QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to |
(State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered: | ||||||
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS | ||||||||
Item 1. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 2. | ||||||||
Item 3. | Defaults Upon Senior Securities | |||||||
Item 4. | Mine Safety Disclosures | |||||||
Item 5. | Other Information | |||||||
Item 6. | ||||||||
June 30, 2022 | March 31, 2022 | ||||||||||
(Unaudited) | |||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Marketable securities | |||||||||||
Accounts receivable and unbilled costs, net of allowance for doubtful accounts of $ | |||||||||||
Inventories and deferred costs | |||||||||||
Prepaid income taxes | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
Fixed assets, net | |||||||||||
Operating lease right-of-use assets | |||||||||||
Goodwill | |||||||||||
Intangible assets, net | |||||||||||
Deferred income taxes | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and Stockholders' Equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued compensation | |||||||||||
Accrued other | |||||||||||
Income taxes payable | |||||||||||
Deferred revenue and customer deposits | |||||||||||
Current portion of operating lease liabilities | |||||||||||
Total current liabilities | |||||||||||
Other long-term liabilities | |||||||||||
Deferred tax liability | |||||||||||
Accrued long-term retirement benefits | |||||||||||
Long-term deferred revenue and customer deposits | |||||||||||
Operating lease liabilities, net of current portion | |||||||||||
Long-term debt | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 13) | |||||||||||
Stockholders' equity: | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated other comprehensive income (loss) | ( | ||||||||||
Treasury stock at cost, | ( | ( | |||||||||
Retained earnings | |||||||||||
Total stockholders' equity | |||||||||||
Total liabilities and stockholders' equity | $ | $ |
Three Months Ended | |||||||||||
June 30, | |||||||||||
2022 | 2021 | ||||||||||
Revenue: | |||||||||||
Product | $ | $ | |||||||||
Service | |||||||||||
Total revenue | |||||||||||
Cost of revenue: | |||||||||||
Product | |||||||||||
Service | |||||||||||
Total cost of revenue | |||||||||||
Gross profit | |||||||||||
Operating expenses: | |||||||||||
Research and development | |||||||||||
Sales and marketing | |||||||||||
General and administrative | |||||||||||
Amortization of acquired intangible assets | |||||||||||
Restructuring charges | |||||||||||
Total operating expenses | |||||||||||
Loss from operations | ( | ( | |||||||||
Interest and other expense, net: | |||||||||||
Interest income | |||||||||||
Interest expense | ( | ( | |||||||||
Other income (expense), net | ( | ||||||||||
Total interest and other expense, net | ( | ( | |||||||||
Loss before income tax benefit | ( | ( | |||||||||
Income tax benefit | ( | ( | |||||||||
Net loss | $ | ( | $ | ( | |||||||
Basic net loss per share | $ | ( | $ | ( | |||||||
Diluted net loss per share | $ | ( | $ | ( | |||||||
Weighted average common shares outstanding used in computing: | |||||||||||
Net loss per share - basic | |||||||||||
Net loss per share - diluted |
Three Months Ended | |||||||||||
June 30, | |||||||||||
2022 | 2021 | ||||||||||
Net loss | $ | ( | $ | ( | |||||||
Other comprehensive income (loss): | |||||||||||
Cumulative translation adjustments | ( | ||||||||||
Changes in market value of investments: | |||||||||||
Changes in unrealized losses, net of tax benefit of ($ | ( | ( | |||||||||
Total net change in market value of investments | ( | ( | |||||||||
Changes in market value of derivatives: | |||||||||||
Changes in market value of derivatives, net of (benefit) taxes of ($ | ( | ||||||||||
Reclassification adjustment for net gains (losses) included in net loss, net of taxes (benefit) of $ | ( | ||||||||||
Total net change in market value of derivatives | ( | ||||||||||
Other comprehensive income (loss) | ( | ||||||||||
Total comprehensive loss | $ | ( | $ | ( |
Three Months Ended June 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
Common Stock Voting | Additional Paid In Capital | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Retained Earnings | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||||||||||
Shares | Par Value | Shares | Stated Value | ||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2022 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||
Net loss | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Unrealized net investment losses | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Unrealized net loss on derivative financial instruments | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Cumulative translation adjustments | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock pursuant to vesting of restricted stock units | |||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense for restricted stock units granted to employees | |||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of treasury stock | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2022 | $ | $ | $ | ( | $ | ( | $ | $ |
Three Months Ended June 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Common Stock Voting | Additional Paid In Capital | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Retained Earnings | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||
Shares | Par Value | Shares | Stated Value | ||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2021 | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||
Net loss | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Unrealized net investment losses | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Unrealized net gains on derivative financial instruments | |||||||||||||||||||||||||||||||||||||||||||||||
Cumulative translation adjustments | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock pursuant to vesting of restricted stock units | |||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense for restricted stock units granted to employees | |||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of treasury stock | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2021 | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||
June 30, | |||||||||||
2022 | 2021 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | ( | $ | ( | |||||||
Adjustments to reconcile net loss to cash provided by operating activities, net of the effects of acquisitions: | |||||||||||
Depreciation and amortization | |||||||||||
Operating lease right-of-use assets | |||||||||||
Loss on disposal of fixed assets | |||||||||||
Share-based compensation expense | |||||||||||
Deferred income taxes | ( | ( | |||||||||
Other losses | |||||||||||
Changes in assets and liabilities | |||||||||||
Accounts receivable and unbilled costs | |||||||||||
Inventories | |||||||||||
Prepaid expenses and other assets | ( | ( | |||||||||
Accounts payable | ( | ( | |||||||||
Accrued compensation and other expenses | ( | ( | |||||||||
Operating lease liabilities | ( | ( | |||||||||
Income taxes payable | ( | ( | |||||||||
Deferred revenue | ( | ( | |||||||||
Net cash (used in) provided by operating activities | ( | ||||||||||
Cash flows from investing activities: | |||||||||||
Purchase of marketable securities | ( | ( | |||||||||
Proceeds from sales and maturity of marketable securities | |||||||||||
Purchase of fixed assets | ( | ( | |||||||||
Purchase of intangible assets | ( | ||||||||||
Decrease in deposits | |||||||||||
Net cash provided by (used in) investing activities | ( | ||||||||||
Cash flows from financing activities: | |||||||||||
Issuance of common stock under stock plans | |||||||||||
Treasury stock repurchases, including accelerated share repurchases | ( | ||||||||||
Tax withholding on restricted stock units | ( | ( | |||||||||
Repayment of long-term debt | ( | ||||||||||
Net cash used in financing activities | ( | ( | |||||||||
Effect of exchange rate changes on cash and cash equivalents | ( | ||||||||||
Net (decrease) increase in cash and cash equivalents | ( | ||||||||||
Cash and cash equivalents, beginning of period | |||||||||||
Cash and cash equivalents, end of period | $ | $ | |||||||||
Supplemental disclosures: | |||||||||||
Cash paid for interest | $ | $ | |||||||||
Cash paid for income taxes | $ | $ | |||||||||
Non-cash transactions: | |||||||||||
Transfers of inventory to fixed assets | $ | $ | |||||||||
Additions to property, plant and equipment included in accounts payable | $ | $ | |||||||||
Balance at March 31, 2022 | $ | ||||
Provision for allowance for credit losses | ( | ||||
Recoveries and other adjustments | |||||
Write off charged against the allowance for credit losses | ( | ||||
Balance at June 30, 2022 | $ |
Three Months Ended | |||||||||||
June 30, | |||||||||||
2022 | 2021 | ||||||||||
Cost of product revenue | $ | $ | |||||||||
Cost of service revenue | |||||||||||
Research and development | |||||||||||
Sales and marketing | |||||||||||
General and administrative | |||||||||||
$ | $ |
Amortized Cost | Unrealized Losses | Fair Value | |||||||||||||||
Type of security: | |||||||||||||||||
U.S. government and municipal obligations | $ | $ | ( | $ | |||||||||||||
Commercial paper | |||||||||||||||||
Corporate bonds | ( | ||||||||||||||||
Certificates of deposit | |||||||||||||||||
Total short-term marketable securities | ( | ||||||||||||||||
Total long-term marketable securities | |||||||||||||||||
Total marketable securities | $ | $ | ( | $ |
Amortized Cost | Unrealized Losses | Fair Value | |||||||||||||||
Type of security: | |||||||||||||||||
U.S. government and municipal obligations | $ | $ | ( | $ | |||||||||||||
Commercial paper | |||||||||||||||||
Corporate bonds | ( | ||||||||||||||||
Certificates of deposit | |||||||||||||||||
Total short-term marketable securities | ( | ||||||||||||||||
Total long-term marketable securities | |||||||||||||||||
Total marketable securities | $ | $ | ( | $ |
June 30, 2022 | March 31, 2022 | ||||||||||
Available-for-sale securities: | |||||||||||
Due in 1 year or less | $ | $ | |||||||||
Due after 1 year through 5 years | |||||||||||
$ | $ |
Fair Value Measurements at | |||||||||||||||||||||||
June 30, 2022 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
ASSETS: | |||||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | |||||||||||||||||||
U.S. government and municipal obligations | |||||||||||||||||||||||
Commercial paper | |||||||||||||||||||||||
Corporate bonds | |||||||||||||||||||||||
Certificate of deposits | |||||||||||||||||||||||
$ | $ | $ | $ | ||||||||||||||||||||
LIABILITIES: | |||||||||||||||||||||||
Derivative financial instruments | $ | $ | ( | $ | $ | ( | |||||||||||||||||
$ | $ | ( | $ | $ | ( |
Fair Value Measurements at | |||||||||||||||||||||||
March 31, 2022 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
ASSETS: | |||||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | |||||||||||||||||||
U.S. government and municipal obligations | |||||||||||||||||||||||
Commercial paper | |||||||||||||||||||||||
Corporate bonds | |||||||||||||||||||||||
Certificate of deposits | |||||||||||||||||||||||
Derivative financial instruments | |||||||||||||||||||||||
$ | $ | $ | $ | ||||||||||||||||||||
LIABILITIES: | |||||||||||||||||||||||
