NetScout Systems (NTCT) 2 Nov 192020 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to NETSCOUT's Second Quarter Fiscal Year 2020 Results Conference Call. [Operator Instructions].

As a reminder, this call is being recorded.

Tony Piazza, Vice President of Corporate Finance, and his colleagues at NETSCOUT are on the line with us today. [Operator Instructions].

to the call company's like Piazza to now begin to prepared would turn over the Tony I remarks. Please go ahead.

Thank Welcome to XXXX good morning Quarter XX, and the Year September for Conference you, Fiscal Call ended XXXX. NETSCOUT's Operator, Second period everyone.

today and NETSCOUT's President are Chief NETSCOUT's Financial Michael and NETSCOUT's Bua, Singhal, and Officer; Officer. Operating Jean Anil Executive me CEO; Szabados, Joining Chief Vice President

remarks. slide our presentation a There's prepared that accompanies

slides follow the advance the the the our page of section slides can www.netscout.com, commentary. landing accessed prepared and the to Quarterly page. on the financial under at including be within the can remarks webcast You the areas webcast Both our in multiple itself results, website under Results IR viewer and Relations Information in Investor Financial

Slide range as described well any due announcements statements as herein. and no to Form year the slide this subsequent on and Form or are in Today's statements. financial the XXXX, on and differ on facts to strictly that XX, our press plans, such XX-K as historical on Exchange in Report obligation potential which forward-looking will include release actual to may prefaced and could opportunities their and file on and on expect, of such described NETSCOUT forward-looking a key the the this share, and as from These call contained Securities X. will by forward-looking and be respect conference communication with known along cover financial future March market impact topics Commission. anticipate, initiatives words the ended information with factors and statements assumes uncertainties, These XX-Q and assumptions to unknown not update Moving and financial statements are company's uncertainties, business involve product performance. results Reports forward-looking other with risks our materially Quarterly for today's our guidance, results market believe Annual risks, in

Let's turn non-GAAP involve which X, to Slide will metrics.

otherwise detailed in non-GAAP release. solely conference should call and will While isolation and on this both along on from unless accordance slide financial non-GAAP is presentation today's only. discussed The information be providing basis GAAP measures the limitations results, a with as for stated, prepared slide press considered relying be not non-GAAP on rationale for measures with includes These financial those in on this or GAAP. measures a substitute information of today's in

tools performance result sale business, HNT remove which as HNT of comparability purposes. will trends the the of revenue tools organic certain we Additionally, for non-GAAP a provide

metrics earnings appendix with website. of release measures are Reconciliations presentation, all non-GAAP provided the press in slide this today's also are on the they applicable and GAAP our of in

now turn the prepared for will call to I remarks. Anil? Anil over his

for Good joining you and Tony. you, thank everyone, morning, Thank us.

million, recap a for Let's second-quarter on brief share performance solid Slide share corresponding $X.XX. delivered for begin a of we with non-GAAP with quarterly Revenue our quarter. expectations of $XXX.X fiscal XXXX per earnings end revenue the quarter and with our results. both perspective, of the the high exceeding was earnings From X financial year per

force the at on steady our our sales and quarter. go-to-market integration to from started that benefited projects order from provider as beginning pace spending year. as government well large a quarter The funded quarter, previously initiatives, continue last a cable including which as have was were delayed strong great product our our this fiscal perspective, of made a initiatives service approved at we strategic From advance progress

where Mobile using quarters. This a further proposed. a this report that This segment, we cable they their of scope negotiations as for been its deal size noted for broad quarter had Operator, in highlights. to that Virtual to further Michael Service or large completed Slide with deal than customer in the in move operator MVNO, resulted expanding our subscribers' space on Let's we will offering I'm X, Network perspective on In originally expanded expanded and concentrating our this several business some as review his scope larger the earlier, achieving customer Provider on assist this is remarks. are a objectives. in a optimizing experience. integrated happy their transaction platform to elaborate U.S.

