Investor Day - s22.q4cdn.com€¦ · Investor Day May 16, 2014 . 2 2014 IR Day | NetScout...
Transcript of Investor Day - s22.q4cdn.com€¦ · Investor Day May 16, 2014 . 2 2014 IR Day | NetScout...
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 1
Investor Day
May 16, 2014
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 2
Safe Harbor Statement
Certain matters being discussed by NetScout’s management today include
forward-looking statements which are made pursuant to the Safe Harbor provisions
of section 21-E of the Securities Exchange Act of 1934. Stockholders are cautioned
that statements which are not strictly historical statements, including statements
concerning future expected financial performance, management objectives and
plans for future operations, our relationships with strategic partners, the release
date of new products or enhancements to existing products, growth and trends in
the market for network and application performance management and market
acceptance of our products, constitute forward-looking statements.
The forward-looking statements include, but are not limited to, any
statements containing the words “expect,” “anticipate,” “estimates,” “believes,”
“may,” “will,” “should” and similar expressions and the negatives thereof. These
forward-looking statements involve a number of risks and uncertainties that could
cause actual results to differ materially from the forward-looking statements. Those
risks and uncertainties are detailed in the company's filings from time to time with
the Securities and Exchange Commission. The information in the forward-looking
statements is provided as of the date of such oral statements and the company
disclaims any obligation to update such statements.
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 3
AGENDA
8:30 Opening Remarks
Jean Bua, CFO
8:45 NetScout 3.0: Foundation, Technology, Strategy
Anil Singhal, CEO
10:15 Break
10:30 4G/LTE Evolution
Bruce Kelley, CTO
11:15 Financial Overview
Jean Bua, CFO
Webcast Concludes
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 4
11:50 Customer Discussion Moderator: Michael Szabados, COO
12:30 Lunch (Kennedy Ballroom)
AGENDA
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 5
NetScout Today - Well positioned to leverage major IT trends and growth -
Market Leader Largest market share
Global footprint - in 30 countries
Technology Leader 300 man-years in core (ASI) technology
5 recent acquisitions, 70+ patents
Financial Success Story ~ $400M in revenues, 25% operating margin
~ $200M+ cash, Market Cap ~ $ 1.5B
Consistent Vision & Execution Category creator and leader for two decades
…still a nimble, entrepreneurial culture
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 6
NetScout 3.0
Foundation, Technology and
Platform Growth Strategy
Anil Singhal
President, CEO & Co-Founder
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 7
279 262
290 309
352
397
450-465
0.86 0.86
1.04 1.10
1.32
1.53
1.74-1.81
$0
$100
$200
$300
$400
$500
$600
$700
FY09 Actual FY10 Actual FY11 Actual FY12 Actual FY13 Actual FY14 Actual FY15Guidance
Total Revenue EPS
Success so far and FY 2015 Outlook Revenue and EPS
(in $millions except EPS, non-GAAP)
FY13 – 15 Revenue CAGR 13%-15%
EPS CAGR 15%-17%
FY09 – 12 Revenue CAGR 3%
EPS CAGR 9%
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 8
Launched nGeniusONE Powered by ASI ~ 300 man-years investment
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 9
The “Secret Sauce” behind nGeniusONE Adaptive Session Intelligence (ASI) Technology
Real Time and Actionable
Operational Intelligence
Network
Monitoring
Service
Assurance
Cyber
Intelligence
BI/CEM and
Big Data Analytics
Packet
Flow
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 10
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 11
nGeniusONE is really “ONE” of a Kind Cluttered Management versus Natural Integration
nGeniusONE powered by ASI
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 12
nGeniusONE Business Model - Compelling and Scalable Value proposition -
• ONE platform for performance analytics and operational
intelligence
• ONE product for NPM+APM convergence
NPM+APM
• ONE interface for all
Apps/Services
• ONE fully integrated software
platform
• ONE path to TCO
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 13
Compelling Migration Value Proposition
nGeniusONE with ASI nGenius Original Solutions
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 14
Technology Acquisitions ~ $ 100M Investment
Psytechnics
Video and
Voice Analysis
& Monitoring
FoxReplay
Session
Reconstruction
and Analysis
Simena
Intelligent
Packet Flow
Switches
Accanto
