NETSCOUT SYSTEMS INC

Previous wording

The following information should be read in conjunction with the audited consolidated financial information and the notes thereto included in this Annual Report on Form 10-K. In addition to historical information, the following discussion and other parts of this Annual Report contain forward-looking statements that involve risks and uncertainties. You should not place undue reliance on these forward-looking statements. Actual events or results may differ materially due to competitive factors and other factors discussed in Item 1A. "Risk Factors" and elsewhere in this Annual Report. These factors may cause our actual results to differ materially from any forward-looking statement. See the section titled "Cautionary Statement Concerning Forward-Looking Statements" that appears at the beginning of this Annual Report.

Current wording

The following information should be read in conjunction with the audited consolidated financial information and the notes thereto included in this Annual Report. In addition to historical information, the following discussion and other parts of this Annual Report contain forward-looking statements that involve risks and uncertainties. You should not place undue reliance on these forward-looking statements. Actual events or results may differ materially due to the factors discussed in Item 1A. "Risk Factors" and elsewhere in this Annual Report. These factors may cause our actual results to differ materially from any forward-looking statement. See the section titled "Cautionary Statement Concerning Forward-Looking Statements" that appears at the beginning of this Annual Report.

Previous wording

We are an industry leader with nearly four decades of experience in providing service assurance and cybersecurity solutions that are based on our pioneering deep packet inspection technology at scale, which is used by many Fortune 500 companies to protect their digital business services against disruption. Service providers and enterprises, including local, state and federal government agencies, rely on our solutions to achieve the visibility and protection necessary to optimize network performance, ensure the delivery of high-quality, mission-critical applications and services, gain timely insight into the end user experience and to protect their networks from attack. With our offerings, customers can quickly, efficiently and effectively identify and resolve issues that result in downtime, interruptions to services, poor service quality or compromised data, thereby reducing meantime-to-resolution of issues and driving compelling returns on their investments in their networks and broader technology initiatives. Some of the more significant technology trends and catalysts for our business include the evolution of customers' digital transformation initiatives such as the migration to cloud environments, the rapidly evolving cybersecurity threat landscape, artificial intelligence and business analytics advancements, and the 5G technology evolution in both the service provider and enterprise customer verticals.

Current wording

We are an industry leader with four decades of experience in providing service assurance and cybersecurity solutions that are based on our pioneering deep packet inspection technology at scale, which is used by many Fortune 500 companies to protect their digital business services against disruption. Service providers and enterprises, including local, state and federal government agencies, rely on our solutions to achieve the visibility and protection necessary to optimize network performance, ensure the delivery of high-quality, mission-critical applications and services, gain timely insight into the end user experience and to protect their networks from attack. With our offerings, customers can quickly, efficiently and effectively identify and resolve issues that result in downtime, interruptions to services, poor service quality or compromised data, thereby reducing meantime-to-resolution of issues and driving compelling returns on their investments in their networks and broader technology initiatives. Some of the more significant technology trends and catalysts for our business include the evolution of customers' digital transformation initiatives such as the migration to cloud environments and the edges of their networks, the rapidly evolving cybersecurity threat landscape, artificial intelligence and business analytics advancements, and the 5G technology evolution in both the service provider and enterprise customer verticals.

Previous wording

Our operating results are influenced by a number of factors, including, but not limited to, the mix and quantity of products and services sold, pricing, costs and availability of materials used in our products, growth in employee-related costs, including commissions, and the expansion of our operations. Factors that affect our ability to maximize our operating results include, but are not limited to, our ability to introduce and enhance existing products, the marketplace acceptance of those new or enhanced products, continued expansion into international markets, expansion into new or adjacent markets, development of strategic partnerships, competition, successful acquisition and integration efforts, and our ability to control costs and make improvements in a highly competitive industry.

Current wording

Our operating results are influenced by a number of factors, including, but not limited to, the volume, mix, and quantity of products and services sold, pricing, costs and availability of materials used in our products, growth in employee-related costs, including commissions, and the expansion of our operations. Factors that affect our ability to maximize our operating results include, but are not limited to, our ability to introduce and enhance existing products, the marketplace acceptance of those new or enhanced products, continued expansion into international markets, expansion into new or adjacent markets, development of strategic partnerships, competition, successful acquisition and integration efforts, and our ability to control costs and make improvements in a highly competitive industry.

Previous wording

We continue to closely monitor current global and macroeconomic conditions, including the impacts of the ongoing war in Ukraine and hostilities in the Middle East, global geopolitical tension, stock market volatility, industry-specific capital spending trends, exchange rate fluctuations, inflation, interest rates, and the risk of a recession, including the manner and extent to which they have impacted and could continue to impact our business, customers, employees, supply chain, and distribution network. The full extent of the impacts of these global and macroeconomic conditions remain uncertain. For the fiscal year ended March 31, 2024, we observed that our cybersecurity revenue grew, likely due to heightened geopolitical tensions and the evolving cyber threat landscape, while our service assurance revenue declined, primarily related to the domestic service provider industry which is challenged by a constrained spending environment. In this environment, we continued to focus on advancing our products, expanding revenue, enhancing earnings per share, and generating free cash flow. In response to the war in Ukraine, we ceased business operations in Russia, including sales, support on existing contracts and professional services. The macroeconomic environment remains challenging with constrained customer spending and we expect this to persist into the remainder of fiscal year 2025. Although we expect our cybersecurity momentum to continue, this is likely to be offset with continued pressure on the service assurance offerings, primarily impacting our service provider customers. The enterprise vertical of service assurance is anticipated to stabilize. As a result, we have continued our efforts to manage discretionary costs and align spending with the current environment while we continue to execute on our long-term strategic plans.

