NetScout(US:NTCT)2025-11-06 21:15Financial Performance - Total revenue increased by $40.1 million, or 11%, for the six months ended September 30, 2025, compared to the same period in 2024[131]. - Net income for the six months ended September 30, 2025, was $22.1 million, a significant improvement from a net loss of $434.3 million in the same period of 2024[133]. - Non-GAAP net income for the six months ended September 30, 2025, was $69.8 million, compared to $54.1 million for the same period in 2024[140]. - Total revenue for the three months ended September 30, 2025, was $219.0 million, representing a 15% increase from $191.1 million in the same period of 2024[144]. - Total revenue for the six months ended September 30, 2025, was $405.8 million, an increase of 11% or $40.1 million compared to $365.7 million in the same period of 2024[166]. Revenue Breakdown - Product revenue increased by 17% to $94.7 million, while service revenue rose by 13% to $124.3 million compared to the previous year[144][145]. - Product revenue increased by 18% or $25.5 million to $167.7 million, driven by service assurance offerings and cybersecurity offerings[166]. - Service revenue grew by 7% or $14.6 million to $238.1 million, primarily due to maintenance contracts and cloud services[167]. - Revenue from the United States grew by 18% to $131.2 million, accounting for 60% of total revenue, driven by service assurance offerings[147][150]. - Service assurance revenue increased by 10% or $24.0 million to $262.4 million, while cybersecurity revenue rose by 13% or $16.1 million to $143.4 million[169]. Profitability Metrics - Gross profit percentage rose by 3 percentage points to 79% during the six months ended September 30, 2025, due to increased product and service revenue growth[132]. - The gross profit for the six months ended September 30, 2025, was $318.7 million, up from $279.2 million in the same period of 2024[140]. - Gross profit for the three months ended September 30, 2025, was $175.4 million, an 18% increase from $149.1 million in 2024, with a gross profit margin of 80%[152]. - The gross profit margin improved to 79% for the six months ended September 30, 2025, compared to 76% in the same period of 2024[171]. Expenses and Charges - Research and development expenses increased by 12% to $40.3 million, primarily due to higher employee-related variable incentive compensation[154][156]. - Total operating expenses rose by 6% to $142.9 million, representing 65% of total revenue[154]. - The company recorded restructuring charges of $0.3 million in the current period, significantly lower than $2.4 million in the same period last year[160]. - Total operating expenses decreased by 60% to $292.8 million, down from $728.4 million, primarily due to a significant goodwill impairment charge in the prior year[173]. Cash and Liquidity - Cash, cash equivalents, marketable securities, and investments totaled $526.9 million as of September 30, 2025, an increase of $34.4 million from $492.5 million at March 31, 2025[134]. - Net cash provided by operating activities for the six months ended September 30, 2025, was $80.2 million, a significant increase from $34.7 million in the same period of 2024[186]. - Cash used in investing activities was $12.6 million for the six months ended September 30, 2025, compared to cash provided of $0.9 million in the same period of 2024[187]. - Cash used in financing activities decreased to $46.8 million during the six months ended September 30, 2025, from $63.8 million in the same period of 2024[189]. - The company believes it has adequate liquidity to meet anticipated funding requirements for at least the next twelve months, supported by cash flows from operating activities and available cash balances[206]. Strategic Initiatives - The company ceased business operations in Russia in response to the war in Ukraine, impacting its operational strategy[128]. - The company is focused on driving product innovation and returning to annual revenue growth amid ongoing macroeconomic uncertainty[128]. - The company plans to continue investing in capital expenditures to support infrastructure through the remainder of fiscal year 2026[188]. Tax and Other Financial Metrics - The effective tax rate for the three months ended September 30, 2025, was 17.7%, down from 26.8% in the same period of 2024[163]. - The effective tax rate for the six months ended September 30, 2025, was 22.4%, compared to 1.6% for the same period in 2024, reflecting a change primarily due to sales mix and non-deductible expenses[179]. - Interest and other expense, net, decreased by 39% to $(1.8) million, attributed to a reduction in interest expense and an increase in interest income[162]. - Interest and other income (expense), net, decreased by 66% or $5.2 million to $2.6 million, mainly due to a decline in the fair value of an equity investment[178]. Market and Risk Factors - The company is not currently exposed to market risks related to interest rate fluctuations as it had no debt as of September 30, 2025[211]. - The company engages in foreign currency hedging to limit exposure to movements in exchange rates, primarily for expenses denominated in foreign currencies[212]. - Macroeconomic factors such as high inflation and interest rates could increase funding requirements or complicate access to capital[207].