Legacy Voice
Assurance
OnPath
Chassis-based
Packet Flow
Switches
April 2011 July 2012 October 2011 November 2011 November 2012
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 15
New Additions nGenius Voice and Video Manager
• Patented voice quality algorithms
• Distributed architecture and highly scalable
• Transport quality metrics
• Payload quality metrics
• Advanced voice session analytics
• Co-resident on Infinistream
• Integrated with nGeniusONE
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 16
New Additions nGenius Packet Flow Switches
• Highly scalable, modular architecture
• Common interface blades across series
• State of the art, centralized management
• Supports layer 2 ASI and reporting
• All-inclusive feature functionality
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 17
InfiniStream Voice
(TDM)
InfiniStream
(IP)
New Additions nGenius Subscriber Intelligence (Voice)
Service Monitors
(Data KPIs)
Service Monitors
(Voice KPIs)
Dashboard
(Service Templates)
Metadata
Data Voice
nGeniusONE
ASI portal
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 18
New Additions - nGenius Cyber Investigator -
Capture nGenius InfiniStream
appliance captures
session traffic
Reconstruction Dedicated Server Platform for
fast reconstruction and data
warehousing
Replay Visual replay of session as
seen by the user
1
2
3
Packet retrieval: • Admin configures time, duration and
other criteria
• Triggers packet on pre-defined
criteria for targeted network activity
Dedicated Platform: • Reordering based on timestamps
• Multiple stream without dedups
• Keyword indexing
Reconstructed Applications: • Web 2.0 content
• Social media
• VoIP conversations
• Most common IP protocols: HTTP,
IM, RTP and many more
Advanced Options: • Security: Role-based
administration, multiple users etc.
• Filtering and search
• Timeline-based analysis
nGenius Cyber Investigator Appliance
nGenius Cyber Investigator
Console
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 19
NPM Innovations and Industry Firsts
Protocol Analysis Portable Analyzer
Remote Monitoring probe
NetFlow Monitoring
Switched LAN Monitoring
Continuous Recording
Reporting on Packet Data
Packet Decodes in Probe 10M
100M
1G
10G
100G
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 20
NPM and Packet Flow Players The Last Three Decades
Armon
Axon
Protools
NAT
IBM
HP
Agilent
Mercury
BMC
Compuware
CA Synoptics Kalpana
Tekelec
Cabletron
DEC
Niksun
Solera
Concord
Micromuse
Endace Convergent
NetTest
Exelan Novell
Paradyne
Visual
TEC
Shomiti
NetMetrix
Narus
ClearSight
Agilent
Digital Link
ODS
NAI
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 21
nGeniusONE in Action With ASI Inside
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 22
Our Expanded Mission
Enable IT and Service Providers to realize maximum
benefit with minimal risk from technology advances,
like IP convergence, NFV, SDN, Virtualization, Cloud,
Mobility, BYOD, Web, and the evolving Internet
by
Proactively managing the inherent complexity in a cost-
effective manner
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 23
Traditional APM Approaches
Are No Longer Adequate
Network Infrastructure and Service Accessibility
Server Farm Infrastructure and Service Delivery
• Byte code instrumentation
• Synthetic transactions
• Server agents
• Application agents
• Device and server logs
• Packet analysis
• Interconnecting network
• Service enablers
• Server dependencies
• Application dependencies
• Application resource contention
• Distributed service delivery
Traditional APM Approaches
Interrelationships and Dependencies
Outside the Server
Problems Not Addressed
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 24
Service Networks
Physical Network — IT Infrastructure
DNS
Exchange
Oracle
Call Manager ASI
Visibility
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 25
Server
Application
NPM+APM with nGeniusONE
Incident
nGeniusONE
Service Dashboard
Session
Analysis Packet
Analysis
Component Performance
Management IP Traffic Deep Dive
Network
Problem
solved Service Monitors Dependency Mapping
UMC/OSS
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 26
nGeniusONE Workflow - Simple, Elegant, Reusable, Expandable -
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 27
Application
Servers
InfiniStream
T1
T2
T3
Web
Servers
Database
Servers
Client
Communities
A Typical 3-Tier Application
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 28
Typical Exchange 2010 Architecture But App Architecture is rarely that simple
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 29
nGeniusONE Dashboard
Drilldown to CAS layer to investigate
further….
