Please stand by. Your program is about to begin. Ladies and gentlemen, thank you for standing by, and welcome to NetScout's Fourth Quarter and Full- Year 2020 Earnings Results 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. Tony Piazza, Vice President of Corporate Finance, and his colleagues at NetScout are on the line with us today. If you require operator assistance at any time, please press star zero. I would now like to turn the call over to Tony Piazza to begin the company's prepared remarks.
Great. Thank you, operator, and g ood morning, everyone. Welcome to NetScout's Fourth Quarter and Full Fiscal Year 2020 conference call for the period ended March 31st, 2020. Joining me today are Anil Singhal, NetScout's 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. You can advance the slides in the webcast viewer to follow our commentary. Both the slides and the prepared remarks can be accessed in multiple areas within the investor relations section of our website at www.netscout.com, including the IR landing page under Financial Results, the webcast itself, and under Financial Information on the quarterly results page. Moving on to slide number three, today's conference call will include forward-looking statements.
These statements may be prefaced by words such as anticipate, believe, and expect, and will cover a range of topics that are not strictly historical facts, such as financial guidance, our market opportunities and market share, key business initiatives and future product plans, along with their potential impact on our financial performance. These forward-looking statements involve risks and uncertainties, and actual results could differ materially from the forward-looking statements due to known and unknown risks, uncertainties, assumptions, and other factors which are described on the slide and in today's financial results presentation, as well as in the company's annual report on Form 10-K for the year ended March 31st, 2019, and subsequent quarterly reports on Form 10-Q on file with the Securities and Exchange Commission. NetScout assumes no obligation to update any forward-looking information contained in this communication or with respect to the announcements described herein.
Let's turn to slide four, which involves non-GAAP metrics. While this slide presentation includes both GAAP and non-GAAP results, unless otherwise stated, financial information discussed on today's conference call will be on a non-GAAP basis only. The rationale for providing the non-GAAP measures, along with the limitations of relying solely on those measures, is detailed on this slide and in today's press release. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. Additionally, as a result of the sale of the HNT Tools business, we will provide certain organic non-GAAP performance trends, which remove HNT Tools revenue for comparability purposes. Reconciliations of the non-GAAP metrics with the applicable GAAP measures are provided in the appendix of this slide presentation in today's earnings press release, and they are also on our website.
I will now turn the call over to Anil for his prepared remarks. Anil?
Thank you, Tony. Good morning, everyone, and thank you for joining us. Let's begin on slide number six with some introductory comments. As we are all aware, we are in unprecedented, uncertain, and challenging times as a result of the COVID-19 global pandemic. During these times, our purpose as guardians of the connected world has never been more important. Our customers depend on NetScout service assurance and security solutions to support and protect critical networks and infrastructures that connect people and support businesses around the globe. It is essential that these infrastructures continue to perform even as they are stressed with unparalleled demand, as many of us now work remotely. Accordingly, we have been effectively operating our business throughout this crisis, given the critical nature of what we provide to our customers.
In line with our lean but not mean culture, our first priority has been the health and safety of our people, partners, customers, and the communities where we live and work. Early on in this crisis, we activated our contingency plans, which have allowed us to ensure the safety of our team while effectively operating the company with most of our employees working remotely. Finally, NetScout generates significant free cash flow, as demonstrated in the Fiscal Year 2020, where we generated more than $200 million. Additionally, at the end of our fiscal year, we had approximately $390 million in cash, cash equivalents, and marketable securities, which represents approximately six months of our normal working capital requirements. We also have borrowing capacity on our $1 billion revolving credit facility, with only $450 million outstanding at our fiscal year-end and no principal repayments due until the facility matures in January of 2023.
