Ladies and gentlemen, thank you for standing by and welcome to NETSCOUT's Fourth Quarter and Fiscal Year 2017 Results Conference Call. At this time, all parties are in a listen-only mode until the question-and-answer portion of the call. As a reminder, this call is being recorded. Andrew Kramer, Vice President of Investor Relations and his colleagues at NETSCOUT are on the line with us today. I would now like to turn the call over to Andrew Kramer to begin the company's prepared remarks.

Thank you, Neal, and good morning everyone. Welcome to NETSCOUT's fourth quarter and fiscal year 2017 conference call for the period ended March 31, 2017. I'm joined today by Anil Singhal, NETSCOUT's Co-Founder, President and CEO; Michael Szabados, NETSCOUT's Chief Operating Officer; and Jean Bua, NETSCOUT's Executive Vice President and Chief Financial Officer. There is a slide presentation that accompanies our prepared remarks, which can be accessed on the Investor Relations section of our website at www.netscout.com. You can advance the slides in the webcast viewer to follow our commentary. We'll try to call out the slide number we're referencing in our remarks. Today's agenda will be consistent with prior quarters. Our CEO, Anil Singhal, will share his perspective on our results, key trends and highlights, and our outlook for fiscal year 2018. Our COO Michael Szabados will briefly highlight notable go-to-market activities and key wins. Our CFO Jean Bua will then provide greater detail and insight into the financial results, and review our fiscal year 2018 guidance. Moving on to slide number 3, I would like to remind everybody listening that forward-looking statements as part of this communication are made pursuant to the Safe Harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and other federal securities laws. Investors are cautioned that statements in this conference call, which are not strictly historical statements, including but not limited to, the statements related to the financial guidance and expectations for NETSCOUT, market conditions and customer demand, and all of the other various product development, sales and marketing, expense management, integration and other initiatives planned for fiscal year 2018 and beyond, constitute forward-looking statements which involve risks and uncertainties. Actual results could differ materially from the forward-looking statements due to known and unknown risks, uncertainties, assumptions and…

Thank you, Andy. Good morning everyone, and thank you for joining us. Let's begin on slide 6 with a recap of our recent results. We enjoyed a solid finish to the quarter that enabled us to achieve our fiscal year 2017 targets with non-GAAP revenue of $1.2 billion, a gross margin of 75.2%, an operating profit margin of 23% and diluted EPS of $1.92 per share. Jean will review our performance in more detail, but I'll share a few brief observations. Total revenue was essentially unchanged from the prior year's on a pro forma basis. In the service provider vertical, exceptionally strong revenue growth within our Arbor security product area was offsetted by the decline in our service assurance product area. Excluding one of our Tier 1 service providers who delayed larger orders during the second half of the year, we were encouraged that NETSCOUT's service assurance revenue grew by double digits. In enterprise, mid-single-digit growth of our nGeniusONE solutions and mid-teens growth at Arbor was offset by declines within the legacy Fluke enterprise product lines arising from product rationalization and the ramping of new manufacturing and distribution channels. We have put these issues behind us and expect any related impact to be minimal in fiscal year 2018. Overall, our cybersecurity product area was a standout performer with exceptional growth that reflected the combination of a surge in capacity expansion initiatives and new customer wins following highly publicized, advanced denial-of-service attacks and a spike in service provider spending related to a transition in product offerings. In terms of profitability, we delivered our second consecutive year of 200 basis points of operating margin improvement. We have continued to solidify our market and technology leadership in both verticals. We have fully integrated the key assets we acquired from Danaher and we have…

