Q4 2020 Earnings Call

[noise], ladies and gentlemen, thank you for standing by and welcome to Netscouts fourth quarter and full year 2020 earnings results call.

At this time all parties are in listen only mode until the question and answer portion of the call. As a reminder, this call is being recorded.

Tony Peay also vice President of corporate finance and his colleagues that not SCO, our online with us today.

If you require operator assistance at any time, Please press star zero.

I'd now like to turn the call over to Tony Peay also to begin the company's prepared remarks.

Great. Thank you operator, and good morning, everyone welcome to Netscouts fourth quarter and full fiscal year 2020 conference call for the period ended March 31st 2020, joining me today, our Nielsen call Netscouts, President and CEO, Michael Szabados, Netscouts, Chief operating officer and GE.

Netscouts Executive Vice President and Chief Financial Officer.

There's a slide presentation that accompanies our prepared remarks, you can advance the slides in the webcast you want to follow a commentary.

The slides and the prepared remarks can be accessed in multiple areas within the Investor Relations section of our website at www Dot Netscout dot com, including the IR landing page under financial results the webcast itself and under financial information on a quarterly results page.

Moving onto slide number three today's conference call will include forward looking statements. These statements may be processed by words, such as anticipated elite and expect and will cover a range of topics that are not strictly historical facts, such as financial guidance, our market opportunities and market share.

Business initiatives and future product plans, along with their potential impact on our financial performance.

These forward looking statements involve risks and uncertainties and actual results could differ materially from the forward looking statement statements due to known and unknown risks uncertainties assumptions and other factors, which I described on slide and in today's financial results presentation as well as in the Companys annual report.

On form 10-K for the year ended March 31st 2019, and subsequent quarterly reports on form 10-Q on file with the Securities Exchange Commission Netscout assumes no obligation to update any forward looking information contained in this communication or with respect to the announced its described herein.

Let's turn to slide four which involves non-GAAP metrics.

Well the fall. This slide presentation includes both GAAP and non-GAAP results unless otherwise stated financial information discussed on todays conference call will be on a non-GAAP basis only.

The rationale for providing the non-GAAP measures along with the limitations of relying solely on those measures is detailed on this slide and in todays press press release. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with gap. Additionally, as a result of the sale.

Acknowledgement solutions domain data about leadership position within the industry.

<unk>, let's move on door financially there and then I will provide more insight on or business outlook and the trends D.S. team.

Let's begin on slide number seven.

<unk> recap of what fully are going deeper in the non gab financial results.

For fiscal year 2020.

$892 million and diluted learning, but shared was one dollar then 54 seven cents.

We delivered solid diluted earnings by shared abroad, or 14% on essentially flat organically Avenue, meaning excluding the devastated <unk> business compared with the bride fiscal year.

Avenue in that would work.

<unk> flat and then organic organic bases as well and <unk> and have a negro 1% <unk>, what they call declined by 1.4 0.1, 0.4%.

Doing a fiscal year.

Software only product line grow approximately 35% compared with the right. It software only that when you know the <unk> revenue service by their product revenue was consistent with the with the variety at at approximately 30%.

During the fiscal year, we saw software that it's offered only the avenue and grow to 30 Bucks enough service assurance Enterprise verdict Avenue lock fiscal year. This was only about 10%.

Gardening too slight ache I would like to briefly cover a fourth quarter financial did.

<unk> Avenue was $229.4 million and diluted are neat, but shared was 50 cent.

<unk>, approximately 4% to 8% lower than expected you to disruption from the go read 19 global been damaged, they're but nevertheless, some highlights and Dick what they're such as.

<unk> I've connected with Avenue growth in <unk> sparred by D. doesn't have a government health care and manufacturing customers Michael will comment on some of these deal in his remarks.

We also continued to see the decline and ancelotti product lines, such as look system without a fluke system decline <unk> would have good on approximately viper, sending the court.

Left on the slide nine for somebody marks on the outlook and that ran to the F.C.

Looking forward to our fiscal year 2021 believed that have a unique solutions that yeah. Good the system with Gus loved in dealing with some of that unexpected network and security capacity challenges in new with throughout and after the global brain damage.

Although they may and encourage about the opportunities V.C.. We had also cautiously optimistic given that that uncertainty of the global economy.

Accordingly will therefore, providing fiscal year 2021 guidance until that is greater visibility into the elements, we do not controlled such as the market trends estimate budgeting behavior and their duration and magnitude of that fact sub they'll go read 19 brain damage.