Derivative financial instruments | $ | $ | ( | $ | $ | ( | |||||||||||||||||
$ | $ | ( | $ | $ | ( |
June 30, 2022 | March 31, 2022 | ||||||||||
Raw materials | $ | $ | |||||||||
Work in process | |||||||||||
Finished goods | |||||||||||
Deferred costs | |||||||||||
$ | $ |
Balance at March 31, 2022 | $ | ||||
Foreign currency translation impact | |||||
Balance at June 30, 2022 | $ |
Estimated Useful Life in Years | Cost | Accumulated Amortization | Net | ||||||||||||||||||||
Developed technology | $ | $ | ( | $ | |||||||||||||||||||
Customer relationships | ( | ||||||||||||||||||||||
Distributor relationships and technology licenses | ( | ||||||||||||||||||||||
Definite-lived trademark and trade name | ( | ||||||||||||||||||||||
Core technology | ( | ||||||||||||||||||||||
Non-compete agreements | ( | ||||||||||||||||||||||
Capitalized software | ( | ||||||||||||||||||||||
Other | ( | ||||||||||||||||||||||
$ | $ | ( | $ |
Estimated Useful Life in Years | Cost | Accumulated Amortization | Net | ||||||||||||||||||||
Developed technology | $ | $ | ( | $ | |||||||||||||||||||
Customer relationships | ( | ||||||||||||||||||||||
Distributor relationships and technology licenses | ( | ||||||||||||||||||||||
Definite-lived trademark and trade name | ( | ||||||||||||||||||||||
Core technology | ( | ||||||||||||||||||||||
Non-compete agreements | ( | ||||||||||||||||||||||
Capitalized software | ( | ||||||||||||||||||||||
Other | ( | ||||||||||||||||||||||
$ | $ | ( | $ |
Three Months Ended | |||||||||||
June 30, | |||||||||||
2022 | 2021 | ||||||||||
Amortization of intangible assets included as: | |||||||||||
Cost of product revenue | $ | $ | |||||||||
Operating expense | |||||||||||
$ | $ |
2023 (remaining nine months) | $ | ||||
2024 | |||||
2025 | |||||
2026 | |||||
2027 | |||||
Thereafter | |||||
$ |
Notional Amounts (a) | Prepaid Expenses and Other Current Assets | Accrued Other | |||||||||||||||||||||||||||||||||
June 30, 2022 | March 31, 2022 | June 30, 2022 | March 31, 2022 | June 30, 2022 | March 31, 2022 | ||||||||||||||||||||||||||||||
Derivatives Designated as Hedging Instruments: | |||||||||||||||||||||||||||||||||||
Forward contracts | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
$ | $ | $ | $ |
Gain (Loss) Recognized in OCI on Derivative (a) | Gain (Loss) Reclassified from Accumulated OCI into Income (b) | ||||||||||||||||||||||||||||
June 30, 2022 | June 30, 2021 | Location | June 30, 2022 | June 30, 2021 | |||||||||||||||||||||||||
Forward contracts | $ | ( | $ | Research and development | $ | $ | ( | ||||||||||||||||||||||
Sales and marketing | ( | ||||||||||||||||||||||||||||
$ | ( | $ | $ | $ | ( |
Loss Recognized in Income (a) | |||||||||||||||||||||||||||||
Location | June 30, 2022 | June 30, 2021 | |||||||||||||||||||||||||||
Forward contracts | General and administrative | $ | $ | ( | |||||||||||||||||||||||||
$ | $ | ( |
Q1FY23 Plan | |||||
Balance at March 31, 2022 | $ | ||||
Restructuring charges to operations | |||||
Cash payments | ( | ||||
Balance at June 30, 2022 | $ | ||||
Three Months Ended | |||||||||||
June 30, | |||||||||||
2022 | 2021 | ||||||||||
Lease cost under long-term operating leases | $ | $ | |||||||||
Lease cost under short-term operating leases | |||||||||||
Variable lease cost under short-term and long-term operating leases | |||||||||||
Total operating lease cost | $ | $ |
June 30, 2022 | June 30, 2021 | ||||||||||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ | $ |
June 30, 2022 | March 31, 2022 | ||||||||||
Weighted average remaining lease term in years - operating leases | |||||||||||
Weighted average discount rate - operating leases | % | % |
Year ending March 31: | |||||
2023 (remaining nine months) | $ | ||||
2024 | |||||
2025 | |||||
2026 | |||||
2027 | |||||
Thereafter | |||||
Total lease payments | $ | ||||
Less imputed interest | ( | ||||
Present value of lease liabilities | $ |
Three Months Ended | |||||||||||
June 30, | |||||||||||
2022 | 2021 | ||||||||||
Service cost | $ | $ | |||||||||
Interest cost | |||||||||||
Net periodic pension cost | $ | $ |
Three Months Ended | |||||||||||
June 30, | |||||||||||
2022 | 2021 | ||||||||||
Numerator: | |||||||||||
Net loss | $ | ( | $ | ( | |||||||
Denominator: | |||||||||||
Denominator for basic net loss per share - weighted average common shares outstanding | |||||||||||
Dilutive common equivalent shares: | |||||||||||
Weighted average restricted stock units and performance-based restricted stock units | |||||||||||
Denominator for diluted net loss per share - weighted average shares outstanding | |||||||||||
Net loss per share: | |||||||||||
Basic net loss per share | $ | ( | $ | ( | |||||||
Diluted net loss per share | $ | ( | $ | ( |
Three Months Ended | |||||||||||
June 30, | |||||||||||
2022 | 2021 | ||||||||||
Restricted stock units |
Three Months Ended | |||||||||||
June 30, | |||||||||||
2022 | 2021 | ||||||||||
United States | $ | $ | |||||||||
Europe | |||||||||||
Asia | |||||||||||
Rest of the world | |||||||||||
$ | $ |
Three Months Ended | |||||||||||
June 30, | |||||||||||
2022 | 2021 | ||||||||||
Revenue (GAAP and non-GAAP) | $ | 208,812 | $ | 190,272 | |||||||
GAAP gross profit | $ | 151,098 | $ | 135,862 | |||||||
Share-based compensation expense | 2,037 | 1,887 | |||||||||
Amortization of acquired intangible assets | 2,328 | 3,360 | |||||||||
Acquisition related depreciation expense | 7 | 5 | |||||||||
Non-GAAP gross profit | $ | 155,470 | $ | 141,114 | |||||||
GAAP loss from operations | $ | (9,127) | $ | (10,667) | |||||||
Share-based compensation expense | 15,581 | 13,965 | |||||||||
Amortization of acquired intangible assets | 16,209 | 18,366 | |||||||||
Business development and integration expense | — | (5) | |||||||||
Compensation for post-combination services | — | 2 | |||||||||
Restructuring charges | 1,774 | — | |||||||||
Acquisition related depreciation expense | 65 | 60 | |||||||||
Transitional service agreement expense | — | 58 | |||||||||
Non-GAAP income from operations | $ | 24,502 | $ | 21,779 | |||||||
GAAP net loss | $ | (7,132) | $ | (11,341) | |||||||
Share-based compensation expense | 15,581 | 13,965 | |||||||||
Amortization of acquired intangible assets | 16,209 | 18,366 | |||||||||
Business development and integration expense | — | (5) | |||||||||
Compensation for post-combination services | — | 2 | |||||||||
Restructuring charges | 1,774 | — | |||||||||
Acquisition-related depreciation expense | 65 | 60 | |||||||||
Income tax adjustments | (8,445) | (6,089) | |||||||||
Non-GAAP net income | $ | 18,052 | $ | 14,958 | |||||||
GAAP diluted net loss per share | $ | (0.10) | $ | (0.15) | |||||||
Per share impact of non-GAAP adjustments identified above | 0.34 | 0.35 | |||||||||
Non-GAAP diluted net income per share | $ | 0.24 | $ | 0.20 | |||||||
GAAP loss from operations | $ | (9,127) | $ | (10,667) | |||||||
Previous adjustments to determine non-GAAP income from operations | 33,629 | 32,446 | |||||||||
Non-GAAP income from operations | 24,502 | 21,779 | |||||||||
Depreciation excluding acquisition related | 5,311 | 5,811 | |||||||||
Non-GAAP EBITDA from operations | $ | 29,813 | $ | 27,590 |
Three Months Ended | Change | ||||||||||||||||||||||||||||||||||
June 30, | |||||||||||||||||||||||||||||||||||
(Dollars in Thousands) | |||||||||||||||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||||||||||||||
% of Revenue | % of Revenue | $ | % | ||||||||||||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||||||||||
Product | $ | 98,251 | 47 | % | $ | 81,950 | 43 | % | $ | 16,301 | 20 | % | |||||||||||||||||||||||
Service | 110,561 | 53 | 108,322 | 57 | 2,239 | 2 | % | ||||||||||||||||||||||||||||
Total revenue | $ | 208,812 | 100 | % | $ | 190,272 | 100 | % | $ | 18,540 | 10 | % |
Three Months Ended | Change | ||||||||||||||||||||||||||||||||||
June 30, | |||||||||||||||||||||||||||||||||||
(Dollars in Thousands) | |||||||||||||||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||||||||||||||
% of Revenue | % of Revenue | $ | % | ||||||||||||||||||||||||||||||||
United States | $ | 134,801 | 65 | % | $ | 102,893 | 54 | % | $ | 31,908 | 31 | % | |||||||||||||||||||||||
International: | |||||||||||||||||||||||||||||||||||
Europe | 33,765 | 16 | 38,556 | 20 | (4,791) | (12) | % | ||||||||||||||||||||||||||||
Asia | 13,675 | 6 | 17,316 | 9 | (3,641) | (21) | % | ||||||||||||||||||||||||||||
Rest of the world | 26,571 | 13 | 31,507 | 17 | (4,936) | (16) | % | ||||||||||||||||||||||||||||
Subtotal international | 74,011 | 35 | 87,379 | 46 | (13,368) | (15) | % | ||||||||||||||||||||||||||||
Total revenue | $ | 208,812 | 100 | % | $ | 190,272 | 100 | % | $ | 18,540 | 10 | % |
Three Months Ended | Change | ||||||||||||||||||||||||||||||||||
June 30, | |||||||||||||||||||||||||||||||||||
(Dollars in Thousands) | |||||||||||||||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||||||||||||||
% of Revenue | % of Revenue | $ | % | ||||||||||||||||||||||||||||||||
Cost of revenue | |||||||||||||||||||||||||||||||||||
Product | $ | 26,805 | 13 | % | $ | 23,165 | 12 | % | $ | 3,640 | 16 | % | |||||||||||||||||||||||
Service | 30,909 | 15 | 31,245 | 16 | (336) | (1) | % | ||||||||||||||||||||||||||||
Total cost of revenue | $ | 57,714 | 28 | % | $ | 54,410 | 28 | % | $ | 3,304 | 6 | % | |||||||||||||||||||||||
Gross profit: | |||||||||||||||||||||||||||||||||||
Product $ | $ | 71,446 | 34 | % | $ | 58,785 | 31 | % | $ | 12,661 | 22 | % | |||||||||||||||||||||||
Product gross profit % | 73 | % | 72 | % | |||||||||||||||||||||||||||||||
Service $ | $ | 79,652 | 38 | % | $ | 77,077 | 41 | % | $ | 2,575 | 3 | % | |||||||||||||||||||||||
Service gross profit % | 72 | % | 71 | % | |||||||||||||||||||||||||||||||
Total gross profit $ | $ | 151,098 | $ | 135,862 | $ | 15,236 | 11 | % | |||||||||||||||||||||||||||
Total gross profit % | 72 | % | 71 | % |
Three Months Ended | Change | ||||||||||||||||||||||||||||||||||
June 30, | |||||||||||||||||||||||||||||||||||
(Dollars in Thousands) | |||||||||||||||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||||||||||||||
% of Revenue | % of Revenue | $ | % | ||||||||||||||||||||||||||||||||
Research and development | $ | 43,457 | 21 | % | $ | 42,820 | 23 | % | $ | 637 | 1 | % | |||||||||||||||||||||||
Sales and marketing | 76,323 | 37 | 65,958 | 35 | 10,365 | 16 | % | ||||||||||||||||||||||||||||
General and administrative | 24,790 | 12 | 22,745 | 12 | 2,045 | 9 | % | ||||||||||||||||||||||||||||
Amortization of acquired intangible assets | 13,881 | 7 | 15,006 | 8 | (1,125) | (7) | % | ||||||||||||||||||||||||||||
Restructuring charges | 1,774 | 1 | — | — | 1,774 | 100 | % | ||||||||||||||||||||||||||||
Total operating expenses | $ | 160,225 | 78 | % | $ | 146,529 | 78 | % | $ | 13,696 | 9 | % |
Three Months Ended | Change | ||||||||||||||||||||||||||||||||||
June 30, | |||||||||||||||||||||||||||||||||||
(Dollars in Thousands) | |||||||||||||||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||||||||||||||
% of Revenue | % of Revenue | $ | % | ||||||||||||||||||||||||||||||||
Interest and other expense, net | $ | (1,358) | (1) | % | $ | (2,420) | (1) | % | $ | 1,062 | 44 | % |
Three Months Ended | Change | ||||||||||||||||||||||||||||||||||
June 30, | |||||||||||||||||||||||||||||||||||