tier we incremental on mentioned providers increased radio mobile service second call, which customer to and the an quarter, the modeling project. one last initial of XG. we prepares As order this as received the propagation the size for of scope an placed order earnings Subsequent frequency order, our during from X X-figure customer for our domestic the

portion We quarter as well and as the significant of modeling with for completed the recognition in should fourth expect which visibility are fiscal associated propagation working projects enhances year. second quarter, the fiscal along on revenue of our a our our that half be the the

begin carriers our and XG, we with prepare continue on front. to engage to We this customers are to for see pleased

continue to longer this and beginning believe benefit especially are growth see leading XG some to numerous business computing will accelerate driver in term mainstream, we While as opportunity their we is carriers our ways, that edge initiatives. that a of becomes more

throughout EMEA, service geographies, and their advance Asia-Pac they America see countries networks. international our related we Within Latin continue provider as XG-LTE to emerging opportunities

segment. Enterprise to Turning our

user-approved has orders said that pipeline business of a Federal for waiting within we have been Government funding. our before, As large we have

release from our During this quarter, we of pipeline. of benefited for funds some the

deals orders of completed quarter, completed our remarks. be we during on Michael few orders had will our his other in second third some fiscal quarter. a these were that will these Although in elaborate

segment, Overall, our within and Enterprise transformation customers security digital initiatives. their advance continue to the

most uneven of time, evaluation and takes the world, orders of customer newer these that to technologies Given networks the implementation operates we these complex throughout in some anticipate quarters. our and the the be

these the beyond. second level from to we half and fiscal pattern year during mature, However, this over out benefit as we believe the should expect time projects and the of

opportunities ability them. on capitalize and review to X the Slide to outlook. we seeing about excited our move We to our remain let's are Now

our solid radio projects modeling the quarter, the performance of the that range to the year, Government increasing million the should and view benefit $X.XX reaffirming $X.XX to deals propagation of guidance original in due related our and pipeline in-house $X.XX. are frequency structure to management. to fiscal to million earnings $XXX $X.XX, our the second and range we capital half our original the share was to Federal Given of revenue guidance per range The the $XXX

the I year with look forward you sharing our as to continues. progress

now this turn will Michael to the over point. I call at

with everyone. cable advance company Network In Anil X-figure MVNO, as Virtual to Mobile their Anil, you, expand leading as morning cover. Slide Thank into XX Service good mentioned, a Provider strategy U.S. the space. they the segment, won I an deal will and areas Operator outlines the we

customer their Our ensure key experience customer's differentiator. service to and of availability Mobile help use is order superior In objective and to their quality as a WiFi

from initiative security nGX and and our platform, assist they our DDoS to and platform, nBA Analytics core security Arbor both optimal are our ensuring TMS solutions company-wide our is our Sightline portfolios from software, Experience Customer nPulse services, the our instrumentation and deal products deploying portfolio. and service customer an phase ISNG in includes This flagship Synthetic initial testing of experience. assurance Video the

systems. the we Government. large-scale, first are of arsenal GovCloud is involving and common to from hybrid had AWS offerings, switches, and of ensure of a remediation the cloud role end-to-end with segment, In our and visibility, initially the and X- assurance these mission-critical the deals in a monitoring we monitoring solutions in The factors. of these X-figure theme active software performance environment, new in deal, multiple Federal indispensable and availability form conjunction In phase leveraged initiative we transactions, the this passive predominantly to of of orchestration part services. in the continuous largest assuring in Enterprise low we deals play mandated virtual service including a security entire monitoring In

strong due reputation and on displaced government operations. assurance we with our track technology requirements extensive successes case, their our and the incumbent knowledge our another based of the service internal record In superior our with and to

third uniquely deal, accuracy years strict application, a solution customize leveraged service. to to Finally, we in strength, monitoring to solution our requirement with of which dependable our meet incumbent in own our platform a after a superior the refresh agility helped combined mission-critical many

continue deployment agency in government partnerships. cite recently AWS, going perspective, we the I'm two With a to a GovCloud. of to our our first vStream we large successfully by expand From AWS and completed examples. go-to-market products vnGeniusONE

capabilities inside include agent-based now the with deployment Our combination in deployment both workload separate AWS VPC and traffic-monitoring.

