Revenue Performance - Total revenue for Q3 FY25 was $252.0 million, a 15.5% increase from $218.1 million in Q3 FY24[4] - Product revenue accounted for approximately 51% of total revenue at $128.2 million, up from 44% in Q3 FY24[5] - Service revenue was $123.8 million, representing approximately 49% of total revenue, compared to 56% in Q3 FY24[6] - Total revenue for the three months ended December 31, 2024, was $252.0 million, a 15.6% increase from $218.1 million in the same period of 2023[30] - Product revenue increased to $128.2 million, up 33.6% from $95.8 million year-over-year[30] - FY'24 revenue is projected at $829.5 million, while FY'25 revenue is estimated to be between $810 million and $820 million[40] Income and Profitability - GAAP income from operations was $61.7 million, a significant recovery from a GAAP loss of $134.4 million in Q3 FY24[7] - Non-GAAP net income for Q3 FY25 was $68.3 million, or $0.94 per share, compared to $52.0 million, or $0.73 per share in Q3 FY24[8] - Net income for the three months ended December 31, 2024, was $48.8 million, compared to a net loss of $132.6 million in the same period of 2023[30] - Basic net income per share for the three months ended December 31, 2024, was $0.68, compared to a loss of $1.87 per share in the same period of 2023[30] - Non-GAAP Gross Profit for the three months ended December 31, 2024, was $208,598,000, up from $178,461,000, reflecting a 16.9% increase year-over-year[33] - Non-GAAP Income from Operations for the three months ended December 31, 2024, was $89,746,000, compared to $63,249,000 in the prior year, indicating a 41.9% increase[33] - The company reported a GAAP Net Income of $48,810,000 for the three months ended December 31, 2024, compared to a loss of $(132,577,000) in the same quarter of 2023[33] Balance Sheet and Liabilities - Total current assets increased to $692.2 million as of December 31, 2024, from $672.5 million as of March 31, 2024[32] - Total liabilities decreased to $654.2 million as of December 31, 2024, from $703.2 million as of March 31, 2024[32] - The company reported a goodwill impairment of $427.0 million for the nine months ended December 31, 2024[30] - Goodwill impairment for FY'24 is projected at $217.3 million, with FY'25 expected to be around $427 million[40] Future Guidance and Projections - The company expects FY25 revenue to be in the range of $810 million to $820 million, maintaining the midpoint from previous guidance[13] - GAAP net loss per share for FY25 is projected to be between ($5.21) and ($5.10), primarily due to restructuring charges[13] - GAAP net loss for FY'24 is expected to be $(147.7) million, with FY'25 projected net loss ranging from $(373) million to $(366) million[40] - Non-GAAP net income for FY'24 is anticipated to be $159.1 million, with FY'25 expected to be between $156 million and $163 million[40] - Non-GAAP net income per share (diluted) for FY'24 is expected to be $2.20, with FY'25 projected between $2.15 and $2.25[40] Operational Changes and Strategy - NETSCOUT initiated a Voluntary Separation Program expected to reduce approximately 142 employees, representing about 6.2% of its workforce[14] - NETSCOUT continues to focus on executing its business strategy effectively as it positions for fiscal year 2026 and beyond[26] - The company emphasizes the importance of non-GAAP measures for understanding its operating results and future business trends[24] Product Developments - Recent product updates include enhancements to Arbor Edge Defense and Arbor Enterprise Manager to combat AI-enabled DDoS threats[18]

Core Viewpoint - Investors are encouraged to consider NetScout Systems (NTCT) due to improving earnings estimates and positive stock momentum [1][2] Earnings Estimate Revisions - Analysts are increasingly optimistic about NetScout's earnings prospects, leading to higher estimates that are expected to positively impact the stock price [2] - The earnings estimate for the current quarter is $0.74 per share, reflecting a +1.37% change from the previous year, with a 17.31% increase in the Zacks Consensus Estimate over the last 30 days [4] - For the full year, the expected earnings are $2.21 per share, indicating a +0.45% change from the prior year, with a 15.11% increase in the consensus estimate over the past month [5] Zacks Rank and Performance - NetScout currently holds a Zacks Rank 1 (Strong Buy), indicating strong agreement among analysts in raising earnings estimates, which historically correlates with stock performance [3][6] - Stocks with Zacks Rank 1 and 2 have shown significant outperformance compared to the S&P 500 [6] Recent Stock Performance - The stock has appreciated by 7.6% over the past four weeks due to strong estimate revisions, suggesting potential for further upside [7]