Therefore, I believe that our solid balance sheet and strong financial position currently provide us the flexibility and liquidity required to weather this pandemic situation while continuing to invest in our technology and solutions to maintain our leadership position within the industry. Let's move on to our financial results, and then I will provide more insight on our business outlook and the trends we are seeing. Let's begin on slide number seven with a brief recap of our full year 2020 non-GAAP financial results. For Fiscal Year 2020, revenue was $892 million, and diluted earnings per share was $1.57. We delivered solid diluted earnings per share growth of 14% on essentially flat organic revenue, meaning excluding the divested HNT Tools business compared with the prior fiscal year. Revenue in our verticals were essentially flat in an organic basis as well.
In the service provider vertical, the revenue grew 1%, while the enterprise vertical declined by 1.4%. During the fiscal year, our software-only product line grew approximately 35% compared with the prior year. Software-only revenue as a percentage of service revenue, service provider product revenue was consistent with the prior year at approximately 30%. During the fiscal year, we saw software-only revenue grow to 30% of service assurance enterprise product revenue. Last fiscal year, this was only about 10%. Turning to slide eight, I would like to briefly cover our fourth quarter financial business. For our fourth quarter, the revenue was $229.4 million, and diluted earnings per share was $0.50.
While revenue came in approximately 4% to 8% lower than expected due to disruption from the COVID-19 global pandemic, there were nevertheless some highlights in the quarter, such as a second quarter of consecutive revenue growth in the enterprise vertical, spurred by DDoS and our government, healthcare, and manufacturing customers. Michael will comment on some of these deals in his remarks. We also continued to see the decline in ancillary product lines such as Fluke System. Without the Fluke System decline, the enterprise vertical would have grown approximately 5% in the quarter. Let's turn to slide nine for some remarks on our outlook and the trends we are seeing. Looking forward to our Fiscal Year 2021, we believe that our unique solution set could assist our customers in dealing with some of their unexpected network and security capacity challenges in new ways throughout and after the global pandemic.
Although we remain encouraged about the opportunities we see, we are also cautiously optimistic given the current uncertainty of the global economy. Accordingly, we're therefore providing Fiscal Year 2021 guidance until there is greater visibility into the elements we do not control, such as the market trends, customer purchasing behavior, and the duration and magnitude of the effects of the COVID-19 pandemic. However, I would like to share with you some insight. Interest from our customer remains high. However, given the current economic environment, timing, and funding of deals is challenging to predict. At this point, we have already received a large eight-figure deal from an international service provider. We also anticipate completing the prior year's radio propagation modeling project in the first half of this fiscal year.
Given our robust functionality and the ability to sell solution in many forms, we are a premier partner with many of the service providers on a global basis. We are 5G ready and can support both standalone and non-standalone 5G networks, enabling us to support our customers regardless of where they are in their evolutions. In the enterprise vertical, companies continue to advance their digital transformation and security initiatives as they work to address speed, agility, and cost. We see the potential for an acceleration of customers' digital transformation, cloud migration, and security initiatives given how companies are operating and some of the lessons being learned as they deal with the impacts of the global pandemic. We have already seen multiple low seven-figure deals from some of our financial institutions customers in late March and April. Michael will provide some insight on these deals during his remarks.
Regarding 5G, we see this as not only a service provider opportunity, but also as an enterprise opportunity. Enterprises and governments are focused on leveraging 5G public and private networks to operate their businesses with greater automation and precision. Our customers are offering new products and services utilizing this technology, which offers high speeds and low latency. Some of the use cases for this technology are in manufacturing with automated factories, healthcare with telemedicine, transportation with smart vehicles, and other applications such as smart cities and homes, enhanced gaming and entertainment, and national defense. We also believe we are uniquely qualified and positioned to help our customer, as we are one of the only companies to have a service provider scalability and enterprise functionality.
Finally, regarding our Arbor DDoS business, which is part of both our service provider and enterprise vertical, we also believe that this area of the business could benefit as security becomes an even greater focus during the current pandemic as bad actors attempt to take advantage of distracted companies. We continue to combine elements of our service assurance and security technologies to provide enhanced capabilities to our customers that leverage the strengths of our offerings. We believe this combination provides a unique and valuable offering in the marketplace. Turning now towards our cost structure, w e remain committed to improving our operations and maintaining cost controls such that we should be able to once again provide leverage in our earnings per share. We plan to continue to innovate and invest in our technology and solutions to ensure that we maintain our industry leadership throughout this crisis and into the future.