Current wording

We continue to closely monitor current global and macroeconomic conditions, including the impacts of the ongoing wars in Ukraine and the Middle East, global geopolitical tension, stock market volatility, industry-specific capital spending trends, exchange rate fluctuations, inflation, interest rates, international trade relations (including trade protection measures, such as tariffs and other trade barriers), and the risk of a recession, including the manner and extent to which they have impacted and could continue to impact our business, customers, employees, supply chain, and distribution network. The full extent of the impacts of these global and macroeconomic conditions remain uncertain. In response to the war in Ukraine, we ceased business operations in Russia, including sales, support on existing contracts and professional services. The macroeconomic environment remains challenging with constrained customer spending and we expect this to persist during fiscal year 2026. As a result, we have continued our efforts to manage discretionary costs and align spending with the current environment while we continue to execute on our long-term strategic plans.

Previous wording

Though we continue to monitor the impacts of evolving global and macroeconomic conditions on our business, we believe our current cash reserves and access to capital through our revolving credit facility leave us well-positioned to manage our business in today's environment. We expect net cash provided by operations combined with cash, cash equivalents, marketable securities and investments and borrowing availability under our 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. We continue to take actions to manage costs and increase productivity throughout our company, including managing discretionary spending and hiring activities, but are continuing to invest in areas that advance our business for the future. In addition to our cash equivalents, based on covenant levels at March 31, 2024, we had an incremental $700 million available to us under our revolving credit facility.

Current wording

Though we continue to monitor the impacts of evolving global and macroeconomic conditions on our business, we believe our current cash reserves and access to capital through our revolving credit facility leave us well-positioned to manage our business in today's environment. We expect net cash provided by operations combined with cash, cash equivalents, marketable securities and investments and borrowing availability under our 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. We continue to take actions to manage costs and increase productivity throughout our company, including managing discretionary spending and hiring activities, but are continuing to invest in areas that advance our business for the future. In addition to our cash equivalents, based on covenant levels at March 31, 2025, we had an incremental $600 million available to us under our revolving credit facility.

Previous wording

Our gross profit percentage increased by one percentage point to 77% during the fiscal year ended March 31, 2024 as compared with the fiscal year ended March 31, 2023 primarily due to product mix with less revenue during the fiscal year ended March 31, 2024 from radio frequency propagation modeling projects, which have lower margins, as well as lower incentive compensation expense.

Current wording

Our gross profit percentage increased by one percentage point to 78% during the fiscal year ended March 31, 2025 as compared with the fiscal year ended March 31, 2024 primarily due to lower employee-related expenses in fiscal year 2025.

Previous wording

Net loss for the fiscal year ended March 31, 2024 was $147.7 million, as compared with net income for the fiscal year ended March 31, 2023 of $59.6 million, a decrease in net income (loss) of $207.3 million. The decrease in net income (loss) was primarily due to a $217.3 million goodwill impairment charge, an $85.1 million decrease in revenue, a $1.4 million increase in contractor fees, a $1.3 million increase in travel expense, and a $1.0 million increase in accounting related expenses. These decreases in net income (loss) were partially offset by a $23.7 million decrease in costs to deliver radio frequency propagation modeling projects, a $17.1 million decrease in employee-related expenses associated with a decrease in variable incentive compensation, a $7.9 million decrease in amortization expense, a $7.2 million increase in the fair value of an equity investment, a $6.0 million decrease in legal fees mainly due to a favorable decision related to the Packet Intelligence LLC appeal, a $5.5 million decrease in expenses related to trade shows, user conferences and other events, a $5.5 million decrease in income tax expense, a $4.7 million increase in interest income, a $3.8 million gain on the divestiture of the Test Optimization business, a $3.4 million decrease in advertising expense, a $2.8 million decrease from depreciation expense, a $1.8 million decrease in restructuring expense, a $1.7 million decrease in recruiting expenses, a $1.6 million decrease in commissions expense, a $1.6 million decrease in interest expense, a $1.3 million decrease in direct material costs, and a $1.1 million decrease in business taxes.

Current wording

Net loss for the fiscal year ended March 31, 2025 was $366.9 million, as compared with net loss for the fiscal year ended March 31, 2024 of $147.7 million. The increase of $219.2 million in net loss was primarily due to a $209.7 million increase in goodwill impairment charges, a $20.1 million increase from restructuring charges, a $6.8 million decrease in revenue, a $6.7 million increase in expenses related to trade shows, user conferences, and other events, a $5.6 million decrease in other income mainly due to the change in fair value of a foreign equity investment, a $5.6 million increase in legal fees mainly due to a favorable decision related to the Packet Intelligence LLC appeal recorded during the fiscal year ended March 31, 2024, a $3.8 million gain on the divestiture of the TO business recognized in fiscal year 2024, a $2.5 million increase in commissions expense, a $2.0 million increase from software licenses, and a $1.6 million increase in other marketing related expenses. These increases to net loss were partially offset by a $21.0 million net decrease in employee related expenses as a result of a decrease in headcount, partially offset by an increase in variable incentive compensation, a $7.0 million decrease in amortization expense of intangible assets, a $4.0 million decrease from depreciation expense, a $1.9 million decrease in advertising expense, a $1.6 million decrease in rent and other facilities related costs, a $1.5 million decrease in interest expense, a $1.3 million decrease in direct material costs, a $1.3 million decrease in the cost of materials used to support customers under service contracts, and a $1.1 million increase in interest income.