(Dollars in Thousands) | |||||||||||||||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||||||||||||||
% of Revenue | % of Revenue | $ | % | ||||||||||||||||||||||||||||||||
Income tax benefit | $ | (3,353) | (2) | % | $ | (1,746) | (1) | % | $ | (1,607) | (92) | % |
June 30, 2022 | March 31, 2022 | ||||||||||
Cash and cash equivalents | $ | 332,502 | $ | 636,161 | |||||||
Short-term marketable securities | 42,144 | 67,037 | |||||||||
Cash, cash equivalents and marketable securities | $ | 374,646 | $ | 703,198 |
Three Months Ended | |||||||||||
June 30, | |||||||||||
(in thousands) | |||||||||||
2022 | 2021 | ||||||||||
Net cash (used in) provided by operating activities | $ | (12,521) | $ | 24,056 | |||||||
Net cash provided by (used in) investing activities | $ | 22,522 | $ | (32) | |||||||
Net cash used in financing activities | $ | (310,846) | $ | (4,777) |
Three Months Ended | |||||||||||
June 30, | |||||||||||
(in thousands) | |||||||||||
2022 | 2021 | ||||||||||
Cash provided by (used in) investing activities included the following: | |||||||||||
Purchase of marketable securities | $ | (27,691) | $ | (5,696) | |||||||
Proceeds from sales and maturity of marketable securities | 52,570 | 8,230 | |||||||||
Purchase of fixed assets | (2,201) | (2,578) | |||||||||
Purchase of intangible assets | (161) | — | |||||||||
Decrease in deposits | 5 | 12 | |||||||||
$ | 22,522 | $ | (32) |
Three Months Ended | |||||||||||
June 30, | |||||||||||
(in thousands) | |||||||||||
2022 | 2021 | ||||||||||
Cash used in financing activities included the following: | |||||||||||
Issuance of common stock under stock plans | $ | 1 | $ | — | |||||||
Treasury stock repurchases, including accelerated share repurchases | (150,039) | — | |||||||||
Tax withholding on restricted stock units | (10,808) | (4,777) | |||||||||
Repayment of long-term debt | (150,000) | — | |||||||||
$ | (310,846) | $ | (4,777) |
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | Maximum Number of Shares That May Yet be Purchased Under the Program | |||||||||||||||||||
4/1/2022-4/30/2022 | 10,571 | $ | 31.81 | — | 5,758,482 | ||||||||||||||||||
5/1/2021-5/31/2022 | 3,262,506 | 32.26 | 3,255,814 | 2,502,668 | |||||||||||||||||||
6/1/2021-6/30/2022 | 291,825 | 35.14 | — | 2,502,668 | |||||||||||||||||||
Total | 3,564,902 | $ | 32.50 | 3,255,814 | 2,502,668 |
Composite conformed copy of Third Amended and Restated Certificate of Incorporation of NetScout (as amended) (filed as Exhibit 3.2 to NetScout's current report on Form 8-K, SEC File No. 000-26251, filed on September 21, 2016, and incorporated herein by reference). | |||||||||||
Amended and Restated By-laws of NetScout (filed as Exhibit 3.1 to NetScout's current report on Form 8-K, SEC File No. 000-26251, filed on May 11, 2020 and incorporated herein by reference). | |||||||||||
Confirmation – Issuer Forward Repurchase Transaction, dated May 9, 2022, between NetScout Systems, Inc. and Mizuho Markets Americas LLC (filed as Exhibit 10.1 to NetScout's current report on Form 8-K, SEC File No. 000-26251, filed on May 10, 2022 and incorporated herein by reference). | |||||||||||
Confirmation – Issuer Forward Repurchase Transaction, dated May 9, 2022, between NetScout Systems, Inc. and Wells Fargo Bank, National Association (filed as Exhibit 10.2 to NetScout's current report on Form 8-K, SEC File No. 000-26251, filed on May 10, 2022 and incorporated herein by reference). | |||||||||||
+ | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||||||||||
+ | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||||||||||
++ | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||||||||||
++ | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||||||||||
101.INS | + | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||||
101.SCH | + | Inline XBRL Taxonomy Extension Schema Document. | |||||||||
101.CAL | + | Inline XBRL Taxonomy Extension Calculation Linkbase document. | |||||||||
101.DEF | + | Inline XBRL Taxonomy Extension Definition Linkbase document. | |||||||||
101.LAB | + | Inline XBRL Taxonomy Extension Label Linkbase document. | |||||||||
101.PRE | + | Inline XBRL Taxonomy Extension Presentation Linkbase document. | |||||||||
104 | The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 formatted in Inline XBRL |
+ | Filed herewith. | ||||
++ | Exhibit has been furnished, is not deemed filed and is not to be incorporated by reference into any of the Company's filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, irrespective of any general incorporation language contained in any such filing. |
NETSCOUT SYSTEMS, INC. | ||||||||
Date: August 4, 2022 | /s/ Anil K. Singhal | |||||||
Anil K. Singhal | ||||||||
President, Chief Executive Officer and Chairman | ||||||||
(Principal Executive Officer) | ||||||||
Date: August 4, 2022 | /s/ Jean Bua | |||||||
Jean Bua | ||||||||
Executive Vice President and Chief Financial Officer | ||||||||
(Principal Financial Officer) | ||||||||
(Principal Accounting Officer) |
/s/ Anil K. Singhal | |||||
Anil K. Singhal | |||||
President, Chief Executive Officer and Chairman | |||||
(Principal Executive Officer) |
/s/ Jean Bua | |||||
Jean Bua | |||||
Executive Vice President and Chief Financial Officer | |||||
(Principal Financial Officer) | |||||
(Principal Accounting Officer) |
/s/ Anil K. Singhal | |||||
Anil K. Singhal | |||||
President, Chief Executive Officer and Chairman | |||||
Principal Executive Officer |
/s/ Jean Bua | |||||
Jean Bua | |||||
Executive Vice President and Chief Financial Officer | |||||
(Principal Financial Officer) | |||||
(Principal Accounting Officer) |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Mar. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 1,614 | $ 1,649 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock, shares issued (in shares) | 127,371,813 | 126,425,383 |
Common stock, shares outstanding (in shares) | 71,483,821 | 74,102,293 |
Treasury stock, shares (in shares) | 55,887,992 | 52,323,090 |
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (7,132) | $ (11,341) |
Other comprehensive income (loss): | ||
Cumulative translation adjustments | (251) | 19 |
Changes in market value of investments: | ||
Changes in unrealized losses, net of tax benefit of ($3), and ($1), respectively | (11) | (5) |
Total net change in market value of investments | (11) | (5) |
Changes in market value of derivatives: | ||
Changes in market value of derivatives, net of (benefit) taxes of ($46), and $40, respectively | (148) | 129 |
Reclassification adjustment for net gains (losses) included in net loss, net of taxes (benefit) of $38, and ($25), respectively | 122 | (80) |
Total net change in market value of derivatives | (26) | 49 |
Other comprehensive income (loss) | (288) | 63 |
Total comprehensive loss | $ (7,420) | $ (11,278) |
Consolidated Statements of Comprehensive Loss (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Statement of Comprehensive Income [Abstract] | ||
Changes in unrealized losses, tax expense (benefit) | $ (3) | $ (1) |
Changes in market value of derivatives, tax expense (benefit) | (46) | 40 |
Reclassification adjustment for net gains (losses) included in net income (loss), tax expense (benefit) | $ 38 | $ (25) |
BASIS OF PRESENTATION |
3 Months Ended |
---|---|
Jun. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The accompanying unaudited interim consolidated financial statements have been prepared by NetScout Systems, Inc. (NetScout or the Company). Certain information and footnote disclosures normally included in financial statements prepared under United States generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). In the opinion of management, the unaudited interim consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the Company's financial position and stockholders' equity, results of operations and cash flows. The year-end consolidated balance sheet data and statement of stockholders' equity were derived from the Company's audited financial statements, but do not include all disclosures required by GAAP. The results reported in these unaudited interim consolidated financial statements are not necessarily indicative of results that may be expected for the entire year. All significant intercompany accounts and transactions are eliminated in consolidation. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2022 filed with the Securities and Exchange Commission on May 19, 2022. COVID-19 Risks and Uncertainties The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of its business. The future impacts of the pandemic and any resulting economic impact on the Company's operations are evolving. It is possible that the measures taken by the governments of countries affected and the resulting economic impact may materially and adversely affect the Company's future results of operations, cash flows and financial position as well as its customers. The Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued. The Company has taken and continues to take precautionary actions to manage costs and spending across the organization. This includes managing discretionary spending and hiring activities. In addition, based on covenant levels, the Company had, as of June 30, 2022, an incremental $600 million available under its revolving credit facility. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the CARES Act) was enacted. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The Company had elected to defer the employer-paid portion of social security taxes. As of June 30, 2022, the Company had deferred $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 accrued other in the Company's consolidated balance sheet at June 30, 2022. The Company expects net cash provided by operations combined with cash, cash equivalents, and marketable securities and borrowing availability under the revolving credit facility to provide sufficient liquidity to fund current obligations, capital spending, debt service requirements and working capital requirements over at least the next twelve months. Recent Accounting Pronouncements In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires companies to recognize and measure contract assets and contract liabilities acquired in a business combination as if the acquiring company originated the related revenue contracts. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. ASU 2021-08 is effective for the Company beginning April 1, 2023. Amendments within the standard are required to be applied on a prospective basis from the date of adoption. The adoption is not expected to have a material impact on the Company's financial position, results of operations, and disclosures. We will apply the provisions of ASU 2021-08 after adoption to future acquisitions, if any. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments provide optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform, which clarifies the scope and application of certain optional expedients and exceptions regarding the original guidance. ASU 2021-01 may be applied prospectively through December 31, 2022. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The adoption is not expected to have a material impact on the Company's financial position, results of operations, and disclosures.