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 30
CAS 1 in distress while CAS 2 is fine
CAS 1 huge Timeouts / Retransmissions
while CAS 2 is fine
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 31
Error Analysis on App Servers Errors appearing for POP3 and HTTP traffic but there should only be
encrypted traffic - F5 Load Balancer set to OFFLOAD SSL
1) Non encrypted
Traffic seen on the
CAS Servers…
2) High number of
application errors
3) Errors on the POP3 traffic…..
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 32
Long Term Vision & Strategy - Technology and Product Directions -
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 33
Unified Communication (UC) - NextGen version of nVVM -
• UC coming to the mainstream
- Adaptive video
- Telepresence
- HD voice
- Videoconferencing
• Data plane quality monitor
• nVVM will be upgraded to nUCM
• Distributed architecture & GUI like nG1
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 34
nGenius Trust Monitor A New Paradigm for handling NextGen threats
• Move away from signature-based detection as the
primary defense
Advanced attacks will not have any signature
• Don’t rely on needing to know the new threat or
catch all vulnerabilities
Threats keep evolving and vulnerabilities will
continue to exist
This focus keeps your defense posture in a
reactive mode
• Focus on understanding what happens on your
network, develop Trust Profile (TP)
Take the advantage away from the hacker
Improved understanding enables better
anomaly detection
ASI
ASI collects and analyzes
flows across the service
path in real-time enhanced
with a
TRUST PROFILE
nGeniusONE
Trust Monitor
Domain Controllers (Enablers)
• DNS, Radius, Diameter, Active Directory, Kerberos
HTTPS (443) Load
Balancer/ADC
Web Servers
SQL Servers
SQL (1443)
Internet
Traditional Firewalls, AV. Spam Filters
Storage / SAN
Application Server
Leverage your existing investment in monitoring!
TP
TP TP
TP
TP
TP TP
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 35
Building the ASI Sensor Network For next generation Big Data analytics
Local nGeniusONE Local nGeniusONE
Global nGeniusONE
3rd-Party Consumers
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 36
Cyber Security Strategy
Big Data Warehouse
Third Party Security Analytics
Cyber Trust
Monitor
ASI Data ETL
ASI Data
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 37
Big Data and BI Strategy
IBM
Cognos
Big Data Warehouse
SAP
Business Objects
Oracle
BI
MicroStrategy
Columnar DB
Great ASI Data to Great Analytics
ASI Data
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 38
vASI
8900
InfiniStream
100G
Packet Flow
Switch
Plug In
SDN/NFV
Ubiquitous ASI Instrumentation
NIC Driver
OS/Kernel
WinPcap/LibPcap
Monitoring Application
nGenius PFS Plug-in
Open
API
3rd Party
Monitoring
Tool
ASI on
a Brick
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 39
Server
Application
NetScout’s Approach to NPM+APM
- Best ROI and TCO for our Customers - Incident
nGeniusONE
Service Dashboard
Session
Analysis Packet
Analysis
Component Performance
Management IP Traffic Deep Dive
Network
Problem
solved Service Monitors Dependency Mapping
UMC/OSS
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 40
Expanded Market Landscape
and Competitive Approaches
SA-SP Tektronix • JDSU
w/XDR
ASI (w/Accanto) InfoVista • IBM • Ericsson
APM-Enterprise Extrahop • Opnet ASI Patent CA Wiley • Compuware • BMC
UC NI • Riverbed ASI (w/ Psytechnics) Ciscoworks • Avaya
Cyber Solera • NetWitness •
SourceFire
ASI (w/ FoxReplay) FireEye • HP • IBM
BigData None ASI (w/ Phase 2) Splunk • IBM,
PFS Gigamon • AppCon •
Ixia
ASI Layer 2 • Ingress probing •
PFS plug In
N/A
Cloud None ASI (Enabler for NextGen
Outsourcing)
Traditional Players
Market Segment Approach 1
Analyzer
Approach NetScout
Probe
Approach 2
Component Mgmt.
NPM-Enterprise NetGen • HP • NI
Wireshark
CDM
Concord/CA • Desktalk/HP
Micromuse/IBM • CiscoWorks
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 41
Q&A
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 42
Break
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 43
4G/LTE Evolution:
Business Intelligence/Customer
Experience Management Operational and Business Intelligence
Improves Customer Experience
Bruce Kelley
CTO & VP Service Provider Business Operations
May, 2014
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 44
Big Data and BI Strategy
IBM
Cognos
Big Data Warehouse
SAP
Business Objects
Oracle
BI
Great ASI Data to Great Analytics
ASI Data
nGenius
Analytics
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 45 45
BI/Analytics
ASI
Service
Assurance
NetScout’s nGenius Solution
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 46
ASI Patented Technology
ASI Highlight Description
Big Data Technology Derives adaptable intelligence from IP traffic for proactive
service monitoring and BI/CEM at any scale
IP Intelligence Made broadly accessible and practical to advanced analytics
Intelligent Data
Reduction
10 to 100 times, without losing the signal
Reduces Hardware
Costs
Scalable to 100G, Small footprint for reduced power and
cooling (Green technology)
Enables Next
Generation
Enables next generation service assurance, performance
management, business intelligence, and cyber intelligence
Rich Meta-Data Control and User plane
Real-time, Layer 8 classification
Community based KPIs (millions of subscribers)
SA & BI Dimensions: Subscriber, location, application,
device
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 47 47
Device/Handset Subscriber Service/Application
Network/Cell Location APNs
KPIs by Community, Session level for Individuals
Throughput, success/failure, error cause, latency, handovers, MOS, #subscribers, #sessions, etc…
Dimensions
Metrics
Control Plane User Plane
ASI – Rich Meta Data Leveraged by both SA & BI
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 48
nGenius BI Solution
ASI DB
Infinistream
ASI
Infinistream
ASI
Infinistream
ASI
Session
Cache
Correlation, Filtering, Formatting, Enrichment, Analytics
…
High Speed
1 2
nGenius BI Analytics Big Data Warehouse
OSS BI Dashboards
Custom Reporting
AdHoc Query
OLAP
nGenius BI Server
SP Big Data
Marketing Intelligence
3rd Party (IBM,…)
Open System
“Trusted Data Source” NetScout Solution
https
ASI Sessions, KPIs
by individual or community
https https
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 49
Business Intelligence
• How do I retain customers?
• What is the user experience for the iPhone5?
• What OTT services are impacting my network?
• How can I generate new service revenues?
• How many subscribers can I upgrade to a smartphone?
• Which services are popular for teenagers?
• I am launching the iPad3, what impact will that have?
• What is the new service uptake per market?
• How can I improve customer experience for HVAs?
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 50
The Power of ASI Relevant to multiple lines of the business
Marketing
Customer Care
Operations
Engineering
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 51
Relevant to multiple BI Consumers
Engineer Business
Analyst Executive Planner
BI consumers within each line of business
The user reporting requirements across these folks range
from high level summaries, historical trends, real-time
dashboards, to extreme flexibility & highly interactive
reports
Customer
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 52
BI Consumers
• Big Picture
• Rollups (by market, region, device…)
• Service Usage
• Device Uptake
• Results of Strategic Initiatives
• Reports (simple, minimal interactivity)
Engineer Business
Analyst Executive Planner Customer
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 53
• Trends Over Time
• Traffic, Performance
• By Market, Location, Device…
• Pro-active
Engineer Business
Analyst Executive Planner Customer
BI Consumers
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 54
• Real-time
• Field Trials (VoLTE, LTE, …)
• Troubleshooting
• Performance Analysis
• Reports (highly interactive)
Engineer Business
Analyst Executive Planner Customer
BI Consumers
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 55
• Data Exploration
• OLAP
• Custom Views & Reports
• Requires Full Flexibility
• All metrics & dimensions
Engineer Business
Analyst Executive Planner Customer
BI Consumers
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 56
• Service Oriented
• Internal or external customer
• Read-only from a Custom Portal
• Multi-Tenancy Support
• All metrics & dimensions
Engineer Business
Analyst Executive Planner Customer
BI Consumers
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 57
nGenius
BI Analytics in Action
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 58
Geo-Mapping
ASI metrics on a map, easy to comprehend
Good communication vehicle for executive meetings
Any ASI metric or dimension on a map
Relevant to all BI Consumers
from Executive to Engineer
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 59
Executive Report
Are the markets performing comparably?
Rollup data by Market, by NEM
Markets : Atlanta, Boston,…
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 60
Custom Interactive Portals
Interactivity
Distributions / Trends
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 61
Trends Over Time
Top Handsets
by Region
Trend
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 62
Customer Experience Management
Individual User
Experience
How well are services working?
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 63
Customer Experience Management
• Individual vs. Community
Is the problem with the individual or the community?
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 64
Customer Experience Management
What was the user’s experience
in different locations?
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 65
Business Analyst
• Full ASI for the analyst to build their own views
• Define custom metrics
Interactive Map
Subscribers by Market Area
Network Entry Success Rate
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 66
• Save & share analyst views and reports
• Blend with third-party data
Business Analyst
Custom Region Shapes
Drill-Down Views
Drag/Drop Elements
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 67
Tier 1
Tier 2
Tier 3
CO
$$ Extra Cost
Competitors
$$ Extra Cost
Competitors
• Simplest Pricing and
Packaging not based on
bandwidth, subscribers,
sessions, professional
services
• Probe footprint reduction via
PFS, ASI, SA+BI
• Single architecture/platform
for all links
• Extensibility via ASI Adaptors
• Scalable to 40G/100G
nGenius ASI-Based Instrumentation
nGenius Middleware
nGenius SA & BI
ASI
The NetScout Advantage
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 68
Key nGenius BI Advantages
• Geo-Mapping
• Columnar big-data database
• Custom KPI building
• Blend with your own external data
• Mobile support
• Pricing: no “charge by weight” model
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 69
• Virtualization
Network Function Virtualization - NFV
Software Defined Networks - SDN
• Next-Gen Voice
Voice over LTE - VoLTE/IMS
Circuit Switched Fallback - CSFB
• Data Continues to Explode
Capacity Upgrades
New Services - such as RCS
Adaptive Video
4G/LTE Evolution: Monetizing the Investment
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 70
Virtualization - NFV
WAN
Accelerator
Firewall Session Border
Controller
MGW PE
Router
PGW
SGSN MME
Standard High Volume Ethernet Switches
ISVs
Standard High Volume Servers
Standard High Volume Storage
Orchestration &
Automatic Remote Install
Virtual
Appliances
Network Virtualization Approach
• Fragmented non-commodity hardware.
• Physical install per appliance site.
• Hardware development large barrier
for new vendors, constraining innovation
and competition.
CSCF
Classic Network Appliance Approach Software
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 71
Data Plane
Controller
SDN
OpenFlow OF-Config
Northbound Interface
Southbound Interface
FIB
RIB
Application Application Application
OSPF BGP Custom
Physical or Virtual
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 72
NFV vs SDN
NFV builds virtualized network functions (Firewall, PGW)
SDN defines how the network is built
Both support Orchestration
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 73
ASI – Next-Gen Ready Ubiquitous ASI Instrumentation
• ONE Solution for Virtual and Physical Environments
nGeniusONE
Cost Effective Service Assurance & Business Intelligence Solution
• Value Propositions
Monitor orchestration
Monitor the applications flowing on the network (physical or virtual)
• ASI supports
Custom HW COTS HW Virtual Machine NFV ASI on a Brick
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 74
ASI Metadata
Raw Packets
vASI
Tap Function
Packet
Conditioning
NIC HOST
VMs
ASI
Plugin
Infinistream
Other
vASI: Extending ASI visibility into VM, SDN, NFV
Virtualization
Encapsulation
3. Analyze traffic,
generate metadata
4a. Encapsulate traffic,
forward to NIC
4b. De-capsulate traffic
V
N
I
C
V
N
I
C
V
N
I
C
vSwitch
V
N
I
C
1. Capture traffic to/from
VMs in the host
2. Filter, modify and
forward traffic to
ASI VM and to NIC
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 75
Evolving Video Delivery
• Video Services
VoD, IPTV, eMBMS
• Threats to SP
MultiScreen vs OTT (NetFlix, HULU), Net Neutrality
• Next-Gen Technologies
Adaptive Video, HEVC (H.265)
• New Paradigms
Time Shifting, Play Shifting, Place Shifting
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 76
Next-Gen Video
Adaptive Video Protocols Description
MPEG-DASH ISO Standard
HLS Apple
Microsoft Smooth Streaming Microsoft
HDS Adobe
Flute eMBMS
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 77
Adaptive Video
WEB Server
Video Stream
Encoder
Manifest File
URL = Segment 1
URL = Segment 2
URL = Segment N
WEB
Server
Manifest file every
x seconds
HTTP GET URL requests:
Different bit rate segments
depending on download speed
Video is encoded and separated into segments. Segments are files of 2-10 seconds of video
High Quality Video Encoding
Medium Quality Video Encoding
Low Quality Video Encoding
Segment 1 Segment 2
High bit rate stream
Medium bit rate stream
Low bit rate stream
Encoding Distribution
represents the user
experience!
Network Congestion Poor Video Quality
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 78
eMBMS – Multicast Video over LTE
2014 IR Day | NetScout Confidential | © 2014 NetScout Systems, Inc. All rights reserved. 79
NetScout’s Video Value Props
Service Delivery Inter-dependencies
AAA, DNS, DHCP, NTP,
TFTP…
User Experience New ASI meta-data
Encoding distribution
Number of downshifts
Next-Gen Video Adaptive Video
Apple, Microsoft, Adobe
Standards (MPEG-DASH)
Quality
of
Experi
ence
Quality
Of
Experience
Media Transport (e.g. HTTP,
MPEG-TS)
Video Control Protocols
BackOffice Protocols (DRM,GEO,
etc.)
DNS, NTP, Radius, etc.
Content Delivery Network (CDN)
Network Links
Video Quality
Data Plane
Application
Video Quality
Control Plane
Service Enablers
Network
Focus on Quality of Experience
… not just “Video Quality”
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RCS – Rich Communication Services
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Financial Overview
Jean Bua
CFO
2014 Investor Day – New York City
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Financial Business Model
• “Sticky” revenue due to high switching costs
• Maintenance support annuity
• Fortune 1000 customer base
• Overall lower and certain TCO
• Gross margins similar to software industry
• Strong cash flow generation:
Scalable infrastructure
Minimal capital expenditure requirements
Customer loyalty and operating efficiency at NTCT’s core
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$290 $309
$352
$397
$1.04 $1.10
$1.32
$1.53
FY '11 FY '12 FY '13 FY '14 FY '15Guidance
$450 - $465 13 - 17% Growth
$1.74 - $1.81 14 –18% Growth
Accelerating revenue and EPS growth Guidance as of April 24, 2014
Non-GAAP, in millions except EPS
FY ’11- 14 Revenue CAGR: 11%
Revenue and EPS Performance
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Cumulative Free Cash Flow Generation (in millions)
Capital deployment priority: product development
$-
$50
$100
$150
$200
$250
$300
$350
FY '10FY '11
FY '12FY '13
FY '14
FY '14 FCF
FY '13 FCF
FY '12 FCF
FY '11 FCF
FY '10 FCF
$40
$100
$157
$240
$337
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NetScout Investment Position:
Balance Sheet Highlights (in millions)
Total liquidity exceeds $465M
FY ’14 FY ’13 FY ’12 FY ’11
Cash and Securities $219 $154 $214 $229
Accounts Receivable $61 $74 $70 $63
Total Debt $0 $0 $62 $68
Total Deferred Revenue $134 $121 $112 $100
Total Stockholders’ Equity $409 $372 $342 $320
Free Cash Flow $97 $83 $57 $60
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Expanding Addressable Markets
Current TAM has grown 3X based on product strategy… Continuing future TAM expansion
-
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
PastPresent
Future
$ B
illio
ns
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NetScout Operating Targets
Operating targets attained at mid-teens revenue growth.
Operating Targets
FY ’15 Guidance
(as of 4/24/14)
Gross Margin 78 – 81% 79 – 80%
R&D of Revenue 13 – 15% 15 – 16%
S&M of Revenue 33 – 35% 32 – 33%
G&A of Revenue 6 – 8% 6 – 7%
Operating Margin
24 – 27% 26 – 27%
Scalable organization increases operating leverage
Non-GAAP
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In Summary….
• Our continuing success is based on assisting our
customers adapt to the new computing trends.
• Our experience and innovation focused on IP networks
has come to the forefront of our customers IT
infrastructures
• Our financial discipline allows us the opportunity to:
• Evolve our product vision
• Maintain our customers’ loyalty
• Increase shareholder value