Thank you, Anil, and good morning everyone. Slide number 11 outlines the areas that I will cover. As you may know, we begin every fiscal year with our annual Sales Kickoff event and our Engage User Conference. This year's Engage had record attendance with CIOs, CSOs, and senior-level network, cybersecurity and line-of-business professionals from over 300 organizations representing every major vertical as well as NETSCOUT distribution partners. It was invigorating to see the enthusiasm of our sales teams and our customers for our newest products that are being delivered according to the timetables that we laid out for them last year. We see our smart data technology becoming even more important to our customers as they advance their digital transformation projects. I will integrate some of the feedback we received from our customers at Engage as I review several notable wins. Our carrier and cable customers at Engage were impressed by the way that we brought together the former TekComms and NETSCOUT technologies to provide a seamless user experience, while enabling them to access next-generation analytics and cost-effectively expand their visibility via the software-only version of our real-time information platform. This is exemplified by our recent win with Vodafone, and I look forward to sharing details of another software-only win in the Asia Pacific region next quarter. In the enterprise, we closed approximately $3 million in orders during the fourth quarter with a global payments technology leader in support of multiple projects. One of this longstanding customer's orders was for consolidating their service triage tools by standardizing on our nGeniusONE platform and moving away from a dual-sourced vendor strategy that had included Riverbed's Opnet products. Another order involves the build-out of two new next-generation data centers using the latest SDN and private cloud technologies. Customers like this understand that they…

Thank you, Michael, and good morning everyone. This morning, I will review key fourth quarter and full-year metrics for fiscal year 2017. After that I will review the guidance for fiscal year 2018. As a reminder, this review will focus on our non-GAAP results, and comparisons between fiscal years 2017 and 2016 are on a pro forma basis, unless otherwise noted. Slide number 13 shows our results for the fourth quarter of fiscal year 2017. As we've previously discussed, we anticipated a large order from one of our service providers that moved from the third quarter of fiscal year 2017 into the fourth quarter, and then it actually moved out of fiscal year 2017. Despite that delay, our teams around the globe worked diligently to be able to achieve our annual financial targets. For the quarter, total revenue increased 6% to $327.2 million, our operating profit margin was 27.5% and our diluted earnings per share was $0.65 per share. For the quarter, income from operations grew approximately 30% on revenue growth of 6%. This performance illustrates the operating leverage that can be achieved as we execute on our strategy since we believe we have already made the necessary investments in our R&D and go-to-market teams that are focused on building our positions across all segments of our total addressable market. Turning to our full-year results on slide 14, our total revenue was comparable to the prior year's total revenue. Service revenue grew by 2%, while product revenue declined by 1%. Our gross margins improved slightly as favorable shifts in product mix more than offset the impact of long lead-time projects involving lower-margin legacy products from the former TekComms product area. Operating expenses declined more than 3% over the prior year due mostly to reductions in personnel-related costs. Our operating margin…

We'll take our first question from Mark Kelleher of D. A. Davidson. Your line is open. Mark Kelleher - D. A. Davidson & Co.: Great. Thanks for taking the questions. I wanted to look at Arbor a little closer. You mentioned there was a large deal – I think you mentioned there was a large deal in the enterprise area. Is there a way you can give us an idea of what percent of Arbor right now is enterprise versus service provider?

It's about – enterprise versus service provider in Arbor's revenue is about 65% service provider and 35% enterprise. Mark Kelleher - D. A. Davidson & Co.: Okay. And as a follow-up, that growth there seems to be offsetting some weakness at Fluke which is, if I understand is enterprise. Where are we with the Fluke transition? Is that still a headwind or has that bottomed out?

I think as we talked about, Mark, it has bottomed out now and I think we are beginning to see an uptick and we don't see any real impact on this – negative impact on this in the coming years. Mark Kelleher - D. A. Davidson & Co.: Okay. Thanks.

Sure.

Thank you. We'll take our next question from Alex Kurtz of Pacific Quest (sic) [Pacific Crest] (35:25). Your line is open.

Yeah. Thanks. Can you guys hear me okay?

Yeah.

Yeah.

Yes. Good morning. So, the high-single-digit declines in service provider, Anil, if I heard that right, what percentage of that is being driven by just overall spending in that vertical versus transitioning some of your customers to software-only? I think you said 8% to 10% of the business this year will be software-only, but I guess what's that percentage – as a follow-up, what's that percentage in the service provider segment?

I'll let Jean add maybe a specific percentage, but overall software strategy is that we need to mitigate part of the OpEx and CapEx challenges. So, everything is related to dealing with OpEx and CapEx. We just decided that instead of market forces disrupting us, we rather do it ourselves proactively. And so that's what is resulting in 10%, we are – that number we are forecasting for this year, it was low single digits this year. And next year, we hope that we'll accelerate that beyond 10% and that will result in even better gross margins. But overall, dynamic playing in the sector is that customer has X amount of budget. And unless they can buy sufficient capacity for an X amount, they rather not do anything or do go to cheaper solutions, less attractive, but cheaper solutions. And by we coming up with a software solution and it's evidenced by the couple of (37:06) we announced, the decisions (37:10) have been possible without the software solution.

Okay. And, Jean, the Arbor growth at 14% in enterprise, was total Arbor growth approximately that kind of rate or is it – maybe it was higher because of the service provider?

Yes, the Arbor service provider growth was 40% as we talked about and then it was 14% in enterprise. So, when you blend that together, they came close to a 30% growth rate. And as I mentioned in our prepared remarks, they had a product transition, that is one of the reasons why their growth rate is so far ahead of the market rate. The market generally grows anywhere from 12% – 10% to 12% and Arbor, when you normalize for that product transition, actually grew a little faster still than the market in 2017, probably mostly due to some of the high-profile events that happened in DDoS and a lot of customers come forward realizing that they have vulnerabilities and then they turn to Arbor.

I think I just wanted to point out one interest – additional dynamic for all the audience as it may not be clear. I mean, there are three ways to sell the Arbor product, direct sale to enterprise, direct sale to service provider and selling to service provider so that they can be a channel for the enterprise. So, that makes the – it's very difficult to take the service provider number and say how much was real enterprise because that service provider includes not only the stuff they're consuming for themselves, but what they are using it as selling as a service and it's just hard for us to separate ourselves. That's why it looks – service provider number look higher than that actual.

And, Alex, just to make sure that everybody's clear, that 8% to 10% contribution for the software platform is on a – as it relates to product revenue, not total revenue.

We'll take our next question from Chad Bennett of Craig-Hallum. Your line is open.

Great. Thanks for taking my questions this morning.

Sure.

So, Anil, can you maybe talk about kind of the software transition that you're seeing within service provider? Maybe how the magnitude of the transition from roughly a year-ago period and kind of how your thoughts have changed there. And then maybe you can chat about your competitive strength in a software-only world in the service provider space.

Yeah. So, I think we were – NETSCOUT was always a software company. We just ship most of the software with bundled hardware. TekComms, on the service provider side, was primarily a hardware-based company, custom hardware and that affected, obviously, their gross margin and the combined margin of the company in the service provider sector after the acquisition because they were a bigger dominant portion of the revenue. So, what we saw last year was that we have the best solution and we were the number one and number two player and combined, we have 50% market share and everyone wants to use our solution, but they were looking for two things. They were looking for a better price because of their budget challenges and they were looking for the best of both features in a single product. And that was the number one initiative for the company which is why it (40:55) started almost 18 months ago. And so that's what we have delivered now. We've delivered phase one of that last year, which was a software solution, but with only NETSCOUT technology and we just are starting to deliver now the combined solution in the software form. And I think that's creating the best of both worlds for the customer or best of three worlds in the sense that, they're getting the best three technology from the two companies in a single platform. They're able to have a price point, which fits their budget and software model reestablishes the incumbency for us, so that we can sell other optional things in the future as we move to video analytics and other areas.

Right. And then, Anil, can you give us an update on your thoughts on both timing and relative impact of 5G on spend to you guys?

I think we see a very small impact of 5G, but there is an indirect impact on our 4G solution because of the software strategy. So, as people are looking for 5G solutions, they will traditionally look for incumbents who can satisfy their needs both from a budget and a value perspective. So, moving to a software model, the dynamic I just described, allows us to be the number one player in the 5G area, but it's not going to really impact – have any meaningful impact on the revenue in the coming years.

Our next question comes from Matt Hedberg of RBC Capital Markets. Mr. Hedberg, your line is open.

Hi guys. Yeah, thank you. Sorry about that. You guys have talked about getting gross margins back to their historic levels of, I think, near 80%, versus kind of mid-70%s today. I guess, including the release of InfiniStreamNG, can you outline and maybe rank the other opportunities for gross margin expansion?

I'll let Jean maybe add to this. But I think the biggest opportunity is because InfiniStreamNG has become the combined platform for TekComms and NETSCOUT moving forward, and it's available in the software and appliance versions. And so margins are already increasing even with the appliance version, because it's higher gross margin than the TekComms' custom hardware version. But we think that this will allow us to reach our 80% gross margin target sooner than we would have thought earlier, and maybe even exceed it in the future. Jean, anything else?

Sure. As we've talked about in the past, Matt, if you went through the different products that we have, the cybersecurity product already achieved a margin higher than 80%, and the legacy NETSCOUT products were probably a little higher than 80% also. And then when you move to software-only, that would have probably a 90% or greater margin. So, as we talked about in the past, those products, and those are the products that we're really driving, should help to improve the gross margin. Some of the legacy products, like some of the Fluke product, systems product, and some of the software related to Tek, also gets integrated to the InfiniStream. The drag on margins from those two product areas should dissipate over FY 2018 and then further into 2019 and 2020.

That's great. And then maybe as a follow-up, your security business is doing well. I'm curious, with your international exposure, are you seeing any benefits from the European breach notification? Or is it hard to sort of quantify the benefit of that?

Yeah. I'm not directly familiar with this. But overall our, I mean, international business is a very big portion of the security business compared to the service assurance business. So I think that DDoS solution, which is sort of universally applicable, has bigger budgets allocated on the international side than what we see in the service assurance side.

Thanks, guys.

Yeah. Thank you.

Thank you.

We'll take our next question from Eric Martinuzzi of Lake Street Capital Markets. Your line is open.

Yeah. I just wanted to sharpen my pencil here on the Q1 guide. If we start with the $278 million of non-GAAP revenue in Q1 of 2017 and we're decrementing that, you said high teens, just because of this abnormal skewing here in FY 2018. I'm coming up with about – if I use a minus 16%, I'm coming up with about $234 million. Is that a correct algebra exercise for Q1?

Hi, Eric, it's Jean. I just would quibble on the definition of high teens, I would say high teens would probably be closer to 18%, 19% rather than more of a mid teens, 16%.

Okay, all right. Given that substantial drawdown, I'm looking at an EPS decrement of a similar percent versus the $0.28 a year ago. Is that fair? Or is there enough of an offset on the gross margin/OpEx, too?

No, I think that decrement is probably – I think the decrement flows through and, in our prepared remarks, we said we anticipated that the earnings per share for the first quarter would be anywhere between $0.05 to $0.08.

Okay. All right. And then, shifting over to the Vodafone win. By the way, congratulations to (47:15) renewal/expansion there. You characterize the win as kind of them choosing you because of the ability to standardize and do something repeatable. I think, if you could go a layer deeper there, it might help me get an appreciation for some competitive advantages of you versus other providers.

So I think, when you look at the service assurance, which is the biggest portion of the revenue for the company and, even within service assurance, service provider is the bigger portion for us. So, standardized means that we are the exclusive provider of service assurance solutions and there is no competition in that, and we have – and the standardization also means that, obviously, we have to continue to deliver great service to them, which we're counting on. But otherwise, standardization means that, every time we take an order, there is no price negotiation, there is no contract or anything, it's basically just order. We have a price for our product negotiated based on this deal, and we just order, just from this thing. They don't need to go to various places. As long as they have budget, they don't have to go for approval. So, it makes the process much simpler. So, we have to continue to watch out for other things which we can do beyond service assurance. But overall, (48:48) competitive and as we move to 5G virtualization and other areas.

Hi, Eric, this is Jean. Just to add on, Vodafone is a architectural decision that's coupled with our functionality and ease of management. And it is an example of the product suite that we have where we can go in the case of a service provider from the RAN, which should help us in 5G all the way to the data center which – where our service assurance products have been heavily invested and also in analytics and to the cloud when it comes to enterprise. So, we see the Vodafone win as being able to standardize on vendors also and being able to consolidate the tool (49:30) vendors that a lot of our customers struggle with.

We'll take our next question from Kevin Liu of B. Riley and Company. Your line is open. Kevin Liu - B. Riley & Co. LLC: Hi, good morning.

Hello. Kevin Liu - B. Riley & Co. LLC: Just regarding the service provider deal that slipped out of the back half, are you guys still factoring that into your guidance for the current year? And maybe more generally just from the larger Tier 1 customers that you've had traditionally, what's sort of the expectation baked in for the declines over there over the course of 2018?

Hi, Kevin, this is Jean. I would say that we are – they've been a long-term customer and we're on negotiations and discussions and relationship management with them. As you know from reading the headlines, a lot of these customers have been hit lately with the all-you-can-eat plans. So, it's caused them to stop and really look at their overall spending. So, I would say today that is really the situation that we're in with this particular Tier 1. So, while we don't anticipate at this point any large orders in the current quarter, we are hopeful that they will be continuing to see the value that we've provided to them and continuing to place orders with us over the next three quarters or so. Actually, just to add on one comment. We're also talking to all of the Tier 1s as it comes to our software-only solution. So, if there's any – as Anil talked earlier, where their budgets are being constrained due to their own economics where we have the software-only appliance also, we can give them a price point that more aligns with what their CapEx needs are or OpEx needs today, but continue to provide them with excellent service. Kevin Liu - B. Riley & Co. LLC: Got it. Actually that ties in well with my follow-up, which is just in terms of the software-only deals, how does kind of the amount of spend you're getting from these customers compare with what they might have traditionally? Or are these really targeted more so at kind of new potential accounts that you haven't touched previously?

I think there are three numbers – this is a very common question people are asking, what it could have been and nobody knows what it could have been. I think clearly, if they were to buy the same amount of product from us four years ago at the height of LTE spending, the numbers will be significantly larger. But the reality is, we didn't have a software solution, we will not get what we are getting. So, I think this is a short-term disruption, I call it short-term pain, long-term gain, it's a blessing in disguise because ultimately it'll promote one of the best solution in the industry, which is ours to be more progressive in the enterprise and service providers. Even the software solution could eventually be used in the enterprise also. And this will allow us to deliver more value at a reasonable price to the customer. So, that's how I look at it. I think if you compare apples-to-apples, yes, it's significantly lower price for the same amount of product or same amount of coverage versus three years ago, but that's not the right metrics. It is the metrics, what would happen if we didn't have a software solution. And I think the situation will be really bad and will be affecting both gross margin, top line and operating margins. Now we are able to improve gross margin, operating margin, keep the revenue line intact and then grow from that base moving forward. Kevin Liu - B. Riley & Co. LLC: Understood. Thank you for taking the questions.

And there are no further questions at this time.

Great. Well, thank you very much, operator, and thanks to our analysts and shareholders and investors for listening into today's call. Hope to see you out on the road over the next couple of months. And certainly, if you do have any follow-up questions, feel free to send an e-mail to Investor Relations or give me a call. Thank you all very much.

This does conclude today's NETSCOUT's fourth quarter and fiscal year 2017 results conference call. You may now disconnect your lines, and everyone have a great day.