|
REVENUE |
3 Months Ended | ||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||
REVENUE | REVENUE 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 from the sale of network management tools and security solutions for service provider and enterprise customers, which include hardware, software and service offerings. The Company's product sales consist of software only offerings and offerings which include hardware appliances with embedded software that are essential to providing customers the intended functionality of the solutions. The Company accounts for revenue once a legally enforceable contract with a customer has been approved by the parties and the related promises to transfer products or services have been identified. A contract is defined by the Company as an arrangement with commercial substance identifying payment terms, each party’s rights and obligations regarding the products or services to be transferred and the amount the Company deems probable of collection. Customer contracts may include promises to transfer multiple products and services to a customer. Determining whether the products and services are considered distinct performance obligations that should be accounted for separately or as one combined performance obligation may require significant judgment. Revenue is recognized when control of the products or services are transferred to the Company's customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for products and services. Product revenue is typically recognized upon shipment, provided a legally enforceable contract exists, control has passed to the customer, and in the case of software products, when the customer has the rights and ability to access the software, and collection of the related receivable is probable. If any significant obligations to the customer remain post-delivery, typically involving obligations relating to installation and acceptance by the customer, revenue recognition is deferred until such obligations have been fulfilled. The Company's service offerings include installation, integration, extended warranty and maintenance services, post-contract customer support, stand-ready software-as-a-service (SAAS) and other professional services including consulting and training. The Company generally provides software and/or hardware support as part of product sales. Revenue related to the initial bundled software and hardware support is recognized ratably over the support period. In addition, customers can elect to purchase extended support agreements for periods after the initial software/hardware warranty expiration. Support services generally include rights to unspecified upgrades (when and if available), telephone and internet-based support, updates, bug fixes and hardware repair and replacement. Consulting services are recognized upon delivery or completion of performance depending on the terms of the underlying contract. Reimbursements of out-of-pocket expenditures incurred in connection with providing consulting services are included in services revenue, with the offsetting expense recorded in cost of service revenue. Training services include on-site and classroom training. Training revenues are recognized upon delivery of the training. Generally, the Company's contracts are accounted for individually. However, when contracts are closely interrelated and dependent on each other, it may be necessary to account for two or more contracts as one to reflect the substance of the group of contracts. Bundled arrangements are concurrent customer purchases of a combination of the Company's product and service offerings that may be delivered at various points in time. The Company allocates the transaction price among the performance obligations in an amount that depicts the relative standalone selling prices (SSP) of each obligation. Judgment is required to determine the SSP for each distinct performance 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 performance obligation's historical pricing. The Company also considers its overall pricing objectives and practices across different sales channels and geographies, and market conditions. Generally, the Company has established SSP for a majority of its service performance obligations based on historical standalone sales. In certain instances, the Company has established SSP for services based upon an estimate of profitability and the underlying cost to fulfill those services. SSP has primarily been established for product performance obligations as the average or median selling price the performance obligation was recently sold for, whether sold alone or sold as part of a bundle transaction. The Company reviews sales of the product performance obligations on a quarterly basis and updates, when appropriate, its SSP for such performance obligations to ensure that it reflects recent pricing experience. The Company's products are distributed through its direct sales force 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 transfers 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 from the customer. With limited exceptions, the Company's return policy does not allow product returns for a refund. Returns have been insignificant to date. In addition, the Company has a history of successfully collecting receivables from its resellers and distributors. During the three months ended June 30, 2022, the Company recognized revenue of $114.1 million related to the Company's deferred revenue balance reported at March 31, 2022. Performance Obligations Customer contracts may include promises to transfer multiple products and services to a customer. Determining whether the products and services are considered distinct performance obligations that should be accounted for separately or as one combined performance obligation may require significant judgment. The transaction price is allocated among performance obligations in bundled contracts in an amount that depicts the relative standalone selling prices of each obligation. For contracts involving distinct hardware and software licenses, the performance obligations are satisfied at a point in time when control is transferred to the customer. For standalone maintenance and post-contract support (PCS) the performance obligation is satisfied ratably over the contract term as a stand-ready obligation. For consulting and training services, the performance obligation may be satisfied over the contract term as a stand-ready obligation, satisfied over a period of time as those services are delivered, or satisfied at the completion of the service when control has transferred, or the services have expired unused. Payments for hardware, software licenses, one-year maintenance, PCS and consulting services, are typically due up front with payment terms of 30 to 90 days. However, the Company does have contracts pursuant to which billings occur ratably over a period of years following the transfer of control for the contracted performance obligations. Payments on multi-year maintenance, PCS and consulting services are typically due in annual installments over the contract term. The Company did not have any material variable consideration such as obligations for returns, refunds or warranties at June 30, 2022. At June 30, 2022, the Company had total deferred revenue of $423.9 million, which represents the aggregate total contract price allocated to undelivered performance obligations. The Company expects to recognize $297.3 million, or 70%, of this revenue during the next 12 months, and expects to recognize the remaining $126.6 million, or 30%, of this revenue thereafter. Because of NetScout's revenue recognition policies, there are circumstances for which the Company does not recognize revenue relating to sales transactions that have been billed, but the related account receivable has not been collected. While the receivable represents an enforceable obligation, the Company does not believe its right to payment is unconditional, therefore for balance sheet presentation purposes, the Company has not recognized the deferred revenue or the related account receivable and no amounts appear in the consolidated balance sheets for such transactions because control of the underlying deliverable has not transferred. The aggregate amount of unrecognized accounts receivable and deferred revenue was $5.5 million and $9.4 million at June 30, 2022 and March 31, 2022, respectively. NetScout expects that the amount of billed and unbilled deferred revenue will change from quarter to quarter for several reasons, including the specific timing, duration and size of large customer support and service agreements, varying billing cycles of such agreements, the specific timing of customer renewals, and foreign currency fluctuations. The Company did not have material significant financing components, or variable consideration or performance obligations satisfied in a prior period recognized during the three months ended June 30, 2022. Contract Balances The Company may receive payments from customers based on billing schedules as established by the Company's contracts. Contract assets relate to performance obligations where control has transferred to the customer in advance of scheduled billings. The Company records unbilled accounts receivable representing the right to consideration in exchange for goods or services that have been transferred to a customer conditional on the passage of time. Deferred revenue relates to scenarios where billings with an unconditional right to payment occur before all performance obligations are delivered or payments are received in advance of performance under the contract. Costs to Obtain Contracts The Company has determined that the only significant 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 ratably over the remaining performance periods of the related contracts with remaining performance obligations. The Company expenses costs as incurred for sales commissions when the amortization period would have been one year or less. At June 30, 2022, the consolidated balance sheet included $9.6 million in assets related to sales commissions to be expensed in future periods. A balance of $5.2 million was included in prepaid expenses and other current assets, and a balance of $4.4 million was included in other assets in the Company's consolidated balance sheet at June 30, 2022. At March 31, 2022, the consolidated balance sheet included $8.8 million in assets related to sales commissions to be expensed in future 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 in other assets in the Company's consolidated balance sheet at March 31, 2022. During the three months ended June 30, 2022 and 2021, respectively, the Company recognized $1.7 million and $1.6 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 for Credit Losses The Company continually monitors collections from its customers. The Company evaluates the collectability of its accounts receivable and determines the appropriate allowance for credit losses based on a combination of factors, including but not limited to, analysis of the aging schedules, past due balances, historical collection experience and prevailing economic conditions. The following table summarizes the activity in the allowance for credit losses (in thousands):
|
CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS |
3 Months Ended |
---|---|
Jun. 30, 2022 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS | CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of investments, trade accounts receivable and accounts payable. The Company's cash, cash equivalents, and marketable securities are placed with financial institutions with high credit standings. At June 30, 2022, the Company had one direct customer which accounted for more than 10% of the accounts receivable balance, while no indirect channel partners accounted for more than 10% of the accounts receivable balance. At March 31, 2022, the Company had no direct customers or indirect channel partners which accounted for more than 10% of the accounts receivable balance. During the three months ended June 30, 2022, two direct customers, AT&T and Verizon, accounted for more than 10% of the Company's total revenue, while no indirect channel partners accounted for more than 10% of total revenue. During the three months ended June 30, 2021, no direct customers or indirect channel partners accounted for more than 10% of the Company's total revenue. Historically, the Company has not experienced any significant failure of its customers' ability to meet their payment obligations nor does the Company anticipate material non-performance by its customers in the future; accordingly, the Company does not require collateral from its customers. However, if the Company's assumptions are incorrect, there could be an adverse impact on its allowance for doubtful accounts.
|
SHARE-BASED COMPENSATION |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION On September 12, 2019, the Company's stockholders approved the 2019 Equity Incentive Plan (2019 Plan), which replaced the Company's 2007 Equity Incentive Plan, as amended (Amended 2007 Plan). The 2019 Plan permits the granting of incentive and nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, and other stock awards, collectively referred to as "share-based awards." On September 10, 2020, the Company's stockholders approved an amendment and restatement of the 2019 Plan (2019 Amended Plan) to increase the number of shares reserved for issuance by 4,700,000 shares, established a one-year minimum vesting requirement for awards granted on or after September 10, 2020, and changed the factor used to calculate the increase or reduction in the number of shares available for issuance under the 2019 Amended Plan. Periodically, the Company grants share-based awards to employees, officers, and directors of the Company and its subsidiaries. During the fiscal year ended March 31, 2022, the Company granted performance-based restricted stock units to certain executive officers that vest based upon the Company's total shareholder return as compared to the Russell 2000 Index over a three-year period ending in June 2024. The performance-based restricted stock units were valued using the Monte Carlo Simulation model. The measurement and recognition of compensation expense is based on estimated fair values for all share-based payment awards made to its employees and directors. Share-based award grants are generally measured at fair 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. The following is a summary of share-based compensation expense including restricted stock units and performance-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 fair values within the applicable cost and expense lines identified below (in thousands):
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CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES | CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents and those investments with original maturities greater than three months to be marketable securities. Cash and cash equivalents mainly consisted of U.S. government and municipal obligations, commercial paper, certificate of deposits, money market instruments and cash maintained with various financial institutions at June 30, 2022 and March 31, 2022. Marketable Securities The following is a summary of marketable securities held by NetScout at June 30, 2022, classified as short-term and long-term (in thousands):
The following is a summary of marketable securities held by NetScout at March 31, 2022, classified as short-term and long-term (in thousands):
Contractual maturities of the Company's marketable securities held at June 30, 2022 and March 31, 2022 were as follows (in thousands):
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FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets. Level 2 refers to fair values estimated using significant other observable inputs, and Level 3 includes fair values estimated using significant non-observable inputs. The following tables present the Company's financial assets and liabilities measured on a recurring basis using the fair value hierarchy at June 30, 2022 and March 31, 2022 (in thousands):
This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. On a recurring basis, the Company measures certain financial assets and liabilities at fair value, including marketable securities and derivative financial instruments. The Company's Level 1 investments are classified as such because they are valued using quoted market prices or alternative pricing sources with reasonable levels of price transparency. The Company's Level 2 investments are classified as such because they are valued using observable inputs other than Level 1 quoted prices that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets in markets that are not active.