I would like to shared with use some insight.

Interest from a customer remains high powered given the current economic environment timing and funding of deal funding of D.D. of the challenging to predict at this point via already be saved a large eight figure deal from an international service provider.

Also anticipate completing that but I'd years had radio propagation modeling project in the first off of this fiscal year.

Robust functionality and the ability to set solution in many forms we at a premium Barbara many or for the service provider on on the global basis.

Five d. ready and then again support both Standalone and nonstandard of I.D. net flicks, enabling us to support our customers regardless of via they are.

<unk> evolution.

<unk> companies continue to advise the digital transmission and security initiatives as they walked toward recipe that Julie d. and costs.

Made up adventure V.C., the potential for an acceleration of customers digital transformation cloud matched condition and security initiative, given how companies operating and some of the lessons being learned as the deal with named back so the global burned damage.

We have already seen multi below seven figure deals from some of our financial institutions customers in late March and after that.

My colored provide some insight on these these this duty or you might use remarks.

Regarding fight G.V.C. This is not only a service brighter opportunity, but also as an enterprise opportunity.

And and everybody's isn't the government's that focus on leveraging five d. public and private networks.

That businesses with greater opera are dimension and decisions.

Customers are offering new products and services you'd lending utilizing this technology, which are force high speeds and low latency.

Some of the use cases, what this technology out in the manufacturing I didn't matter of fact, getting with automated factories healthcare with Billy Madison Transportation with smart vehicles, and other applications, such as Mark C.D.'s and homes enhance gaming and then the entertainment and National Defense.

We also believe me at a uniquely qualified and position to help <unk> as we had one of the only companies do have a service by just scalability and enterprise functionality.

Finally regarding other I'd I birdied us business, which is part of both of US service by that enterprise vertical.

I believe that this area of the business would benefit and security becomes an even greater focus during that I didn't bring down make as bad actors at them to take advantage of distracted companies.

The new to combine elements <unk> and security technologies to provide enhance capabilities to the customers that level the strength offered offerings.

We believe this combination provides a unique and valuable off putting in the marketplace.

Gardening out towards the cost structure remain committed to improving or operations and maintaining cost controls. So that we should be able to once again provide leverage in a a meetings, but shit. He planned to continue to innovate and invest in our technology and solutions to ensure that we maintain our industry leadership throughout this.

Cases and into the future.

We believe that I was solid balance sheets and financial position for the white.

<unk> liquidity and flexibility net to study the way that these challenging times at this time be also believe with it's prudent to Brazil, Brazil capital and will not him we will not implement that share the purchase program, Florida first fiscal quarter.

Gardening to customize engagement last week, we hosted about annual technology and you. This summit engage which was worse for the first time, there's the allowed out virginity for many more what customers and partners. But then we had to approximately 3500 people register for the rent which was approximately four times.

More than last year.

We see this as an opera Ginny due to increased visibility up what flexible solution.

Including carts.

She'll off the shelf hardware.

Michael elaborate on it but engage you gonna during his remarks.

Finally, I would like to thank all the plus responders, who are working that list. The bulky Basaev. My Fellow Guardian set next got for the commitment and dedication as well as a custom what's at stake holders toward the continued support.

I look forward to look forward to sharing about progress with you during fiscal year 2021.

Out on the call over to Michael Flud. His remarks. Thank you on your good morning, everyone Slide 11 outlines the areas that I've been to cover.

<unk>.

Gives me a good progress <unk>, new and existing customers, a new customer that'd be one <unk> global leading manufacturer and market market to.

You could product was advising that digital transformation initiative, including moving to the cloud the cost of the little was expedia foremost issues and they could not address you should see solutions that are not based on small detail the custom place.

Oh seven figure that order do gained a full complement the for solutions for global visibility to assist in resolving performance.

<unk> Becca these reaching formation solutions.

They are also utilizing God's because he has a service or vast offering to accelerate and optimize the value for solutions that won't see the value for <unk> customers as I said, you drop transformation a minority status.

We didn't the public sector. You you will be also had something like spins, both dumbest domestically and internationally as we continue to assist east customers read the digits off as formation initiatives as well one of the larger cities in the United States decided agreed that education information infrastructure. They placed a low to mid seven figure in order to be the us to do.

State of the auto correlation restaurants and visibility as the foundation of that is your door transformation initiative, while not the initial trigger scaling up remotes learning is also enable by disability.

