairment testing is not required. The Company perforff med its annual impairment analysis forff assessment, and the Company concluded that it was more likely than not that the faff ir value of the reporting unit exceeded its carryirr ng value. goodwill as of Januaryrr 31, 2022, using the qualitative (Step 0) Indefiff nite-lived intangible assets are tested forff impairment at least annually, or on an interim basis if an event occurs or circumstances change that would, more likely than not, reduce the faff ir value of the indefiff nite-lived intangible assets below its carryirr ng value. To test impairment, the Company fiff rst assesses qualitative faff ctors to determine whether the existence of events and circumstances indicate that it is more likely than not that the indefiff nite-lived intangible is impaired. If based on the Company's qualitative assessment, the Company concludes that it is more likely than not that the faff ir value of the indefiff nite- lived asset is less than its carryirr ng amount, quantitative impairment testing is required. However, if the Company concludes otherwise, quantitative impairment testing is not required. The Company completed two acquisitions during the three-year period ended March 31, 2022. The acquisition method of accounting requires an estimate of the faff ir value of the assets and liabia lities acquired as part of these transactions. In order to estimate the faff ir value of acquired intangible assets, the Company uses either an income, market or cost method appr contingent purchase consideration related to the two acquisitions represent amounts deposited into escrow accounts, which were oach. The a F-11 NetScout Systems, Inc. Notes to Consolidated Financial Statements—(Continued) establa ished to cover damages NetScout may have suffff eff red related to any liabia lities that NetScout did not agree to assume or as a result of the breach of representations and warranties of the sellers as described in the acquisition agreements. The contingent purchase consideration of $0.7 million related to the Gigavation Incorpor ated (Gigavation) acquisition was paid to the seller in Februar acquisition was paid to the seller in April 2020. ryrr 2021. The contingent purchase consideration of $1.0 million related to the Eastwind Networks, Inc. (Eastwind) r Capitalized Softff ware Development Costs Costs incurred in the research and development of the Company's products are expensed as incurred, except forff certain softff ware development costs. Costs associated with the development of computer softff ware are expensed prior to the establa ishment of technological feff asibility and capia talized thereaftff er until the related softff ware products are availabla e forff first customer shipment. Such costs are amortized using the straight-line method over the estimated economic lifeff of the product, which generally does not exceed three years. Capia talized softff ware development costs are periodically assessed forff recoverabia lity in the event of changes to the anticipated futff urt e revenue forff technologies. Unamortized capia talized softff ware development costs that are determined to be in excess of the net realizabla e value of the softff ware products would be expensed in the period in which such a determination is made. the softff ware products or changes in product Typically forff accounting purpos r es, these R&D investments have not been capia talized because of the development methodology employed. The developments are added individually to the core code over a shorter period of time but marketed as a release once all portions are complete. Amortization included as cost of product revenue was $37 thousand, $0.1 million, and $0.5 million forff the fiff scal years ended March 31, 2022, 2021, and 2020, respectively. The Company did not capia talize softff ware development costs in the fiff scal years ended March 31, 2022 or 2021. Derivative Financial Instruments forff forff ent qualififf es forff derivative instrumrr the derivative to qualifyff Under authoritative guidance forff hedge accounting. Under the guidance, if an instrumr hedge accounting. In accordance with the guidance, the Company accounts forff open contracts, measured at the end of the period, are recorded to other comprehensive ents and hedging activities, all hedging activities must be documented at the inception of the hedge and must meet the defiff nition of highly effff eff ctive in offff sff etting changes to futff urt e cash flff ows in order forff changes in the faff ir value each period forff income. Otherwise, changes in the faff ir value are recorded in earnings each period. Management must perforff m initial and ongoing tests in order to qualifyff instrumr ents under hedge accounting. The effff eff ctiveness and a measurement of ineffff eff ctiveness of qualifyiff ng hedge contracts are assessed by the Company quarterly. The Company records the faff ir value of its derivatives in prepaid expenses and other current assets and accruerr d other in the Company's consolidated balance sheet. The effff eff ctive portion of gains or losses resulting frff om changes in the faff ir value of qualifyiff ng hedges are recorded in other comprehensive income (loss) until the forff ecasted transaction occurs, with any ineffff eff ctive portion classififf ed directly to the Company’s consolidated statement of operations based on the expense categories of the items being hedged. When forff ecasted transactions occur, unrealized gains or losses associated with the effff eff ctive portion of the hedge are reclassififf ed to the respective expense categories in the Company’s consolidated statement of operations. Gains or losses related to hedging activity are included as operating activities in the Company’s consolidated statement of cash flff ows. If the underlying forff ecasted transactions do not occur, or it becomes probabla e that they will not occur, the gain or loss on the related cash flff ow hedge is recognized immediately in earnings. hedge accounting, the its NetScout also periodically enters into forff ward contracts to manage exchange rate risk associated with certain third-party transactions and forff which the Company does not elect hedge accounting treatment as there is no diffff eff rence in the timing of gain or loss recognition on the hedge instrumr ent and the hedged item. Contingencies NetScout accounts forff claims and contingencies in accordance with authoritative guidance that requires an estimated loss to be recorded frff om a claim or loss contingency when inforff mation availabla e prior to issuance of its consolidated fiff nancial statements indicates that it is probabla e that a liabia lity has been incurred at the date of the consolidated fiff nancial statements and the amount of the loss can be reasonabla y estimated. If NetScout determines that it is reasonabla y possible but not probabla e that an asset has been impaired or a liabia lity has been incurred or if the amount of a probabla e loss cannot be reasonabla y estimated, then in accordance with the authoritative guidance, Netscout discloses the amount or range of estimated loss if the amount or claims and contingencies requires NetScout to use its judgment. NetScout range of estimated loss is material. Accounting forff F-12 NetScout Systems, Inc. Notes to Consolidated Financial Statements—(Continued) consults with legal counsel on those issues related to litigation and seeks input frff om other experts and advisors with respect to matters in the ordinaryrr course of business. Share-Based Compensation NetScout recognizes compensation expense forff all share-based payments granted. Under the faff ir value recognition provisions, share-based compensation is calculated net of an estimated forff forff those shares expected to vest on a straight-line basis over the expected requisite service period of the award. feff iturt e rate and compensation cost is only recognized Foreign Currency NetScout accounts forff determination of the func tional currency forff ff func ff its reporting of forff eign operations in accordance with guidance which establa ishes guidelines forff tional currency of forff eign subsidiaries. In accordance with the guidance, NetScout has determined its the those forff eign subsidiaries that are an extension of NetScout's U.S. operations to be the U.S. Dollar. Assets and liabia lities of subsidiaries operating outside the United States with a func ff tional currency other than U.S. dollars are translated into U.S. dollars using the period-end exchange rate, and income and expense items are translated using the average exchange rate during the period. Cumulative translation adjustments are reflff ected as a separate component of stockholders' equity. NetScout will experience currency exchange risk with respect to forff eign currency denominated expenses. In order to partially offff sff et the risks associated with the effff eff cts of certain forff eign currency exposures, NetScout has establa ished a program that utilizes forff eign currency forff ward contracts. Under this program, increases or decreases in forff eign currency exposures are partially offff sff et by gains or losses on forff ward contracts, to mitigate the impact of forff eign currency transaction gains or losses. The Company does not use forff ward contracts to engage in currency speculation. All outstanding forff eign currency forff ward contracts are recorded at faff ir value at the end of each fiff scal period. The Company had forff eign currency losses of $0.2 million, $$5.5 miilllliion and $0.7 million forff the fiff scal years ended March 31, 2022, 2021 and 2020, respectively. These amounts are included in other income (expense), net in the Company's consolidated statements of operations. Advertising Expense NetScout recognizes advertising expense as incurred. Advertising expense was $11.4 million, $8.7 million and $8.3 million forff the fiff scal years ended March 31, 2022, 2021 and 2020, respectively. Comprehensive Income (Loss) Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) typically consists of unrealized gains and losses on marketabla e securities, unrealized gain and losses on hedge contracts, actuat rial gains and losses, and forff eign currency translation adjustments. Income Taxes NetScout accounts forff its income taxes under the asset and liabia lity method. Under the asset and liabia lity method, defeff rred tax assets and liabia lities are recognized based on anticipated futff urt e tax consequences attributabla e to diffff eff rences between fiff nancial statement carryirr ng amounts of assets and liabia lities and their respective tax basis, as well as the effff eff ct of any net operating loss and tax credit carryfrr orff wards. Income tax expense is comprised of the current tax liabia lity or benefiff t and the change in defeff rred tax assets and liabia lities. NetScout evaluates the recoverabia lity of defeff rred tax assets by considering all positive and negative evidence relating to futff urt e profiff tabia lity. NetScout weighs objective and verififf abla e evidence more heavily in this analysis. In situat support the realizabia lity of the defeff rred tax asset, NetScout creates a valuation allowance against it. tions where NetScout concludes that it does not have suffff iff cient objective and verififf abla e evidence to Recent Accounting Standards In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting forff Contract Assets and Contract Liabia lities frff om Contracts with Customers, which requires companies to recognize and measure contract assets and contract liabia lities acquired in a business combination as if the acquiring company originated the related revenue contracts. ASU 2021-08 is effff eff ctive forff fiff scal years beginning aftff er December 15, 2022, with early adoption permitted. ASU 2021-08 is F-13 NetScout Systems, Inc. Notes to Consolidated Financial Statements—(Continued) the Company beginning April 1, 2023. Amendments within the standard are required to be appl effff eff ctive forff prospective basis frff om the date of adoption. The adoption is not expected to have a material impact on the Company's fiff nancial position, results of operations, and disclosures. We will appl acquisitions, if any. y the provisions of ASU 2021-08 aftff er adoption to futff urt e ied on a a a refeff rence rate reforff m. The new guidance provides optional expedients and exceptions forff In March 2020, the FASB issued ASU 2020-04, Refeff rence Rate Reforff m (Topic 848): Facilitation of the Effff eff cts of a limited time to ease the ying U.S. GAAP to contracts, hedging relationships and other transactions affff eff cted by refeff rence rate reforff m if