Financial Performance - Total revenue decreased by $42.3 million, or 10%, for the six months ended September 30, 2024, compared to the same period in 2023[100]. - Net loss for the six months ended September 30, 2024, was $434.3 million, a significant increase of $451.6 million from a net income of $17.3 million in the prior year[100]. - Gross profit percentage decreased by one percentage point to 76% during the six months ended September 30, 2024, primarily due to lower sales volume of higher margin products and services[100]. - Total revenue for Q3 2024 was $191.1 million, a decrease of 3% compared to $196.8 million in Q3 2023[108]. - GAAP net income for Q3 2024 was $9.0 million, down from $21.5 million in Q3 2023[108]. - Non-GAAP net income for Q3 2024 was $33.6 million, compared to $44.5 million in Q3 2023, reflecting a decrease of 25%[108]. - Total revenue for the six months ended September 30, 2024, was $365.7 million, a decrease of 10% or $42.3 million compared to $407.9 million in the same period last year[133]. - The decrease in product revenue for the six months ended September 30, 2024, was 19% or $33.0 million, primarily due to capital spending constraints in the industry[133]. - Revenue from the United States decreased by 13%, or $32.2 million, primarily due to a decline in service assurance offerings[136]. - International revenue decreased by 6%, or $10.1 million, driven by lower revenue from service provider customers in both service assurance and cybersecurity[136]. - Service assurance revenue was $238.4 million, a decrease of 13% or $37.1 million, while cybersecurity revenue was $127.3 million, down 4% or $5.2 million[137]. Cash and Investments - Cash, cash equivalents, marketable securities, and investments totaled $401.9 million as of September 30, 2024, a decrease of $22.2 million from $424.1 million at March 31, 2024[100]. - Net cash provided by operating activities was $34.7 million for the six months ended September 30, 2024, compared to cash used of $48.7 million in the same period of 2023, reflecting an $83.4 million change[158]. - Cash provided by investing activities was $0.9 million during the six months ended September 30, 2024, a significant improvement from $7.0 million used in the same period of 2023[160]. - Cash used in financing activities increased to $63.8 million during the six months ended September 30, 2024, compared to $49.9 million in the same period of 2023[161]. - The company repurchased 1,362,205 shares for $25.3 million under the 2022 Share Repurchase Program during the six months ended September 30, 2024[161]. Operational Changes - The company ceased business operations in Russia in response to the war in Ukraine, impacting its operational landscape[98]. - The decrease in revenue was attributed to lower revenue from service assurance offerings and cybersecurity services due to industry-specific capital spending constraints[100]. - The company is managing discretionary costs and aligning spending with the current environment while continuing to invest in future business advancements[98]. - The company recorded restructuring charges of $19.0 million related to a voluntary separation program for employees[148]. - The company expects annual run-rate savings of approximately $25 million to $27 million from restructuring efforts, with $18 million to $19 million expected to be realized in the remainder of fiscal year 2025[150]. Expenses and Impairments - Total operating expenses increased significantly to $728.4 million, a rise of 149% or $435.6 million compared to the previous year[144]. - A $427.0 million goodwill impairment charge significantly contributed to the net loss for the six months ended September 30, 2024[100]. - Research and development expenses increased by 2% or $0.8 million to $35.9 million for the three months ended September 30, 2024[121]. - Research and development expenses decreased by 3%, or $2.3 million, primarily due to a reduction in headcount[144]. Credit and Financing - An incremental $725 million was available under the revolving credit facility as of September 30, 2024, which was later amended to $525 million[98]. - The company amended its credit facility to a five-year, $800 million senior secured revolving credit facility, with $75 million outstanding as of September 30, 2024[162]. - The interest rate on the credit facility is 5.95%, and a 10% change in the interest rate would result in an annual increase or decrease of approximately $446,000 in interest expense[169]. - The company expects to meet its funding requirements for at least the next twelve months through operating cash flows and available credit[165]. - The maximum consolidated net leverage ratio is set at 4.00 to 1.00, and the company was in compliance with all covenants as of September 30, 2024[164]. Revenue Breakdown - Product revenue increased by 1% to $81.0 million, while service revenue decreased by 5% to $110.1 million compared to the same period last year[108][109]. - Revenue from service assurance decreased by 6% to $121.7 million, while cybersecurity revenue increased by 3% to $69.4 million[112]. - The company experienced a 4% decrease in U.S. revenue, primarily driven by declines in service assurance offerings[112]. - Revenue from the service provider customer vertical decreased by 25% or $22.3 million, while revenue from the enterprise customer vertical increased by 16% or $16.7 million[114][115].