This is only the start of them <unk> as they have more than 1800 schools to upgrade in the city.

In the international gone that duty I'll be had a mid seven digits.

Digit figure.

I mean.

To provide a system like augmentation and has mental service session on solutions at a large government agency that but I'd be services do all the government agencies of that country.

<unk> devalue for incumbency customers and the ability to provide the M.B. to continue value as the adapt to changes in their operations and Adventist infrastructures.

The service provider vertical.

Dearborn, North American getting yours as they plan that five g. initial deployments during the quarter to be to live deliver and recognized significant portion of revenue from the radio frequency propagation modeling project. If you want earlier into a year from I.D. or more.

North America carrier.

We also continue to vote, who door international categorized as the as not as the networks do for G.L.D. and in some cases five g.

Finally, I want to provide some insight into some of the activity. We have these have you seen related to the movies 19 grow bullpen dummy.

<unk> Oh, good late in the end of holder, while others in early April on the enterprise phones, we have started to see some orders from our large financial institution cost.

Late March and April as the enhance both that'd be stability and security solutions by all getting that infrastructure and adding details capacity to manage higher traffic demands on the N.S. books, and L.I.B. that security needs.

You know so peaceful at a good call we have seen interesting Albany, new technology, and indeed us capacity reading that infrastructures one European category. Please low seven figure in order to opportunities that medication infrastructure do the latest technology in one of the major countries <unk>.

<unk>.

Capacity as as traffic spike at roughly independently more people can be mostly.

In terms of golf go to Mark It as I only last last week, we hosted or virtual annual technology and use and use it for them engage event has been an overwhelming success be a record interest as approximately 3500 people would I just there's there's approximately nine on the last.

Yeah.

Representing more than 1000 organisation around a little.

Registrants represents a service will either enterprising governments booty calls as well as representation from our various partners.

Event attract a strong <unk> representation that more than half or <unk> being internationally based.

We also noted northeast abroad airy of functions as any event architects application developers and development and security operations represented in addition, genetic engineering and operations.

In any event B. showcases or solutions that S. is costing <unk> formation security business ethics and five.

She has is that on all and more physical given the recent global crisis.

In addition to the three days of standing call presentations.

Virtual hands on training sessions covering at approximately 30 different subjects.

Delivery of these sessions do our customers are over a duty for a grand total more than 4000 seats.

Our plans to continue to leverage afford them like this <unk> engagement with existing and perspective.

<unk>.

I don't want to sharing additional use of our success you know go to market initiatives and our customers.

2020 that concludes my free but the marks and that you know not to them to call over the gene.

Thank you Michael.

One.

Key metrics for our fourth quarter pulled fiscal year 2020.

Mind, and they said in focusing on on on gap results unless otherwise stated in all reconciliation with our gap results appear in the presentation appendix.

Due to the sale on the H.M.T. tools business in next September 2018, I will highlight.

Trends on an organic non gap basis, which removes H.M.T. tools revenue for the applicable period reference I don't know the nature of any such comparison.

Slide number 13 detailed our results for whatever and full fiscal year twentytwenty focusing on a quarterly performance past revenue decline, 2.5% over the same quarter and apply here to $229.4 million.

Avenue decline, 7.2% and service revenue growth, 2.8% over the pie he is quota.

Fourth quarter fiscal year 2020, gross profit margin was 76% damn three percentage points over the same quarter last chance to lower margin with attributable to a higher volume of radio frequency propagation modeling revenue that has a low gross margins in the initial stages as well as increased variable compensation in the quarter.

Quarterly operating expenses increased 7.3% from the pie here, primarily due to higher variable compensation costs and one time lost contingent tame.

Point and operating profit margin of 21.2% went down rooted earnings per share a 50 cent.

For the full fiscal year, twentytwenty, but at any wise $892 million, which was a decline of 2.1% over the pie you have appointed basis adjusting for the divested <unk> isn't it when he was relatively flat compared with the pie here. Despite the pulpit 19 pandemic impact on off.

Fourth quarter gross profit margin was 76.4%, which is consistent with the pie here.

<unk> software only sales at 20% of surface insurance product revenue was offset by lower margin radio frequency propagation modeling services and increased compensation costs.

Annual operating expenses decreased 3%.

Primarily due to the H.M.T. tools <unk> head count management and continued cost controls, we recorded and operating profit margin of 18.3%.

