NetScout(NTCT) - 2026 Q1 - Quarterly Results

Overview and Management Commentary CEO Anil Singhal announced a solid start to fiscal year 2026, with Q1 growth driven by Cybersecurity and Service Assurance, focusing on product innovation and margin improvement CEO Remarks CEO Anil Singhal announced a solid start to fiscal year 2026, with Q1 growth driven by Cybersecurity and Service Assurance, focusing on product innovation and margin improvement - The company delivered a solid start to fiscal year 2026, with growth in its Cybersecurity and Service Assurance product lines[2] - Strategic priorities include driving product innovation, achieving annual revenue growth, and enhancing margins via cost management[3] Financial Performance NETSCOUT reported a 6.9% YoY revenue increase to $186.7 million in Q1 FY2026, significantly reducing GAAP net loss and growing non-GAAP net income and EPS Q1 FY26 Financial Results NETSCOUT reported a 6.9% YoY revenue increase to $186.7 million in Q1 FY2026, significantly reducing GAAP net loss and growing non-GAAP net income and EPS Revenue Analysis Total revenue grew 6.9% YoY to $186.7 million, primarily driven by a 19.3% increase in product revenue, with service revenue remaining flat and product backlog significantly increasing Q1 Revenue Performance (in millions) | Metric | Q1 FY2026 | Q1 FY2025 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $186.7 | $174.6 | +6.9% | | Product Revenue | $73.0 | $61.2 | +19.3% | | Service Revenue | $113.8 | $113.4 | +0.3% | - Total product backlog increased significantly to $30.9 million as of June 30, 2025, compared to $15.3 million a year prior[5] Profitability Analysis GAAP loss from operations narrowed dramatically to $6.6 million due to the absence of a prior-year goodwill impairment, while non-GAAP income from operations nearly doubled to $26.6 million Q1 Profitability Metrics (in millions, except per share data) | Metric | Q1 FY2026 (GAAP) | Q1 FY2025 (GAAP) | Q1 FY2026 (Non-GAAP) | Q1 FY2025 (Non-GAAP) | | :--- | :--- | :--- | :--- | :--- | | Income (Loss) from Operations | $(6.6) | $(463.3) | $26.6 | $14.0 | | Operating Margin | (3.5)% | (265.4)% | 14.2% | 8.0% | | Net Income (Loss) | $(3.7) | $(443.4) | $24.7 | $20.6 | | Diluted EPS | $(0.05) | $(6.20) | $0.34 | $0.28 | - The significant reduction in GAAP loss from operations was mainly due to the absence of the $427.0 million goodwill impairment charge recorded in Q1 FY2025[7] Balance Sheet and Cash Flow NETSCOUT's cash and marketable securities increased to $543.5 million as of June 30, 2025, with the company repurchasing $15.0 million in stock and maintaining zero debt - Cash, cash equivalents, and marketable securities increased to $543.5 million as of June 30, 2025, from $492.5 million as of March 31, 2025[9] - Repurchased 761,249 shares of common stock for an aggregate price of approximately $15.0 million during the quarter[9] - The company had no debt outstanding under its $600 million revolving credit facility as of the quarter's end[9] Business Outlook NETSCOUT reaffirmed its full-year fiscal 2026 guidance, projecting revenue between $825 million and $865 million, along with specific GAAP and non-GAAP diluted EPS ranges Fiscal Year 2026 Outlook NETSCOUT reaffirmed its full-year fiscal 2026 guidance, projecting revenue between $825 million and $865 million, along with specific GAAP and non-GAAP diluted EPS ranges FY2026 Financial Outlook | Metric | Guidance Range | | :--- | :--- | | Revenue | $825 million to $865 million | | GAAP Net Income per Share (diluted) | $1.07 to $1.22 | | Non-GAAP Net Income per Share (diluted) | $2.25 to $2.40 | Recent Developments NETSCOUT completed a foreign investment sale and rolled out significant AI-backed enhancements to its Arbor DDoS and Omnis Cyber Intelligence solutions, improving threat detection capabilities Corporate and Product Updates NETSCOUT completed a foreign investment sale and rolled out significant AI-backed enhancements to its Arbor DDoS and Omnis Cyber Intelligence solutions, improving threat detection capabilities - Completed the sale of a foreign investment for approximately $12 million on August 4, 2025[11] - Announced new AI-backed enhancements to its Arbor DDoS solutions to automate defense, capable of mitigating up to 80% of all DDoS attacks without further analysis[13] - Introduced Adaptive Threat Analytics for its Omnis Cyber Intelligence Network Detection and Response (NDR) solution to improve incident response and reduce risk[13] - Participated in TM Forum's NeuroNOC Catalyst event, deploying its Omnis AI Insights Solution to demonstrate AI-driven operations for 5G networks[13] Financial Statements and Reconciliations This section provides detailed unaudited financial statements, including condensed consolidated statements of operations, balance sheets, and comprehensive reconciliations of GAAP to non-GAAP measures Condensed Consolidated Statements of Operations This section provides the detailed unaudited income statement for the three months ended June 30, 2025, highlighting revenues, costs, and operating expenses, notably the absence of a goodwill impairment charge in FY2026 Condensed Consolidated Statements of Operations (in thousands) | Line Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total revenue | $186,747 | $174,565 | | Gross profit | $143,325 | $130,196 | | Total operating expenses | $149,889 | $593,520 | | Loss from operations | $(6,564) | $(463,324) | | Net loss | $(3,679) | $(443,376) | | Diluted net loss per share | $(0.05) | $(6.20) | Consolidated Balance Sheets This section presents the company's balance sheet as of June 30, 2025, detailing assets, liabilities, and stockholders' equity, showing a slight decrease in total assets and liabilities over the quarter Consolidated Balance Sheet Highlights (in thousands) | Line Item | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Cash, cash equivalents, marketable securities and investments | $532,509 | $491,473 | | Total current assets | $683,915 | $713,184 | | Total assets | $2,157,426 | $2,186,578 | | Total current liabilities | $386,982 | $407,932 | | Total liabilities | $609,875 | $626,183 | | Total stockholders' equity | $1,547,551 | $1,560,395 | Reconciliation of GAAP to Non-GAAP Measures This section provides detailed reconciliations of GAAP to non-GAAP financial measures for key metrics and the full-year FY2026 outlook, detailing adjustments like share-based compensation and amortization Q1 FY26 Reconciliation of GAAP Loss from Operations to Non-GAAP Income from Operations (in thousands) | Description | Amount | | :--- | :--- | | Loss from Operations (GAAP) | $(6,564) | | Share-based compensation expense | $19,959 | | Amortization of acquired intangible assets | $11,669 | | Restructuring charges | $529 | | Executive Transition Costs | $959 | | Other adjustments | $12 | | Non-GAAP Income from Operations | $26,564 | FY2026 Outlook Reconciliation of GAAP to Non-GAAP Net Income (in millions) | Description | Amount | | :--- | :--- | | GAAP net income | ~$79 to ~$90 | | Total adjustments (Amortization, Share-based comp, etc.) | $111 | | Related impact of adjustments on income tax | ($23) | | Non-GAAP net income | ~$167 to ~$178 |