We believe that our solid balance sheet and financial position provide us with the liquidity and flexibility necessary to weather these challenging times. At this time, we also believe it is prudent to preserve capital, and we will not implement a share repurchase program for our first fiscal quarter. Turning to our customer engagement. Last week, we hosted our annual technology and user summit, ENGAGE, which was virtual for the first time. This allowed the opportunity for many more of our customer and partners to attend. We had approximately 3,500 people registered for the event, which was approximately four times more than last year. We see this as an opportunity to increase visibility of our flexible solution, including COTS, commercial off-the-shelf hardware. Michael will elaborate on our ENGAGE event during his remarks.
Finally, I would like to thank all the first responders who are working tirelessly to keep us safe, my fellow guardians at NetScout for their commitment and dedication, as well as our customers and stakeholders for their continued support. I look forward to sharing our progress with you during Fiscal Year 2021. I will now turn the call over to Michael for his remarks.
Thank you, Anil, and good morning, everyone. Slide 11 outlines the areas that I will cover. Starting with customer wins, w e continue to make good progress with both new and existing customers. A new customer that we won during the quarter, a global leading manufacturer and marketer of beauty products, was advancing their digital transformation initiative, including moving to the cloud. The customer was experiencing performance issues, and they could not address issues with solutions that were not based on smart data. The customer placed a low seven-figure order to gain the full complement of our solutions for global visibility to assist in resolving performance using our packet-based rich information solutions.
They are also utilizing our Visibility as a Service, or VaaS offering, to accelerate and optimize the value of our solutions, demonstrating the value for packet-based visibility solutions and VaaS offerings as customers advance their digital transformation and cloud migration strategies. Within the public sector area, we also had some nice wins, both domestically and internationally, as we continue to assist these customers with their digital transformation initiatives as well. One of the largest cities in the United States decided to upgrade their education information infrastructure. They placed a low to mid seven-figure order with us to deploy state-of-the-art service assurance and visibility as the foundation of their digital transformation initiatives. While not the initial trigger, scaling up remote learning is also enabled by this upgrade. This is only the start of their modernization effort, as they have more than 1,800 schools to upgrade in the city.
In the international government area, we had a mid seven-digit figure win to provide a system-wide augmentation and enhancement of service assurance solutions at a large government agency that provides IT services to all the government agencies of that country. Both wins demonstrate the value for incumbency with our customers and our ability to provide them with continued value as they adapt to changes in their operations and advance their infrastructures. In the service provider vertical, we continue to work with our Tier 1 North American carriers as they plan their 5G initial deployments. During the quarter, we delivered and recognized a significant portion of revenue from the radio frequency propagation modeling project we won earlier in the year from a Tier 1 North American carrier. We also continue to work with our international carriers as they advance their networks to 4G, LTE, and in some cases, 5G.
Finally, I want to provide some insight into some of the activity we have recently seen related to the COVID-19 global pandemic. Some of these deals occurred late in the quarter, while others in early April. On the enterprise front, we have started to see some orders from our large financial institution customers in both late March and early April, as they enhance both their visibility and security solutions by upgrading their infrastructure and adding DDoS capacity to manage higher traffic demands on their networks and elevated security needs. In our service provider vertical, we have seen interest in upgrading technology and adding DDoS capacity within their infrastructures. One European carrier placed a low seven-figure order to upgrade its threat mitigation infrastructure to the latest technology in one of the major countries it operates in.