Previous wording

At March 31, 2024, we had cash, cash equivalents, and marketable securities and investments (current and non-current) of $424.1 million. This represents a decrease of $3.8 million compared to the fiscal year ended March 31, 2023. This decrease was primarily due to $50.0 million used to repurchase shares of our common stock, $19.4 million used for tax withholdings on restricted stock units, and $6.3 million used for capital expenditures. These decreases were partially offset by $58.8 million of net cash provided by operating activities, and $7.8 million in proceeds from the divestiture of the Test Optimization business during the fiscal year ended March 31, 2024.

Current wording

At March 31, 2025, we had cash, cash equivalents, and marketable securities and investments (current and non-current) of $492.5 million. This represents an increase of $68.4 million compared to the fiscal year ended March 31, 2024. This increase was primarily due to $217.7 million of net cash provided by operations, partially offset by a net $100.0 million used to repay long-term debt, $25.3 million used to repurchase shares of our common stock, $13.9 million used for tax withholdings on restricted stock units, $5.4 million used for capital expenditures, $2.8 million used for the payment of debt issuance costs, and $1.3 million used to acquire technology licenses during the fiscal year ended March 31, 2025.

Previous wording

We supplement the United States generally accepted accounting principles (GAAP) financial measures we report in quarterly and annual earnings announcements, investor presentations and other investor communications by reporting the following non-GAAP measures: non-GAAP gross profit, non-GAAP income from operations, non-GAAP net income, non-GAAP net income per share (diluted) and non-GAAP earnings before interest and other expense, income taxes, depreciation, and amortization (EBITDA) from operations. Non-GAAP gross profit removes expenses related to the amortization of acquired intangible assets, share-based compensation expense, and acquisition-related depreciation expense. Non-GAAP income from operations removes the aforementioned adjustments and also removes business development and integration expense, compensation for post-combination services, legal (benefit) expense related to civil judgments, goodwill impairment charges, gain on the divestiture of a business, restructuring charges, and transitional service agreement expenses. Non-GAAP net income removes the foregoing adjustments related to non-GAAP income from operations, and also removes loss on extinguishment of debt, change in fair value of contingent consideration, and change in the fair value of derivative instrument, net of related income tax effects. Non-GAAP EBITDA from operations removes the aforementioned items related to non-GAAP income from operations and also removes non-acquisition related depreciation expense.

Current wording

We supplement the United States generally accepted accounting principles (GAAP) financial measures we report in quarterly and annual earnings announcements, investor presentations and other investor communications by reporting the following non-GAAP measures: non-GAAP gross profit, non-GAAP income from operations, non-GAAP net income, non-GAAP net income per share (diluted) and non-GAAP earnings before interest and other expense, income taxes, depreciation, and amortization (Non-GAAP EBITDA) from operations. Non-GAAP gross profit removes expenses related to the amortization of acquired intangible assets, share-based compensation expense, and acquisition-related depreciation expense. Non-GAAP income from operations includes the aforementioned adjustments and also removes restructuring charges, goodwill impairment charges, gain on the divestiture of a business, and legal (benefit) expense related to civil judgments. Non-GAAP net income includes the foregoing adjustments related to non-GAAP income from operations, and also removes loss on extinguishment of debt, and change in fair value of derivative instrument, net of related income tax effects. Non-GAAP diluted net income per share includes the foregoing adjustments related to non-GAAP net income. Non-GAAP EBITDA from operations includes the aforementioned items related to non-GAAP income from operations and also removes non-acquisition related depreciation expense.

Previous wording

These non-GAAP measures are not in accordance with GAAP, should not be considered an alternative for measures prepared in accordance with GAAP (revenue, gross profit, operating margin, net income and diluted net income per share), and may have limitations because they do not reflect all our results of operations as determined in accordance with GAAP. These non-GAAP measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. The presentation of non-GAAP information is not meant to be considered superior to, in isolation from, or as a substitute for results prepared in accordance with GAAP.

Current wording

These non-GAAP measures are not prepared in accordance with GAAP, should not be considered an alternative for measures prepared in accordance with GAAP (revenue, gross profit, operating margin, net income and diluted net income per share), and may have limitations because they do not reflect all our results of operations as determined in accordance with GAAP. These non-GAAP measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. The presentation of non-GAAP information is not meant to be considered superior to, in isolation from, or as a substitute for results prepared in accordance with GAAP.

Previous wording

We consider accounting policies and estimates related to revenue recognition, and valuation of goodwill, intangible assets and other acquisition and divestiture accounting items to be critical in fully understanding and evaluating our financial results. We apply significant judgment and create estimates when applying these policies.

Current wording

We consider accounting policies and estimates related to revenue recognition, and valuation of goodwill to be critical in fully understanding and evaluating our financial results. We apply significant judgment and create estimates when applying these policies.

Previous wording

Product revenue is typically recognized upon fulfillment, 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. Our 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. We generally provide 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.

Current wording

Product revenue is typically recognized upon fulfillment, 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. Our service offerings include installation, integration, extended warranty and maintenance services, post-contract customer support, stand-ready SaaS solutions and other professional services including consulting and training. We generally provide 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.

Previous wording

We amortize acquired definite-lived intangible assets over their estimated useful lives. Goodwill is not amortized but subject to annual impairment tests; more frequently if events or circumstances occur (a "triggering event") that would indicate the fair value of our reporting unit is below its carrying value. We perform the assessment annually during the fourth quarter and on an interim basis if potential impairment indicators arise.

Current wording

Goodwill is not amortized but subject to annual impairment tests; or more frequently if events or circumstances occur (a "Triggering Event") that would indicate the fair value of our reporting unit is below its carrying value. We perform the assessment annually during the fourth quarter and on an interim basis if potential impairment indicators arise.

Previous wording

To test impairment, we first assess qualitative factors to determine whether the existence of events and circumstances indicate that it is more likely than not that the intangible asset is impaired. If based on our qualitative assessment it is more likely than not that the fair value of the intangible asset is less than its carrying amount, quantitative impairment testing is required. However, if we conclude otherwise, quantitative impairment testing is not required.