Earnings per share of $1.57 cents point, 13.8% increase compared with the pie here.

Turning to slide 14, I'd like to I.B.M. key revenue trends, which excludes the divested H.N.T. tools business for the fiscal year 2019 comparison.

Fiscal year 2020 revenue for the service provider customer vertical grew 1%, while the enterprise vertical declined 1.4% approximately 52% of total revenue was generated from the service provider vertical whether remained it from the enterprise.

Turning to slide 15, it shows that geographic revenue mix on a gap basis, which include $18 million in <unk>.

Yeah.

Oh, Yeah, 2019, Hey, giglia geographical split between international and domestic rather than you.

Consistent with the pie here [noise]. Additionally, there were no customers that represent at 10% or more for the yeah.

Signed 16 details are balance sheet highlights and take cash flow. We ended the quarter with cash cash equivalent short term marketable securities and long term marketable securities up $389.1 million, which is an increase of $42.6 million since the end of the third quarter.

And marketable securities balance represents approximately six months of normal working capital requirements.

Cash flow generate anything in the quarter was $102.5 million as we had strong working capital during this quarter during the quarter. We purchased approximately 2 million shares about common stock at a cost of $50 million Oh, an average price of $25.62 per share.

During fiscal year, Twentytwenty really trying to proximately $175 million to our shareholders given the current economic conditions and uncertainties as a result of the cold with 19 global pandemic capital allocation fire already hinted to Capitol presentation in the near term and we do not anticipate implement.

<unk> <unk> purchase program in the first quarter fiscal year 2021.

From the get perspective as of the end of the fourth quarter, we had $450 million outstanding on our 1 billion dollar with bobbing credit facility. We had a proximately 1.5 times, a cushion against Douglas leverage company, which could provide falling capacity if acquired a revolving credit facility expire.

Wary of 2023 and has no acquired principle, we payments due until maturity.

Briefly recap other balance sheet highlights accounts receivable, Matt was $213.5 million down by $31.4 million since the end of December D.S., those with 73 days versus 88 days at the end up basically a 2009.

And 77 days at the end of December 2019.

Moving to slide 17, and they know stated in his remarks, given the rapidly evolving Kobe 19 situation. The company will differ providing full fiscal year Twentytwenty one guidance until there is a clear outlook on the duration of magnitude at the effects of the global pandemic.

That said I would like to comment on a few capital structure items related to our first quarter of fiscal year 2021 for the quota we expect the tax rate to be consistent with it first quarter of the pie year at approximately 23%. Additionally, we expect that diluted shares outstanding for the quarter to be approximately 73 million chance.

That concludes my former with view of our financial results before we transition to kill an a. I'd like to quickly note that I I R Conference participation is listed on slide 18, I'm out turn the call over to the operated thought queuing.

Yeah, that's time, if you'd like to ask a question. Please pass star and one on your touchdown phone. If he was trying to if you saw from the question you press the pound key we do asking the interest of time that you limit yourself to one question and one follow up.

Oh, well go first to my head start with RBC capital markets.

Oh, Hey, Hey, guys come morning, Thanks for taking my questions.

Neil owners start with you can you talk a little bit more about when you start to see the disruption in March and also whether or not those trend to begin to improve in April I know you noted a few nice weeds in the financial service a vertical.

In April as well as in each figure International service provider transaction, just trying to get a sense. If you know round around the timing disruption and perhaps maybe some improvements you're seeing in April.

Yeah.

I think may be I mean, we don't know the exec timing it was ongoing depending on different parts of the business different regions I do most important point is that because it's end of the fiscal year. Much is traditionally one of the <unk> until you via saw some effect, but they're laid down into month.

He started getting somewhere <unk>, we'd made up for this so as it is old and easily being able to deliver flat profile flat yeah, nobody at a performance and not only done by about 1% from the guidance do provided a year ago. So it all I think we did quite well and.

Different bar, depending on where we could travel and what kind of conditions were there and at the same time. There are people, who had an additional divided and including some people had a couple of people have new but just.

Work on the go read 19 project, so they're all kinds of mix should it's very hard to sift through that my and.

And I think this quarter is bad we'll be able to see how this is impacting and.

On the bus decide what the negative side given the importance of what we do.

Got it Okay, and then something stood out to me and you're prepared remarks, I think you noted that <unk> software only revenue was about 30% of service assurance, which was a huge move higher on a year on year basis, which is great to here can you talk a little bit more about you know the factors driving.