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INVENTORIES |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES | INVENTORIESInventories are stated at the lower of actual cost or net realizable value. Cost is determined by using the first in, first out (FIFO) method. Inventories consist of the following (in thousands):
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GOODWILL AND INTANGIBLE ASSETS |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS Goodwill The Company has one reporting unit. The Company assesses goodwill for impairment at the reporting unit level at least annually, or on an interim basis if an event occurs or circumstances change that would, more likely than not, reduce the fair value of the reporting unit below its carrying value. The Company completed its annual impairment test on January 31, 2022 using the qualitative assessment as the Company concluded that it was more likely than not that the fair value of the reporting unit exceeded its carrying value. At June 30, 2022 and March 31, 2022, the carrying amount of goodwill was $1.7 billion. The change in the carrying amount of goodwill for the three months ended June 30, 2022 was due to the impact of foreign currency translation adjustments related to asset balances that are recorded in currencies other than the U.S. Dollar. The following table summarizes the changes in the carrying amount of goodwill for the three months ended June 30, 2022 as follows (in thousands):
Intangible Assets The net carrying amounts of intangible assets were $415.0 million and $433.4 million at June 30, 2022 and March 31, 2022, respectively. Intangible assets acquired in a business combination are recorded under the acquisition method of accounting at their estimated fair values at the date of acquisition. The Company amortizes acquired intangible assets over their estimated useful lives. Intangible assets include the following amortizable intangible assets at June 30, 2022 (in thousands):
Intangible assets include the following amortizable intangible assets at March 31, 2022 (in thousands):
Amortization included as cost of product revenue consists of amortization of developed technology, distributor relationships and technology licenses, core technology and software. Amortization included as operating expense consists of all other intangible assets. The following table provides a summary of amortization expense for the three months ended June 30, 2022 and 2021, respectively (in thousands):
The following is the expected future amortization expense at June 30, 2022 for the fiscal years ending March 31 (in thousands):
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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES NetScout operates internationally and, in the normal course of business, is exposed to fluctuations in foreign currency exchange rates. The exposures result from costs that are denominated in currencies other than the U.S. Dollar, primarily the Euro, British Pound, Canadian Dollar, and Indian Rupee. The Company manages its foreign cash flow risk by hedging forecasted cash flows for operating expenses denominated in foreign currencies for up to twelve months, within specified guidelines through the use of forward contracts. The Company enters into foreign currency exchange contracts to hedge cash flow exposures from costs that are denominated in currencies other than the U.S. Dollar. These hedges are designated as cash flow hedges at inception. NetScout also periodically enters into forward contracts to manage exchange rate risks associated with certain third-party transactions and for which the Company does not elect hedge accounting treatment as there is no difference in the timing of gain or loss recognition on the hedging instrument and the hedged item. All of the Company's derivative instruments are utilized for risk management purposes, and the Company does not use derivatives for speculative trading purposes. These contracts will mature over the next twelve months and are expected to impact earnings on or before maturity. The notional amounts and fair values of derivative instruments in the consolidated balance sheets at June 30, 2022 and March 31, 2022 were as follows (in thousands):
(a) Notional amounts represent the gross contract/notional amount of the derivatives outstanding. The following table provides the effect that foreign exchange forward contracts designated as hedging instruments had on other comprehensive income (OCI) and results of operations for the three months ended June 30, 2022 and 2021 (in thousands):
(a)The amount represents the change in fair value of derivative contracts due to changes in spot rates. (b)The amount represents reclassification from other comprehensive income to earnings that occurs when the hedged item affects earnings. The following table provides the effect that foreign exchange forward contracts not designated as hedging instruments had on the Company's results of operations for the three months ended June 30, 2022 and 2021 (in thousands):
(a)The amount represents the change in fair value of derivative contracts due to changes in spot rates.
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LONG-TERM DEBT |
3 Months Ended |
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Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT 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, BofA Securities Inc., RBC Capital Markets, PNC Capital Markets LLC and Mizuho Bank, Ltd., as joint lead arrangers and joint bookrunners; Santander Bank, N.A., U.S. Bank National Association, Fifth Third Bank National Association, Silicon Valley Bank and TD Bank, N.A., as co-documentation agents; and the lenders party thereto. The Second Amended and Restated Credit Agreement provides for a five-year, $800.0 million senior secured revolving credit facility, including a letter of credit sub-facility of up to $75.0 million. The Company may elect to use the credit facility for general corporate purposes (including to finance the repurchase of shares of the Company's common stock). The 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. In connection with the Second Amended and Restated Credit Agreement, during the fiscal year ended March 31, 2022, the Company paid off the outstanding balance of $350 million under the Amended Credit Agreement 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 off of unamortized deferred financing costs, which was included in interest expense in the consolidated statements of operations for the fiscal year ended March 31, 2022. On May 9, 2022, the Company repaid $150.0 million of borrowings under the Second Amended and Restated Credit Agreement. At June 30, 2022, $200 million was outstanding under the Second Amended and Restated Credit Agreement. 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 (for the interest period selected by the Company, subject to customary provisions regarding succession from LIBO rate to SOF rate in anticipation of the upcoming discontinuation of the LIBO rate), in each case plus an applicable margin. For the period from the delivery of the Company's financial statements for the quarter ended March 31, 2022, until the Company has delivered financial statements for the quarter ended June 30, 2022, the applicable margin will be 1.25% per annum for Term Benchmark Revolving loans and 0.25% per annum for Alternate Base Rate loans, and thereafter the applicable margin will vary depending on the Company's consolidated gross leverage ratio, ranging from 1.00% per annum for Alternate Base Rate loans and 2.00% per annum for 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 for Alternate Base Rate loans and 1.00% per annum for Term Benchmark Revolving loans if the Company's consolidated gross leverage ratio is equal to or less than 1.50 to 1.00. The Company's consolidated gross leverage ratio is the ratio of its consolidated total debt compared to its consolidated EBITDA as defined in the Second Amended and Restated Credit Agreement (adjusted consolidated EBITDA). Adjusted consolidated EBITDA includes certain adjustments, including, without limitation, adjustments relating to extraordinary, unusual or non-recurring charges, certain restructuring charges, non-cash charges, certain transaction costs and expenses and certain pro forma adjustments in connection with material acquisitions and dispositions, all as set forth in detail in the Second Amended and Restated Credit Agreement. Commitment fees will accrue on the daily unused amount of the credit facility. For the period from the delivery of the Company's financial statements for the quarter ended March 31, 2022, until the Company has delivered financial statements for the quarter ended June 30, 2022, the commitment fee will be 0.20% per annum, and thereafter the commitment fee will vary depending on the Company's consolidated gross leverage ratio, ranging from 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 fees are payable to each lender providing the letter of credit sub-facility on the amount of such lender's letter of credit exposure, during the period from 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 applicable rate that would be used to determine the interest rate applicable to Term Benchmark Revolving loans assuming such loans were outstanding during the period. Additionally, the Company will pay a fronting fee to each issuing bank in amounts to be agreed to between the Company and the applicable issuing bank. Interest on Alternate Base Rate loans is payable at the end of each calendar quarter. Interest on Term Benchmark Revolving loans is payable 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 facility 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 subsidiary guarantors, including a pledge of all the capital stock of material subsidiaries held directly by the Borrower and the subsidiary guarantors (which pledge, in the case of any foreign subsidiary, is limited to 65% of the voting stock), subject to certain customary 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 applicable to the Company and its restricted subsidiaries, including, without limitation, limitations on additional indebtedness, liens, various fundamental changes, dividends and distributions, investments (including acquisitions), transactions with affiliates, asset sales, including sale-leaseback transactions, speculative hedge agreements, payment of junior financing, changes in business and other limitations customary in senior secured credit facilities. 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 that the Company maintain a minimum consolidated interest coverage ratio. The Company's consolidated 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 consolidated net leverage ratio is 4.00 to 1.00. These covenants and limitations are more fully described in the Second Amended and Restated Credit Agreement. As of June 30, 2022, the Company was in compliance with all covenants, including the specified total consolidated net leverage ratio range of 4.00 to 1.00. The Second Amended and Restated Credit Agreement provides that events of default will exist in certain circumstances, including failure to make payment of principal or interest on the loans when required, failure to perform certain obligations under the Second Amended and Restated Credit Agreement and related documents including a failure to meet the maximum total consolidated net leverage ratio covenant, defaults under certain other indebtedness, certain insolvency events, certain events arising under ERISA, a change of control and certain other events. Upon an event of default, the administrative agent with the consent of, or at the request of, the holders of more than 50% in principal amount of the loans and commitments, may terminate the commitments and accelerate the maturity of the loans and enforce certain other remedies under the Second Amended and Restated Credit Agreement and the other loan documents. The Company had unamortized capitalized debt issuance costs, net of $4.6 million at June 30, 2022, which are being amortized over the life of the revolving credit facility. The unamortized capitalized debt issuance costs balance of $1.1 million was included as prepaid expenses and other current assets and a balance of $3.5 million was included as other assets in the Company's consolidated balance sheet.