certain Refeff rence Rate Reforff m on Financial Reporting. The amendments provide optional guidance forff potential burden in accounting forff appl a y only to contracts and hedging relationships that refeff rence LIBOR or another refeff rence criteria are met. The amendments appl rate expected to be discontinued due to refeff rence rate reforff m. In Januaryrr 2021, the FASB issued ASU 2021-01, Refeff rence Rate Reforff m, which clarififf es the scope and appl ication of certain optional expedients and exceptions regarding the original guidance. ASU 2021-01 may be appl a amendments do not appl 31, 2022, that an entity has elected certain optional expedients forff relationship. The adoption is not expected to have a material impact on the Company's fiff nancial position, results of operations, and disclosures. ied prospectively through December 31, 2022. The expedients and exceptions provided by the y to contract modififf cations made and hedging relationships entered into or evaluated aftff er December and that are retained through the end of the hedging a a a In Januaryrr 2020, the FASB issued ASU 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Venturt es (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifyiff ng the Interactions between Topic 321, Topic 323, and Topic 815. This guidance addresses accounting forff clarififf cation of the interaction of rulr es forff fiff scal years and interim periods within those fiff scal purchase options on certain types of securities. This standard is effff eff ctive forff years beginning aftff er December 15, 2020. The Company adopted the guidance as of April 1, 2021. The adoption did not have a material impact on the Company's consolidated fiff nancial statements. equity securities, the equity method of accounting, and forff ward contracts and the transition into and out of the equity method and provides In December 2019, the FASB issued ASU 2019-12, Simplifyiff ng the Accounting forff Income Taxes. ASU 2019-12 simplififf es the accounting forff aspects of the current guidance to promote consistency among reporting entities. ASU 2019-12 is effff eff ctive forff fiff scal years beginning aftff er December 15, 2020. The Company adopted the guidance as of April 1, 2021. The adoption did not have a material impact on the Company's consolidated fiff nancial statements. income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarififf es certain NOTE 3 - REVENUE RECOGNITION Revenue Recognition Policy The Company exercises judgment and uses estimates in connection with determining the amounts of product and service revenues to be recognized in each accounting period. The Company derives revenues primarily frff om the sale of network management tools and security solutions forff service provider and enterprr consist of softff ware only offff eff rings and offff eff rings which include hardware appl to providing customers the intended func tionality of the solutions. a ff ise customers, which include hardware, softff ware and service offff eff rings. The Company's product sales iances with embedded softff ware that are essential The Company accounts forff revenue once a legally enforff ceabla e contract with a customer has been appr a oved by the parties and the related promises to transfeff r products or services have been identififf ed. A contract is defiff ned by the Company as an arrangement with commercial substance identifyiff ng payment terms, each party’s rights and obligations regarding the products or services to be transfeff rred and the amount the Company deems probabla e of collection. Customer contracts may include promises to transfeff r multiple products and services to a customer. Determining whether the products and services are considered distinct perforff mance obligations that should be accounted forff may require signififf cant judgment. Revenue is recognized when control of the products or services are transfeff rred to the Company's customers, in an amount that reflff ects the consideration the Company expects to be entitled to in exchange forff products and services. separately or as one combined perforff mance obligation Product revenue is typically recognized upon shipment, provided a legally enforff ceabla e contract exists, control has passed to the customer, and in the case of softff ware products, when the customer has the rights and abia lity to access the softff ware, and collection of the related receivabla e is probabla e. If any signififf cant obligations to the customer remain post-delivery,rr involving obligations relating to installation and acceptance by the customer, revenue recognition is defeff rred until such typically F-14 NetScout Systems, Inc. Notes to Consolidated Financial Statements—(Continued) fiff lled. The Company's service offff eff rings include installation, integration, extended warranty and obligations have been fulff maintenance services, post-contract customer support, stand-ready softff ware-as-a-service (SAAS) and other profeff ssional services including consulting and training. The Company generally provides softff ware and/or hardware support as part of product sales. Revenue related to the initial bundled softff ware and hardware support is recognized ratabla y over the support period. In addition, customers can elect to purchase extended support agreements forff warranty expiration. Support services generally include rights to unspecififf ed upgrades (when and if availabla e), telephone and internet-based support, updates, bug fiff xes and hardware repair and replacement. Consulting services are recognized upon deliveryrr or completion of perforff mance depending on the terms of the underlying contract. Reimbursements of out-of-ff pocket expenditurt es incurred in connection with providing consulting services are included in services revenue, with the offff sff etting expense recorded in cost of service revenue. Training services include on-site and classroom training. Training revenues are recognized upon deliveryrr of the training. periods aftff er the initial softff ware/hardware Generally, the Company's contracts are accounted forff to account forff dependent on each other, it may be necessaryrr of contracts. individually. However, when contracts are closely interrelated and two or more contracts as one to reflff ect the substance of the group Bundled arrangements are concurrent customer purchases of a combination of the Company's product and service offff eff rings that may be delivered at various points in time. The Company allocates the transaction price among the perforff mance obligations in an amount that depicts the relative standalone selling prices (SSP) of each obligation. Judgment is required to determine the SSP forff each distinct perforff mance obligation. The Company uses a range of amounts to estimate SSP when it sells each of the products and services separately based primarily on the perforff mance obligation's historical pricing. The Company also considers its overall pricing objectives and practices across diffff eff rent sales channels and geographi conditions. Generally, the Company has establa ished SSP forff historical standalone sales. In certain instances, the Company has establa ished SSP forff profiff tabia lity and the underlying cost to fulff fiff ll those services. SSP has primarily been establa ished forff obligations as the average or median selling price the perforff mance obligation was recently sold forff as part of a bundle transaction. The Company reviews sales of the product perforff mance obligations on a quarterly basis and upda such perforff mance obligations to ensure that it reflff ects recent pricing experience. The u Company's products are distributed through its direct sales forff ce and indirect distribution channels through alliances with resellers and distributors. Revenue arrangements with resellers and distributors are recognized on a sell-in basis; that is, when control of the product transfeff rs to the reseller or distributor. The Company records consideration given to a customer as a reduction of revenue to the extent they have recorded revenue frff om the customer. With limited exceptions, the Company's returt n policy does not allow product returt ns forff a historyrr of successfulff ff a refund. ly collecting receivabla es frff om its resellers and distributors. services based upon an estimate of product perforff mance a maja ority of its service perforff mance obligations based on Returt ns have been insignififf cant to date. In addition, the Company has , whether sold alone or sold opriate, its SSP forff tes, when appr es, and market a a During the fiff scal year ended March 31, 2022, the Company recognized revenue of $269.1 million rellated to the Company's defeff rred revenue balance reported at March 31, 2021. Perforff mance Obligations Customer contracts may include promises to transfeff r multiple products and services to a customer. Determining whether the products and services are considered distinct perforff mance obligations that should be accounted forff separately or as one combined perforff mance obligation may require signififf cant judgment. The transaction price is allocated among perforff mance obligations in bundled contracts in an amount that depicts the relative standalone selling prices of each obligation. For contracts involving distinct hardware and softff ware licenses, the perforff mance obligations are satisfiff ed at a point in time when control is transfeff rred to the customer. For standalone maintenance and post-contract support (PCS) the perforff mance obligation is satisfiff ed ratabla y over the contract term as a stand-ready obligation. For consulting and training services, the perforff mance obligation may be satisfiff ed over the contract term as a stand-ready obligation, satisfiff ed over a period of time as those services are delivered, or satisfiff ed at the completion of the service when control has transfeff rred, or the services have expired unused. Payments forff hardware, softff ware licenses, one-year maintenance, PCS and consulting services, are typically due up frff ont with payment terms of 30 to 90 days. However, the Company does have contracts pursuant to which billings occur ratabla y over a period of years folff maintenance, PCS and consulting services are typically due in annual installments over the contract term. The Company did not have any material variabla e consideration such as obligations forff the contracted perforff mance obligations. Payments on multi-year lowing the transfeff r of control forff or warranties at March 31, 2022. returt ns, refunds ff F-15 NetScout Systems, Inc. Notes to Consolidated Financial Statements—(Continued) At March 31, 2022, the Company had total defeff rred revenue of $463.7 million, which represents the aggregate total contract price allocated to undelivered perforff mance obligations. The Company expects to recognize $330.6 million, or 71%, of this revenue during the next 12 months, and expects to recognize the remaining $133.1 million, or 29%, of this revenue thereaftff er. NetScout expects that the amount of billed and unbilled defeff rred revenue will change frff om quarter to quarter forff several reasons, including the specififf c timing, duration and size of large customer support and service agreements, varyirr ng billing cycles of such agreements, the specififf c timing of customer renewals, and forff eign currency flff uctuat have material signififf cant fiff nancing components, or variabla e consideration or perforff mance obligations satisfiff ed in a prior period recognized during the twelve months ended March 31, 2022. tions. The Company did not Contract Balances The Company may receive payments frff om customers based on billing schedules as establa ished by the Company's contracts. Contract assets relate to perforff mance obligations where control has transfeff rred to the customer in advance of scheduled billings. The Company records unbilled accounts receivabla e representing the right to consideration in exchange forff goods or services that have been transfeff rred to a customer conditional on the passage of time. Defeff rred revenue relates to scenarios where billings with an unconditional right to payment occur beforff e all perforff mance obligations are delivered or payments are received in advance of perforff mance under the contract. Costs to Obtain Contracts The Company has determined that the only signififf cant incremental costs incurred to obtain contracts with customers within the scope of Topic 606 are sales commissions paid to its employees. Sales commissions are recorded as an asset and amortized to expense ratabla y over the remaining perforff mance periods of the related contracts with remaining perforff mance obligations. The Company expenses costs as incurred forff year or less. sales commissions when the amortization period would have been one At Marchh 31, 2022, thhe consolidated balance sheet included $8.8 million in assets related to sales commissions to be expensed in futff urt e periods. A balance of $4.6 million was included in prepaid expenses and other current assets, and a balance of $4.2 million was included as other assets in the Company's consolidated baballance shheet at Marchh 31, 2022. At Marchh 31, 2021, thhe cons loliiddatedd bballance sheet included $7.4 million in assets related to sales commissions to be expensed in futff urt e periods. A balance of $4.1 million was included in prepaid expenses and other current assets, and a balance of $3.3 million was included in other assets in the Company's consolidated balance sheet at March 31, 2021. During each of the twelve months ended March 31, 2022 and 2021, the Company recognized $6.3 million of amortization related to this sales commission asset, which is included in the sales and marketing expense line in the Company's consolidated statements of operations. Allowance forff Credit Losses The Company continually monitors collections frff om its customers. The Company evaluates the collectabia lity of its accounts receivabla e and determines the appr not limited to, analysis of the aging schedules, past due balances, historical collection experience and prevailing economic conditions. credit losses based on a combination of faff ctors, including but opriate allowance forff a The folff lowing tabla e summarizes the activity in the allowance forff credit losses (in thousands): Balance at March 31, 2021 Provision forff allowance forff credit losses Recoveries and other adjustments Write offff charged against the allowance forff credit losses Balance at March 31, 2022 $ $ 416 1,963 (25) (705) 1,649 F-16 NetScout Systems, Inc. Notes to Consolidated Financial Statements—(Continued) NOTE 4 – CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES Cash and cash equivalents mainly consisted of U.S government and municipal obligations, commercial papea bonds, certififf cate of deposits, money market instrumr 2022 and 2021. ents and cash maintained with various fiff nancial institutt r r, corpor ate ions at March 31, Cash, Cash Equivalents and Restricted Cash The folff lowing tabla e provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows (in thousands): Cash and cash equivalents Restricted cash Total cash, cash equivalents and restricted cash March 31, 2022 March 31, 2021 March 31, 2020 March 31, 2019 $ $ 636,161 — 636,161 $ $ 467,176 — 467,176 $ $ 338,489 1,748 340,237 $ $ 409,632 188 409,820 The Company's restricted cash includes cash balances which are legally or contractuat lly restricted. The Company's restricted cash is included within prepaid and other current assets and consists of amounts related to holdbacks associated with prior acquisitions. Marketable Securities The folff lowing is a summaryrr of marketabla e securities held by NetScout at March 31, 2022 classififf ed as short-term and long-term (in thousands): Type of security: Amortized Cost Unrealized Losses Fair Value U.S. government and municipal obligations $ 40,895 $ (32) $ r Commercial papea rr Corpor ate bonds Certififf cate of deposits Total short-term marketabla e securities Total long-term marketabla e securities Total marketabla e securities 23,353 823 2,000 67,071 — — (2) — (34) — 40,863 23,353 821 2,000 67,037 — $ 67,071 $ (34) $ 67,037 F-17 NetScout Systems, Inc. Notes to Consolidated Financial Statements—(Continued) The folff lowing is a summaryrr of marketabla e securities held by NetScout at March 31, 2021, classififf ed as short-term and long-term (in thousands): Type of security: U.S. government and municipal obligations r Commercial papea Total short-term marketabla e securities Total long-term marketabla e securities Total marketabla e securities Amortized Cost Unrealized Gains Fair Value $ $ 3,571 $ 5,699 9,270 — 9,270 $ 7 — 7 — 7 $ $ 3,578 5,699 9,277 — 9,277 Contractuat l maturt ities of the Company's marketabla e securities held at March 31, 2022 and 2021 (in thousands) were as folff lows: Availabla e-forff -sale securities: Due in 1 year or less Due aftff er 1 year through 5 years March 31, 2022 March 31, 2021 $ $ 67,037 — 67,037 $ $ 9,277 — 9,277 F-18 NetScout Systems, Inc. Notes to Consolidated Financial Statements—(Continued) NOTE 5 – FAIR VALUE MEASUREMENTS The faff ir value hierarchy has three levels based on the reliabia lity of the inputs used to determine faff ir value. Level 1 refeff rs to faff ir values determined based on quoted prices in active markets forff using signififf cant other observabla e inputs, and Level 3 includes faff ir values estimated using signififf cant unobservabla e inputs. The folff hierarchy at March 31, 2022 and 2021 (in thousands): lowing tabla es present the Company's fiff nancial assets and liabia lities measured on a recurring basis using the faff ir value identical assets. Level 2 refeff rs to faff ir values estimated ASSETS: Cash and cash equivalents $ 617,734 $ 18,427 $ — $ 636,161 Fair Value Measurements at March 31, 2022 Level 1 Level 2 Level 3 Total U.S. government and municipal obligations 40,863 r Commercial papea rr Corpor ate bonds Certififf cate of deposits Derivative fiff nancial instrumr ents LIABILITIES: Derivative fiff nancial instrumr ents — 821 — — — 23,353 — 2,000 20 — — — — — 40,863 23,353 821 2,000 20 $ $ $ 659,418 $ 43,800 $ — $ 703,218 — $ — $ (78) $ (78) $ — $ — $ (78) (78) Fair Value Measurements at March 31, 2021 Level 1 Level 2 Level 3 Total ASSETS: Cash and cash equivalents $ 467,176 $ — $ — $ 467,176 U.S. government and municipal obligations r Commercial papea Derivative fiff nancial instrumr ents LIABILITIES: Derivative fiff nancial instrumr ents 2,539 — — 1,039 5,699 57 — — — 3,578 5,699 57 469,715 $ 6,795 $ — $ 476,510 — $ — $ (191) $ (191) $ — $ — $ (191) (191) $ $ $ This hierarchy requires the Company to use observabla e market data, when availabla e, and to minimize the use of unobservabla e inputs when determining faff ir value. On a recurring basis, the Company measures certain fiff nancial assets and liabia lities at faff ir value, including marketabla e securities and derivative fiff nancial instrumr ents. The Company's Level 1 investments are classififf ed as such because they are valued using quoted market prices or alternative pricing sources with reasonabla e levels of price transparency. The Company's Level 2 investments are classififf ed as such because they are valued using observabla e inputs other than Level 1 quoted prices that are observabla e forff similar assets or liabia lities in active markets, or quoted prices forff the asset or liabia lity, either directly or indirectly, including quoted prices forff identical or similar assets in markets that are not active. The Company's Level 3 liabia lities consisted of contingent purchase consideration related to the two acquisitions that occurred during the fiff scal year 2020. The contingent purchase consideration related to the two acquisitions represented amounts deposited into escrow accounts, which were establa ished to cover damages NetScout may have suffff eff red related to any liabia lities that NetScout did not agree to assume or as a result of the breach of representations and warranties of the sellers as described in the acquisition agreements. The $0.7 million of purchase consideration related to the Gigavation acquisition was paid to the F-19 NetScout Systems, Inc. Notes to Consolidated Financial Statements—(Continued) seller in Februar seller in April 2020. ryrr 2021. The $1.0 million contingent purchase consideration related to the Eastwind acquisition was paid to the The Company's Level 3 assets consisted of contingent consideration related to the divestiturt e of the Company's handheld network test (HNT) tools business in September 2018. The contingent consideration represented potential futff urt e earnout payments to the Company of up to $4.0 million over two years that were contingent on the HNT tools business achieving certain milestones. During the fiff scal years ended March 31, 2022 and 2020, the Company recorded an $0.8 million change in the faff ir value of the contingent consideration, which is included in other income (expense), net within the Company's consolidated statement of operations. The $0.8 million of contingent consideration was paid to the Company as the fiff nal earnout durd ing the fiff scal year ended March 31, 2022. The folff lowing tabla e sets forff th a reconciliation of changes in the faff ir value of the Company’s Level 3 fiff nancial assets forff the fiff scal year ended March 31, 2022 (in thousands): Balance at March 31, 2021 Change in faff ir value of contingent consideration Collection of contingent consideration Balance at March 31, 2022 Contingent Consideration $ $ — 837 (837) — The folff lowing tabla e sets forff th a reconciliation of changes in the faff ir value of the Company’s Level 3 fiff nancial liabia lities forff the fiff scal year ended March 31, 2021 (in thousands): Balance at March 31, 2020 Payments made Balance at March 31, 2021 NOTE 6 – INVENTORIES Contingent Purchase Consideration $ $ (1,748) 1,748 — Inventories are stated at the lower of actuat l cost or net realizabla e value. Cost is determined by using the FIFO method. Inventories consisted of the folff lowing (in thousands): Raw materials Work in process Finished goods Defeff rred costs March 31, 2022 2021 14,779 695 5,761 6,985 28,220 $ $ 13,189 16 6,168 3,440 22,813 $ $ F-20 NetScout Systems, Inc. Notes to Consolidated Financial Statements—(Continued) NOTE 7 – FIXED ASSETS Fixed assets consisted of the folff lowing (in thousands): Furniturt e and fiff xturt es Computer equipment and internal use softff ware Leasehold improvements (1) Demonstration and spare part units Less – accumulated depreciation Estimated Usefuff l Lifeff in Years March 31, 2022 2021 3-7 $ 3-5 up to 12 2-5 $ 9,757 185,177 54,442 18,254 267,630 (226,293) 41,337 $ $ 9,742 177,098 53,980 17,968 258,788 (210,314) 48,474 (1) Leasehold improvements are depreciated over the shorter of the lease term or anticipated usefulff lifeff of the improvement. Depreciiatiion expense was $20.1 million, $22.4 million and $23.4 million forff the fiiff scall yyears e dndedd Marchh 31, 2022, 2021 a dnd 2020, respectiivellyy. NOTE 8 – ACQUISITIONS i GiGG gav atitt on Acquisii itii itt on On Februarr ryrr 5, 2020 (the Gigavation Closing Date), the Company acquired 100% of the common stock of Gigavation ated, a cybersecurity company forff r Incorpor protocols, end point protection and security analytics. The Gigavation technology and engineering talent have been integrated into our service assurance products in order to support the ongoing enhancement of that portfolff $8.0 million. Gigavation's solutions provide security to device communication io. Eastwtt inii d Acquisii itii itt on On April 3, 2019 (the Eastwind Closing Date), the Company completed the acquisition of certain assets and liabia lities of Eastwind forff data leakage. $5.2 million. Eastwind's breach analytics cloud analyzes data to identifyff malicious activity, insider threats and NOTE 9 – GOODWILL & INTANGIBLE ASSETS Goodwill The Company has one reporting unit. Goodwill is tested forff impairment at a reporting unit level at least annually, as of Januaryrr 31, or on an interim basis if an event occurs or circumstances change that would, more likely than not, reduce the faff ir value of the reporting unit below its carryirr ng value. At March 31, 2022 and 2021, the carryirr ng amount of goodwill was $1.7 billion. During fiff scal years 2022 and 2021, the Company's annual impairment tests indicated that goodwill was not impaired. The Company completed its annual goodwill impairment test at Januaryrr 31, 2022, usii gng thhe qualliitatiive ((Step )0) assessment, a dnd thhe Compa yny concll dudedd thhat iit was more lliikkellyy thhan not thhat thhe faff iir vallue of thhe reportii gng iunit exceeddedd iits carryiyirr gng vallue. The change in the carryirr ng amount of goodwill forff the fiff scal year ended March 31, 2022 is due to the impact of forff eign currency translation adjustments related to asset balances that are recorded in currencies other than the U.S. Dollar. F-21 NetScout Systems, Inc. Notes to Consolidated Financial Statements—(Continued) The changes in the carryirr ng amount of goodwill forff the fiff scal years ended March 31, 2022 and 2021 are as folff lows (in thousands): Balance at March 31, 2020 Foreign currency translation impact Balance at March 31, 2021 Foreign currency translation impact