It NETSCOUT interoperable in This assuring NETSCOUT's between solutions. of terms illustrates visibility and to applications technology highlights performance well-architected market importance GovCloud. also of AWS benefits the our of delivering partnership and the to fully AWS in advanced migrating the of

Las in in will re:Invent at Vegas. performance We and assuring the upcoming hybrid security demonstrate applications further environments AWS conference capabilities these of cloud of

Finally, NSX-T, of in deployed visibility Edition the vSTREAM the the invisibly VMware and extending virtual our natively quarter, workload, with be to our VMware, to NSX announced and earlier consistent we for deep troubleshooting security. center cloud in for and availability second and leading visibility for data infrastructure analytics platform the

and remarks, the I to turn now will prepared my over concludes That call Jean.

and good with I year our XXXX along everyone. will Thank and guidance. metrics, key quarter second morning you, Michael, first fiscal review half

unless appendix. this reminder, review with in otherwise all our appear focuses stated, GAAP results presentation our non-GAAP on a results and As the reconciliations

the organic comparisons. which In trends addition, referenced. period applicable of any such removes note tools sale mid-September Regardless, basis, will revenue of tools revenue XXXX, certain in I HNT the HNT business the from the of highlight due to an will I on non-GAAP nature

the first half year our XXXX. XX quarter second for results Slide and fiscal details of

color quarter, remarks. as slightly we Focusing exceeded on revenue performance, which $XXX.X quarterly the end in the our of Anil for million, high the outlined of reported his

X% Second an tools declined after million basis on excluding with year-over-year basis around associated HNT was $X the but approximately a quarter on business. revenue organic flat by

year X/X quarter percentage second-quarter of XXXX the a up XX.X%, over Our fiscal margin over point last same was year. gross

diluted reported prior operating to expenses due operating the of margin $X.XX. with reduced year, headcount. X% of share personnel-related from down primarily were from We Quarterly resulting earnings an profit per XX.X% costs over lower

for the half year. key Turning XX, like the of to trends to Slide first review I'd revenue

revenue X% the the was Provider year revenue customers of X% that removing of revenue. Approximately relatively after Provider For of HNT the business first prior the declined or and total of first first X the Service the grew the the months XX% generated or the remainder half revenue tools last Revenue more was Enterprise. year quarter year. segment XX% fiscal with Customer approximately were of Enterprise was the of by year. the half in the There from no approximately impact divested XXXX, Service with that segment from represented the geography consistent segment,

quarter. cash, and million, $XXX.X Free of cash million marketable which short-term XX details first with since quarter Slide million. balance $XXX.X was free end our in ended a We marketable used securities is sheet cash the $X.X of securities the flow long-term flow. of equivalents, cash highlights quarter the and the decrease

the to flow of back or to anticipate approximately an During anticipated depending we first million over shares the stock X/X the our million our approximately half trading at average In market of quarter, free active million returned $XXX and year, repurchased subject per shareholders. $XX.XX this X.X for in or year, price daily of market, fiscal We our of to the on a considerations. cost we share. conditions $XX.X fiscal common cash be volumes and price continuing of

the share have repurchases, facility. billion our $X million second $XXX $XX repaid during our million debt credit to addition now on quarter, we we and outstanding revolving of In also

end by increase end sheet same last $XX.X year XX days accounts was recap days up of June. in million, and briefly DSOs fiscal days of highlights, The were at XX time year. other To the the receivable balance million XX XXXX, the the since net versus at $XXX.X

year from the compared the the the compared Normalizing in was for subsequent to with this the attributable this, DSO a with prior quarter primarily one to end DSOs large that of the of had of year this quarter the quarter payment the same relatively flat customer second is last as second of quarter paid quarter. timing year.