Core Viewpoint - NetScout Systems (NTCT) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on the consensus measure of EPS estimates from sell-side analysts, reflecting the company's changing earnings picture [1][2]. - Changes in earnings estimates are strongly correlated with near-term stock price movements, particularly due to the actions of institutional investors who adjust their valuations based on these estimates [4][6]. Company Performance Indicators - NetScout is expected to earn $2.21 per share for the fiscal year ending March 2025, showing a year-over-year change of 0.5% [8]. - Over the past three months, the Zacks Consensus Estimate for NetScout has increased by 15.1%, indicating a positive trend in earnings estimates [8]. Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Only the top 5% of Zacks-covered stocks receive a 'Strong Buy' rating, suggesting that NetScout's upgrade places it among the best candidates for potential market-beating returns [9][10].

Financial Data and Key Metrics Changes - For Q2 fiscal year 2025, revenue was approximately $191 million, down about 3% year-over-year, impacted by $11 million of backlog-related revenue and $3 million from a divested business [6][20] - Diluted earnings per share for Q2 was $0.47, down approximately $0.23 from the prior year [6][21] - For the first half of fiscal year 2025, revenue was approximately $366 million, down about 10% year-over-year, primarily due to backlog-related revenue and the divestiture [7][22] Business Line Data and Key Metrics Changes - Service assurance revenue for the first half of fiscal year 2025 decreased approximately 13% year-over-year, attributed to backlog-related revenue headwinds and constrained spending [9][22] - Cybersecurity revenue in Q2 increased approximately 3%, but was down about $0.04 for the first half, indicating a strong growth opportunity despite challenges [11][22] Market Data and Key Metrics Changes - For the first half of fiscal year 2025, enterprise customer vertical revenue was consistent, while service provider customer vertical revenue decreased 22.2% [23] - 58% of revenue was derived from the United States, with the remaining 42% from international markets [24] Company Strategy and Development Direction - The company is focused on enhancing cybersecurity offerings to meet growing customer needs due to the expanding cyber threat landscape [12][28] - The company aims to leverage its visibility without Borders platform to address performance, availability, and security challenges in the digital world [13][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's differentiated solutions to address cybersecurity and service assurance needs [5][12] - The company reaffirmed its full year 2025 non-GAAP revenue and EPS outlook, anticipating revenue in the range of $800 million to $830 million [27][28] Other Important Information - The company completed a voluntary separation program expected to yield approximately $25 million in annualized cost reductions [13][29] - The company ended Q2 with $401.9 million in cash and cash equivalents, a decrease of $22.3 million since the end of fiscal year 2024 [24][25] Q&A Session Summary Question: Are you seeing stabilization in the environment? - Management indicated that they expect to benefit from a budget flush in Q3, which is typically stronger than Q4 [31] Question: What is driving growth in cybersecurity? - Management noted a pivot in positioning to cover gaps in cybersecurity solutions, particularly in analytics, with expectations for growth in the next 6 to 12 months [32] Question: How does Verizon's move towards stand-alone 5G affect opportunities? - Management highlighted that slicing presents a revenue opportunity, and they are looking for initial customers interested in leveraging that functionality [34] Question: Any updates on AIOps strategy? - Management stated that while there is significant interest, they do not expect much impact from AIOps this fiscal year [37]

Company Performance - NetScout Systems (NTCT) reported quarterly earnings of $0.47 per share, exceeding the Zacks Consensus Estimate of $0.45 per share, but down from $0.61 per share a year ago, representing an earnings surprise of 4.44% [1] - The company achieved revenues of $191.11 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 1.20%, although this is a decrease from year-ago revenues of $196.8 million [1] - Over the last four quarters, NetScout has surpassed consensus EPS estimates four times and topped consensus revenue estimates three times [1] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.71 on revenues of $219.08 million, and for the current fiscal year, it is $2.20 on revenues of $807.39 million [4] - The estimate revisions trend for NetScout is mixed, leading to a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [4] Industry Context - The Computer - Networking industry, to which NetScout belongs, is currently in the top 39% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [5] - Another company in the same industry, Radcom (RDCM), is expected to report quarterly earnings of $0.19 per share, reflecting a year-over-year increase of 26.7%, with revenues projected at $15 million, up 13.6% from the previous year [5]