Another placed a mid-six-figure order to increase its capacity as traffic spiked abruptly during the pandemic with more people working remotely. In terms of go-to-market, as Anil mentioned, last week, we hosted our first virtual annual technology and user forum, ENGAGE. The event has been an overwhelming success with a record interest at approximately 3,500 people registered versus approximately 900 last year, representing more than 1,000 organizations from around the globe. The registrants represented the service provider, enterprise, and government verticals, as well as representation from our various partners. The event attracted strong global representation with more than half of the registrants being internationally based. We also noticed a broader array of functions attending the event, with architects, application developers, development, and security operations represented in addition to network engineering and operations.
During the event, we showcased our solutions that assist customers with digital transformation, security, business analytics, and 5G-related initiatives that are all the more critical given the recent global crisis. In addition to the three days of technical presentations, we offered virtual hands-on training sessions covering approximately 30 different subjects. Delivery of these sessions to our customers are over a two-week period for a grand total of more than 4,000 seats. Our plan is to continue to leverage a forum like this throughout the year to enhance our engagement with existing and prospective customers. I look forward to sharing additional news of our success in our go-to-market initiatives and our customers in Fiscal Year 2020. That concludes my prepared remarks, and I will now turn the call over to Jean.
Thank you, Michael, and good morning, everyone. I will review key metrics for our fourth quarter and full Fiscal Year 2020. As a reminder, this review focuses on our non-GAAP results, unless otherwise stated, and all reconciliations with our GAAP results appear in the presentation appendix. In addition, due to the sale of the HNT Tools business in mid-September of 2018, I will highlight certain revenue trends on an organic non-GAAP basis, which removes HNT Tools revenue for the applicable period referenced. I will note the nature of any such comparisons. Slide number 13 details our results for our fourth quarter and full Fiscal Year 2020. Focusing on the quarterly performance first, revenue declined 2.5% over the same quarter in the prior year to $229.4 million. Product revenue declined 7.2%, and service revenue grew 2.8% over the prior year's quarter.
Our fourth quarter Fiscal Year 2020 gross profit margin was 76%, down three percentage points over the same quarter last year. The lower margin was attributable to a higher volume of radio frequency propagation modeling revenue that has lower gross margins in the initial stages, as well as increased variable compensation in the quarter. Quarterly operating expenses increased 7.3% from the prior year, primarily due to higher variable compensation costs and a one-time loss contingency. We reported an operating profit margin of 21.2%, with diluted earnings per share of $0.50. For the full Fiscal Year 2020, revenue was $892 million, which was a decline of 2.1% over the prior year on a reported basis. Adjusting for the divested HNT Tools business, revenue was relatively flat compared with the prior year, despite the COVID-19 pandemic impact on our fourth quarter.
Gross profit margin was 76.4%, which is consistent with the prior year. Strong software-only sales at 29% of service assurance product revenue was offset by lower-margin radio frequency propagation modeling services and increased compensation costs. Annual operating expenses decreased 3% from the prior year, primarily due to the HNT Tools divestiture, headcount management, and continued cost controls. We reported an operating profit margin of 18.3%, with a diluted earnings per share of $1.57, or a 13.8% increase compared with the prior year. Turning to slide 14, I'd like to review key revenue trends, which exclude the divested HNT Tools business for the Fiscal Year 2019 comparison. For Fiscal Year 2020, revenue for the service provider customer vertical grew 1%, while the enterprise vertical declined 1.4%. Approximately 52% of total revenue was generated from the service provider vertical, with the remainder from the enterprise.
Turning to slide 15, this shows our geographic revenue mix on a GAAP basis, which includes $18 million of revenue from the divested HNT Tools business in Fiscal Year 2019. The geographical split between international and domestic revenue was relatively consistent with the prior year. Additionally, there were no customers that represented 10% or more of revenue for the year. Slide 16 details our balance sheet highlights and free cash flow. We ended the quarter with cash, cash equivalents, short-term marketable securities, and long-term marketable securities of $389.1 million, which is an increase of $42.6 million since the end of the third quarter. This cash and marketable securities balance represents approximately six months of normal working capital requirements. Free cash flow generated in the quarter was $102.5 million, as we had strong working capital during this quarter.