Slide focus review our non-GAAP Let's my move guidance. on XX for will I guidance. to

the years. year's last consideration we contributed tools HNT business of sold prior should organic it both target fiscal and of remarks, to the $XXX of with continue which year we reminder, to when September a taken the completion the years to $XX the Accordingly, $XXX XXXX, single-digit revenue quarters and impact million Anil's comparing low implies range of As in in million, XXXX sale. especially for the growth. two revenue be first to fiscal the divestiture XXXX XXXX, into Consistent

are from offset of XXXX the modeling initial adoption key gross our currently solutions of a model terms operating frequency cost. where phases improvements other associated margin be propagation higher compared to last by software have on assumptions relatively outlined In slide, fiscal anticipate as to radio this flat year the year, we increased the activities

last we to count, operating merit benefit for in compared plan reduction by from year with Our calls a lower in attributable costs annual costs lower offset head currently increases primarily adjustments. personnel-related as partially

be our range expect tax of the We non-GAAP XX% in rate to XX%. to

anticipate diluted our with shares range mid- delivering to $X.XX The upper management. range to a increasing per capital to earnings earnings Assuming share XX.X outstanding, original structure we was due $X.XX. million growth $X.XX, $X.XX single-digit to to of

like also color I'd third offer to on quarter. some additional the

a impacted the as second completed HNT last by year. million third sale quarter year's tools $XXX.X of As reminder, the last revenue not of business the of quarter in sale was was the

per Diluted currently is to revenue of assess in us, we of the $X.XX. for anticipate the As earnings quarter $X.XX third of million. front million the range timing we range from expected $XXX to opportunities $XXX share to in

formal concludes of financial That our my review results.

to transition we Q&A, Before

that to note listed XX. participation conference I'd our upcoming on is IR like Slide quickly

over the now turn operator to Q&A. I'll the call to start

[Operator from Matt with Instructions]. first take our We'll Hedberg RBC Markets. question Capital

Anil, results congrats on the quarter. this improved

the confidence long-term So the carrier Obviously, a XG. see this in we said that an you pleased this external some perspective, quarter had see a you you're that prepared progressing? are look it's to noted TX order X-figure the guidepost opportunity at you from that prepare here. guess of carriers opportunity. I you your from But what to domestic gives begin you that is also milestones for the when remarks, opportunity

calls previous deployment. a of I XG the opportunity. mentioned findings. longer in as over One couple the months, term or carriers X see last I XG this the time much that a last there So are is And accelerating are new

announced In fact, for XG they're advertising differentiator. TV heavily as and weeks, on last just a T-Mobile the few

in I acceleration announcement think trigger this at I U.S. going to detail which carriers in yesterday, So T-Mobile saw is other

will which local area is outside months, is technology. In used three Federal interesting which of being carriers. very that as during also travels my next a thing, used Second discovered XG trend last about the I in is Government network be

So the known X which X at implication carriers, to least of XG beyond not us will months was be ago. to

the are those trends. So

on so on impact months were the more now we am right XX bullish XX I than XG And last next to year. months

remarks. this security bit more what That's encouraging. portfolio. Very about follow-up, a you in in the And Wonder provide there as if saw great. then commentary quarter a can on Arbor you wasn't ton broader a prepared of your color

announcement So very segments mentioned, are as our really I Threat going be to product. we in X starting soon of with Analytics the

DDoS in security, getting service half is So is other roughly where is that, that's And DDoS with is service assurance was provider. is, part our is half, traditional one half Arbor a roughly flat of And even into area we're year. versus over last area area. though first which the The and business one and enterprise new security, here. a third the

looking Analytics we're small we are announced And just in is work some DDoS. things our is dataset. many addition area Threat on One next look product security NETSCOUT at the also and I we machine broader a the so for had their which in acquired based there to the portfolio, doing when company, learning in year

are a first mostly So overall, impacted last I the behind issues much the been, Arbor has there portion was business international in service of the and think, in we of I assurance. the some of think integration and because which as the half mentioned quarter, than international us, was business bigger

was the So and somewhat impacted those. training by it all

story up. hope But have XX we to areas bigger which make the the just X in we last So but security not other months. over is I invested DDoS, the this think

Street. with Martinuzzi Lake Eric from question next our take We'll

curious. Just

Just the correct, -- digits first it looking year half mid-single a Enterprise had was the business, at side, the tools on if my we math of networking is or the excluding about so. handheld down

your half what then are the second in second have wondering the business And Just question. that expectations for of a year. I

have first may orders, of overall, and source is the integration level, high the and of training mention just half by I'll and timing training some affected additional alignment. So commentary. But Jean it some some in

be and of able flat by Alex, we'll to this think, end Enterprise to make we the up slightly year. in that up So be

you're enough. get soon his Okay. And way, chance by talking the Eric. Alex'll to

Okay, your I okay. saw name.

