NetScout(US:NTCT)2024-10-24 18:59Financial 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]