During the quarter, we repurchased approximately 2 million shares of our common stock at a cost of $50 million, or an average price of $25.62 per share. During Fiscal Year 2020, we returned approximately $175 million to our shareholders. Given the current economic conditions and uncertainties as a result of the COVID-19 global pandemic, our capital allocation priority has shifted to capital preservation in the near term, and we do not anticipate implementing a share repurchase program in the first quarter of Fiscal Year 2021. From a debt perspective, as of the end of the fourth quarter, we had $450 million outstanding on our $1 billion revolving credit facility. We had approximately 1.5x a cushion against our gross leverage covenant, which could provide borrowing capacity if required. Our revolving credit facility expires in January of 2023 and has no required principal repayments due until maturity.
To briefly recap other balance sheet highlights, accounts receivable net was $213.5 million, down by $31.4 million since the end of December. DSOs were 73 days versus 88 days at the end of Fiscal Year 2019, and 77 days at the end of December 2019. Moving to slide 17. As Anil stated in his remarks, given the rapidly evolving COVID-19 situation, the company will defer providing full Fiscal Year 2021 guidance until there is a clear outlook on the duration and magnitude of the effects of the global pandemic. With that said, I would like to comment on a few capital structure items related to our first quarter of Fiscal Year 2021. For the quarter, we expect the tax rate to be consistent with the first quarter of the prior year at approximately 23%. Additionally, we expect the diluted shares outstanding for the quarter to be approximately 73 million shares.
That concludes my formal review of our financial results. Before we transition to Q&A, I'd like to quickly note that our IR conference participation is listed on slide 18. I'll turn the call over to the operator to start Q&A.
At this time, if you would like to ask a question, please press star and one on your touch tone phone. If you wish to remove yourself from the question queue, please press the pound key. We do ask in the interest of time that you limit yourself to one question and one follow-up. We will go first to Matt Hedberg with RBC Capital Markets.
Oh, hey guys, g ood morning. Thanks for taking my questions. Anil, I wanted to start with you. Can you talk a little bit more about when you started to see the disruption in March, and also whether or not those trends have begin to improve in April? I know you noted a few nice wins in the financial service vertical in March and April, as well as an eight-figure international service provider transaction. I'm just trying to get a sense around the timing of disruption and perhaps maybe some improvements that you're seeing in April.
We don't know the exact timing. It was ongoing depending on different parts of the business, different regions. I think the most important point is that because it's end of the fiscal year, March is traditionally one of the very big quarters, and so we saw some effect. Later in the month, we started getting some other orders. We made up for this, so a s a result, we are able to deliver flat year-over-year performance, and only down by about 1% from the guidance we provided a year ago. Overall, I think we did quite well, and I think there are different parts depending on where we could travel and what kind of conditions were there. At the same time, there were people who had additional demand, and including a couple of people have new budgets, which were called the COVID-19 projects.
There are all kinds of mixture. It's very hard to sift through that, Matt, and I think this quarter is where we'll be able to see how this is impacting and on the positive side versus the negative side, given the importance of what we do.
Got it, o kay, and then s omething that stood out to me in your prepared remarks, I think you noted that software-only revenue was about 30% of service assurance, which was a huge move higher on a year-over-year basis, which is great to hear. Can you talk a little bit more about, you know, the factors driving that mix and might we expect a similar mix shift over the next several years in terms of the magnitude of improvement there?
Yeah, I think the factors driving is really is NetScout. We have been pushing our sales people to go through that because it's higher margin business and it improves our capability further. Jean might go over some more details of that. This is the company plan and we focus initially on service provider business because that market was very challenging. We have the best technology in the carrier space or in other areas, maybe by two to one margin, but the market was very price sensitive because of challenges with OTT traffic and on the 4G infrastructure. We lagged in there, and it made a big difference, and then we decided to do that on the enterprise part of the business.
