Netscout Rebounds to Profit as Product Sales Accelerate
Fiscal first-quarter revenue reached $210.4 million as product sales gained 17.8%.
The network performance and cybersecurity company NETSCOUT Systems (NTCT) returned to a fiscal first-quarter profit as stronger Service Assurance demand lifted sales and widened margins.
The quarter marked a sharp change in trajectory. Revenue rose 12.7% from a year earlier after declining roughly 1% in the fourth quarter, while early government orders and contributions from new Omnis Sensor and Streamer products supported the rebound.
Revenue increased to $210.4 million from a year earlier and rose 3.6% sequentially. GAAP net income was $21.8 million, or $0.29 a share, compared with a loss of $3.7 million, or $0.05 a share, a year earlier. Adjusted earnings rose to $0.52 a share from $0.34.
Product revenue climbed 17.8% to $86.0 million and accounted for 41% of sales, up from 39% a year earlier. Service revenue rose 9.4% to $124.4 million, accelerating from 5.9% growth in the fourth quarter, while Cybersecurity revenue was unchanged from a year earlier. The quarter’s strength was primarily due to Service Assurance.
GAAP operating income swung to $14.5 million from a $6.6 million loss, lifting the operating margin to 6.9% from negative 3.5%. Non-GAAP operating income rose 64.6% to $43.7 million, and its margin expanded to 20.8% from 14.2%, though both operating-margin measures narrowed sequentially.
Product backlog ended the quarter at $33 million, up from $31 million a year earlier but down from about $50 million in March. Cash and marketable securities fell to $668.5 million from $705.1 million at the end of March, primarily because of NETSCOUT’s acquisition of DigiCert’s DDoS attack-protection assets.
NETSCOUT continues to expect fiscal 2027 revenue of $885 million to $915 million, GAAP earnings of $1.55 to $1.70 a share and adjusted earnings of $2.65 to $2.80 a share. The midpoint of the outlook represents revenue growth of 4.7% and adjusted earnings growth of 9.9%.
The DigiCert transaction doubled Arbor Cloud mitigation capacity to 33 terabits a second and brought the platform fully in-house, an expansion intended to improve recurring-revenue margin potential.