Current wording

To test impairment, we first assess qualitative factors to determine whether the existence of events and circumstances indicate that it is more likely than not that goodwill is impaired. If based on our qualitative assessment it is more likely than not that the fair value of the reporting unit is below its carrying amount, quantitative impairment testing is required. However, if we conclude otherwise, quantitative impairment testing is not required. The key assumption used in the quantitative impairment testing is the company-specific control premium, which is estimated using expected synergies that would be realized by a hypothetical buyer.

Previous wording

The sections that follow discuss our consolidated statement of operations data for the fiscal years ended March 31, 2024 and March 31, 2023 including results as a percentage of revenue for those periods. For a discussion of (i) our consolidated statement of operations data for the fiscal year ended March 31, 2022 including results as a percentage of revenue for that period, as well as (ii) our liquidity and capital resources for the fiscal year ended March 31, 2022, see "Comparison of Years Ended March 31, 2023 and 2022" and "Liquidity and Capital Resources" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended March 31, 2023, filed with the SEC on May 16, 2023 (our 2023 Annual Report).

Current wording

The sections that follow discuss our consolidated statement of operations data for the fiscal years ended March 31, 2025 and March 31, 2024 including results as a percentage of revenue for those periods. For a discussion of (i) our consolidated statement of operations data for the fiscal year ended March 31, 2023 including results as a percentage of revenue for that period, as well as (ii) our liquidity and capital resources for the fiscal year ended March 31, 2023, see "Comparison of Years Ended March 31, 2024 and 2023" and "Liquidity and Capital Resources" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended March 31, 2024, filed with the SEC on May 16, 2024.

Previous wording

Product revenue consists of sales of our hardware products and licensing of our software products. Service revenue consists of customer support agreements, consulting, training and stand-ready software as a service offerings. During the fiscal year ended March 31, 2024, no direct customer or indirect channel partner accounted for more than 10% of our total revenue. During the fiscal year ended March 31, 2023, one direct customer, Verizon, accounted for more than 10% of our total revenue, while no indirect channel partners accounted for more than 10% of our total revenue.

Current wording

Product revenue consists of sales of our hardware products and licensing of our software products. Service revenue consists of customer support agreements, consulting, training and stand-ready software as a service offerings. During the fiscal years ended March 31, 2025 and 2024, no direct customer or indirect channel partner accounted for more than 10% of our total revenue.

Previous wording

Service. The 1%, or $5.3 million, increase in service revenue compared with the same period last year was primarily due to an increase in revenue from maintenance contracts and professional service contracts.

Current wording

Service. The 1%, or $6.2 million, decrease in service revenue compared with the same period last year was primarily due to a decrease in revenue from maintenance contracts and professional service contracts primarily related to the service assurance product line.

Previous wording

United States revenue decreased 19%, or $113.1 million, compared with the same period last year primarily due to a decrease in revenue from service assurance offerings from both enterprise and service provider customers, including radio frequency propagation modeling projects. International revenue increased 8%, or $28.1 million, compared to the same period last year primarily driven by higher revenue from both enterprise and service provider customers from cybersecurity offerings.

Current wording

United States revenue decreased 1%, or $4.9 million, compared with the same period last year primarily due to a decrease in revenue from service assurance offerings from enterprise customers, including the impact from the divested TO business. International revenue decreased 1%, or $1.9 million, compared to the same period last year primarily driven by lower revenue from service provider customers from both service assurance and cybersecurity offerings, partially offset by an increase in revenue from enterprise customers from both service assurance and cybersecurity offerings.

Previous wording

The 18%, or $121.1 million, decrease in revenue from the service assurance product line included a decrease in revenue from radio frequency propagation modeling projects from service provider customers as well as industry-specific capital spending constraints among both service provider and enterprise customers. The 15%, or $36.0 million, increase in revenue from the cybersecurity product line was due to an increase in revenue from service provider and enterprise customers.

Current wording

The 4%, or $24.7 million, decrease in revenue from the service assurance product line was due to a decrease in revenue from both enterprise and service provider customers, including the impact from the divested TO business, as well as lower revenue from radio frequency propagation modeling projects. The 7%, or $18.0 million, increase in revenue from the cybersecurity product line was due to an increase in revenue from enterprise customers, partially offset by a decrease in revenue from service provider customers.

Previous wording

Product. The 32%, or $30.8 million, decrease in cost of product revenue for the fiscal year ended March 31, 2024 compared to the same period last year was primarily due to a $23.7 million decrease in costs related to the delivery of radio frequency propagation modeling projects, a $2.8. million decrease in the amortization of intangible assets, a $1.6 million decrease in employee-related costs associated with the timing of certain projects, a $1.3 million decrease in direct material costs, and a $0.8 million decrease in obsolescence charges. The product gross profit percentage increased by three percentage points to 82% during the fiscal year ended March 31, 2024 as compared to the same period in the prior year. The 17%, or $59.5 million, decrease in product gross profit, corresponds with the 20%, or $90.3 million, decrease in product revenue, partially offset by the 32%, or $30.8 million, decrease in cost of product revenue.

Current wording

Product. The 10%, or $6.6 million, decrease in cost of product revenue for the fiscal year ended March 31, 2025 compared to the same period last year was primarily due to a $3.1 million decrease in the amortization of intangible assets, a $1.7 million decrease in employee-related costs associated with the timing of certain projects, a $1.3 million decrease in direct material costs, a $0.9 million decrease in inventory obsolescence charges, and a $0.5 million decrease in inventory related expenses. These decreases were partially offset by a $0.9 million increase in costs related to the delivery of radio frequency propagation modeling projects. The product gross profit percentage increased by two percentage points to 84% during the fiscal year ended March 31, 2025 as compared to the same period in the prior year. The 2%, or $6.0 million, increase in product gross profit corresponds with the 10%, or $6.6 million, decrease in cost of product revenue, partially offset by the $0.6 million decrease in product revenue.