Mix and you know might we expect a similar make shift over.

Over the next several years in terms of like the magnitude of improvement there.

Yeah, I didn't know practice driving is is to the yearly is it isn't that so and if we have been pushing goats salespeople.

Do go through that because it had my in business and it didn't <unk> folder and Jean might go over some more details of that but I mean this is the company blend and that Dan refocus initially on service by their business because that might get was very challenging sometime we were getting we have the best.

<unk> Indic area of space. So in other areas, maybe by two <unk>, but the market was very ready by sensitive because of.

<unk> traffic and under 40 infrastructure, so relaxed and Dan and <unk> admitted big difference and then we decided to.

Do do that on the enterprise part of the business and this year <unk>, we had lunging the into into a demanding part of the business, which is the dots, which is to the integration, Nevada, but we did last year now we'll be able to afford that in all three parts of the business. So I think brand is that this is going to go up and some of this was.

Negated by low margin propagation deliberate and so once these didn't get sorted out over to our trend is what we have been predicting it <unk>, but I think we move is that at some point will be a majority of plus Avenue will be software base.

God that's raised here thanks a lot.

Sure.

[noise] addict.

Maybe or a mute.

Operate in a way of the next question.

Down next to Eric Martin Newsy with like Street.

Alright, hopefully on life.

Yeah.

Okay I had a question you know with the the onset of covert in work from home learn from home.

Seeing.

As far as stand with demands deserve benefit to your service provider customers increase bandwidth translating into revenue opportunity for Netscout.

Well on the under Gadhia side, I mean, if you're looking at the mobility provide the they're they're different threatened but if you look at fixed line no potatoes.

Then yes, they did did a need for that but we are seeing it'd be good short them him back added gone that D. does spark and decided session in parts of the enterprise business.

And at the same time Ah, Okay ideas like what I, then A.D.D. and all those they have at their own operation idea, but they shouldn't be to behave like enterprises. So the part of the short them being it's eating impact on on that part of the business N.G. and you won't do it.

So I would just say I would say excited about you know the virtual engage in some of the new products like edge mounted Tang that the company is looking at and I don't know if you want to go into more detail about the picture yeah. So I think that this game he's talking about attic and and we are looking at what how we can provide some.

Additional information infusion cause about some of that that extends via knowledge that engage and one of the thing, but edge monitoring which allows you to.

Money to the performance under providers side, even though you have also a lot of your infrastructure.

And that would be even more important in these times because I think one of the ways to do business continued d. is to outsource some of the hardware stuff to providers.

I think the cloud <unk> and so some of the things, which we had known so rigid all all software and also I think it's going to make a big difference and and and will be the leading those things in the next water.

Okay.

And then from the personnel side it sounds like you're you know keeping Ah I on the discretionary your headcount was 2517 the end of December where did you finish up the fiscal year on headcount.

Okay.

This is Jean we'd finished out the fiscal year relatively fat flat without Q3 number around 2500 people.

And then as far as the things that you can't predict about your business. So to talk about the service revenue I understand products, a little bit harder to get your arms around but.

Just reverse revenue elements.

<unk>.

Are there any reason to believe that that is a threat from either retention issues sure on 'cause historically, that's been able to hold up.

So.

Yeah.

Basically I feel that that the high level if at all it's for this fenton when we talked over the customers and D.C.S. you know very unique Bliss a company of decent size strong financial position invested in Las 40 years.

A lot of things in Hot Indian support.

And they can up that had many of the software. So the features which which we have average we had adding at essentially free with it in laws. So I think that unless something really unexpected happens I would position in that in Orlando Service Avenue is what the solidified it does already good end up by but I think maybe.

<unk>.

Yeah. The only other thing I would add to that Eric is in the here. The service revenue as you noted group, 3% plus and we have multiple offerings in there, but the vast majority of it being you know like 80 590 per cent the maintenance and as a nail discussed it's important to the unique offering that we have where you continue to be some.

<unk> as well as to receive enhancement keeps our customers wanting to pay that we also have offered eight.

<unk>, you know I sat offering like which we call visibility in the service, which grew pretty well over that year and then we also have onsite engineers and they have been growing also as our customers really like the value that these people can supply. So I would say that server to have any going 3% with very good.

<unk> and it looks steady going in the future for F.Y. 21.

Thanks for taking my questions.

Yeah right.

Operator, we can move to the next question.

And we will go next to chat with car town.

Please go ahead.

Thanks, Thanks for taking my questions. So.

On on the software penetration.

All the overall revenues I you know just following up on on a prior question I guess.

How should we think about the gross there this year I I mean can <unk> or maybe even exit kind of penetration rate you know could could that kid too you know 40 to 50 per cent when we exit the year this year.

Yeah. The interesting so they the chronology the timeline of the software only but as you remember a few years ago waste introduced it into our international service provider markets based on there.

Desire for full functionality and robust at a price that made sense for them and his migrated towards domestic service provider is false so and this yeah. What was very interesting is that it's also started to migrate into the enterprise. So the enterprises portion use software only probably.

A little less than doubled and that's why 21. So when you take that as an exit rate I think and now in the past has said that probably our tougher only could get to at least more than 50 per cent. So I would see F.Y. 21, especially given over at 19 pandemic.

Shoes, being driven having softer only being driven since it's a very good price point with excellent functionality potentially more strongest so.

You know on on against a man I would say probably could get closer to 40% and apply 21.

Yeah, perfect and then just on the enterprise side of the business. What are the puts and takes you know considering you know the majority of your enterprise business is still.

<unk> or you know data center related for for an enterprise and you know during this pandemic you know I think we've heard from a lot of cost me customers that.

Digital transformation or just flat out move to the cloud has been accelerated you know significantly even even more than it already was beforehand. So he is if we see that acceleration to the cloud by your enterprise customers is that a net hostile.

To revenue at least over the next year or a net you know headwind a revenue anyway, you could answer that would be great.

So I think there that it's a sort of a multi bar down to through this and you mentioned one of the issue is independent I Miss New hardware deployment. So we haven't noticed some software <unk>.

Last week.

<unk> the functionality of existing deployments.

One thing that Dean mentioned earlier, we haven't always to initiate they've got an edge money thing, we strongly feel that I'd operations wanting to keep the control back into visibility.

While they won't do outsource someday introspective blue cloud provider.

And how it and and if they do that they can convert finger pointing in case of issues.

Because I'm still going to go out of my baby when I have it but I'll be the obvious today 65.

Add on any of the outdoors applications.

Yeah, they don't they need that they they don't have access to what's happening in the glowed. So did I just want anything we solution we ever noticed.

Going to make a big difference now having said that echo next and and put away just like that which provide high speed links to fill out a a a infrastructure are the best option. So what solution.

Anything solution can be actually deployed in like so <unk> and if it looks like as if <unk> in debt load is extension of on but but it's really not on the on but I'm interested yet so that's a very interesting <unk> and also.

Software that can be done on top of as D. man.

So we have made a lot of innovations in the last two years, So I think.

Yeah, just because infrastructure has moved through all of loud doesn't mean, all the money thing has to be on the glow or somebody has to make them a bad debt load provide us and sat application people <unk> and <unk> over solution will will having said that that a couple of other.

That's what away there's big one our name, but I know that actually you also using or technology.

Actually support that best them. It. So all these combinations I think is in there, but still because they'd extensive would lead to achieving do it'd be good market. It makes the software the one it makes at high Mark in business, including for the.

And the the visibility <unk> means that you can almost solution and on but I mean, the deployment option is not a requirement. So I wouldn't solution books every anybody you aren't.

And no excuses and some people will put it on on but I am some believe people will end up loud and some people will be in the intermediate aside like I couldn't next.

Yeah, that's great color, thanks, great job, managing the business and and the balance sheet in these times. Thanks. Thank you. Thank you.

Operator, we can take the next call.

<unk> Oh next to Kevin live with came along company.

Oh, you good morning first of running here.

They get a sense birds the quarter and disruption that you guys. So what's up primarily just some kind of new product sales or did you see any impact to maintenance renewal agreements and the like.

Yeah.

I would say it was mostly I would say on was probably exclusively on product revenue.

And then more generally.

How to work through this environment it sounds like the demand generation side of things that is fine in terms of going virtually I'm curious as to what other in pets are sitting on your general sales activities. For instance are you still able to complete kind of the proof concepts that you need to or deployed equipment on quite sites to the extent that's possible I'm just wondering why.

Sort of what parts of the cell cycles are impacted.

We went all we weren't doing on proof of concept for remotely because of an ingenious <unk>. They were not traveling to best website, though that's not impacted at all.