Sorry.

a Still Okay. question. good

big with U.S. Then their your a with on doing any operator of obviously that you. MVNOs, What MVNO MVNO, large Anil? win other expanding the there the they're American North in those cable work about pipeline, are

one, -- mean, was there different not Well, a they're I we and different and I do very is [indiscernible]. mean, year good this business. last

So because year had year. we the last them Arbor But including they bad bought was deal here a solution. everything, with very big

demand. So a pent-up there was

are we or yes, magnitude. working with close size nothing but the So operators, to other

next Capital We'll with Markets. our KeyBanc question from Alex take Kurtz

span could U.S. Anil, XG understanding the could as ago. So an you intensity you the of sense work from cycle as cycle have dollars far NETSCOUT, be saw I how XG that months a could over relates have X that X potentially was spending of 'XX for when of at for you a And this that fiscal great in And maybe the or during it now a how company. all uptick obviously that it guess see look you you to XG, better time? match maybe the how a

come the a think XG keep thought of but my has because That changed, year. during our this last business not ticking versus affected yes, to in XG -- down which NETSCOUT downward a to remark, year because over XG U.S. spending going time as trend biggest reasonable think know, next as mentioned so, brought operators, the XG. I X I And the has And XG. last in earlier down you trend just what we over years. has certainly possibility from there affected Yes, to is But us spending X months of reasonable X now number for higher for dramatically, that the a I XX number. or by

like a you So on maintenance feel we're baseline XG spend there's base now? at that's where you're domestically, been at -- of kind a of right

basically, maintenance. XG for want actual have, And additional I to the X there case, right us, stuff. using modes think maintenance But from do CUPS also need very it's XG. first Yes, it And to are requires in now. the of get stuff model, mention some that well, deployment nonstandalone buy you And upgrade. are version when dollar different are spending new then to that's you where plan, which we additional additional then soon, spending, to you control you

moving opportunity. as you XG, go then, And everything, the a in pure there big and and to forward, edge new are areas that's

So the lot account. X but the sticking of doesn't at investment of last it's a drive which most in is X, area, more in the in months, shared spending,

in like where domain in We see the Initially market are that's more And that there order and could the area now where there might driven calibration we accelerated the in additional some partly we in of leaders it's some predeployment some by be moving forward, will got. spending. be investment. acceleration

plan mention And understand also of XG, carrier are the the position and we XG, positive of known application. market, in the that [indiscernible] and well at understand unique which relevance a is, and is not enterprise with what's lastly, impact, outside the I XG the we traffic point, this because the

XG off will the house. carrier be outside ready combination space. We if that's are a available of of takes which both And sides the

Our Chad Bennett next Craig-Hallum. question with comes from

order that terms even dollars could sounds it were quarter quarter at contribution $XX happened came least that in from million. Jean, like of last I But this quarter, MVNO you expanded. that large around about from we that this the that So the thinking last quantify quarter? think

was to it it's and, thought that complex going a probably we very single based is roll deal all was visibility. quarters to to of out tell, products can to and their it -- said, you glass as obviously a started to you pane many wanted be deal ago, integration they the of As complete on have amount have their they wanted in be strategy how one able that of

had it some and there. of that mid-single-digit products been then So have they working from, the putting assurance on, deal, time, the say over started our increased in multiple a quarters we service security

to $XX from million So it $XX that. went to and in the it range, expanded then

to that of somewhere million that probably in mid would in but quarter, like more but ship shipped part it thought quarter, the And is between to our that so it that. third around it it interesting in million, be actually a you're actually second portion quarter. $XX -- will there's of was million in, came And second up still probably that $X correct $XX the after went $XX we our lot a the in but million

Okay.

revenue a from that there's this more rec be recognized So standpoint, quarter? of still to order