Previous wording

Service. The 4%, or $4.9 million, decrease in cost of service revenue for the fiscal year ended March 31, 2024 compared to the same period last year was primarily due to a $5.4 million decrease in employee-related expenses largely due to a decrease in variable incentive compensation partially offset by an increase in employee-related costs associated with the timing of certain projects. This decrease was partially offset by a $1.4 million increase in cost of materials used to support customers under service contracts. The service gross profit percentage increased by two percentage points to 74% during the fiscal year ended March 31, 2024 compared to the same period in the prior year. The 3%, or $10.1 million, increase in service gross profit corresponds with the 1%, or $5.3 million, increase in service revenue and the 4%, or $4.9 million, decrease in cost of services revenue.

Current wording

Service. The 2%, or $2.1 million, decrease in cost of service revenue for the fiscal year ended March 31, 2025 compared to the same period last year was primarily due to a $1.8 million decrease in employee-related expenses largely driven by a decrease in costs due to a reduction in headcount partially offset by an increase in variable incentive compensation as well as the timing of certain projects, a $1.3 million decrease in the cost of materials used to support customers under service contracts, and a $0.5 million decrease in depreciation expense. These decreases were partially offset by a $1.1 million increase in contractor fees, and a $1.1 million increase in allocated overhead. The service gross profit percentage remained flat at 74% during the fiscal year ended March 31, 2025 compared to the same period in the prior year. The 1%, or $4.1 million, decrease in service gross profit corresponds with the 1%, or $6.2 million, decrease in service revenue, partially offset by the 2%, or $2.1 million, decrease in cost of services revenue.

Previous wording

Gross profit. Our gross profit decreased 7%, or $49.4 million, for the fiscal year ended March 31, 2024 compared to the same period last year. This decrease is attributable to the 9%, or $85.1 million, decrease in revenue, partially offset by the 16%, or $35.7 million, decrease in cost of revenue. The gross profit percentage increased by one percentage point to 77% during the fiscal year ended March 31, 2024 compared to the same period in the prior year.

Current wording

Total gross profit. Our total gross profit increased $1.9 million, for the fiscal year ended March 31, 2025 compared to the same period last year. This increase is attributable to the 5%, or $8.7 million, decrease in cost of revenue, partially offset by the 1%, or $6.8 million, decrease in revenue. The gross profit percentage increased by one percentage point to 78% during the fiscal year ended March 31, 2025 compared to the same period in the prior year.

Previous wording

The 8%, or $15.0 million, decrease in research and development expenses for the fiscal year ended March 31, 2024 compared to the same period last year was primarily due to an $11.5 million decrease in employee-related costs due to a decrease in variable incentive compensation, a $1.6 million decrease in contractor fees, and a $1.6 million decrease in depreciation expense. These decreases were partially offset by a $0.7 million increase in rent and other facilities related expense.

Current wording

The 5%, or $8.3 million, decrease in research and development expenses for the fiscal year ended March 31, 2025 compared to the same period last year was primarily due to a $6.6 million decrease in employee-related expense largely as a result of a reduction in headcount, a $2.2 million decrease from depreciation expense, and a $0.8 million decrease in contractor fees. These decreases were partially offset by a $2.0 million increase in allocated overhead.

Previous wording

The 2%, or $5.9 million, decrease in total sales and marketing expenses for the fiscal year ended March 31, 2024 compared to the same period last year was prima rily due to a $5.5 million decrease in expenses related to trade shows, user conferences and other events, a $3.4 million decrease in advertising expense, a $1.6 million decrease in commissions expense, a $0.8 million decrease in recruitment expense, and a $0.5 million decrease in other marketing related expenses. These decreases were partially offset by a $4.0 million increase in employee-related expenses largely due to an increase in variable incentive compensation as well as an increase in headcount, and a $1.8 million increase in travel expense.

Current wording

The 1%, or $2.9 million, decrease in sales and marketing expenses for the fiscal year ended March 31, 2025 compared to the same period last year was primarily due to an $11.4 million decrease in employee-related expenses as a result of a decrease in headcount and a decrease in variable incentive compensation, a $1.9 million decrease in advertising expense, a $0.5 million decrease in travel expense, and a $0.5 million decrease in rent expense. These decreases were partially offset by a $6.7 million increase related to trade shows, user conferences and other events, a $2.5 million increase in commissions expense, a $1.6 million increase in other marketing related costs, and a $0.9 million increase in contractor fees.

Previous wording

The 7%, or $7.6 million, decrease in general and administrative expenses for the fiscal year ended March 31, 2024 compared to the same period last year was primarily due to a $6.0 million decrease in legal-related expenses mainly due to a favorable decision related to the Packet Intelligence LLC appeal, a $1.6 million decrease in employee-related costs largely due to a decrease in variable incentive compensation, a $1.3 million decrease in business taxes, and a $0.8 million decrease in depreciation expense. These decreases were partially offset by a $1.7 million increase in contractor fees, and a $1.0 million increase in accounting related expenses.

Current wording

The 1%, or $0.8 million, increase in general and administrative expenses for the fiscal year ended March 31, 2025 compared to the same period last year was primarily due to a $5.6 million increase in legal-related expenses as a result of a favorable decision related to the Packet Intelligence LLC appeal recorded during the fiscal year ended March 31, 2024. This increase was partially offset by a $1.7 million decrease in contractor fees, a $0.8 million decrease in depreciation, a $0.7 million decrease in allocated overhead, a $0.6 million decrease in the allowance for credit losses, and a $0.5 million decrease in software maintenance fees.

Previous wording

Amortization of acquired intangible assets. Amortization of acquired intangible assets consists primarily of amortization of customer relationships, definite-lived trademark and trade names, and leasehold interests related to our acquisition of

Current wording

Amortization of acquired intangible assets. Amortization of acquired intangible assets consists primarily of amortization of customer relationships, definite-lived trademark and trade names, and leasehold interests related to our acquisition of Danaher Corporation's communication business (Comms Transaction), Network General Corporation, Avvasi Incorporated and Efflux Systems, Inc.

Previous wording

The 9%, or $5.1 million, decrease inamortization of acquired intangible assets for the fiscal year ended March 31, 2024 compared to the fiscal year ended March 31, 2023 was primarily due to a decrease in the amortization of intangible assets acquired as part of the Comms Transaction and the Network General Corporation transaction.

Current wording

The 8%, or $3.9 million, decrease inamortization of acquired intangible assets for the fiscal year ended March 31, 2025 compared to the same period last year was primarily due to a decrease in the amortization of intangible assets acquired as part of the Comms Transaction and the Network General Corporation transaction.

Previous wording

Goodwill impairment. During the fiscal year ended March 31, 2024, we recorded $217.3 million in goodwill impairment charges. As a result of a sustained decline in our stock price and overall market capitalization during the third quarter of fiscal year 2024, along with other qualitative considerations including the continued impact from the macroeconomic environment, we determined a triggering event occurred, indicating goodwill may be impaired. Accordingly, we performed a quantitative impairment test of goodwill at December 31, 2023. We estimated the implied fair value of our reporting unit using a market approach. As a result of the quantitative impairment test, we determined goodwill was impaired and recorded a goodwill impairment charge of $167.1 million during the third quarter of fiscal year 2024. During the fourth quarter of fiscal year 2024, we performed our annual goodwill impairment test as of January 31, 2024, again using a quantitative assessment and estimated the implied fair value of our reporting unit using a market approach. As a result of the quantitative impairment test, we determined goodwill was further impaired and recorded an impairment charge of $50.2 million during the fourth quarter of fiscal year 2024. The additional impairment charge recorded in the fourth quarter of fiscal year 2024 was primarily due to a decrease in our stock price from December 31, 2023 to January 31, 2024 and an increase in the forecasted interest rate, which impacted our weighted-average cost of capital. At March 31, 2024, we performed a triggering event assessment and concluded no events or circumstances occurred that indicated goodwill was further impaired. During fiscal year 2023, our annual impairment tests was completed as of January 31, 2023 using the qualitative assessment, which indicated that goodwill was not impaired.

Current wording

Goodwill impairment. During fiscal year 2024, we recorded $217.3 million in goodwill impairment charges as a result of the sustained decrease in our stock price and overall market capitalization. During the first quarter of fiscal year 2025, due to the continued decrease in our stock price and overall market capitalization, along with other qualitative considerations including the continued impact from the conditions in the macroeconomic environment, it was determined a Triggering Event occurred, indicating goodwill may be impaired. Accordingly, we conducted a quantitative impairment test of our goodwill at June 30, 2024. We estimated the implied fair value of our goodwill using a market approach. As a result of the quantitative impairment test performed during the first quarter of fiscal year 2025, we determined goodwill was impaired and recorded a goodwill impairment charge of $427.0 million during the three months ended June 30, 2024. The additional impairment charge recorded in the first quarter of fiscal year 2025 was primarily due to the continued decrease in our stock price from March 31, 2024 to June 30, 2024, an increase in our weighted-average cost of capital, and the refinement to the expected cost synergies that could be realized by a hypothetical buyer as a result of the VSP we implemented in the first quarter of fiscal year 2025, which impacted the company-specific control premium used to determine the fair value of the reporting unit under the market approach. During fiscal year 2025, our annual impairment test was completed as of January 31, 2025 using the qualitative assessment, which indicated that goodwill was not impaired. At September 30, 2024, December 31, 2024, and March 31, 2025, we performed a Triggering Event assessment and concluded no event or circumstances occurred that indicated goodwill was further impaired.

Previous wording

The key assumption in the market approach utilized in fiscal year 2024 to determine the fair value of the reporting unit in our quantitative goodwill impairment assessment was the company-specific control premium, which was estimated using expected synergies that would be realized by a hypothetical buyer. We also compared the implied control premium to recent control premiums paid in the industry, as evidenced by guideline public company comparable transactions. This information corroborated that the company-specific control premium was within the range of premiums for other companies operating in the industry. Changes in the estimates or assumptions used in its quantitative impairment test could materially affect the determination of fair value and the associated goodwill impairment assessment. Potential events and circumstances that could have an adverse impact on our estimates and assumptions include, but are not limited to, continued increases in costs, and rising interest rates and other macroeconomic factors. An increase or decrease of 1% in the company-specific control premium used in the determination of the fair value of the reporting unit under the market approach at December 31, 2023 and January 31, 2024 would have resulted in an increase or decrease in the goodwill impairment recorded of approximately $15.6 million and $15.3 million, respectively.

Current wording

The key assumption in the market approach used in the quantitative impairment test performed during the first quarter of fiscal year 2025 was the company-specific control premium, which was estimated using expected synergies that would be realized by a hypothetical buyer. We also compared its implied control premium to recent control premiums paid in the industry, as evidenced by guideline public company comparable transactions. This information corroborated that the company-specific control premium was within the range of premiums for other companies operating in the industry. Changes in the estimates or assumptions used in its quantitative impairment test could materially affect the determination of fair value and the associated goodwill impairment assessment. Potential events and circumstances that could have an adverse impact on our estimates and assumptions include, but are not limited to, continued increases in costs, and high interest rates and other macroeconomic factors. An increase or decrease of 1% in the company-specific control premium used in the determination of the fair value of the reporting unit under the market approach would have resulted in an increase or decrease in the goodwill impairment recorded during the fiscal year ended March 31, 2025 of approximately $13.0 million.

Previous wording

The 157%, or $14.6 million, change in interest and other income (expense), net was primarily due to a $7.2 million increase in the fair value of the equity investment in Napatech A/S (Napatech), a $4.7 million increase in interest income, and a $1.6 million decrease in interest expense due to debt repayments on the credit facility in March 2023, partially offset by an increase in the average interest rate on the credit facility during the fiscal year ended March 31, 2024 when compared to the fiscal year ended March 31, 2023. In addition, there was a $0.9 million decrease in foreign exchange expense, and a $0.5 million increase in other income.

Current wording

The 66%, or $3.5 million, decrease in interest and other income (expense), net was primarily due to a $6.2 million decrease in other income largely due to a decrease in the fair value of the equity investment in Napatech A/S (Napatech), partially offset by a $1.5 million decrease in interest expense due to debt repayments on the credit facility during the fiscal year ended March 31, 2025, and a $1.1 million increase in interest income.

Previous wording

The annual effective tax rate for the fiscal year ended March 31, 2024 was 2.2%, compared to an annual effective tax rate of 12.8% for the fiscal year ended March 31, 2023. The effective tax rate for the fiscal year ended March 31, 2024 is lower than the effective rate for the fiscal year ended March 31, 2023, primarily due to a discrete benefit related to the finalization of our tax return filings and a significant nondeductible goodwill impairment charge.

Current wording

The annual effective tax rate for the fiscal year ended March 31, 2025 was 0.3%, compared to an annual effective tax rate of 2.2% for the fiscal year ended March 31, 2024. The effective tax rate for the fiscal year ended March 31, 2025 is lower than the effective rate for the fiscal year ended March 31, 2024, primarily due to a discrete benefit related to the finalization of our tax return filings, a charge related to stock compensation, and a significant nondeductible goodwill impairment charge.

Previous wording

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 rendered a verdict finding in favor of the Plaintiff and that Plaintiff was entitled to $3.5 million for pre-suit damages and $2.3 million for post-suit damages. 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 $3.5 million pre-suit damages award, affirming the $2.3 million post-suit damages award, vacating the $2.8 million enhancement 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 denied, challenging, among other issues, the basis for enhanced damages and the patentability of the claimed technology. 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. The District Court entered an amended final judgment awarding Plaintiff $2.3 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 Federal Circuit from, among other things, the amended final judgment. On May 2, 2024, in a separate action the Federal Circuit affirmed the PTAB decisions, which as a result found t…

Excerpt shortened here; the source contains the full paragraph.

Current wording

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 rendered a verdict finding in favor of the Plaintiff and that Plaintiff was entitled to $3.5 million for pre-suit damages and $2.3 million for post-suit damages. 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 $3.5 million pre-suit damages award, affirming the $2.3 million post-suit damages award, vacating the $2.8 million enhancement 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 denied, challenging, among other issues, the basis for enhanced damages and the patentability of the claimed technology. 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. The District Court entered an amended final judgment awarding Plaintiff $2.3 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 Federal Circuit from, among other things, the amended final judgment. On May 2, 2024, in a separate action the Federal Circuit affirmed the PTAB decisions, which as a result found t…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

At March 31, 2024, cash, cash equivalents, marketable securities and investments (current and non-current) totaled $424.1 million. This represents a decrease of $3.8 million from $427.9 million at March 31, 2023. This decrease was primarily due to $50.0 million used to repurchase shares of our common stock, $19.4 million used for tax withholdings on restricted stock units, and $6.3 million used for capital expenditures. These decreases were partially offset by $58.5 million of net cash provided by operating activities, and $7.8 million in proceeds from the divestiture of the Test Optimization business during the fiscal year ended March 31, 2024.

Current wording

At March 31, 2025, cash, cash equivalents, marketable securities and investments (current and non-current) totaled $492.5 million. This represents an increase of $68.4 million from $424.1 million at March 31, 2024. This increase was primarily due to $217.7 million of net cash provided by operations, partially offset by a net $100.0 million used to repay long-term debt, $25.3 million used to repurchase shares of our common stock, $13.9 million used for tax withholdings on restricted stock units, $5.4 million used for capital expenditures, $2.8 million used for the payment of debt issuance costs, and $1.3 million used to acquire technology licenses during the fiscal year ended March 31, 2025.

Previous wording

At March 31, 2024, cash, short-term and long-term marketable securities in the United States was approximately $254.6 million, while cash and short-term investments held outside of the United States was approximately $169.5 million.

Current wording

At March 31, 2025, cash, short-term and long-term marketable securities in the United States was approximately $303.2 million, while cash and short-term investments held outside of the United States was approximately $189.3 million.