Yeah that is there are these you as we had people not being able to meet the customers and that has some impact, but <unk> and that sort of balance by the amount of people dying people have to discuss the project with this.

Mentioned why did we get 30 violence in some companies with big ideas, we had.

The people attending and one one company at 50 people attending so I think we gotta getting the mind share of the <unk>.

So do side negative negative side is.

Yeah, not able to travel to customer side then.

Dialogue with a beep late night gone back and I think is say, it's a sort of bad.

Make good balance and net effect will be I think in neutral.

But it and if I get to sneak one more than on the security side. So that you guys acquired a gig evasion.

Early February.

You just talk about can no longer term vision for your security platform. Here are you guys still primarily recognized as Adidas player or do you see recognition out there in the market as being a more.

<unk> prevention side, just wondering you know how the platform is is a balding, yeah and work what other gaps with any you plan on filling in over the over coming years.

Sure so.

I mean, because of our technology based on backing <unk>, we go to actually make security adjacency for that which is.

<unk>.

Range word that how good security.

<unk>.

Sort of is a short and but <unk> is that good sites of the same client.

So I've got in business D. dollars is about 20% of their daughter business and they see it'd be a nose. So <unk> said visual inside.

To land seven monitoring on D. dos N.V.V. it'd be coined divorced smart D. does.

Leah noticed last week, so I think that's going to do have it impact on the D. does business.

But over the last one year Viet quite do companies easily and <unk> do smart technology companies won what gig of Asian as you mentioned.

And they're they're willing to V.D.I. based security service.

And they had some engrave showing and and some other feature though adored the end of the we we we are going to be bringing our that solution, which is based on some existing technology from on the end the right side of the house.

And everyday if they'd technology combine that with some of the thing Eastwind was doing in a in in <unk> advanced security idea plus some of the building blocks from the V.D.A. acquisition and.

And all T. to get that is going to do and vehicle into a knows about entry into the deadline security space, which is very crowded, but because of our building blocks and incumbency in other areas.

<unk>, we're going to have a big impact and next year. So we did alluded to that announcement also last week and doing engaged and be a lot of interesting questions game from that goes to let so one time I think and security will be a much bigger portion of the business.

And it will obviously include that big Bush and from D. does.

Advanced security will be another big abortion in the next couple of yes.

Expecting the question.

Okay operate a little tick the next question.

Okay next to <unk>.

Right. So the question maybe on off of the last one you guys. So I'm pretty positive on Arbor, but can we get a breakdown of girlfriends cross the business and within each protocols walls, but total percentage that Arbor now represents that you guys to redo annual <unk> you just like you'd also.

What is that.

That's not the entire Arbor business.

I guess you know we we since the Hell source has been integrated the way I would think about it is for the quarter, but did very well they actually grew in enterprise in close to the mid single digits.

And so for the year.

They were.

<unk>.

Probably.

Flat to slightly they also had a tremendous year in and quarter in service provider. So this year operated pretty while they're still probably somewhere between 20% to 25%.

Mm.

Oh, that's helpful color and that's obviously, a big cows for Netscout as a potential five g. corresponding a lot of debate around us, but but what does not scouts seeing what's by G. Corps timing given the impact of covert 19 were there any pushouts with some of your maker cheer ones are international carrier.

<unk> meeting that this is going to.

Ah the board we ever get thing is that is I that are going to be neutral <unk> coming at the same speed lever last wants to do afford got stared into bust.

Oh it it might even next alert and because of the families and as we talked about in early of questions that.

Edge computing and and other areas, but we also see that one of the big Gotta manufacturers.

Head buying their own spectrum in Europe, and so it'd be don't know that diming button down so.

We'll see then evaluations.

That is lot of interest anywhere to be dog in gadhia, they want to know aboard or five g.'s dirty and all the investment we made in large 12 months.

Has made it made a big difference and being Dane <unk>, we can share some of the AD search every day I've already deployed in 40 and that the data be you'll see timeline can be it dramatically compressed because they don't need to check everything out and they just need to check the increment buildings, we have done so.

I think that that five g. is is going to go grow at the same speed in dumpster diving or maybe even slightly faster.

Thanks, Thanks, everyone.

So thank you.

Operator.

That concludes our question and answer session.

Yeah.

Great. Thank.

Thank you everybody for joining us today, we have appreciate that includes all remarks or have a great day and stay healthy and safe.

<unk> today's program. We appreciate your participation and you may now disconnect.

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Mm.

HM.

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