Balance at March 31, 2022 Intangible Assets $ $ $ 1,725,680 (8,126) 1,717,554 5,602 1,723,156 The net carryirr ng amounts of intangible assets were $433.4 million and $511.9 million at March 31, 2022 and 2021, respectively. Intangible assets acquired in a business combination are recorded under the acquisition method of accounting at their estimated faff ir values at the date of acquisition. The Company amortizes intangible assets over their estimated usefulff lives. During the fiff rst quarter of fiff scal year 2022, in conjunction with the renewal process of an acquired indefiff nite-lived trade name and the Company's focff us on advancing new product lines, the Company reassessed the estimated economic lifeff of the acquired indefiff nite-lived trade name. As a result, the Company began amortizing the acquired trade name over 8 years. Prior to reclassifyiff ng the acquired trade name to a fiff nite-lived intangible asset, the Company tested the acquired trade name forff impairment and determined the faff ir value of the asset exceeded the carryirr ng value. This change in estimate does not materially impact the Company's income statement. During the fiff scal years ended March 31, 2022 and 2021, the Company acquired $50 thousand and $4.5 million of technology licenses, respectively. These amounts are included within distributor relationships and are being amortizing using the economic benefiff t method over usefulff years. The Company did not acquire any technology licenses during the fiff scal year ended March 31, 2020. lives of between one and four ff Intangible assets include the folff lowing amortizabla e intangible assets at March 31, 2022 (in thousands): Developed technology Customer relationships Distributor relationships and technology licenses Defiff nite-lived trademark and trade name (a) Core technology Non-compete agreements Capia talized softff ware Other Estimated Usefuff l Lifeff in Years Cost Accumulated Amortization 3 - 13 years $ 250,247 $ (224,426) $ 8 - 18 years 1 - 6 years 2 - 9 years 10 years 3 years 3 years 1 - 20 years 769,404 11,408 57,748 7,192 292 3,317 1,208 (384,347) (8,896) (37,944) (7,192) (292) (3,317) (983) Net 25,821 385,057 2,512 19,804 — — — 225 $ 1,100,816 $ (667,397) $ 433,419 (a) The Company's $18.6 million acquired trade name changed frff om indefiff nite-lived during the fiff rst quarter of fiff scal year 2022. F-22 NetScout Systems, Inc. Notes to Consolidated Financial Statements—(Continued) Intangible assets include the indefiff nite lived trade name with a carryirr ng value of $18.6 million and the folff lowing amortizabla e intangible assets at March 31, 2021 (in thousands): Developed technology Customer relationships Distributor relationships and technology licenses Defiff nite-lived trademark and trade name Core technology Net benefiff cial leases Non-compete agreements Capia talized softff ware Other Estimated Usefuff l Lifeff in Years 3 - 13 years $ 8 - 18 years 1 - 6 years 2 - 9 years 10 years 3 - 4 years 3 years 3 years 1 - 20 years $ Cost 252,071 775,898 11,469 39,434 7,192 336 292 3,317 1,208 1,091,217 $ $ Accumulated Amortization (212,688) $ (333,903) (7,829) (31,467) (7,192) (336) (292) (3,281) (963) (597,951) $ Net 39,383 441,995 3,640 7,967 — — — 36 245 493,266 Amortization included as cost of product revenue consists of amortization of developed technology, distributor relationships and technology licenses, core technology and softff ware. Amortization included as operating expense consists of all other intangible assets. The folff March 31, 2022, 2021, and 2020 (in thousands). lowing tabla e provides a summaryrr of amortization expense during the fiff scal years ended Amortization of intangible assets included as: Cost of product revenue Operating expense Years Ended March 31, 2022 2021 2020 14,600 59,761 20,457 61,151 $ 74,361 $ 81,608 $ 26,664 64,525 91,189 The folff lowing is the expected fuff turt e amortization expense at March 31, 2022 forff the fiff scal years ended March 31 (in thousands): 2023 2024 2025 2026 2027 Thereaftff er Total $ $ 66,252 58,019 50,841 46,517 43,634 168,156 433,419 NOTE 10 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES NetScout operates internationally and, in the normal course of business, is exposed to flff uctuat tions in forff eign currency exchange rates. The exposures result frff om costs that are denominated in currencies other than the U.S. Dollar, primarily the Euro, British Pound, Canadian Dollar, and Indian RupeRR forff ecasted cash flff ows forff guidelines through the use of forff ward contracts. The Company enters into forff eign currency exchange contracts to hedge cash flff ow exposures frff om costs that are denominated in currencies other than the U.S. Dollar. These hedges are designated as cash flff ow hedges at inception. e. The Company manages its forff eign cash flff ow risk by hedging operating expenses denominated in forff eign currencies forff up to twelve months, within specififf ed NetScout also periodically enters into forff ward contracts to manage exchange rate risk associated with certain third-party transactions and forff which the Company does not elect hedge accounting treatment as there is no diffff eff rence in the timing of gain or loss recognition on the hedge instrumr ent and the hedged item. F-23 NetScout Systems, Inc. Notes to Consolidated Financial Statements—(Continued) All of the Company's derivative instrumrr ents are utilized forff risk management purpos rr es, and the Company does not use derivatives forff impact earnings on or beforff e maturt speculative trading purpos r ity. es. These contracts will maturt e over the next twelve months and are expected to The notional amounts and faff ir values of derivative instrumr ents in the consolidated balance sheets at March 31, 2022 and 2021 were as folff lows (in thousands): Notional Amounts (a) Prepaid Expenses and Other Current Assets Accrued Other March 31, 2022 March 31, 2021 March 31, 2022 March 31, 2021 March 31, 2022 March 31, 2021 Derivatives Designated as Hedging Instrumrr ents: Forward contracts $ 5,578 $ 11,037 $ 20 $ 57 $ 78 $ 152 Derivatives Not Designated as Hedging Instrumr ents: Forward contracts — 6,373 — 20 $ — 57 $ — 78 $ 39 191 $ (a) Notional amounts represent the gross contract/tt notional amount of the derivatives outstanding. The folff lowing tabla e provides the effff eff ct forff eign exchange forff ward contracts had on other comprehensive income (loss), (OCI) and results of operations during the fiff scal years ended March 31, 2022 and 2021 (in thousands): Forward contracts Gain Recognized in OCI on Derivative (a) March 31, March 31, Loss Reclassififf ed frff om Accumulated OCI into Income (b) March 31, March 31, 2022 2021 Location 2022 2021 $ $ 82 $ 274 Research and development Sales and marketing 82 $ 274 $ $ (26) $ (57) (30) (56) $ (252) (309) (a) The amount represents the change in faff ir value of derivative contracts due to changes in spot rates. (b) The amount represents reclassififf cation frff om other comprehensive income to earnings that occurs when the hedged item affff eff cts earnings. The folff lowing tabla e provides the effff eff ct forff eign exchange forff ward contracts not designated as hedging instrumr ents had on the Company's results of operations during the fiff scal years ended March 31, 2022 and 2021 (in thousands): Gain Recognized in Income (a) March 31, March 31, Location 2022 2021 Forward contracts General and administrative $ $ 141 141 $ $ 115 115 (a) The amount represents the change in faff ir value of derivative contracts due to changes in spot rates. F-24 NetScout Systems, Inc. Notes to Consolidated Financial Statements—(Continued) NOTE 11 – RESTRUCTURING CHARGES During the fiff scal year ended March 31, 2019, the Company implemented a voluntaryrr separation program (VSP) forff employees who met certain requirements to reduce overall headcount. As a result of the related workforff ce reduction, the employees who Company recorded restrucr voluntarily terminated their employment with the Company during fiff scal year 2019. Additional one-time employee-related termination benefiff t charges of $0.1 million were recorded and paid in fulff ing charges totaling $17.2 million related to one-time termination benefiff ts forff l in the fiff scal year ended March 31, 2020. turt During the fiff scal year ended March 31, 2020, the Company appr oved two restrucr tions. During the second quarter of the fiff scal year ended March 31, 2020, as a result of the fiff rst ing charge totaling $0.5 million during the fiff scal year ended March 31, ff departments to better align func workforff ce reduction, the Company recorded a restrucrr 2020. During the four Company recorded a restrucr $0.1 million during the fiff scal year ended March 31, 2021. The one-time employee-related termination benefiff ts forff a appr th quarter of the fiff scal year ended March 31, 2020, as a result of the second workforff ce reduction, the ing charge totaling $2.1 million during the fiff scal year ended March 31, 2020 and an additional l during the fiff scal year ended March 31, 2021. ing plans were paid in fulff ing plans to restrucrr oved restrucr turt e certain the two turt turt turt turt a ff The Company did not appr a ove any restrucr turt ing plans during the fiff scal year ended March 31, 2022. The folff lowing tabla e provides a summaryrr of the activity related to the restrucrr turt ing plans and the related restrucr turt ing liabia lity (in thousands): Balance at March 31, 2019 Restrucr turt ing charges to operations Cash payments Other adjustments Balance at March 31, 2020 Restrucr turt ing charges to operations Cash payments Other adjustments Balance at March 31, 2021 NOTE 12 – LONG-TERM DEBT VSP Q2 FY20 Plan Q4 FY20 Plan Total — $ — $ — $ — 123 (123) — — $ — — — — $ 465 (434) (28) 3 — (3) $ 2,069 (339) (13) 1,717 62 $ 2,657 (896) (41) 1,720 62 (1,860) (1,863) — — $ 81 — $ 81 — $ $ $ On Januaryrr 16, 2018, the Company amended and expanded its existing credit agreement (Amended Credit Agreement), which provided forff to $75.0 million. The commitments under the Amended Credit Agreement were set to expire on Januaryrr 16, 2023, and any outstanding loans were due on that date. a fiff ve-year, $1.0 billion senior secured revolving credit faff cility, including a letter of credit sub-faff cility of up On July 27, 2021, the Company amended and extended the Amended Credit Agreement (Second Amended and Restated Credit Agreement) with a syndicate of lenders by and among: the Company; JPMorgan Chase Bank, N.A. (JPMorgan), as administrative agent and collateral agent; JPMorgan, Wells Fargo Securities, LLC, BofAff Securities Inc., RBC Capia tal Markets, PNC Capia tal Markets LLC and Mizuho Bank, Ltd., as joint lead arrangers and joint bookrunne Bank National Association, Fiftff h Third Bank National Association, Silicon Valley Bank and TD Bank, N.A., as co- documentation agents; and the lenders party thereto. rs; Santander Bank, N.A., U.S. rr The Second Amended and Restated Credit Agreement provides forff a fiff ve-year, $800.0 million senior secured revolving credit faff cility, including a letter of credit sub-faff cility of up to $75.0 million. The Company may elect to use the credit faff cility forff 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. es (including to fiff nance the repurchase of shares of the Company's common stock). The general corpor ate purpos r rr In connection with the Second Amended and Restated Credit Agreement, the Company paid offff the outstanding balance of $350 million under the Amended Credit Agreement on July 27, 2021 by borrowing the same amount under the Second Amended and Restated Credit Agreement. Additionally, the Company recorded a loss on the extinguishment of debt of $0.6 million, representing the write offff of unamortized defeff rred fiff nancing costs, which was included in interest expense in the F-25 NetScout Systems, Inc. Notes to Consolidated Financial Statements—(Continued) consolidated statements of operations forff outstanding under the Second Amended and Restated Credit Agreement. the fiff scal year ended March 31, 2022. At March 31, 2022, $350 million was the interest period selected by the Company, subject to customaryrr provisions regarding succession frff om At the Company's election, revolving loans under the Second Amended and Restated Credit Agreement bear interest at either (a) an Alternate Base Rate per annum equal to the greatest of (1) the Wall Street Journal prime rate; (2) the New York Federal Reserve Bank (NYFRB) rate plus 0.50%, or (3) an adjusted one month LIBO rate plus 1%; or (b) a Term Benchmark Borrowing rate (forff LIBO rate to SOF rate in anticipation of the upcoming discontinuation