Previous wording

Net cash provided by operating activities was $58.8 million during the fiscal year ended March 31, 2024, compared to $156.7 million of net cash provided by operating activities during the fiscal year ended March 31, 2023. This $97.9 million decrease was due in part to a $207.4 million decrease from the change in net income (loss), a $53.3 million decrease from accounts receivable and unbilled costs, a $45.8 million decrease from accrued compensation and other expenses, a $10.9 million decrease from depreciation and amortization, a $10.9 million decrease from prepaid expenses and other assets, an $8.4 million decrease from inventories, a $5.5 million decrease in other gains related to the change in the fair value of an equity investment, a $3.8 million decrease from the gain on the divestiture of the Test Optimization business, a $3.8 million decrease from income taxes payable, and a $1.6 million decrease from the change in fair value of a derivative instrument. These decreases were partially offset by a $217.3 million goodwill impairment charge, a $15.4 million increase from deferred revenue, an $8.8 million increase from share-based compensation, an $8.1 million increase from deferred income taxes, and a $3.7 million increase from accounts payable during the fiscal year ended March 31, 2024 as compared with the fiscal year ended March 31, 2023. Accounts receivable days sales outstanding was 81 days at March 31, 2024 compared to 58 days at March 31, 2023.

Current wording

Net cash provided by operating activities was $217.7 million during the fiscal year ended March 31, 2025, compared to $58.8 million during the fiscal year ended March 31, 2024. This $158.9 million increase in net cash provided by operating activities was due in part to a $209.7 million increase from goodwill impairment charges recorded during the fiscal year ended March 31, 2025 as compared to the fiscal year ended March 31, 2024, a $77.0 million increase from accounts receivable, a $54.2 million increase from accrued compensation and other expenses, a $24.5 million increase from deferred revenue, an $8.4 million increase from deferred income taxes, a $5.1 million increase from accounts payable, a $5.0 million increase from the change in the fair value of an equity investment, a $3.8 million increase related to the gain recorded in the fiscal year ended March 31, 2024 for the divestiture of a business, a $3.7 million increase from income taxes payable, a $3.6 million increase from prepaid expenses and other assets, and a $1.1 million increase from the loss on extinguishment of debt. These increases were partially offset by a $219.2 million decrease from the change in net loss, an $11.2 million decrease from depreciation and amortization expense, and a $6.0 million decrease from share-based compensation expense during the fiscal year ended March 31, 2025 as compared with the fiscal year ended March 31, 2024. Accounts receivable days sales outstanding was 68 days at March 31, 2025 compared to 81 days at March 31, 2024.

Previous wording

Net cash provided by investing activities decreased by $1.9 million to $13.4 million during the fiscal year ended March 31, 2024, compared to $15.3 million of net cash provided by investing activities during the fiscal year ended March 31, 2023.

Current wording

Net cash (used in) provided by investing activities decreased by $20.4 million to $7.0 million of net cash used in investing activities during the fiscal year ended March 31, 2025, compared to $13.4 million of net cash provided by investing activities during the fiscal year ended March 31, 2024. The $20.4 million decrease in net cash (used in) provided by investing activities was due in part to a $12.3 million net decrease in cash inflow from the purchase and sale of marketable securities during the fiscal year ended March 31, 2025 when compared with the fiscal year ended March 31, 2024, a $7.8 million decrease in proceeds due to the divestiture of the Test Optimization business during the fiscal year ended March 31, 2024, and $1.3 million in cash used to acquire technology licenses during the fiscal year ended March 31, 2025. These decreases in cash were partially offset by a $1.0 million decrease in cash used to purchase fixed assets during the fiscal year ended March 31, 2025, compared with the fiscal year ended March 31, 2024.

Previous wording

Net cash used in financing activities decreased $350.0 million to $69.4 million during the fiscal year ended March 31, 2024, compared to $419.4 million of net cash used in financing activities during the fiscal year ended March 31, 2023.

Current wording

Net cash used in financing activities increased $72.6 million to $142.0 million during the fiscal year ended March 31, 2025, compared to $69.4 million of net cash used in financing activities during the fiscal year ended March 31, 2024.

Previous wording

During the fiscal year ended March 31, 2024, we repurchased a total of 1,209,153 shares for $33.6 million in the open market under our twenty-five million share repurchase program authorized in 2017 (2017 Share Repurchase Program), and 614,516 shares for $16.4 million in the open market under the 2022 Share Repurchase Program. During the fiscal year ended March 31, 2023, we repurchased 4,549,329 shares of our common stock under an ASR program for $150.0 million. Purchases during the fiscal year ended March 31, 2023 were under the 2017 Share Repurchase Program.

Current wording

During the fiscal year ended March 31, 2025, we repurchased a total of 1,362,205 shares of our common stock for $25.3 million in the open market under our 2022 Share Repurchase Program. During the fiscal year ended March 31, 2024, we repurchased a total of 1,209,153 shares of our common stock for $33.6 million in the open market under our twenty-five million share repurchase program authorized in 2017 (2017 Share Repurchase Program), and 614,516 shares for $16.4 million in the open market under the 2022 Share Repurchase Program.

Previous wording

In connection with the delivery of common shares upon vesting of restricted stock units, we have withheld 653,645 shares for $19.4 million, and 562,360 shares for $19.4 million related to minimum statutory tax withholding requirements on these restricted stock units during the fiscal years ended March 31, 2024 and 2023, respectively. These withholding transactions do not fall under the repurchase program described above, and therefore do not reduce the amount that is available for repurchase under that program.

Current wording

In connection with the delivery of common stock upon vesting of restricted stock units, we have withheld 703,727 shares for $13.9 million, and 653,645 shares for $19.4 million related to minimum statutory tax withholding requirements on these restricted stock units during the fiscal years ended March 31, 2025 and 2024, respectively. These withholding transactions do not fall under the repurchase program described above, and therefore do not reduce the amount that is available for repurchase under that program.

Previous wording

During the fiscal year ended March 31, 2023, we repaid $250.0 million of borrowings under the Second Amended and Restated Credit Agreement.

Current wording

During the fiscal year ended March 31, 2025, we repaid a net $100.0 million of borrowings under the Third Amended and Restated Credit Agreement, and we paid $2.8 million in debt issuance costs related to the execution of our Third Amended and Restated Credit Agreement.