TO MY FELLOW SHAREHOLDERS:
When I wrote the shareholder letter last year, we were at the beginning of the COVID-19 global pandemic. As I write this year’s letter, we are hopefully putting the pandemic behind us. It was certainly an unprecedented and challenging year from a people, business, and macro-economic perspective. However, as I said last year, “NETSCOUT is a strong Company, and it will emerge from this crisis even stronger.” I am proud to report that we accomplished this objective.
Meeting Fiscal Year 2021 Objectives
Our priority in fiscal year 2021 was the health, safety and security of our people, customers, partners, and other stakeholders, while also focusing on improving our operations and maintaining our disciplined approach to managing cost and capital. Our financial goals were to deliver operating leverage, grow earnings per share, and generate strong free cash flow. From a strategic perspective, our goal was to focus on innovating, advancing, and investing in our technology and solutions to ensure our industry leadership throughout the crisis and well into the future. I am proud to report that we achieved all our objectives in fiscal year 2021.
During this past year, we supported our customers as an essential solution, kept our dedicated team safe and productive, collaborated with the communities around us, invested in our solutions for the future, and delivered on our financial goals. We accomplished all this while demonstrating the importance of our smart visibility and cybersecurity solutions and the flexibility, agility, and resiliency of our business.
From a financial perspective, we drove non-GAAP operating margins up by two and a half percentage points to nearly 21%, increased our non-GAAP diluted earnings per share by more than 8%, and generated nearly $200 million of free cash flow through our disciplined cost and capital management focus. From a strategic perspective, we solidified the next evolution of our strategy, which we call “NETSCOUT without Borders,” and enhanced our existing product offerings while also launching our new Omnis brand of integrated solutions that combines the pervasive visibility of NETSCOUT with the cybersecurity power of Arbor.
Looking Ahead to Fiscal Year 2022
As the global pandemic moves into the rearview mirror, we are excited about the future. Long-term technology trends, such as the advancement of 5G networks, the evolving cybersecurity threat landscape, and the ongoing importance of the user experience amid accelerated digital transformation and cloud migration investments by customers, position NETSCOUT well to remain a leader in our core markets as well as to expand within them.
For fiscal year 2022, we are focused on growth. By capitalizing on these fundamental tailwinds and effectively executing our strategy, we plan to drive revenue growth while continuing our commitment to increasing diluted earnings per share and generating strong free cash flow.
Our NETSCOUT without Borders strategy focuses on three main tenets. One, further expanding within our existing customer base by leveraging our incumbency to access both existing and incremental budget dollars for 5G, cloud, and smart DDoS use cases. Two, acquiring new customers through targeting new logos with existing and new products with our flexible offering formats, such as COTS, virtual, and SaaS solutions. And three, continuing our expansion into high-value adjacencies, such as extended cybersecurity, beyond DDoS, and enhanced big data analytics, that enables customers to gain deeper insight and improve decision outcomes by using our smart data. We believe we have the building blocks necessary to address this next phase of growth for NETSCOUT and have launched some exciting new solutions with our Omnis brand, including Omnis Security. Omnis Security is one of the most advanced threat response platforms in the market, providing unmatched visibility, analytics, and continuous protection across all computing platforms, including hybrid cloud environments.
In addition to these goals, we continue to focus on our environmental, social, and corporate governance (ESG) responsibilities. While ESG is a growing area of interest for a diverse set of stakeholders, these principles have always been a part of who we are at NETSCOUT. To provide greater insight into how we think about ESG related issues and our efforts in this area, we have taken our first foray into publicly reporting on ESG by creating an Environmental, Social and Governance Report as a supplement to our Annual Report. Our ESG report can be accessed on our website at www.netscout.com in the Company section of the site. I invite you to explore this new report and join us as we strive to increase our positive impact on the world.
In closing, I would like to thank my fellow NETSCOUT Guardians around the world for their efforts, dedication, and flexibility, as well as our customers, partners, and stakeholders for their continued support as we navigated the global pandemic this past fiscal year. Our resolve has been tested, and our “Lean But Not Mean” philosophy and culture has served us well during this time, as it has over our 35+ years in business. I look forward to sharing our progress and achievements with you over the course of fiscal year 2022 and beyond.
Co-Founder, President, Chief Executive Officer and Chairman of the Board