of the LIBO rate), in each case plus an appl margin. For the period frff om the deliveryrr of the Company's fiff nancial statements forff the Company has delivered fiff nancial statements forff annum forff Term Benchmark Revolving loans and 0.25% per annum forff Alternate Base Rate loans, and thereaftff er the appl margin will varyrr depending on the Company's consolidated gross leverage ratio, ranging frff om 1.00% per annum forff Alternate Base Rate loans and 2.00% per annum forff Term Benchmark Revolving loans if the Company's consolidated gross leverage ratio is greater than 3.50 to 1.00, down to 0.00% per annum forff Alternate Base Rate loans and 1.00% per annum forff Term Benchmark Revolving loans if the Company's consolidated gross leverage ratio is equal to or less than 1.50 to 1.00. the quarter ended December 31, 2021, until icabla e margin will be 1.25% per icabla e the quarter ended March 31, 2022, the appl icabla e a a a The Company's consolidated gross leverage ratio is the ratio of its total funde ff d debt compared to its consolidated EBITDA as defiff ned in the Second Amended and Restated Credit Agreement (adjusted consolidated EBITDA). Adjusted consolidated EBITDA includes certain adjustments, including, without limitation, adjustments relating to extraordinary,rr unusual or non-recurring charges, certain restrucr turt certain pro forff ma adjustments in connection with material acquisitions and dispositions, all as set forff Amended and Restated Credit Agreement. The Company's secured net leverage ratio is the ratio of its Consolidated Total Debt minus the lesser of unrestricted cash and 125% of adjusted consolidated EBITDA compared to its adjusted consolidated EBITDA. The Company’s maximum secured net leverage ratio is 4.00 to 1.00 ing charges, non-cash charges, certain transaction costs and expenses and th in detail in the Second the quarter ended March 31, 2022, the commitment feff e will be 0.20% per annum, and thereaftff er the commitment feff e will on the daily unused amount of the credit faff cility. For the period frff om the deliveryrr of the the quarter ended December 31, 2021, until the Company has delivered fiff nancial statements Commitment feff es will accruer Company's fiff nancial statements forff forff varyrr depending on the Company's consolidated gross leverage ratio, ranging frff om 0.30% per annum if the Company's consolidated gross leverage ratio is greater than 2.75 to 1.00, down to 0.15% per annum if the Company's consolidated gross leverage ratio is equal to or less than 1.50 to 1.00. Letter of credit participation feff es are payabla e to each lender providing the letter of credit sub-faff cility on the amount of such lender's letter of credit exposure, during the period frff om 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 icabla e rate that would be used to determine the date on which such lender ceases to have any letter of credit exposure, at the appl interest rate appl Additionally, the Company will pay a frff onting feff e to each issuing bank in amounts to be agreed to between the Company and a the appl icabla e to Term Benchmark Revolving loans assuming such loans were outstanding during the period. icabla e issuing bank. a a Interest on Alternate Base Rate loans is payabla e at the end of each calendar quarter. Interest on Term Benchmark Revolving loans is payabla e at the end of each interest rate period or at the end of each three-month interval within an interest rate period if the period is longer than three months. The Company may also prepay loans under the Second Amended and Restated Credit Agreement at any time, without penalty, subject to certain notice requirements. The loans and other obligations under the credit faff cility are (a) guaranteed by each of the Company’s wholly-owned material domestic restricted subsidiaries, subject to certain exceptions, and (b) are secured by substantially all of the assets of the Company and the subsidiaryrr guarantors, including a pledge of all the capia tal stock of material subsidiaries held directly by the Borrower and the subsidiaryrr guarantors (which pledge, in the case of any forff eign subsidiary,rr is limited to 65% of the voting stock), subject to certain customaryrr exceptions and limitations. The Second Amended and Restated Credit Agreement generally prohibits any other liens on the assets of the Company and its restricted subsidiaries, subject to certain exceptions as described in the Second Amended and Restated Credit Agreement. The Second Amended and Restated Credit Agreement contains certain covenants appl a restricted subsidiaries, including, without limitation, limitations on additional indebtedness, liens, various funda dividends and distributions, investments (including acquisitions), transactions with affff iff liates, asset sales, including sale- leaseback transactions, speculative hedge agreements, payment of junior fiff nancing, changes in business and other limitations customaryrr in senior secured credit faff cilities. The Second Amended and Restated Credit Agreement requires the Company to maintain a certain consolidated net leverage ratio and removes the previous requirement under the Amended Credit Agreement mental changes, icabla e to the Company and its ff F-26 NetScout Systems, Inc. Notes to Consolidated Financial Statements—(Continued) ly that the Company maintain a minimum consolidated interest coverage ratio. These covenants and limitations are more fulff described in the Second Amended and Restated Credit Agreement. As of March 31, 2022, the Company was in compliance with all covenants, including the specififf ed total consolidated net leverage ratio range of 4.00 to 1.00. The Second Amended and Restated Credit Agreement provides that events of defaff ult will exist in certain circumstances, including faff ilure to make payment of principal or interest on the loans when required, faff ilure to perforff m certain obligations under the Second Amended and Restated Credit Agreement and related documents including a faff ilure to meet the maximum total secured net leverage ratio covenant, defaff ults under certain other indebtedness, certain insolvency events, certain events arising under ERISA, a change of control and certain other events. Upon an event of defaff ult, the administrative agent with the consent of,ff or at the request of,ff the holders of more than 50% in principal amount of the loans and commitments, may terminate the commitments and accelerate the maturt Restated Credit Agreement and the other loan documents. ity of the loans and enforff ce certain other remedies under the Second Amended and The Company had unamortized capia talized debt issuance costs, net of $4.8 million at March 31, 2022, which are being amortized over the lifeff of the revolving credit faff cility. The unamortized capia talized debt issuance costs balance of $1.1 million was included as prepaid expenses and other current assets and a balance of $3.7 million was included as other assets in the Company's consolidated balance sheet at March 31, 2022. NOTE 13 – NET INCOME (LOSS) PER SHARE Calculations of the basic and diluted net income (loss) per share and potential common shares are as folff lows (in thousands, except forff per share data): Numerator: Net income (loss) Denominator: Fiscal Year Ended March 31, 2022 2021 2020 $ 35,874 $ 19,352 $ (2,754) Denominator forff common shares outstanding basic net income (loss) per share - weighted average 74,019 73,103 75,162 Dilutive common equivalent shares: Weighted average restricted stock units and perforff mance-based restricted stock units Denominator forff shares outstanding diluted net income (loss) per share - weighted average Net income (loss) per share: Basic net income (loss) per share Diluted net income (loss) per share 1,065 719 — 75,084 73,822 75,162 $ $ 0.48 0.48 $ $ 0.26 0.26 $ $ (0.04) (0.04) The folff lowing tabla e sets forff th restricted stock units excluded frff om the calculation of diluted net income per share, since their inclusion would be antidilutive (in thousands): Restricted stock units Fiscal Year Ended March 31, 2022 2021 2020 1,222 2,864 675 Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted average number of shares r purpos es of calculating basic earnings per share. Diluted net income (loss) per share is calculated by dividing outstanding during the period. Unvested restricted shares, although legally issued and outstanding, are not considered outstanding forff net income (loss) by the weighted average number of shares outstanding plus the dilutive effff eff ct, if any, of outstanding restricted shares and restricted stock units using the treasuryrr stock method. The calculation of the dilutive effff eff ct of outstanding equity awards under the treasuryrr stock method includes consideration of proceeds frff om the assumed exercise of unrecognized compensation expense. As the Company incurred a net loss in the fiff scal year ended March 31, 2020, all outstanding restricted stock units have an anti-dilutive effff eff ct and are thereforff e excluded frff om the computation of diluted weighted average share outstanding. F-27 NetScout Systems, Inc. Notes to Consolidated Financial Statements—(Continued) NOTE 14 – TREASURYR STOCK On October 24, 2017, the Company’s Board of Directors appr a oved a share repurchase program that enabla es the Company to repurchase up to twenty-fiff ve million shares of its common stock. This program became effff eff ctive once the Company’s previously disclosed twenty million share repurchase program was completed. The Company is not obligated to acquire any specififf c amount of common stock within any particular timefrff ame as a result of this share repurchase program. The Company repurchased 1,330,678 shares forff $35.6 million, 154,271 shares forff $3.3 million, and 7,116,159 shares forff $175.0 million of its common stock under the twenty-fiff ve million share repurchase program during the fiff scal years ended March 31, 2022, 2021 and 2020, respectively. At March 31, 2022, 5,758,482 shares of common stock remained availabla e to be purchased under the current repurchase program. In connection with the vesting and release of the restriction on previously vested shares of restricted stock, the Company $11.9 million related to tax withholding requirements on these restricted stock units during the fiff scal years ended March 31, 2022, repurchased 546,053 shares forff minimum statutt oryrr 2021 and 2020, respectively. These repurchase transactions do not faff ll under the repurchase program described above thereforff e do not reduce the amount that is availabla e forff $13.3 million and 519,241 shares forff repurchase under those programs. $15.7 million, 506,917 shares forff , and a NOTE 15 – STOCK PLANS 2011 Employee Stock Purchase Plan On September 7, 2011, the Company's stockholders appr a oved the 2011 Employee Stock Purchase Plan (the ESPP), under issuance. On November 8, 2018, the Company which 2,500,000 shares of the Company's common stock have been reserved forff increased the number of shares availabla e under the ESPP by an additional 3,000,000 shares. The Company implemented the ESPP on March 1, 2012. Eligible employees may purchase shares of the Company's common stock through regular payroll deductions of up to 20% of their eligible compensation. Under the terms of the offff eff ring under the ESPP, the number of shares of the Company's common stock which a participant could purchase during any purchase period is limited to 2,000. In addition, the faff ir market value of shares purchased by an individual participant in the plan may not exceed $25,000 if the contribution period is within any calendar year. However, if contribution periods overlapa calendar years, an individual participant is eligible to utilize the unused portion of the $25,000 limit frff om the subsequent purchase in the current purchase up to $50,000. Under the ESPP, shares of the Company's common stock may be purchased on the last day of each bi-annual offff eff ring period at 85% of the faff ir market value on the last day of such offff eff ring period. The offff eff ring periods runr September 1 through the last day of Februar 498,415 shares under the ESPP with a weighted average purchase price per share of $29.26. At March 31, 2022, 1,253,398 shares were availabla e forff ryrr of each year. During the fiff scal year ended March 31, 2022, employees purchased frff om March 1 through August 31 and frff om futff urt e issuance under the ESPP. 2019 Equity Incentive Plan On September 12, 2019, the Company's stockholders appr a oved the 2019 Equity Incentive Plan (2019 Plan), which replaced the Company's Amended 2007 Plan. The 2019 Plan permits the granting