This year, Matt, we are launching in the remaining part of the business, which is DDoS, which is through the integration of Arbor, which we did last year. Now we'll be able to offer that in all three parts of the business. I think trend is that this is going to go up, and some of this was negated by low margin propagation delay business. Once this thing gets sorted out, overall trend is what we have been predicting. It has been a little bit slower, but I think we are moving so that at some point will be a majority of our revenue will be software based.
Got it, t hat's great to hear. Thanks a lot, guys.
Sure. Eric, m aybe you're on mute.
Operator, do we have the next question?
We will go next to Eric Martinuzzi with Lake Street.
All right. Hopefully I'm live.
Yeah, you are live.
Okay. I had a question. With the onset of COVID and work from home, learn from home, are you seeing, as far as bandwidth demands, is there a benefit to your service provider customers increase bandwidth translating into revenue opportunity for NetScout?
Well, on the carrier side, if you look at the mobility provider, there is a different trend, but i f you look at fixed line operators, then yes, there is a need for that. We are seeing a bigger short-term impact, Eric, on the DDoS part and the service assurance parts of the enterprise business. At the same time, carriers like Verizon, AT&T and all those, they have their own operation, IT operation, which behave like enterprises. For the short term, we are seeing an impact on that part of the business, and J ean, do you want to add something?
I would just say I was very excited about the virtual ENGAGE and some of the new products like Edge Monitoring that the company is looking at. I don't know if you want to go into more detail about the future.
Yeah. I think that is what Jean is talking about, Eric, we are looking at how we can provide some additional information in future calls about some of the directions we announced at ENGAGE. One of the things was Edge Monitoring, which allows you to monitor the performance on the provider side, even though you have outsourced a lot of your infrastructure. That will be even more important in these times because I think one of the ways to do business continuity is to outsource some of the hardware stuff to providers. I think the cloud migration might increase or accelerate. Some of the things which we announced, which is all software also, I think it's going to make a big difference, and we'll be releasing those things in the next quarter.
Okay, and then f rom the personnel side, it sounds like you're keeping an eye on the discretionary. Your headcount was 2,517 the end of December. Where did you finish out the fiscal year on headcount and are you taking any action?
Hi, Eric.
Go ahead.
Hi, Eric, this is Jean. We finished out the fiscal year relatively flat with that Q3 number around 2,500 people.
Okay, and then a s far as the things that you can predict about your business, let's talk about the service revenue. I understand product's a little bit harder to get your arms around, but the service revenue element, is there any reason to believe that that is under a threat from either retention issues, churn? Historically, that's been able to hold up pretty well in tough times like this.
I feel that at a high level, if at all, it's further strengthened. When we talk to our customers, and they see us in a very unique place, a company of decent size, strong financial position, invested in last four years, a lot of things in R&D and support, and t hey can upgrade many of the software. The features, which we are adding are essentially free with renewals. I think that unless something really unexpected happens, our position in the renewal and the service revenue is further solidified. It was already good in the past, I think it may be even better.
Yeah, the only other thing I would add to that, Eric, is in the year, the service revenue, as you noted, grew 3%+, and we have multiple offerings in there with the vast majority of it being, you know, like 85% to 90%, the maintenance. As Anil discussed, it's important. The unique offering that we have where you continue to be supported as well as to receive enhancements keeps our customers wanting to pay that. We also have offered a service, you know, a SaaS offering, which we call Visibility as a Service, which grew pretty well over that year. We also have onsite engineers and they have been growing also as our customers really like the value that these people can supply. I would say that service revenue growing 3% was very good this year, and it looks steady going in the future for FY 2021.
All right. Thanks for taking my questions.
Yeah, g reat. Operator, we can move to the next question.
We will go next to Chad Bennett with Craig-Hallum. Please go ahead.
Thanks for taking my questions.
Yeah.
Just on the software penetration of overall revenues and, you know, just following up on a prior question. I guess, how should we think about the growth there this year, or maybe even an exit kind of penetration rate? Could that get to 40% to 50% when we exit the year this year?
Yeah. The chronology, the timeline of the software only was, as you remember a few years ago, we introduced it into our international service provider markets based on their desire for a full functionality and robust at a price that made sense for them. It has migrated towards domestic service providers also and t his year, what was very interesting is that it's also started to migrate into the enterprise. The enterprise's portion use of software only probably a little less than doubled in FY 2021. When you take that as an exit rate, I think Anil in the past has said that probably our software only could get to at least more than 50%. I would see FY 2021, especially given the COVID-19 pandemic issues, having software only being driven, since it's a very good price point with excellent functionality, potentially more stronger.
On a guesstimate, I would say it probably could get closer to 40% in FY 2021.
Got it, p erfect, and then j ust on the enterprise side of the business, what are the puts and takes, considering, you know, the majority of your enterprise business is still on-prem or data center related, for an enterprise. During this pandemic, you know, I think we've heard from a lot of customers that digital transformation or just flat out move to the cloud has been accelerated, you know, significantly, even more than it already was beforehand. If we see that acceleration to the cloud by your enterprise customers, is that a net positive to revenue, at least over the next year, or a net, you know, headwind to revenue? Any way you could answer that would be great.
I think it's a multi-part answer to this. You mentioned one of the issues in the current time is new hardware deployment, s o we have announced some software modules last week, which increase the functionality of existing deployment. Second thing as Jean mentioned earlier, we have announced the initiative called Edge Monitoring. We strongly feel that IT operations want to keep the control back into visibility while they want to outsource some of the infrastructure to cloud provider. If they do that, they can convert finger-pointing in case of issues, because I'm still going to call my IT when I have a problem with Office 365 or any of the outsource applications. Yet, they don't have access to what's happening in the cloud. This Edge Monitoring solution we have announced is going to make a big difference.
Now, having said that, Equinix and providers like that, which provide high-speed links to cloud infrastructure, are the best option. Our Edge Monitoring solution can be actually deployed in likes of Equinix, and it looks like as if we deployed it in the cloud. It's the extension of on-prem, but it's really not on the on-prem infrastructure, so t hat's a very interesting development. Also, our software can be run on top of SD-WAN. We have made a lot of innovations in the last two years. I think just because infrastructure has moved to all cloud, it doesn't mean all the monitoring has to be on the cloud. Somebody has to make the cloud providers and SaaS application people accountable, and that's how our solution will work. Having said that, there are a couple of other SaaS providers, big one, which I can't name right now.
They are actually also using our technology to actually support their customers. All these combinations, I think is a net positive because it extends our leadership into a bigger market. It makes our higher margin business increase further. The Visibility Without Borders story means that our solution and on-prem is a deployment option, it's not a requirement. Our solution works anywhere you want and no excuses. Some people will put it on-prem, some people will put it in the cloud, and some people will put in the intermediate site like Equinix.
Got it, t hat's great color. Thanks. Great job managing the business and the balance sheet in these times. Thanks.
Thank you.
Thank you.
Operator, we can take the next call.
We'll go next to Kevin Liu with K. Liu & Company.
Hi, good morning. First question here, I j ust wanted to get a sense for the quarter end disruption that you guys saw. Was that primarily just some kind of new product sales, or did you see any impact to maintenance renewal agreements and the like?
I would say it was mostly, I would say almost probably exclusively on product revenue.
Got it and th en more generally, as you work through this environment, it sounds like the demand generation side of things is fine, you know, in terms of going virtually, but c urious as to what other impacts you're seeing on your general sales activities. For instance, are you still able to complete the proof of concepts that you need to or deploy equipment on client sites to the extent that's possible? I'm just wondering what parts of the sales cycles are impacted by COVID-19.