Financial Performance - Total revenue for Q2 FY25 was $191.1 million, a decrease of 2.9% from $196.8 million in Q2 FY24[3] - Product revenue was $81.0 million, approximately 42% of total revenue, compared to $80.5 million (41%) in Q2 FY24[3] - Service revenue was $110.1 million, approximately 58% of total revenue, down from $116.3 million (59%) in Q2 FY24[4] - Total revenue for the quarter ended September 30, 2024, was $191.1 million, a decrease of 2.3% compared to $196.8 million for the same period in 2023[27] - Product revenue for the quarter was $81.0 million, up 0.6% from $80.5 million year-over-year, while service revenue decreased by 5.0% to $110.1 million from $116.3 million[27] - Revenue for the three months ended September 30, 2024, was $191,108,000, a decrease of 2.0% compared to $196,802,000 for the same period in 2023[31] Net Income and Loss - GAAP net income for Q2 FY25 was $9.0 million, or $0.13 per share, compared to $21.5 million, or $0.29 per share in Q2 FY24[6] - Non-GAAP net income for Q2 FY25 was $33.6 million, or $0.47 per share, down from $44.5 million, or $0.61 per share in Q2 FY24[6] - The company reported a net income of $9.0 million, down from $21.5 million in the same quarter last year, resulting in a diluted net income per share of $0.13[27] - Net Income (Loss) (GAAP) for the three months ended September 30, 2024, was $9,027,000, compared to $21,462,000 for the same period in 2023, reflecting a decrease of 58.0%[31] - Non-GAAP Net Income for the three months ended September 30, 2024, was $33,562,000, down from $44,541,000 in the prior year, a decline of 24.6%[33] - GAAP net loss for FY'24 is estimated at $(147.7) million, with FY'25 projected net loss ranging from approximately $(374) million to $(359) million[37] - GAAP net loss per share (diluted) for FY'24 is projected at $(2.07), with FY'25 expected to be between $(5.22) and $(5.01)[37] Cost Management and Savings - NETSCOUT initiated a Voluntary Separation Program (VSP) expected to reduce approximately 145 employees, or 6.3% of its workforce[13] - The VSP is anticipated to generate net annual run-rate savings of approximately $25 million, with $19 million realized in FY25[14] - Operating expenses increased to $134.9 million from $127.5 million year-over-year, primarily due to higher sales and marketing expenses[27] - The company is committed to managing costs prudently while continuing to invest in product development and market expansion strategies[24] Future Projections - The company expects FY25 revenue to be in the range of $800 million to $830 million[12] - The company projects FY'25 revenue to be in the range of $800 million to $830 million, compared to FY'24 revenue of $829.5 million[37] - Non-GAAP net income for FY'24 is expected to be $159.1 million, while FY'25 is projected to be between $153 million and $168 million[37] - Non-GAAP net income per share (diluted) for FY'24 is estimated at $2.20, with FY'25 projected between $2.10 and $2.30[37] Asset Management - Cash, cash equivalents, and marketable securities totaled $400.9 million as of September 30, 2024, down from $423.1 million at the end of the previous fiscal year[29] - Total assets decreased to $2.07 billion from $2.60 billion, primarily due to a reduction in goodwill and intangible assets[29] - Current liabilities decreased to $347.1 million from $395.1 million, reflecting improved cash management and operational efficiency[29] Product Development - Recent product enhancements include AI-ready data solutions and updates to the nGenius Enterprise Performance Management solution[15] - The company plans to focus on cybersecurity and AI-related initiatives to enhance its market position and drive future growth[24] Impairments and Adjustments - The company reported a Goodwill impairment of $426,967,000 for the three months ended June 30, 2024[31] - Goodwill impairment for FY'24 was recorded at $217.3 million, with FY'25 expected to be around $427 million[37] - The company reported a total adjustment of $336.7 million for FY'24, with FY'25 adjustments expected to be between $561 million and $562 million[37] Share-Based Compensation - Share-based compensation expense for the three months ended September 30, 2024, was $14,886,000, down from $18,445,000 in the same period last year, a reduction of 19.0%[33] - The total share-based compensation expense for the six months ended September 30, 2024, was $36,084,000, compared to $38,289,000 for the same period in 2023[33]

LOS ANGELES, Oct. 10, 2024 (GLOBE NEWSWIRE) -- CyberSecurity Breakthrough, a leading independent market intelligence organization that recognizes the top companies, technologies and products in the global information security market, today announced the NETSCOUT Arbor Edge Defense (AED) security appliance has been selected as the winner of the "Threat Detection Solution of the Year" award in the 8th annual CyberSecurity Breakthrough Awards program. The mission of the CyberSecurity Breakthrough Awards is to ...

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks. Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks. In addition ...

Table of Contents Title of each class Trading Symbol(s) Name of each exchange on which registered: Common Stock, $0.001 par value per share NTCT Nasdaq Global Select Market UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition ...