NETSCOUT Reports Second Quarter Fiscal Year 2026 Financial Results

WESTFORD, Mass.--( BUSINESS WIRE)--NETSCOUT SYSTEMS, INC. (NASDAQ: NTCT), a leading provider of enterprise performance management, carrier service assurance, cybersecurity, and DDoS protection solutions, today announced financial results for its second quarter ended September 30, 2025.

Remarks by Anil Singhal, NETSCOUT’s President & Chief Executive Officer:

"We delivered another solid quarter in Q2, driven by revenue growth from both our Cybersecurity and Service Assurance product lines as we continued to advance our strategic initiatives, including AI-driven product innovation. Our strong top and bottom-line performance also benefited from the acceleration of some orders originally anticipated in the second half of the fiscal year.

“Looking ahead, given our strong first-half performance, we are raising our revenue and earnings per share outlook while we continue to successfully navigate uncertainties in the macroeconomic environment. We are energized by strong customer feedback, including at our recent Engage Technology and User Summit, where we showcased our latest solutions. It is clear that our customers rely on our highly curated data to drive improved business outcomes across key ecosystems, which positions us well to capture new opportunities through our differentiated solutions.”

Q2 FY26 Financial Results

Total revenue for the second quarter of fiscal year 2026 increased to $219.0 million, compared with $191.1 million in the second quarter of fiscal year 2025.

Product revenue for the second quarter of fiscal year 2026 was $94.7 million, or approximately 43% of total revenue in the period. This compares with product revenue of $81.0 million, or approximately 42% of total revenue in the second quarter of fiscal year 2025. As of September 30, 2025, NETSCOUT had a total product backlog of $39.8 million, which includes $27.7 million of fulfillable backlog, $7.1 million related to a multi-year enterprise license commitment, and $5.0 million of radio frequency propagation modeling projects. This compares to $27.1 million on September 30, 2024, consisting of $22.4 million of fulfillable backlog and $4.7 million of radio frequency propagation modeling projects.

Service revenue for the second quarter of fiscal year 2026 was $124.3 million, or approximately 57% of total revenue in the period. This compares with service revenue of $110.1 million, or approximately 58% in the second quarter of fiscal year 2025.

NETSCOUT’s GAAP income from operations was $32.5 million in the second quarter of fiscal year 2026, which included a restructuring charge of $0.3 million. This compares with a GAAP income from operations of $14.1 million in the second quarter of fiscal year 2025, which included a restructuring charge of $2.4 million. The Company’s GAAP operating margin was 14.8% in the second quarter of fiscal year 2026, versus 7.4% in the same period of fiscal year 2025. Non-GAAP income from operations was $58.1 million with a non-GAAP operating margin of 26.5% in the second quarter of fiscal year 2026. This compares to non-GAAP income from operations of $44.1 million and a non-GAAP operating margin of 23.1% in the second quarter of fiscal year 2025. Non-GAAP EBITDA from operations in the second quarter of fiscal year 2026 was $60.7 million, or 27.7% of quarterly revenue for the period. This compares to non-GAAP EBITDA from operations of $47.5 million in the second quarter of fiscal year 2025, or 24.9% of quarterly revenue for the period.

Net income (GAAP) for the second quarter of fiscal year 2026 was $25.8 million, or $0.35 per share (diluted), which included the restructuring charge mentioned above, versus a GAAP net income of $9.0 million, or $0.13 per share (diluted), for the second quarter of fiscal year 2025, which included the previously mentioned restructuring charges. Non-GAAP net income was $45.1 million or $0.62 per share (diluted) for the second quarter of fiscal year 2026, compared with $33.6 million, or $0.47 per share (diluted), for the second quarter of fiscal year 2025.

As of September 30, 2025, cash, cash equivalents, short and long-term marketable securities and investments were $526.9 million, compared with $492.5 million as of March 31, 2025. As previously disclosed, NETSCOUT completed the sale of a foreign investment for the equivalent of $11.8 million on August 4, 2025. The original purchase price was $7.5 million. During the second quarter of fiscal year 2026, NETSCOUT repurchased a total of 740,981 shares of its common stock at an average price of $22.34 per share for an aggregate purchase price of approximately $16.6 million. As of September 30, 2025, the Company had no debt outstanding under its $600 million revolving credit facility, which expires in October 2029.

First-Half FY26 Financial Results

Financial Outlook Update

The Company is raising its revenue and GAAP and non-GAAP net income per share (diluted) outlook for fiscal year 2026:

Recent Developments and Highlights

Conference Call Instructions:

NETSCOUT will host a conference call to discuss its second-quarter fiscal year 2026 financial results and financial outlook today at 8:30 a.m. ET. This call will be webcast live through NETSCOUT’s website at https://ir.netscout.com/investors/overview/default.aspx. Alternatively, investors can listen to the call by dialing (203) 518-9783. The conference call ID is NTCTQ226. A replay of the call will be available after 12:00 p.m. ET today, for approximately one week. The number for the replay is (800) 839-3011 for U.S./Canada and (402) 220-7231 for international callers.

Use of Non-GAAP Financial Information:

To supplement the financial measures presented in NETSCOUT's press release in accordance with accounting principles generally accepted in the United States (GAAP), NETSCOUT also reports the following non-GAAP measures: non-GAAP gross profit, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income, non-GAAP diluted net income per share, and non-GAAP earnings before interest and other expense, income taxes, depreciation, and amortization from operations (Non-GAAP EBITDA from operations). Non-GAAP gross profit removes expenses related to the amortization of acquired intangible assets, share-based compensation expense, and acquisition-related depreciation expense. Non-GAAP income from operations includes the aforementioned adjustments related to non-GAAP gross profit and also removes goodwill impairment charges, executive transition costs, and restructuring charges. Non-GAAP operating margin includes the foregoing adjustments related to non-GAAP income from operations. Non-GAAP net income includes the foregoing adjustments related to non-GAAP income from operations, and also removes the income tax effects of such adjustments. Non-GAAP diluted net income per share includes the foregoing adjustments related to non-GAAP net income. Non-GAAP EBITDA from operations includes the aforementioned adjustments related to non-GAAP income from operations and also removes non-acquisition related depreciation expense. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures included in the attached tables within this press release.

These non-GAAP measures are not in accordance with GAAP, should not be considered an alternative for measures prepared in accordance with GAAP (gross profit, operating margin, net income, and diluted net income per share), and may have limitations because they do not reflect all NETSCOUT’s results of operations as determined in accordance with GAAP. These non-GAAP measures should only be used to evaluate NETSCOUT’s results of operations in conjunction with the corresponding GAAP measures. The presentation of non-GAAP information is not meant to be considered superior to, in isolation from, or as a substitute for results prepared in accordance with GAAP. NETSCOUT believes these non-GAAP financial measures will enhance the reader’s overall understanding of NETSCOUT’s current financial performance and NETSCOUT's prospects for the future by providing a higher degree of transparency for certain financial measures and providing a level of disclosure that helps investors understand how the Company plans and measures its own business. NETSCOUT believes that providing these non-GAAP measures affords investors a view of NETSCOUT’s operating results that may be more easily compared to peer companies and also enables investors to consider NETSCOUT’s operating results on both a GAAP and non-GAAP basis during and following the integration period of NETSCOUT’s acquisitions. Presenting the GAAP measures on their own, without the supplemental non-GAAP disclosures, might not be indicative of NETSCOUT’s core operating results. Furthermore, NETSCOUT believes that the presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures provides useful information to management and investors regarding present and future business trends relating to its financial condition and results of operations.

NETSCOUT management regularly uses supplemental non-GAAP financial measures internally to understand, manage and evaluate its business and to make operating decisions. These non-GAAP measures are among the primary factors that management uses in planning and forecasting.

About NETSCOUT

NETSCOUT SYSTEMS, INC. (NASDAQ: NTCT) protects the connected world from cyberattacks and performance and availability disruptions through the company’s unique visibility platform and solutions powered by its pioneering deep packet inspection at scale technology. NETSCOUT serves the world’s largest enterprises, service providers, and public sector organizations. Learn more at www.netscout.com or follow @NETSCOUT on LinkedIn, X (formerly known as Twitter), or Facebook.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Examples of forward-looking statements include statements regarding our future financial performance or position, liquidity, results of operations, business strategy, plans and objectives of management for future operations, and other statements that are not historical fact. You can identify forward-looking statements by their use of forward-looking words such as “may,” “will,” “anticipate,” “expect,” “believe,” “estimate,” “intend,” “plan,” “should,” “seek,” or other comparable terms. Investors are cautioned that such forward-looking statements in this press release include, without limitation, statements regarding NETSCOUT’s ability to capture new opportunities through its differentiated solutions; NETSCOUT’s financial outlook and expectations; NETSCOUT’s strategic objectives, plans, commitments, aspirations and goals. Actual results could differ materially from those indicated in the forward-looking statements due to known and unknown risks, uncertainties, assumptions, and other factors, including macroeconomic factors and slowdowns or downturns in economic conditions generally and in the market for advanced networks, service assurance and cybersecurity solutions specifically; the volatile foreign exchange environment; the Company’s relationships with strategic partners and resellers; dependence upon broad-based acceptance of the Company’s network performance management solutions; the presence of competitors with greater financial resources than the Company has, and their strategic response to the Company’s products; the Company’s ability to retain key executives and employees; the Company’s ability to realize the anticipated savings from restructuring actions and other expense management programs; potential lower than expected demand for the Company’s products and services; and the timing and magnitude of stock buyback activity based on market conditions, corporate considerations, debt agreements, and regulatory requirements. The risks included above are not exhaustive. For a more detailed description of the risk factors associated with the Company, please refer to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2025, filed with the Securities and Exchange Commission on May 15, 2025. Any forward-looking information in this press release is as of the date of this press release, and NETSCOUT undertakes no obligation to update such information unless required by law. NETSCOUT’s financial guidance is based on estimates and assumptions that are subject to significant uncertainties.

©2025 NETSCOUT SYSTEMS, INC. All rights reserved. NETSCOUT and the NETSCOUT logo are registered trademarks or trademarks of NETSCOUT SYSTEMS, INC. and/or its subsidiaries and/or affiliates in the USA and/or other countries.

NETSCOUT SYSTEMS, INC.

Condensed Consolidated Statements of Operations

(In thousands, except for per share data)

(Unaudited)

Three Months Ended

Six Months Ended

September 30,

2025

2024

2025

2024

Revenue:

Product

94,712

81,033

167,705

142,202

Service

124,305

110,075

238,059

223,471

Total revenue

219,017

191,108

405,764

365,673

Cost of revenue:

Product

11,597

13,440

23,522

25,444

Service

32,013

28,617

63,510

60,982

Total cost of revenue

43,610

42,057

87,032

86,426

Gross profit

175,407

149,051

318,732

279,247

Operating expenses:

Research and development

40,269

35,909

80,058

78,374

Sales and marketing

64,925

61,226

135,520

131,556

General and administrative

26,261

23,742

54,118

49,323

Amortization of acquired intangible assets

11,162

11,642

22,281

23,256

Restructuring charges

304

2,409

833

18,972

Goodwill impairment

—

426,967

Total operating expenses

142,921

134,928

292,810

728,448

Income (loss) from operations

32,486

14,123

25,922

(449,201

)

Interest and other (expense) income, net

(1,104

)

(1,797

)

2,632

7,831

Income (loss) before income tax expense (benefit)

31,382

12,326

28,554

(441,370

)

Income tax expense (benefit)

5,554

3,299

6,405

(7,021

)

Net income (loss)

25,828

9,027

22,149

(434,349

)

Basic net income (loss) per share

0.36

0.13

0.31

(6.08

)

Diluted net income (loss) per share

0.35

0.13

0.30

(6.08

)

Weighted average common shares outstanding used in computing:

Net income (loss) per share - basic

72,077

71,447

71,904

71,457

Net income (loss) per share - diluted

72,917

71,837

73,130

71,457

NETSCOUT SYSTEMS, INC.