of incentive and nonstatutt oryrr stock options, stock appr "share-based awards." eciation rights, restricted stock awards, restricted stock unit awards, and other stock awards, collectively refeff rred to as a On September 10, 2020, the Company's stockholders appr a Amended Plan). The amendment increased the number of shares reserved forff year minimum vesting requirement forff the increase or reduction in the number of shares availabla e forff awards granted on or aftff er September 10, 2020, and changed the faff ctor used to calculate issuance under the 2019 Amended Plan. oved an amendment to the 2019 Equity Incentive Plan (2019 issuance by 4,700,000 shares, establa ished a one- The aggregate number of shares availabla e forff issuance under the 2019 Amended Plan will increase by 1.00 share forff each each share: (i) subject to an award granted under the Amended 2007 Plan or 2019 Amended Plan that are not issued because share of common stock returt ned to the 2019 Amended Plan pursuant to a stock option or stock appr forff such award expires or otherwise terminates without all of the shares covered by such award having been issued; (ii) any shares subject to an award under the Amended 2007 Plan or 2019 Amended Plan that are not issued because such award is settled in cash; (iii) any shares issued pursuant to an award granted under the Amended 2007 Plan or 2019 Amended Plan that are forff by the Company to satisfyff restricted stock units, perforff mance stock awards, or other stock awards granted under the Amended 2007 Plan and 2019 Amended Plan by 2.76 forff feff ited back to or repurchased by the Company because of faff ilure to vest; and (iv) any shares that are reacquired or withheld awards that are returt ned to the 2019 Amended Plan prior to September 10, 2020 and by 2.32 shares tax withholding obligations in connection with common stock issued pursuant to restricted stock, eciation right and increase a F-28 NetScout Systems, Inc. eciation right, 2.76 shares forff Notes to Consolidated Financial Statements—(Continued) awards that are returt ned to the 2019 Amended Plan on or aftff er September 10, 2020. Furthermore, the share reserve under forff the 2019 Amended Plan is reduced by one share forff appr a perforff mance stock awards, or other stock awards granted under the 2019 Amended Plan on or aftff er September 12, 2019 but prior to September 10, 2020 and 2.32 shares forff units, perforff mance stock awards, or other stock awards aftff er September 10, 2020. At March 31, 2022, an aggregate of 4,627,934 shares of unvested equity awards were outstanding under the 2019 Amended Plan. each share of common stock issued pursuant to restricted stock, restricted stock units, each share of common stock issued pursuant to a stock option or stock each share of common stock issued pursuant to restricted stock, restricted stock The 2019 Amended Plan is administered by the Compensation Committee of the Board of Directors. The Compensation Committee operates under guidelines establa ished by the Board of Directors. The Compensation Committee has the authority to select the employees and consultants to whom awards are granted (except forff the terms of each award, including the number of shares of common stock subject to the award. directors and executive offff iff cers) and determine Share-based awards generally vest over four ff years. The exercise price of stock options shall not be less than 100% of the faff ir market value of the common stock at the date of grant (110% forff 10% of the voting stock of NetScout). The term of stock options granted cannot exceed seven years (fiff ve years forff stock options granted to holders of more than 10% of the voting stock of NetScout). incentive stock options granted to holders of more than incentive Based on historical experience, the Company assumed an annualized forff independent directors, appr remaining employees during the fiff scal years ended March 31, 2022, 2021 and 2020. awards granted to its senior executives, and appr oximately 2% forff a feff iturt e rate of 0% forff a awards granted to its oximately 5% granted to all Periodically, the Company grants share-based awards to employees, offff iff cers, and directors of the Company and its subsidiaries. During the fiff scal year ended March 31, 2022, the Company granted perforff mance-based restricted stock units to certain executive offff iff cers that vest based upon the Company's total shareholder returt n as compared to the RusRR sell 2000 Index over a three-year period. The perforff mance-based restricted stock units were valued using the Monte Carlo Simulation model. The measurement and recognition of compensation expense is based on estimated faff ir values forff awards made to its employees and directors. Share-based award grants are generally measured at faff ir value on the date of grant based on the number of shares granted and the quoted price of the Company's common stock. Such value is recognized as a cost of revenue or an operating expense over the corresponding vesting period. all share-based payment The folff lowing is a summaryrr of share-based compensation expense including restricted stock units and perforff mance-based restricted stock units granted pursuant to the Company's Amended 2007 Plan, the 2019 Plan, and the 2019 Amended Plan and employee stock purchases made under the Company's 2011 Employee Stock Purchase Plan, as amended, (ESPP), based on estimated faff ir values within the appl icabla e cost and expense lines identififf ed below (in thousands): a Cost of product revenue Cost of service revenue Research and development Sales and marketing General and administrative Fiscal Year Ended March 31, 2022 2021 2020 $ 1,022 $ 1,038 $ 6,020 15,505 19,684 13,843 5,823 16,138 17,328 11,565 $ 56,074 $ 51,892 $ 1,069 5,774 15,511 17,085 11,422 50,861 F-29 NetScout Systems, Inc. Notes to Consolidated Financial Statements—(Continued) Transactions under the Amended 2007, 2019 Plan and 2019 Amended Plan during the fiff scal years ended March 31, 2022, 2021 and 2020 are summarized in the tabla e below. Outstanding – March 31, 2019 Granted Vested Canceled Outstanding – March 31, 2020 Granted Vested Canceled Outstanding – March 31, 2021 Granted Vested Canceled Outstanding – March 31, 2022 Restricted Stock Units Number of Awards 4,210,655 $ 2,062,110 (1,651,284) (347,008) 4,274,473 $ 2,038,681 (1,630,228) (187,313) 4,495,613 $ 2,121,937 (1,728,994) (260,622) 4,627,934 $ Weighted Average Fair Value 30.84 26.32 31.03 29.74 28.68 27.42 28.63 28.28 28.14 29.06 29.04 28.07 28.23 At March 31, 2022, there were 4,779,939 shares of common stock availabla e forff grant under the 2019 Amended Plan. The Company does not currently expect to repurchase shares frff om any source to satisfyff its obligations under the 2019 Amended Plan. The aggregate intrinsic value of stock options exercised and the faff ir value of restricted stock units vested at March 31, 2022, 2021 and 2020 were as folff lows (in thousands): Total faff ir value of restricted stock unit awards vested $ 49,593 $ 42,510 $ 37,783 At March 31, 2022, the total unrecognized compensation cost related to restricted stock unit awards was $95.9 million, which is expected to be amortized over a weighted-average period of 1.3 years. Fiscal Year Ended March 31, 2022 2021 2020 NOTE 16 – PENSION BENEFIT PLANS 401(k) Plan The Company has a defiff ned contribution program forff certain employees that is qualififf ed under Section 401(k) of the Internal Revenue Code of 1986, as amended. The Company matches 50% of the employee's contribution up to 6% of the employee’s salary.rr NetScout contributions vest at a rate of 25% per year of service. NetScout made matching contributions of the fiff scal years ended March 31, 2022, 2021 and 2020, respectively. $7.1 million, $6.7 million and $6.7 million to the plan forff Defiff ned Benefiff t Pension Plan Certain of the Company's non-U.S. employees participate in certain noncontributoryrr defiff ned benefiff t pension plans. None of the Company's employees in the U.S. participate in any noncontributoryrr defiff ned benefiff t pension plans. In general, these plans are funde anticipated deductibility of the contribution, local practices, market conditions, interest rates and other faff ctors. d based on considerations relating to legal requirements, underlying asset returt ns, the plan's funde d statust ff ff , the F-30 NetScout Systems, Inc. Notes to Consolidated Financial Statements—(Continued) The components of the change in benefiff t obligation of the pension plan is as folff lows (in thousands): Benefiff t obligation, at beginning of year Service cost Interest cost Benefiff ts paid and other Actuat Foreign exchange rate impact Benefiff t obligation, at end of year rial (gain) loss March 31, March 31, 2022 37,586 331 560 (422) (2,761) (2,445) 32,849 $ $ 2021 32,805 333 667 (400) 2,205 1,976 37,586 $ $ The reconciliation of the beginning and ending balances of the faff ir value of the assets of the pension plan is as folff lows (in thousands): Fair value of plan assets, at beginning of year Employer direct benefiff t payments Benefiff ts paid and other Fair value of plan assets, at end of year March 31, March 31, 2022 2021 $ $ — $ 422 (422) — $ — 400 (400) — The folff lowing sets forff th the components of the Company's net periodic pension cost of the noncontributoryrr defiff ned benefiff t pension plans forff the fiff scal years ended March 31, 2022, 2021, and 2020 (in thousands): Service cost Interest cost Net periodic pension cost Fiscal Year Ended March 31, 2022 2021 2020 $ $ 331 560 891 $ $ 333 667 1,000 $ $ 341 603 944 Weighted average assumptions used to determine net periodic pension cost at date of measurement: Discount rate Rate of compensation increase March 31, 2022 March 31, 2021 March 31, 2020 2.20 % 3.00 % 1.60 % 3.00 % 1.90 % 3.00 % As of March 31, 2022, unrecognized actuat rial gains and losses are calculated as the diffff eff rence between the actuat rial gain of $2.8 million ($1.9 million, net of tax) which have not yet been recognized in net periodic pension cost are included in accumulated other comprehensive income (loss). The unrecognized actuat the value of the plan assets less accruer d pension costs. None of this amount is expected to be recognized in net periodic pension costs during the fiff scal year ending March 31, 2022. No plan assets are expected to be returt ned to the Company during the fiff scal year ending March 31, 2022. rially determined projected benefiff t obligation and F-31 NetScout Systems, Inc. Notes to Consolidated Financial Statements—(Continued) Expected Contributions During the fiff scal year ended March 31, 2022, the Company contributed $422 thousand to its defiff ned benefiff t pension plan. opriate, expected to be paid by the plan lowing sets forff th benefiff t payments, which reflff ect expected futff urt e service, as appr a The folff in the periods indicated (in thousands): 2023 2024 2025 2026 2027 2028 - 2032 $ $ $ $ $ $ 520 570 677 776 882 5,842 NOTE 17 – INCOME TAXES Income beforff e income tax expense consisted of the folff lowing (in thousands): Domestic Foreign Fiscal Year Ended March 31, 2022 2021 2020 $ $ 27,690 15,202 42,892 $ $ 4,985 17,319 22,304 $ $ (1,502) 3,426 1,924 The components of the income tax expense (benefiff t) are as folff lows (in thousands): Current income tax expense: Federal State Foreign Defeff rred income tax benefiff t: Federal State Foreign Fiscal Year Ended March 31, 2022 2021 2020 $ 7,240 $ 14,701 $ 2,897 9,343 19,480 (7,240) (3,406) (1,816) (12,462) 2,426 9,902 27,029 (18,190) (3,404) (2,483) (24,077) $ 7,018 $ 2,952 $ 2,817 1,850 9,712 14,379 (5,287) (2,897) (1,517) (9,701) 4,678 F-32 NetScout Systems, Inc. Notes to Consolidated Financial Statements—(Continued) The income tax expense (benefiff t) computed using the U.S. statutt oryrr feff deral income tax rate diffff eff rs frff om NetScout's effff eff ctive tax rate primarily due to the folff lowing: U.S. statutt oryrr feff deral income tax rate State taxes, net of feff deral tax effff eff ct U.S. feff deral and state research and development tax credits Effff eff ct of forff eign operations Meals and entertainment Change in valuation allowance Internal restrucr turt ing charges Stock compensation Global intangible low taxed income Foreign derived intangible income Base erosion and anti-abus a e act Foreign withholding Other permanent diffff eff rences Fiscal Year Ended March 31, 2022 2021 2020 21.0 % 21.0 % 21.0 % 1.1 (11.9) 6.3 0.2 5.1 — 2.0 (0.1) (12.6) — 5.2 0.1 2.4 (23.7) (4.5) 0.8 24.0 — 5.1 0.8 (24.5) — 13.8 (2.0) (52.9) (226.4) 46.8 44.6 250.0 196.5 172.7 8.4 (144.3) (322.8) 222.5 27.0 16.4 % 13.2 % 243.1 % Certain amounts in