Federal his with, along Yes, in we that's comments, Government. the of as Anil said from some orders of had true, that some receive the

it. Got

I software-based amount is where software-based a considering then was in where of noted or of it you'll the commentary fair I software-defined product And solutions. this orders the you of were percentage that and a give today, Can you interesting sense terms fed at about us that we in software-defined of you think revenue? Okay. there, be thought you received, are or year they think

what mean I think I -- are, percentage. of have were. the I know don't -- But we some don't assumptions I the that's But

at something. Anil is looking

the from facts. it a with last hardware Chad, last we software-only probably out, the was just enterprise, see also, you QX On quarter And assurance of it mid-single in the in XX% was both of thing, very our 'XX's is year. software that percentage The in digits just FY service only. interesting point appliances significant the as revenue, Let to assurance as you of product revenue. service that started percentage use periods. in a This about enterprise, such about of it to basis is give some consistent me was move for

X/X of our to up However, this went in it of QX almost current revenue. year,

only. enterprise correctly some the other enterprise, pointed fed strategic and out, the larger customers interested are So in as you software of definitely

you standpoint pay-down, buyback think both maybe the then one you, this last deployment debt real for we capital versus How did share appetite which And should a quick. from quarter? Jean, for Interesting.

Sure.

it's debt pay-down this we the going get in I where were a a think -- did structure revolver the what a amounts year in our revolver. just leverage that's you natural as was was gross for down

we leverage were revolver gross our levels debt credit decided in ratios So to the according our manage that facility. to

so of it into capital of business, the repurchase. our And it continue point at has investing better use Share after ROI to back we to the shareholders believe the form debt repurchase is best than share the that give pay-down. a to in this

cash we required will of and capital international domestically, represents well working monitor continue entities of our So working cash internationally to levels your our will some continue as operations. around cash our to minimum to capital due keep the in million, which that as the stays $XXX

the share foreseeable we at program. $XX next our So we'll XX probably least at shares still to over probably share -- could million have continue XX a We're on XX shares we million -- repurchase million repurchase. just as year left future, left million and of outstanding, defined probably about

get we over XX-ish down million few And could next so years. to the

Fish comes question with from Piper Our Jaffray. next Jim

on the you their you, us for verticals? service portfolio color and respective Congrats on Matt's one this current prior from double-clicking more security maybe before. assurance just Can give portfolios around within question the year. Jean,

Sure.

And the enterprise, with with we as however, very to many talked service pattern what network, or have and overall their about, X do provider since basis work to consistent, that For digital probably down the within we figure point complex down move in provider as they talked place. transformation out about they we to the grown mid-teen assurance, the service on so large Arbor, X. transformation, market want -- they digits I the it's a customers a as close and was mid-single uneven tend digital say would towards the year-to-date projects relatively about service be has in And X%. cloud. that maybe

of transformation. some over like that kind with do projects see saw their of lot what we they customers, a years pattern wait-and-see decided now architecture. largest wanted some to last our it ago they a institutions a year, as financial We we with for these of do was And our few had digital people

continue important digital we So very believe transformation will that be us. to to

probably to on that other of again, also that Arbor, the They're prior And the very done pertains a your in some to year-over-year the they enterprise maybe in large the have with that years down mid-teens. financial question. And in speaks part of security basis institutions. the projects

the there, than The Jean. whatnot. for sort the XX% of color back downs. revenue year it. more And the and guide midyear in talked maybe on few kind half guides about just last of And guidance. on we years of in resulted Got that of coming initial Thanks the

XX% And looks looking again, at midpoint the annual the in For based on the quarter. here on my accelerating actually math, implies about based of guide like the of guide. double-digit fourth year, organic half business of in second your your it growth product fiscal the

that to when kind confident of has hit the from deals, you again the quarter you started deals timing? saw a can come this some down larger quarter of some larger of guys this makes besides you the what, this guess benefit remnants I and macro with

much as deals that better we may deals all, federal this, visibility didn't those entering on and provider, half. of have the have we of first and Well, more we is have X-figure color cable to the because second which those mentioned, Jean