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RESTRUCTURING CHARGES |
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||
RESTRUCTURING CHARGES | RESTRUCTURING CHARGES During the three months ended June 30, 2022, the Company restructured certain departments to better align functions resulting in the termination of eighteen employees. As a result of the workforce reduction, during the three months ended June 30, 2022, the Company recorded a restructuring charge totaling $1.8 million related to one-time employee-related termination benefits for the employees that were notified of their termination during the period. The one-time termination benefits will be paid in full during the fiscal year ending March 31, 2023. The following table provides a summary of the activity related to the restructuring plan and the restructuring liability (in thousands):
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LEASES |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | LEASES The Company determines if an arrangement is a lease at inception. Right-of-use (ROU) assets represent the Company's right to use an underlying asset for the duration of the lease term. Lease liabilities represent the Company's contractual obligation to make lease payments over the lease term. The Company's policy is to combine lease and non-lease components and to not recognize ROU assets and lease liabilities for short-term leases. Leases with an initial term of twelve months or less are classified as short-term leases. ROU assets are recorded and recognized at commencement for the lease liability amount, plus initial direct costs incurred less lease incentives received. Lease liabilities are recorded at the present value of future 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 determinable. Incremental borrowing rates are calculated periodically to estimate the rate the Company would pay to borrow the funds necessary to obtain an asset of similar value over a similar term. Lease expenses relating to operating leases are recognized on a straight-line basis over the lease term. The Company has operating leases for administrative, research and development, sales and marketing and manufacturing facilities and equipment under various non-cancelable lease agreements. The Company's leases have remaining lease terms ranging from 1 year to 9 years. The Company's lease terms may include options to extend or terminate the lease where it is reasonably certain that the Company will exercise those options. The Company considers several economic factors when making this determination, including but not limited to, the significance of leasehold improvements incurred in the office space, the difficulty in replacing the asset, underlying contractual obligations, or specific characteristics unique to a particular lease. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company has an obligation to return certain leased facilities to their original condition at the end of the respective lease term. These obligations were not material to the Company's financial statements for all periods presented. Most of the Company's lease agreements contain variable payments, primarily for common area maintenance (CAM), which are expensed as incurred and not included in the measurement of the ROU assets and lease liabilities. The components of operating lease cost for the three months ended June 30, 2022 and 2021 were as follows (in thousands):
The table below presents supplemental cash flow information related to leases during the three months ended June 30, 2022 and 2021 (in thousands):
At June 30, 2022 and March 31, 2022, the weighted average remaining lease term in years and weighted average discount rate were as follows:
Future minimum payments under non-cancellable leases at June 30, 2022 are as follows (in thousands):
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COMMITMENTS AND CONTINGENCIES |
3 Months Ended |
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Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES From time to time, NetScout is subject to legal proceedings and claims in the ordinary 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 effect on the Company's financial condition, results of operations or cash flows. As previously disclosed, in March 2016, Packet Intelligence LLC (Packet Intelligence or Plaintiff) filed a Complaint against NetScout and two subsidiary entities in the United States District Court for the Eastern District of Texas asserting infringement of five United States patents. Plaintiff's Complaint alleged that legacy Tektronix GeoProbe products, including the G10 and GeoBlade products, infringed these patents. NetScout filed an Answer denying Plaintiff's allegations and asserting that Plaintiff's patents were, among other things, invalid, not infringed, and unenforceable due to inequitable conduct. In October 2017, a jury trial was held to address the parties' claims and counterclaims regarding infringement of three patents by the G10 and GeoBlade products, invalidity of these patents, and damages. In October 2017, the jury rendered a verdict finding in favor of the Plaintiff and that Plaintiff was entitled to $3,500,000 for pre-suit damages and $2,250,000 for post-suit damages. The jury indicated that the awarded damages amounts were intended to reflect a running royalty. In September 2018, the Court entered judgment and "enhanced" the jury verdict in the amount of $2.8 million as a result of a jury finding. The judgment also awarded pre- and post-judgment interest, and a running royalty on the G10 and GeoBlade products until the expiration of the patents at issue, the last date being June 2022. Following the entry of final judgment, NetScout appealed, and in July 2020, the Court of Appeals for the Federal Circuit (Federal Circuit) issued a decision vacating the $3,500,000 pre-suit damages award, affirming 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 filed a petition for a writ of certiorari to the United States Supreme Court, which was subsequently denied, challenging, among other issues, the basis for enhanced damages and the patentability 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. After the PTAB decisions were issued, NetScout moved, among other things, to dismiss the case and enter judgment in its favor on the grounds that the PTAB decisions invalidating the asserted claims precluded Plaintiff from continuing to assert its patent infringement causes of action and from seeking damages from NetScout. The District Court denied NetScout’s motion with respect to its request to dismiss the case and enter judgment in its favor, but in response to alternative requests for relief requested by NetScout, vacated $1.7 million of the "enhanced" jury 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 final judgment awarding Plaintiff $2.25 million in post-suit damages, $1.1 million in enhanced damages, pre- and post-judgment interest, and a running royalty on the G10 and GeoBlade products until the expiration of the patents at issue, the last expiration date being June 2022. On July 20, 2022, NetScout filed a notice of appeal to the Court of Appeals for the Federal Circuit from, among other things, the amended final judgment. In view of the 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 NetScout's appeal, NetScout has concluded that the risk of loss associated with such damages award remains "probable" in accounting terms, and that the risk of loss associated with pre-suit damages is remote.
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PENSION BENEFIT PLANS |
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PENSION BENEFIT PLANS | PENSION BENEFIT PLANS Certain of the Company's non-U.S. employees participate in noncontributory defined benefit pension plans. None of the Company's employees in the U.S. participate in any noncontributory defined benefit pension plans. In general, these plans are funded based on considerations relating to legal requirements, underlying asset returns, the plan's funded status, the anticipated deductibility of the contribution, local practices, market conditions, interest rates and other factors. The following sets forth the components of the Company's net periodic pension cost of the noncontributory defined benefit pension plans for the three months ended June 30, 2022 and 2021 (in thousands):
Expected Contributions During the three months ended June 30, 2022, the Company made contributions of $0.1 million to its defined benefit pension plans. During the fiscal year ending March 31, 2023, the Company's cash contribution requirements for its defined benefit pension plans are expected to be less than $1.0 million. As a majority of the participants within the Company's plans are all active employees, the benefit payments are not expected to be material in the foreseeable future.
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TREASURY STOCK |
3 Months Ended |
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Jun. 30, 2022 | |
Equity [Abstract] | |
TREASURY STOCK | TREASURY STOCK On October 24, 2017, the Company's Board of Directors approved a share repurchase program that enabled the Company to repurchase up to twenty-five million shares of its common stock (2017 Share Repurchase Program). This program became effective when the Company's previously disclosed twenty million share repurchase program was completed. The Company was not obligated to acquire any specific amount of common stock within any particular timeframe as a result of this share repurchase program. Through June 30, 2022, the Company repurchased a total of 22,497,332 shares for $612.6 million in the open market under the 2017 Share Repurchase Program, and at June 30, 2022, 2,502,668 shares of common stock remained available to be purchased under the 2017 Share Repurchase Program. On May 3, 2022, the Company's Board of Directors approved a new share repurchase program that enables the Company to repurchase up to twenty-five million shares of its common stock (2022 Share Repurchase Program). This new program will become effective once the Company's 2017 Share Repurchase Program is completed. The Company is not obligated to acquire any specific amount of common stock within any particular timeframe as a result of its new share repurchase program. On May 9, 2022, the Company entered into accelerated share repurchase (ASR) 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 accelerated stock repurchase transactions under the 2017 Share Repurchase Program. Under the terms of the ASR, the Company made a $75 million payment to each of the Dealers on May 10, 2022, and received an initial delivery of 1,627,907 shares from each of the Dealers, or 3,255,814 shares in the aggregate, which is approximately 70 percent of the total number of shares of the Company's common stock expected to be repurchased under the ASR. These shares were deducted under the 2017 Share Repurchase Program. The final number of shares repurchased under the ASR is dependent upon the average of the daily volume-weighted average prices of the Company’s common stock during the term of the ASR, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR. The delivery of additional shares of common stock to the Company or an additional delivery of shares of common stock or a cash payment, at NetScout's election, by the Company to the Dealers may be required. The final settlement of each of the ASR transactions is expected to occur no later than the end of the third quarter of the fiscal year ending March 31, 2023. In connection with the delivery of shares of the Company's common stock upon vesting of restricted stock units, the Company withheld 309,088 shares and 164,133 shares at a cost of $10.8 million and $4.8 million, respectively, related to minimum statutory tax withholding requirements on these restricted stock units during the three months ended June 30, 2022 and 2021, respectively. These withholding transactions do not fall under the share repurchase programs described above, and therefore do not reduce the number of shares that are available for repurchase under those programs.
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NET LOSS PER SHARE |
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NET LOSS PER SHARE | NET LOSS PER SHARE Calculations of the basic and diluted net loss per share and potential common shares are as follows (in thousands, except for per share data):
The following table sets forth restricted stock units excluded from the calculation of diluted net loss per share, since their inclusion would be anti-dilutive (in thousands):
Basic net loss per share is calculated by dividing net loss by the weighted average number of shares outstanding during the period. Unvested restricted shares, although legally issued and outstanding, are not considered outstanding for purposes of calculating basic earnings per share. Diluted net loss per share is calculated by dividing net loss by the weighted average number of shares outstanding plus the dilutive effect, if any, of outstanding stock options, restricted shares and restricted stock units using the treasury stock method. The calculation of the dilutive effect of outstanding equity awards under the treasury stock method includes consideration of proceeds from the assumed exercise of stock options and unrecognized compensation expense as additional proceeds. As the Company incurred a net loss during the three months ended June 30, 2022 and 2021, all outstanding restricted stock units and performance-based restricted stock units have an anti-dilutive effect and are therefore excluded from the computation of diluted weighted average shares outstanding. The delivery of approximately 3.3 million shares under the Company's ASR agreements reduced the Company's outstanding shares used to determine the weighted average common shares outstanding for purposes of calculating basic and diluted earnings per share for the three months ended June 30, 2022. See Note 15 for additional information.
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INCOME TAXES |
3 Months Ended |
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Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Generally, the Company's effective tax rate differs from the U.S. federal statutory income tax rate primarily due to foreign withholding taxes, valuation allowances, and U.S. taxation on foreign earnings, partially offset by research and development tax credits, foreign tax credits, stock related compensation and the foreign derived intangible income deduction. The Company's effective tax rates of 32.0% and 13.3% represented an income tax benefit for the three months ended June 30, 2022 and 2021, respectively. The effective tax rate for the three months ended June 30, 2022 differed from the effective tax rate for the three months ended June 30, 2021 primarily due to the impact of research and development tax credits, U.S. taxation of foreign earnings and the foreign derived intangible income deduction relative to forecasted profits, which were partially offset by a discrete benefit from stock compensation during the three months ended June 30, 2022.
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SEGMENT AND GEOGRAPHIC INFORMATION |
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT AND GEOGRAPHIC INFORMATION | SEGMENT AND GEOGRAPHIC INFORMATION The Company reports revenues and income under one reportable segment. The Company manages its business in the following geographic areas: United States, Europe, Asia and the rest of the world. The Company's policies mandate compliance with economic sanctions and the export controls. Total revenue by geography is as follows (in thousands): The United States revenue includes sales to resellers in the United States. These resellers fulfill customer orders and may subsequently ship the Company's products to international locations. Further, the Company determines the geography of its sales after considering where the contract originated. A majority of revenue attributable to locations outside of the United States is a result of export sales. Substantially all of the Company's identifiable assets are located in the United States.
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BASIS OF PRESENTATION (Policies) |
3 Months Ended |
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Jun. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | BASIS OF PRESENTATION The accompanying unaudited interim consolidated financial statements have been prepared by NetScout Systems, Inc. (NetScout or the Company). Certain information and footnote disclosures normally included in financial statements prepared under United States generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). In the opinion of management, the unaudited interim consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the Company's financial position and stockholders' equity, results of operations and cash flows. The year-end consolidated balance sheet data and statement of stockholders' equity were derived from the Company's audited financial statements, but do not include all disclosures required by GAAP. The results reported in these unaudited interim consolidated financial statements are not necessarily indicative of results that may be expected for the entire year. All significant intercompany accounts and transactions are eliminated in consolidation. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2022 filed with the Securities and Exchange Commission on May 19, 2022.
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Recent Accounting Pronouncements | Recent Accounting Pronouncements In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires companies to recognize and measure contract assets and contract liabilities acquired in a business combination as if the acquiring company originated the related revenue contracts. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. ASU 2021-08 is effective for the Company beginning April 1, 2023. Amendments within the standard are required to be applied on a prospective basis from the date of adoption. The adoption is not expected to have a material impact on the Company's financial position, results of operations, and disclosures. We will apply the provisions of ASU 2021-08 after adoption to future acquisitions, if any. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments provide optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform, which clarifies the scope and application of certain optional expedients and exceptions regarding the original guidance. ASU 2021-01 may be applied prospectively through December 31, 2022. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The adoption is not expected to have a material impact on the Company's financial position, results of operations, and disclosures.
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Revenue Recognition Policy | 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 from the sale of network management tools and security solutions for service provider and enterprise customers, which include hardware, software and service offerings. The Company's product sales consist of software only offerings and offerings which include hardware appliances with embedded software that are essential to providing customers the intended functionality of the solutions. The Company accounts for revenue once a legally enforceable contract with a customer has been approved by the parties and the related promises to transfer products or services have been identified. A contract is defined by the Company as an arrangement with commercial substance identifying payment terms, each party’s rights and obligations regarding the products or services to be transferred and the amount the Company deems probable of collection. Customer contracts may include promises to transfer multiple products and services to a customer. Determining whether the products and services are considered distinct performance obligations that should be accounted for separately or as one combined performance obligation may require significant judgment. Revenue is recognized when control of the products or services are transferred to the Company's customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for products and services. Product revenue is typically recognized upon shipment, provided a legally enforceable contract exists, control has passed to the customer, and in the case of software products, when the customer has the rights and ability to access the software, and collection of the related receivable is probable. If any significant obligations to the customer remain post-delivery, typically involving obligations relating to installation and acceptance by the customer, revenue recognition is deferred until such obligations have been fulfilled. The Company's service offerings include installation, integration, extended warranty and maintenance services, post-contract customer support, stand-ready software-as-a-service (SAAS) and other professional services including consulting and training. The Company generally provides software and/or hardware support as part of product sales. Revenue related to the initial bundled software and hardware support is recognized ratably over the support period. In addition, customers can elect to purchase extended support agreements for periods after the initial software/hardware warranty expiration. Support services generally include rights to unspecified upgrades (when and if available), telephone and internet-based support, updates, bug fixes and hardware repair and replacement. Consulting services are recognized upon delivery or completion of performance depending on the terms of the underlying contract. Reimbursements of out-of-pocket expenditures incurred in connection with providing consulting services are included in services revenue, with the offsetting expense recorded in cost of service revenue. Training services include on-site and classroom training. Training revenues are recognized upon delivery of the training. Generally, the Company's contracts are accounted for individually. However, when contracts are closely interrelated and dependent on each other, it may be necessary to account for two or more contracts as one to reflect the substance of the group of contracts. Bundled arrangements are concurrent customer purchases of a combination of the Company's product and service offerings that may be delivered at various points in time. The Company allocates the transaction price among the performance obligations in an amount that depicts the relative standalone selling prices (SSP) of each obligation. Judgment is required to determine the SSP for each distinct performance 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 performance obligation's historical pricing. The Company also considers its overall pricing objectives and practices across different sales channels and geographies, and market conditions. Generally, the Company has established SSP for a majority of its service performance obligations based on historical standalone sales. In certain instances, the Company has established SSP for services based upon an estimate of profitability and the underlying cost to fulfill those services. SSP has primarily been established for product performance obligations as the average or median selling price the performance obligation was recently sold for, whether sold alone or sold as part of a bundle transaction. The Company reviews sales of the product performance obligations on a quarterly basis and updates, when appropriate, its SSP for such performance obligations to ensure that it reflects recent pricing experience. The Company's products are distributed through its direct sales force 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 transfers 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 from the customer. With limited exceptions, the Company's return policy does not allow product returns for a refund. Returns have been insignificant to date. In addition, the Company has a history of successfully collecting receivables from its resellers and distributors.
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REVENUE (Tables) |
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||
Summary of Allowance for Credit Losses | The following table summarizes the activity in the allowance for credit losses (in thousands):
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SHARE-BASED COMPENSATION (Tables) |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Share-Based Compensation Expense | The following is a summary of share-based compensation expense including restricted stock units and performance-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 fair values within the applicable cost and expense lines identified below (in thousands):
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CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Marketable Securities | The following is a summary of marketable securities held by NetScout at June 30, 2022, classified as short-term and long-term (in thousands):
The following is a summary of marketable securities held by NetScout at March 31, 2022, classified as short-term and long-term (in thousands):
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Summary of Contractual Maturities of Marketable Securities | Contractual maturities of the Company's marketable securities held at June 30, 2022 and March 31, 2022 were as follows (in thousands):
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FAIR VALUE MEASUREMENTS (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Financial Assets and Liabilities | The following tables present the Company's financial assets and liabilities measured on a recurring basis using the fair value hierarchy at June 30, 2022 and March 31, 2022 (in thousands):
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INVENTORIES (Tables) |
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventories | Inventories consist of the following (in thousands):
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GOODWILL AND INTANGIBLE ASSETS (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Carrying Amount of Goodwill | The following table summarizes the changes in the carrying amount of goodwill for the three months ended June 30, 2022 as follows (in thousands):
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Schedule of Intangible Assets | Intangible assets include the following amortizable intangible assets at June 30, 2022 (in thousands):
Intangible assets include the following amortizable intangible assets at March 31, 2022 (in thousands):
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Finite-lived Intangible Assets Amortization Expense | The following table provides a summary of amortization expense for the three months ended June 30, 2022 and 2021, respectively (in thousands):
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Schedule of Expected Future Amortization Expense | The following is the expected future amortization expense at June 30, 2022 for the fiscal years ending March 31 (in thousands):
|
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Notional Amounts and Fair Values of Derivative Instruments on Consolidated Balance Sheet | The notional amounts and fair values of derivative instruments in the consolidated balance sheets at June 30, 2022 and March 31, 2022 were as follows (in thousands):
(a) Notional amounts represent the gross contract/notional amount of the derivatives outstanding.
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Summary of Effect of Foreign Exchange Forward Contracts on OCI and Results of Operations | The following table provides the effect that foreign exchange forward contracts designated as hedging instruments had on other comprehensive income (OCI) and results of operations for the three months ended June 30, 2022 and 2021 (in thousands):
(a)The amount represents the change in fair value of derivative contracts due to changes in spot rates. (b)The amount represents reclassification from other comprehensive income to earnings that occurs when the hedged item affects earnings. The following table provides the effect that foreign exchange forward contracts not designated as hedging instruments had on the Company's results of operations for the three months ended June 30, 2022 and 2021 (in thousands):
(a)The amount represents the change in fair value of derivative contracts due to changes in spot rates.
|
RESTRUCTURING CHARGES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Liability | The following table provides a summary of the activity related to the restructuring plan and the restructuring liability (in thousands):
|
LEASES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Operating Lease Cost and Supplemental Cash Flow Information | The components of operating lease cost for the three months ended June 30, 2022 and 2021 were as follows (in thousands):
The table below presents supplemental cash flow information related to leases during the three months ended June 30, 2022 and 2021 (in thousands):
At June 30, 2022 and March 31, 2022, the weighted average remaining lease term in years and weighted average discount rate were as follows:
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Future Minimum Payments Under Non-Cancellable Leases | Future minimum payments under non-cancellable leases at June 30, 2022 are as follows (in thousands):
|
PENSION BENEFIT PLANS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Periodic Pension Costs of Noncontributory Defined Benefit Pension Plans | The following sets forth the components of the Company's net periodic pension cost of the noncontributory defined benefit pension plans for the three months ended June 30, 2022 and 2021 (in thousands):
|
NET LOSS PER SHARE (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Calculations of the Basic and Diluted Net Loss Per Share and Potential Common Shares | Calculations of the basic and diluted net loss per share and potential common shares are as follows (in thousands, except for per share data):
|
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Summary of Antidilutive Securities Excluded from Computation of Diluted Net Income (Loss) Per Share | The following table sets forth restricted stock units excluded from the calculation of diluted net loss per share, since their inclusion would be anti-dilutive (in thousands):
|
SEGMENT AND GEOGRAPHIC INFORMATION (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Total Revenue by Geography | Total revenue by geography is as follows (in thousands):
|
BASIS OF PRESENTATION - Narrative (Details) $ in Millions |
Jun. 30, 2022
USD ($)
|
---|---|
Summary Of Significant Accounting Policies [Line Items] | |
Deferred employer payroll taxes | $ 4.5 |
Accrued Liabilities | |
Summary Of Significant Accounting Policies [Line Items] | |
Deferred employer payroll taxes | 4.5 |
Senior Secured Revolving Credit Facility | Line of Credit | |
Summary Of Significant Accounting Policies [Line Items] | |
Current borrowing capacity | $ 600.0 |
REVENUE - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Mar. 31, 2022 |
|
Disaggregation of Revenue [Line Items] | |||
Revenue recognized | $ 114.1 | ||
Deferred revenue | 423.9 | ||
Unrecognized accounts receivable and deferred revenue | 5.5 | $ 9.4 | |
Capitalized contract cost | 9.6 | 8.8 | |
Amortization of capitalized costs to obtain contracts | 1.7 | $ 1.6 | |
Prepaid Expenses and Other Current Assets | |||
Disaggregation of Revenue [Line Items] | |||
Capitalized contract cost | 5.2 | 4.6 | |
Other Assets | |||
Disaggregation of Revenue [Line Items] | |||
Capitalized contract cost | $ 4.4 | $ 4.2 | |
Minimum | |||
Disaggregation of Revenue [Line Items] | |||
Payment terms | 30 days | ||
Maximum | |||
Disaggregation of Revenue [Line Items] | |||
Payment terms | 90 days |
REVENUE - Allowance for Credit Losses (Details) $ in Thousands |
3 Months Ended |
---|---|
Jun. 30, 2022
USD ($)
| |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |
Allowance for credit losses, beginning balance | $ 1,649 |
Provision for allowance for credit losses | (130) |
Recoveries and other adjustments | 136 |
Write off charged against the allowance for credit losses | (41) |
Allowance for credit losses, ending balance | $ 1,614 |
SHARE-BASED COMPENSATION - Narrative (Details) - shares |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Sep. 10, 2020 |
Jun. 30, 2022 |
Mar. 31, 2022 |
|
ESPP | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Percentage of common stock price for employees | 85.00% | ||
Performance Based Restricted Stock Units | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Award performance measurement period | 3 years | ||
2019 Amended Plan | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Number of new shares (in shares) | 4,700,000 | ||
2019 Amended Plan | Minimum | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share-based awards generally vesting years | 1 year |
CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES - Summary of Contractual Maturities of Marketable Securities (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Mar. 31, 2022 |
---|---|---|
Available-for-sale securities: | ||
Due in 1 year or less | $ 42,144 | $ 67,037 |
Due after 1 year through 5 years | 0 | 0 |
Available-for-sale Securities | $ 42,144 | $ 67,037 |
INVENTORIES (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Mar. 31, 2022 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 16,181 | $ 14,779 |
Work in process | 324 | 695 |
Finished goods | 5,930 | 5,761 |
Deferred costs | 405 | 6,985 |
Total inventories | $ 22,840 | $ 28,220 |
GOODWILL AND INTANGIBLE ASSETS - Narrative (Details) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 30, 2022
USD ($)
reporting_unit
|
Mar. 31, 2022
USD ($)
|
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Number of reporting units | reporting_unit | 1 | |
Goodwill | $ 1,726,200 | $ 1,723,156 |
Carrying value of intangible assets | $ 414,950 | $ 433,419 |
GOODWILL AND INTANGIBLE ASSETS - Schedule of Changes in Carrying Amount of Goodwill (Details) $ in Thousands |
3 Months Ended |
---|---|
Jun. 30, 2022
USD ($)
| |
Goodwill [Roll Forward] | |
Balance at March 31, 2022 | $ 1,723,156 |
Foreign currency translation impact | 3,044 |
Balance at June 30, 2022 | $ 1,726,200 |
GOODWILL AND INTANGIBLE ASSETS - Schedule of Amortization Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of acquired intangible assets | $ 16,539 | $ 18,673 |
Cost of product revenue | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of acquired intangible assets | 2,653 | 3,662 |
Operating expense | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of acquired intangible assets | $ 13,886 | $ 15,011 |
GOODWILL AND INTANGIBLE ASSETS - Schedule of Expected Future Amortization Expense (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Mar. 31, 2022 |
---|---|---|
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2023 (remaining nine months) | $ 49,531 | |
2024 | 57,837 | |
2025 | 50,676 | |
2026 | 46,323 | |
2027 | 43,447 | |
Thereafter | 167,136 | |
Net | $ 414,950 | $ 433,419 |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Narrative (Details) |
3 Months Ended |
---|---|
Jun. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Managing period of hedging forecasted cash flows for operating expenses denominated in foreign currencies | 12 months |
Contract maturity period | 12 months |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Summary of Notional Amounts and Fair Values of Derivative Instruments on Consolidated Balance Sheet (Details) - Forward contracts - USD ($) $ in Thousands |
Jun. 30, 2022 |
Mar. 31, 2022 |
---|---|---|
Prepaid Expenses and Other Current Assets | ||
Derivatives, Fair Value [Line Items] | ||
Prepaid Expenses and Other Current Assets | $ 0 | $ 20 |
Accrued Other | ||
Derivatives, Fair Value [Line Items] | ||
Accrued Other | 91 | 78 |
Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Notional Amounts | 1,997 | 5,578 |
Designated as Hedging Instrument | Prepaid Expenses and Other Current Assets | ||
Derivatives, Fair Value [Line Items] | ||
Prepaid Expenses and Other Current Assets | 0 | 20 |
Designated as Hedging Instrument | Accrued Other | ||
Derivatives, Fair Value [Line Items] | ||
Accrued Other | $ 91 | $ 78 |
RESTRUCTURING CHARGES - Narrative (Details) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 30, 2022
USD ($)
employee
|
Jun. 30, 2021
USD ($)
|
|
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | $ 1,774 | $ 0 |
One-time Termination Benefits | ||
Restructuring Cost and Reserve [Line Items] | ||
Number of employees terminated | employee | 18 | |
Restructuring charges | $ 1,800 |
RESTRUCTURING CHARGES - Schedule of Restructuring Liability (Details) - Q1FY23 Plan - One-time Termination Benefits $ in Thousands |
3 Months Ended |
---|---|
Jun. 30, 2022
USD ($)
| |
Restructuring Reserve [Roll Forward] | |
Balance at March 31, 2022 | $ 0 |
Restructuring charges to operations | 1,771 |
Cash payments | (218) |
Balance at June 30, 2022 | $ 1,553 |
LEASES - Narrative (Details) |
Jun. 30, 2022 |
---|---|
Minimum | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Remaining lease terms | 1 year |
Maximum | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Remaining lease terms | 9 years |
LEASES - Operating Lease Cost (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Leases [Abstract] | ||
Lease cost under long-term operating leases | $ 3,122 | $ 3,275 |
Lease cost under short-term operating leases | 775 | 560 |
Variable lease cost under short-term and long-term operating leases | 983 | 833 |
Total operating lease cost | $ 4,880 | $ 4,668 |
LEASES - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Mar. 31, 2022 |
|
Leases [Abstract] | |||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 273 | $ 0 | |
Weighted average remaining lease term in years - operating leases | 6 years 9 months 25 days | 6 years 11 months 23 days | |
Weighted average discount rate - operating leases | 4.00% | 4.00% |
LEASES - Future Minimum Payments Under Non-Cancellable Leases (Details) $ in Thousands |
Jun. 30, 2022
USD ($)
|
---|---|
Leases [Abstract] | |
2023 (remaining nine months) | $ 9,290 |
2024 | 11,645 |
2025 | 10,997 |
2026 | 9,642 |
2027 | 7,393 |
Thereafter | 22,396 |
Total lease payments | 71,363 |
Less imputed interest | (8,969) |
Present value of lease liabilities | $ 62,394 |
COMMITMENTS AND CONTINGENCIES - Narrative (Details) |
1 Months Ended | 3 Months Ended | |||
---|---|---|---|---|---|
Jul. 31, 2020
USD ($)
|
Sep. 30, 2018
USD ($)
|
Oct. 31, 2017
USD ($)
patent
|
Mar. 31, 2016
subsidiary
patent
|
Jun. 30, 2022
USD ($)
|
|
Commitments and Contingencies Disclosure [Line Items] | |||||
Number of subsidiary entities | subsidiary | 2 | ||||
Number of patents allegedly infringed | patent | 3 | 5 | |||
Damages sought | $ 2,800,000 | ||||
Pre-suit Damages | |||||
Commitments and Contingencies Disclosure [Line Items] | |||||
Damages sought | $ 3,500,000 | $ 3,500,000 | $ 1,700,000 | ||
Post-suit Damages | |||||
Commitments and Contingencies Disclosure [Line Items] | |||||
Damages sought | $ 2,250,000 | $ 2,250,000 | $ 1,100,000 |
PENSION BENEFIT PLANS - Narrative (Details) $ in Millions |
3 Months Ended |
---|---|
Jun. 30, 2022
USD ($)
employee
| |
Defined Benefit Plan Disclosure [Line Items] | |
Contributions to defined benefit pension plans | $ 0.1 |
Expected cash contribution requirements for defined benefit pension plans, less than | $ 1.0 |
United States | |
Defined Benefit Plan Disclosure [Line Items] | |
Number of employees participating in noncontributory defined benefit pension plans | employee | 0 |
PENSION BENEFIT PLANS - Net Periodic Pension Costs (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Retirement Benefits [Abstract] | ||
Service cost | $ 45 | $ 45 |
Interest cost | 92 | 91 |
Net periodic pension cost | $ 137 | $ 136 |
NET LOSS PER SHARE - Schedule of Calculations of EPS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Numerator: | ||
Net loss | $ (7,132) | $ (11,341) |
Denominator: | ||
Denominator for basic net loss per share - weighted average common shares outstanding (in shares) | 72,452 | 73,859 |
Dilutive common equivalent shares: | ||
Weighted average restricted stock units and performance-based restricted stock units (in shares) | 0 | 0 |
Denominator for diluted net loss per share - weighted average shares outstanding (in shares) | 72,452 | 73,859 |
Net loss per share: | ||
Basic net loss per share (in dollars per share) | $ (0.10) | $ (0.15) |
Diluted net loss per share (in dollars per share) | $ (0.10) | $ (0.15) |
NET LOSS PER SHARE - Antidilutive Securities Excluded from Computation (Details) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Restricted stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities (in shares) | 1,735 | 1,353 |
NET LOSS PER SHARE - Narrative (Details) - shares |
3 Months Ended | |
---|---|---|
May 10, 2022 |
Jun. 30, 2022 |
|
ASR Program | ||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||
Repurchase of treasury stock (in shares) | 3,255,814 | 3,300,000 |
INCOME TAXES - Narrative (Details) |
3 Months Ended | |
---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Income Tax Disclosure [Abstract] | ||
Effective income tax rate | 32.00% | 13.30% |
SEGMENT AND GEOGRAPHIC INFORMATION (Details) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 30, 2022
USD ($)
segment
|
Jun. 30, 2021
USD ($)
|
|
Segment Reporting [Abstract] | ||
Number of segments | segment | 1 | |
Segment Reporting Information [Line Items] | ||
Total revenue | $ 208,812 | $ 190,272 |
United States | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 134,801 | 102,893 |
Europe | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 33,765 | 38,556 |
Asia | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 13,675 | 17,316 |
Rest of the world | ||
Segment Reporting Information [Line Items] | ||
Total revenue | $ 26,571 | $ 31,507 |
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