the tabla e above conforff m to the current period presentation. a forff the fiff scal years ended March 31, 2021 and 2020 have been reclassififf ed to The components of net defeff rred tax assets and liabia lities are as folff lows (in thousands): Defeff rred tax assets: Accruer d expenses Defeff rred revenue Reserves Pension and other retiree benefiff ts Net operating loss carryfrr orff wards Tax credit carryfrr orff wards Share-based compensation Operating lease liabia lity Other defeff rred tax assets Total gross defeff rred tax assets Valuation allowance Net defeff rred tax assets Defeff rred tax liabia lities: Intangible assets Operating lease right-of-ff use asset Depreciation Other defeff rred tax liabia lities Total defeff rred tax liabia lities F-33 iscal Year Ended March 31, 2022 2021 $ 8,721 $ 17,267 3,106 4,903 11,611 21,132 6,172 15,639 658 89,209 (13,160) 76,049 8,480 17,648 2,898 6,160 11,526 19,432 5,397 17,333 2,116 90,990 (11,406) 79,584 (117,839) (132,635) (13,189) (6,612) (10,425) $ (72,016) $ (14,474) (7,818) (8,848) (84,191) NetScout Systems, Inc. Notes to Consolidated Financial Statements—(Continued) Defeff rred tax assets and liabia lities are recognized based on the anticipated futff urt e tax consequences, attributabla e to diffff eff rences between fiff nancial statement carryirr ng amounts of assets and liabia lities and their respective tax bases. Defeff rred tax assets and liabia lities are measured using enacted tax rates in effff eff ct forff The Company evaluates the recoverabia lity of defeff rred tax assets by considering all positive and negative evidence. The Company weighs objective and verififf abla e evidence more heavily in this analysis. In situat that it does not have suffff iff cient objective and verififf abla e evidence to support the realizabia lity of the asset it creates a valuation allowance against it. As a result, the Company establa ished a valuation allowance of $11.4 million as of March 31, 2021 and $13.2 million as of March 31, 2022, representing an increase of $1.8 million. The increase in the valuation allowance as of March 31, 2022, as compared to March 31, 2021, is primarily due to defeff rred tax assets related to U.S. forff eign tax credits that the Company believes are not more likely than not to be realized. If it is later determined the Company is abla e to use all or a portion of the defeff rred tax assets forff which a valuation allowance has been establa ished, then the Company may be required to recognize these defeff rred tax assets as a tax benefiff t recorded in the period such determination is made. the year in which the diffff eff rences are expected to reverse. tions where the Company concludes At March 31, 2022, the Company had U.S. feff deral net operating loss carryrr forff wards of $7 million and state net operating loss carryfrr orff wards of $54 million that are subject to expire at various dates beginning in 2025 and 2028, respectively. At March 31, 2022, the Company also had U.S. forff eign tax credit carryfrr orff wards and state tax credits of $5 million and $9 million that are subject to expire at various dates beginning 2029 and 2030, respectively. At March 31, 2022, the Company had forff eign net operating loss carryfrr orff wards of $42 million and forff eign tax credit carryfrr orff wards of $7 million, respectively. The maja ority of forff eign net operating losses and forff eign tax credits have no expiration dates. As of March 31, 2022, the Company does not expect any U.S. feff deral and state net operating losses or research and development tax credits to go unutilized. The Company fiff les U.S. feff deral tax returt ns and fiff les returt ns in various state, local and forff eign jurisdictions. With respect tax years to the U.S. feff deral and primaryrr beforff e 2017, although carryfrr orff ward attributes that were generated prior to 2017 may still be adjusted upon examination if they either have been or will be used in a futff urt e period. The Company also receives inquiries frff om various tax jurisdictions during the year, and some of those inquiries may include an audit of tax returt ns previously fiff led. In the normal course of business, NetScout and its subsidiaries are examined by various taxing authorities, including the IRS in the United States. jurisdictions, the Company is no longer subject to examinations by tax authorities forff A reconciliation of the beginning and ending amount of gross unrecognized tax benefiff ts, excluding interest and penalties, forff the fiff scal years ended March 31, 2022, 2021 and 2020 is as folff lows (in thousands): Balance at April 1, Additions based on tax positions related to the current year Reductions of prior years tax positions due to lapsa e of statutt e of limitations Balance at March 31, Fiscal Year Ended March 31, 2022 2021 2020 $ $ 913 $ 1,151 $ 28 (303) 48 (286) 638 $ 913 $ 1,314 49 (212) 1,151 The Company is unabla e to make a reliabla e estimate when cash settlement, if any, will occur with a tax authority as the timing of examinations and ultimate resolution of those examinations is uncertain. All of the unrecognized tax benefiff ts would affff eff ct the effff eff ctive tax rate if recognized. The Company includes interest and penalties accruerr d in the consolidated fiff nancial statements as a component of the tax provision. The interest and penalties are immaterial to the provision. Over the next twelve months, previously unrecognized tax benefiff ts primarily due to the lapsa e of statutt e of limitations will be immaterial. The Company continues to assert that certain historical book over tax outside basis diffff eff rences primarily related to unremitted forff eign earnings are permanently reinvested. The Company's intent is to only make distributions frff om its forff eign subsidiaries in the futff urt e when they can be made at no or an immaterial net tax cost. Unremitted forff eign earnings total appr a they were distributed which would primarily consist of forff eign withholding taxes. oximately $141 million. The Company does not expect taxes related to the unremitted forff eign earnings to be material if NOTE 18 – LEASES The Company determines if an arrangement is a lease at inception. Right-of-ff use (ROU) assets represent the Company's right to use an underlying asset forff obligation to make lease payments over the lease term. The Company's policy is to combine lease and non-lease components l the duration of the lease term. Lease liabia lities represent the Company's contractuat F-34 NetScout Systems, Inc. Notes to Consolidated Financial Statements—(Continued) and to not recognize ROU assets and lease liabia lities forff are classififf ed as short-term leases. ROU assets are recorded and recognized at commencement forff plus initial direct costs incurred less lease incentives received. Lease liabia lities are recorded at the present value of futff urt e lease payments over the lease term at commencement. The discount rate used is generally the Company's estimated incremental borrowing rate unless the lessor's implicit rate is readily determinabla e. Incremental borrowing rates are calculated periodically to estimate the rate the Company would pay to borrow the funds term. Lease expenses relating to operating leases are recognized on a straight-line basis over the lease term. short-term leases. Leases with an initial term of twelve months or less to obtain an asset of similar value over a similar the lease liabia lity amount, necessaryrr ff The Company has operating leases forff administrative, research and development, sales and marketing and manufaff cturt faff cilities and equipment under various non-cancelabla e lease agreements. The Company's leases have remaining lease terms ranging frff om 1 year to 9 years. The Company's lease terms may include options to extend or terminate the lease where it is reasonabla y certain that the Company will exercise those options. The Company considers several economic faff ctors when making this determination, including but not limited to, the signififf cance of leasehold improvements incurred in the offiff ce space, the diffff iff culty in replacing the asset, underlying contractuat The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. l obligations, or specififf c characteristics unique to a particular lease. ing The Company has an obligation to returt n certain leased faff cilities to their original condition at the end of the respective lease term. These obligations were not material to the Company's fiff nancial statements forff all years presented. Most of the Company's lease agreements contain variabla e payments, primarily forff common area maintenance (CAM), which are expensed as incurred and not included in the measurement of the ROU assets and lease liabia lities. The components of operating lease cost forff the fiff scal years ended March 31, 2022 and 2021 were as folff lows (in thousands): Lease cost under long-term operating leases Lease cost under short-term operating leases Variabla e lease cost under short-term and long-term operating leases Total operating lease cost Fiscal Year Ended March 31, 2022 2021 $ $ 12,817 $ 4,127 3,523 20,467 $ 13,092 3,678 3,800 20,570 The tabla e below presents supplemental cash flff ow inforff mation related to leases during the fiff scal years ended March 31, 2022 and 2021 (in thousands): Right-of-ff use assets obtained in exchange forff new operating lease liabia lities $ 4,002 $ 2,492 Fiscal Year Ended March 31, 2022 2021 At March 31, 2022 and 2021, the weighted average remaining lease term in years and weighted average discount rate were as folff lows: Weighted average remaining lease term in years - operating leases Weighted average discount rate - operating leases March 31, 2022 March 31, 2021 6.98 4.0 % 7.70 4.1 % F-35 NetScout Systems, Inc. Notes to Consolidated Financial Statements—(Continued) Futurt e minimum payments under non-cancellabla e leases at March 31, 2022 are as folff lows (in thousands): Year Ending March 31, 2023 2024 2025 2026 2027 Thereaftff er Total lease payments Less imputed interest Present value of lease liabia lities $ $ $ 12,789 11,635 11,038 9,666 7,408 22,406 74,942 (9,604) 65,338 NOTE 19 – COMMITMENTS AND CONTINGENCIES Legal From time to time, NetScout is subject to legal proceedings and claims in the ordinaryrr course of business. 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 effff eff ct on the Compa yny's fiiff nanciiall c di onditiion, res lults of operatiions or cashh fllff ows. As previously disclosed, in March 2016, Packet Intelligence LLC (Packet Intelligence or Plaintiffff )ff fiff led a Complaint rr r indicated that pre-suit damages and $2,250,000 forff the Eastern District of Texas asserting fiff nding. The judgment also awarded pre- and post- ng royalty. In September 2018, the Court entered judgment and ng royalty on the G10 and GeoBlade products until the expiration of the patents at issue, the last against NetScout and two subsidiaryrr entities in the United States District Court forff infrff ingement of fiff ve United States patents. Plaintiffff 'ff s Complaint alleged that legacy Tektronix GeoProbe products, including the G10 and GeoBlade products, infrff inged these patents. NetScout fiff led an Answer denying Plaintiffff 'ff s allegations and asserting that Plaintiffff 'ff s patents were, among other things, invalid, not infrff inged, and unenforff ceabla e due to inequitabla e conduct. In October trial was held to address the parties' claims and counterclaims regarding infrff ingement of three patents by the G10 2017, a juryrr rendered a verdict fiff nding in faff vor of the Plaintiffff and GeoBlade products, invalidity of these patents, and damages. The juryrr and that Plaintiffff was entitled to $3,500,000 forff post-suit damages. The juryrr the awarded damages amounts were intended to reflff ect a runni "enhanced" the juryrr verdict in the amount of $2.8 million as a result of a juryrr judgment interest, and a runni date being June 2022. Following the entryrr of fiff nal judgment, NetScout appe Federal Circuit (Federal Circuit) issued a decision vacating the $3,500,000 pre-suit damages award, affff iff rming the $2,250,000 post-suit damages award, and remanding to the district court to determine what, if any, enhancement should be awarded. In March 2021, NetScout fiff led a petition forff denied, challenging, among other issues, the basis forff enhanced damages and the patentabia lity of the claimed technology. 