NetScout(US:NTCT)2022-10-28 00:10Financial Data and Key Metrics Changes - Second quarter revenue was $228.1 million, representing year-over-year growth of nearly 8% driven by 10% product revenue growth and more than 5% service revenue growth [8][10] - Diluted earnings per share for the second quarter was $0.50, reflecting a growth of approximately 21% year-over-year [9][11] - For the first half of fiscal year 2023, revenue was $436.9 million, growing by nearly 9% year-over-year, with product revenue growth of more than 14% and service revenue growth of nearly 4% [10] Business Line Data and Key Metrics Changes - Cybersecurity revenue grew by 14% year-over-year in the first half of fiscal year 2023, while service assurance revenue grew by more than 6% [10][38] - Service provider revenue increased by 11% year-over-year in the first half of fiscal year 2023, primarily due to higher revenue from radio frequency propagation modeling projects [16] - Enterprise customer vertical revenue grew by approximately 6% year-over-year, driven by demand for cybersecurity and visibility solutions [17][38] Market Data and Key Metrics Changes - Revenue was more concentrated in the U.S. in the first half of fiscal year 2023, primarily due to higher revenue from Tier 1 domestic carriers [39] - One customer represented 10% or more of total revenue in the second quarter and the first half of fiscal year 2023 [40] Company Strategy and Development Direction - The company plans to continue managing operations prudently, balancing revenue growth and profitability while remaining confident about business prospects [19][20] - The focus remains on expanding the cybersecurity business and enhancing the Omnis suite of cyber intelligence products [14][21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the current uncertainty in the macroeconomic environment but expressed confidence in the business prospects and market opportunities [19][20] - The company reiterated its fiscal year 2023 outlook, targeting revenue in the range of $895 million to $925 million and non-GAAP EPS in the range of $1.91 to $2.03 [20][44] Other Important Information - Gross profit margin was 76.8% in the second quarter, down 1.5 percentage points year-over-year, impacted by radio frequency propagation modeling projects [35] - The company ended the second quarter with $367.1 million in cash, cash equivalents, and marketable securities [41] Q&A Session Summary Question: Confidence points for the second half - Management noted good activity across various trends, including 5G projects and digital transformation initiatives, supporting confidence in reaffirming revenue ranges [51] Question: Federal business performance - Federal service revenue remained consistent year-over-year, while product revenue was slightly flat compared to the previous year [54] Question: Macroeconomic impacts on business - Management has not seen significant delays or cancellations in projects, maintaining a positive outlook despite potential macroeconomic headwinds [67] Question: Backlog normalization expectations - Management anticipates backlog will return to a more traditional range over time, influenced by cybersecurity initiatives [63] Question: Expense normalization and future outlook - Travel expenses are expected to increase next year, but overall operating expenses should remain manageable with strong revenue flow-through [71]