We were doing all proof of concepts remotely because our engineers who are very involved, they were not traveling to customer site, so that's not impacted at all. Yes, there are issues with people not being able to meet customers, and that has some impact. Overall, and that's balanced by the amount of time people have to discuss the projects with us. Michael mentioned, why did we get 35? In some companies where big carriers, we had 10 to 20 people attending, and one company had 50 people attending. I think we are getting the mind share of the people. That's the positive side. The negative side is that we are not able to travel to customer site and have a direct dialogue with people and eye contact. I think it's sort of a good balance, and net effect will be, I think, neutral.
Got it and i f I could just sneak one more in on the security side. Saw that you guys acquired Gigavation in early February. Anil, could you just talk about the longer-term vision for your security platform here? Are you guys still primarily recognized as a DDoS player, or do you see recognition out there in the market as being more on the advanced threat prevention side? I'm just wondering, you know, how this platform is evolving, and what other gaps, if any, you plan on filling in over the coming years.
Sure, so b ecause of our technology based on packets and visibility we provide, we could actually make security adjacency for us, which is very strange word that how could security be adjacency to service assurance? The way we handle it is the two sides of the same coin. Our current business, DDoS, is about 20% of the total business. This year we announced some feeds from our service assurance side to do Layer 7 monitoring on DDoS, and we coined the word Smart DDoS, which we announced last week. I think that's going to have a impact on the DDoS business. Over the last one year, we acquired two companies, Eastwind, two small technology companies. One was Gigavation, as you mentioned. They were in the VDI-based security space, and they had some encryption and some other features.
Towards the end of the year, we are going to be bringing out that solution, which is based on some existing technology from on the enterprise side of the house and, with the ASI technology, combine that with some of the things Eastwind was doing, in the advanced security area, plus some of the building blocks from the VDI acquisition, and a ll three together, we're going to announce our entry into the advanced security space, which is very crowded, but because of our building blocks and incumbency in other areas, I think we're going to have a big impact in next year. We did allude to that announcement also, last week, during ENGAGE, and we had a lot of interesting questions came from the customers.
Over time, I think security will be a much bigger portion of the business, and it will obviously include a big portion from DDoS, but advanced security will be another big portion in the next couple of years.
Great. Thanks for taking the question.
Okay, operator, we'll take the next question.
We'll go next to James Fish with Piper Sandler.
Hey, thanks for the question.
Sure.
Maybe going off of the last one, y ou guys sounded pretty positive on Arbor, but can we get a breakdown of growth rates across the business and within each vertical, as well as the total percentage that Arbor now represents that you guys typically do annual. I get you just said DDoS is 20%, but that's not the entire Arbor business.
I guess, you know, since the sales force has been integrated, the way I would think about it is for the quarter, Arbor did very well. They actually grew, in enterprise in close to the mid-single digits, and so f or the year, I'm just trying to look. For the year, they were probably flat to slightly up. They also had a tremendous year and quarter in service provider. This year, Arbor did pretty well. They're still probably somewhere between 20% to 25%.
Got it, t hat's helpful color and, o bviously, a big catalyst for NetScout is the potential 5G core spending. A lot of debate around this, what is NetScout seeing with 5G core timing given the impact of COVID-19? Were there any pushouts with some of your major tier 1s or international carriers?
We think that what we are getting is that it's either going to be neutral, meaning only coming at the same speed level as was forecasted in the past, or it might even accelerate because of the same reason as we talked about in earlier questions, that Edge computing and other areas, but w e also see that one of the big car manufacturers has buying their own spectrum in Europe. We don't know the timing, but in terms of POCs and evaluations, there is lot of interest. Anywhere we talk in carrier, they want to know about our 5G story and all the investment we made in last 12 months has made a big difference.
We being the incumbent, we can share some of the assets which they have already deployed in 4G and that their POC timeline can be dramatically compressed because they don't need to check everything out. They just need to check the incremental things we have done. All in all, I think that the 5G is going to grow at the same speed in terms of timing or maybe even slightly faster.
Got it. Thanks. Thanks, everyone.
Sure.
Thank you.
Operator?
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