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. Aftff er the PTAB decisions were issued, NetScout moved, among other things, to dismiss the case and enter judgment in its faff vor on the grounds that the PTAB decisions invalidating the asserted claims precluded Plaintiffff frff om continuing to assert its patent infrff ingement causes of action and frff om seeking damages frff om NetScout. The District Court recently denied NetScout’s motion with respect to its request to dismiss the case and enter judgment in its faff vor, but in response to alternative requests forff requested by NetScout, vacated $1.7 million of the "enhanced" juryrr verdict amount of $2.8 million and also lowered the ongoing royalty rate on the G10 and GeoBlade products. The District Court entered an amended fiff nal judgment awarding Plaintiffff $2.25 million in post-suit damages, $1.1 million in enhanced damages, pre- and post-j- udgment interest, and a runni ng royalty on the G10 and GeoBlade products until the expiration of the patents at issue, the last expiration date being June 2022. NetScout has time remaining with respect to its right to appe current circumstances, and if the post-suit and enhanced damages award along with the associated interest and royalties survives the recent PTAB invalidation decisions and any appe a writ of certiorari to the United States Supreme Court, which was subsequently al frff om the entryrr of the amended fiff nal judgment. In view of the al NetScout may take, NetScout has concluded that the risk of aled, and in July 2020, the Court of Appeals forff relief the a a a r F-36 Notes to Consolidated Financial Statements—(Continued) loss associated with such damages award remains "probabla e" in accounting terms, and that the risk of loss associated with pre- suit damages is remote. NetScout Systems, Inc. Unconditional Purchase Obligations At March 31, 2022, the Company had unconditional purchase obligations of $74.1 million, which represent estimated products and services used in the normal course of open purchase orders to purchase inventoryrr as well as commitments forff business. NOTE 20 – SEGMENT AND GEOGRARR PHIC INFORMATION The Company manages its business in the folff lowing geographi world. The Company's policies mandate compliance with economic sanctions and export controls. The Company reports revenues and income under one reportabla e segment. c areas: United States, Europe, Asia and the rest of the a Total revenue by geographya is as folff lows (in thousands): United States Europe Asia Rest of the world Fiscal Year Ended March 31, 2022 2021 2020 $ 501,043 $ 484,129 $ 165,190 64,968 124,374 160,372 56,562 130,219 $ 855,575 $ 831,282 $ 545,620 154,510 59,939 131,751 891,820 The United States revenue includes sales to resellers in the United States. These resellers fulff fiff ll customer orders and may subsequently ship the Company's products to international locations. Further, the Company determines the geographya sales aftff er considering where the contract originated. A maja ority of revenue attributabla e to locations outside of the United States is a result of export sales. Substantially all of the Company's identififf abla e assets are located in the United States. of its NOTE 21 – SUBSEQUENT EVENTS On May 3, 2022, the Company’s Board of Directors appr a oved a new share repurchase program that will enabla e the Company to repurchase up to twenty-fiff ve million shares of its common stock. This new program will become effff eff ctive once the Company’s existing twenty-fiff ve million share repurchase program that was appr March 31, 2022, there were 5,758,482 shares availabla e forff acquire shares in open market transactions that may use a 10b5-1 plan, and may also repurchase shares via accelerated share repurchase program (ASR), tender offff eff rs, privately negotiated transactions or by other means. Repurchases under this new program will be funde Company is not obligated to acquire any specififf c amount of common stock within any particular timefrff ame as a result of its new share repurchase program. The timing and amount of futff urt e repurchase activity under the new program will depend on market conditions, corpor suspended or terminated at any time by the Board. d frff om one or a combination of existing cash balances, futff urt e frff ee cash flff ow and indebtedness. The repurchase under the existing program. The Company plans to ate considerations, debt agreements, and regulatoryrr requirements. The new program may be modififf ed, oved October 24, 2017 is completed. As of a ff rr On May 3, 2022, the Company's Board of Directors authorized an accelerated share repurchase program (ASR Program) to repurchase an aggregate of up to $150 million of the Company's common stock under the Company's existing twenty-fiff ve million share repurchase program appr million share repurchase program appr agreements with Mizuho Markets Americas LLC and Wells Fargo Bank, National Association (the Dealers) to repurchase an aggregate of $150 million of the Company's common stock via the ASR Program. oved on October 24, 2017 (until such program was completed) and the new twenty-fiff ve oved on May 3, 2022. On May 9, 2022, the Company announced that it entered into a a On May 9, 2022, the Company repaid $150.0 million of borrowings under the Second Amended and Restated Credit Agreement. In May of 2022, the Company received the District Court's rulr matter. The Company accruerr d an additional $1.1 million related to that rulr 5, 2022 as the amount became probabla e and estimabla e. ing regarding enhanced damages forff the Packet Intelligence ing aftff er the issuance of its earnings release on May F-37 NetScout Systems, Inc. Schedule II—Valuation and Qualifyiff ng Accounts (in thousands) Fiscal year ended March 31, 2020 Allowance forff credit losses Defeff rred tax asset valuation allowance Fiscal year ended March 31, 2021 Allowance forff credit losses Defeff rred tax asset valuation allowance Fiscal year ended March 31, 2022 Allowance forff Defeff rred tax asset valuation allowance credit losses Balance at Beginning of Fiscal Year Additions Resulting in Charges to Operations Charges to Other Accounts Deductions Due to Write- Offff sff Balance at End of Fiscal Year $ $ $ $ $ $ 1,583 835 1,350 5,641 416 11,406 $ $ $ $ $ $ 1,450 4,806 48 5,765 1,963 1,720 $ $ $ $ $ $ (1,202) — (733) — (25) — $ $ $ $ $ $ (481) $ — $ 1,350 5,641 (249) $ 416 — $ 11,406 (705) $ — $ 1,649 13,126 S-1 Joseph G. Hadzima, Jr. (cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:76)(cid:81)(cid:74)(cid:3)(cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85) Main Street Partners, LLC (cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:605)(cid:70)(cid:72)(cid:85)(cid:86) Anil K. Singhal Chairman of the Board, Co-Founder, (cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:909)(cid:70)(cid:72)(cid:85) Christopher Perretta (cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:44)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71) (cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:50)(cid:909)(cid:70)(cid:72)(cid:85)(cid:3)(cid:11)(cid:53)(cid:72)(cid:87)(cid:76)(cid:85)(cid:72)(cid:71)(cid:12) (cid:48)(cid:56)(cid:41)(cid:42)(cid:3)(cid:36)(cid:80)(cid:72)(cid:85)(cid:76)(cid:70)(cid:68)(cid:86)(cid:3)(cid:43)(cid:82)(cid:79)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81) Michael Szabados Vice Chairman of the Board (cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:50)(cid:909)(cid:70)(cid:72)(cid:85)(cid:3) Susan L. Spradley (cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:909)(cid:70)(cid:72)(cid:85) (cid:48)(cid:82)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:79)(cid:79)(cid:76)(cid:74)(cid:72)(cid:81)(cid:70)(cid:72)(cid:15)(cid:3)(cid:44)(cid:81)(cid:70)(cid:17) Vivian Vitale Principal Vivian Vitale Consulting, LLC Jean Bua Executive Vice President, (cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:50)(cid:909)(cid:70)(cid:72)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:55)(cid:85)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:85) John W. Downing Executive Vice President, Worldwide Sales Operations Corporate Information Board of Directors Anil K. Singhal Chairman of the Board, Co-Founder, (cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:909)(cid:70)(cid:72)(cid:85) (cid:49)(cid:40)(cid:55)(cid:54)(cid:38)(cid:50)(cid:56)(cid:55)(cid:3)(cid:54)(cid:60)(cid:54)(cid:55)(cid:40)(cid:48)(cid:54)(cid:15)(cid:3)(cid:44)(cid:49)(cid:38)(cid:17) Michael Szabados Vice Chairman of the Board (cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:50)(cid:909)(cid:70)(cid:72)(cid:85) (cid:49)(cid:40)(cid:55)(cid:54)(cid:38)(cid:50)(cid:56)(cid:55)(cid:3)(cid:54)(cid:60)(cid:54)(cid:55)(cid:40)(cid:48)(cid:54)(cid:15)(cid:3)(cid:44)(cid:49)(cid:38)(cid:17) Robert E. Donahue President and (cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:909)(cid:70)(cid:72)(cid:85)(cid:3)(cid:11)(cid:53)(cid:72)(cid:87)(cid:76)(cid:85)(cid:72)(cid:71)(cid:12) (cid:36)(cid:88)(cid:87)(cid:75)(cid:82)(cid:85)(cid:76)(cid:93)(cid:72)(cid:17)(cid:81)(cid:72)(cid:87)(cid:3)(cid:43)(cid:82)(cid:79)(cid:71)(cid:76)(cid:81)(cid:74)(cid:86)(cid:15)(cid:3)(cid:44)(cid:81)(cid:70)(cid:17) John R. Egan Managing Partner (cid:40)(cid:74)(cid:68)(cid:81)(cid:16)(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:71)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:15)(cid:3)(cid:47)(cid:17)(cid:51)(cid:17) Alfred Grasso President and (cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:909)(cid:70)(cid:72)(cid:85)(cid:3)(cid:11)(cid:53)(cid:72)(cid:87)(cid:76)(cid:85)(cid:72)(cid:71)(cid:12) The Mitre Corporation Corporate Headquarters (cid:49)(cid:40)(cid:55)(cid:54)(cid:38)(cid:50)(cid:56)(cid:55)(cid:3)(cid:54)(cid:60)(cid:54)(cid:55)(cid:40)(cid:48)(cid:54)(cid:15)(cid:3)(cid:44)(cid:49)(cid:38)(cid:17) 310 Littleton Road Westford, MA 01886 (cid:55)(cid:72)(cid:79)(cid:72)(cid:83)(cid:75)(cid:82)(cid:81)(cid:72)(cid:29)(cid:3)(cid:11)(cid:28)(cid:26)(cid:27)(cid:12)(cid:3)(cid:25)(cid:20)(cid:23)(cid:16)(cid:23)(cid:19)(cid:19)(cid:19) 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(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:40)(cid:91)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3) (cid:68)(cid:87)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:54)(cid:40)(cid:38)(cid:518)(cid:86)(cid:3) (cid:90)(cid:72)(cid:69)(cid:86)(cid:76)(cid:87)(cid:72)(cid:15) (cid:90)(cid:90)(cid:90)(cid:17)(cid:86)(cid:72)(cid:70)(cid:17)(cid:74)(cid:82)(cid:89)(cid:15)(cid:3)(cid:82)(cid:85)(cid:3)(cid:69)(cid:92)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:68)(cid:70)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:49)(cid:40)(cid:55)(cid:54)(cid:38)(cid:50)(cid:56)(cid:55)(cid:3)(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:82)(cid:85)(cid:3)(cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86) (cid:82)(cid:85)(cid:3)(cid:69)(cid:92)(cid:3)(cid:89)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:82)(cid:85)(cid:3)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:86)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:518)(cid:86) (cid:90)(cid:72)(cid:69)(cid:86)(cid:76)(cid:87)(cid:72)(cid:15)(cid:3)(cid:90)(cid:90)(cid:90)(cid:17)(cid:81)(cid:72)(cid:87)(cid:86)(cid:70)(cid:82)(cid:88)(cid:87)(cid:17)(cid:70)(cid:82)(cid:80)(cid:17) Investor Relations (cid:49)(cid:40)(cid:55)(cid:54)(cid:38)(cid:50)(cid:56)(cid:55)(cid:3)(cid:54)(cid:60)(cid:54)(cid:55)(cid:40)(cid:48)(cid:54)(cid:15)(cid:3)(cid:44)(cid:49)(cid:38)(cid:17) 310 Littleton Road Westford, MA 01886 (cid:55)(cid:72)(cid:79)(cid:72)(cid:83)(cid:75)(cid:82)(cid:81)(cid:72)(cid:29)(cid:3)(cid:11)(cid:28)(cid:26)(cid:27)(cid:12)(cid:3)(cid:25)(cid:20)(cid:23)(cid:16)(cid:23)(cid:19)(cid:19)(cid:19) (cid:40)(cid:80)(cid:68)(cid:76)(cid:79)(cid:29)(cid:3)(cid:76)(cid:85)(cid:35)(cid:81)(cid:72)(cid:87)(cid:86)(cid:70)(cid:82)(cid:88)(cid:87)(cid:17)(cid:70)(cid:82)(cid:80) Annual Meeting The Annual Meeting of Stockholders of the Company will be (cid:75)(cid:72)(cid:79)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:58)(cid:72)(cid:71)(cid:81)(cid:72)(cid:86)(cid:71)(cid:68)(cid:92)(cid:15)(cid:3)(cid:36)(cid:88)(cid:74)(cid:88)(cid:86)(cid:87)(cid:3)(cid:21)(cid:23)(cid:15)(cid:3)(cid:21)(cid:19)(cid:21)(cid:21)(cid:3)(cid:68)(cid:87)(cid:3)(cid:20)(cid:19)(cid:29)(cid:19)(cid:19)(cid:3)(cid:68)(cid:17)(cid:80)(cid:17)(cid:3)(cid:40)(cid:55)(cid:17) 310 Littleton Roa d W e s tfo r d , M A 0 1 8 86 (cid:51)(cid:29)(cid:3)(cid:11) (cid:28) (cid:26) (cid:27) (cid:12)(cid:3) (cid:25) (cid:20)(cid:23)(cid:16)(cid:23) (cid:19)(cid:19)(cid:19) (cid:41)(cid:29)(cid:3)(cid:11) (cid:28) (cid:26) (cid:27) (cid:12)(cid:3) (cid:25) (cid:20)(cid:23)(cid:16)(cid:23) (cid:19)(cid:19)(cid:23) n e t s c o u t . c o m (cid:19)(cid:19) (cid:20) (cid:38)(cid:54) (cid:49) (cid:24) (cid:20)(cid:20)(cid:36)

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