So I point in think of we of are last year. slightly ahead terms than view visibility

fact there. I we a because I it's situation many think talent only different feel XX% mean, I and despite of so that much about, few the years in the you're -- are than And past in reasons, talking notwithstanding that better the

have XX%-XX% of company, the the But first in we history range typically this throughout in the been half.

of we So have I moving quarter. similar think into if you domain look additional because at are that, visibility the the in we third

K. with question Liu Kevin our Company. from next We'll take Liu &

similar Just macro-type kind question. of a

sort of you As did of you had macro any you the into expected? delay cycle? the large QX, way sort move as deals you see the that through look the those X-figure-type or at of pipeline did absent kind affected of Or maybe opportunity, coming sale have concerns would

last be any large this have quarter the on it you timing we the didn't previous in of said, will you deal, whenever size. missed macro came the issues. order, was Like is No, deal. we a second early always it the these or But but saw different. of it cable And bigger through, this that in I not see cusp whether only provider quarter quarter, fortunately,

the typically funding. of side, September. driver, federal that approved, we they have projects September the and a in On been demand big year But delayed been in end and clearly, what that's but has do And were pent-up very federal good at there happened. is

may be macro I negative overall, on what's side. We any the effect So trends, the think macro positive. trends see really don't

looking it R&D there That's just it spend, down rate one-time great. that's in sort a your it's if if fairly kind forward? of there And up ticked basis, then But of I anything I'm curious reasonable at going run or of sequential meaningfully. on a just like seemed kind was know year-over-year.

over absorbed the year XX, $XX going When the I the it's to about I full over say Kevin, down million quarter, be I merit to And guess of looked beginning July. probably gave that increase it, think at about QX I'm we probably on in would basis, a 'XX. the that for going year, FY

from Alex is question Kurtz a with Markets. Capital next follow-up KeyBanc Our

here. follow-up quick a taking for Thanks

model. So the a this longer is the company question about and term

that match to but which that. So complete appliance, to approach, is at I their software least moving something buy of that have something of in And cloud of interest from a akin there provider hasn't guys a not a Or that see 'XX to you from their pay-as-you-go, bigger we just models 'XX? maybe in and technology something life been Is how on maybe the now device? moving software your customers? service about considered government to a been wonder away started ask customers from kind that lot is your subscription and have with have customers providers strategic and of and and decision companies lot could that's you

a as I Visibility think and ago. you solution on the I'll interest then can we quarters offering answer a call of Service announce a a go quick of did a few in We future over. with maybe SaaS give time, a

similar demanding. be And of in point from product demand do the now. have we people demand packaging ready sales X customers. high-end there the we're been there'll end been go I has market. tremendous view. and we of But X, all like when think But have not not right But the a a and customers, maybe lower

the And SaaS has also we'll offering, the a But been portion so of VaaS offering. some yes, any revenue at but this reasonable has see not some point, from revenue.

Yes. on offering. to various follow through We mainstream models. -- a various do just have And our factors and And hardware Anil's in products pricing to can subscription X In like in XXX, interested sell comments. were we our customers Fortune model. the think they last years, X or maybe there's I in over X year the Maybe that it X been did for years. subscription X a customers, or form

customers. So of it our we're for seeing not most

in mentioned, might there is in But see uptick Anil As in networks, VaaS would which we an offering, be incremental our targeted offering growth. subscription complex had generally that less towards area. as that

iron whatever some these an out Jean, core you ready service be do how moving subscription that business in it's term we that there in to of see to and deals? they're go better that? at or volatility just a sort it could couldn't like Or create your not provider is, on But the or guys market visibility argument, X-year least to or

models about, I subscription and obviously, visibility mean, right and certainty. you're

have to our customers. it We offered

of to willingness move vast model. point customers have a subscription We seen to at for this to not the majority our want

end be I or enterprise the think they'll lower of think to mid-tier. market I going are use subscription areas don't model.

offline. it discuss can We Okay.

presenters remarks. closing questions. And floor have no there return for appears we I'll our the further to

more time. We us today, Thank remarks day. at the have have no for and nice joining a you

today's conclude And does this program.

may now You disconnect.