Consolidated Balance Sheets

(In thousands)

September 30,

March 31,

2025

(Unaudited)

Assets

Current assets:

Cash, cash equivalents, marketable securities and investments

516,863

491,473

Accounts receivable and unbilled costs, net

130,158

163,654

Inventories and deferred costs

12,381

12,891

Prepaid expenses and other current assets

48,629

45,166

Total current assets

708,031

713,184

Fixed assets, net

21,290

21,529

Operating lease right-of-use assets

38,388

37,717

Goodwill and intangible assets, net

1,307,906

1,335,073

Long-term marketable securities

10,042

1,004

Other assets

90,527

78,071

Total assets

2,176,184

2,186,578

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

14,706

18,208

Accrued compensation

53,461

56,696

Accrued other

22,484

20,280

Deferred revenue and customer deposits

276,768

301,753

Current portion of operating lease liabilities

10,009

10,995

Total current liabilities

377,428

407,932

Other long-term liabilities

7,911

8,210

Deferred tax liability

2,872

2,643

Accrued long-term retirement benefits

29,571

27,379

Long-term deferred revenue and customer deposits

151,311

147,510

Operating lease liabilities, net of current portion

33,539

32,509

Total liabilities

602,632

626,183

Stockholders' equity:

Common stock

136

134

Additional paid-in capital

3,293,220

3,255,333

Accumulated other comprehensive income

3,954

4,073

Treasury stock, at cost

(1,701,464

)

(1,654,702

)

Accumulated deficit

(22,294

)

(44,443

)

Total stockholders' equity

1,573,552

1,560,395

Total liabilities and stockholders' equity

2,176,184

2,186,578

NETSCOUT SYSTEMS, INC.

Reconciliation of Current GAAP to Current and Historical Non-GAAP Financial Measures

(In thousands, except for per share data)

(Unaudited)

Three Months Ended

Six Months Ended

September 30,

June 30,

September 30,

2025

2024

2025

2024

Revenue

219,017

191,108

186,747

405,764

365,673

Gross Profit (GAAP)

175,407

149,051

143,325

318,732

279,247

Share-based compensation expense (1)

2,227

2,200

3,160

5,387

5,520

Amortization of acquired intangible assets (2)

551

996

550

1,101

1,991

Acquisition related depreciation expense (3)

Non-GAAP Gross Profit

178,186

152,249

147,037

325,223

286,762

Income (Loss) from Operations (GAAP)

32,486

14,123

(6,564

)

25,922

(449,201

)

GAAP Operating Margin

14.8

7.4

(3.5

6.4

(122.8

Share-based compensation expense (1)

13,557

14,886

19,959

33,516

36,084

Amortization of acquired intangible assets (2)

11,713

12,638

11,669

23,382

25,247

Restructuring charges

304

2,409

529

833

18,972

Goodwill impairment

—

426,967

Acquisition related depreciation expense (3)

Executive Transition Costs (4)

—

959

—

Non-GAAP Income from Operations

58,071

44,067

26,564

84,635

58,092

Non-GAAP Operating Margin

26.5

23.1

14.2

20.9

15.9

Net Income (Loss) (GAAP)

25,828

9,027

(3,679

)

22,149

(434,349

)

Share-based compensation expense (1)

13,557

14,886

19,959

33,516

36,084

Amortization of acquired intangible assets (2)

11,713

12,638

11,669

23,382

25,247

Restructuring charges

304

2,409

529

833

18,972

Goodwill impairment

—

426,967

Acquisition related depreciation expense (3)

Executive Transition Costs (4)

—

959

—

Income tax adjustments (5)

(6,336

)

(5,409

)

(4,712

)

(11,048

)

(18,804

)

Non-GAAP Net Income

45,077

33,562

24,737

69,814

54,140

Diluted Net Income (Loss) Per Share (GAAP)

0.35

0.13

(0.05

)

0.30

(6.08

)

Share impact of non-GAAP adjustments identified above

0.27

0.34

0.39

0.65

6.83

Non-GAAP Diluted Net Income Per Share

0.62

0.47

0.34

0.95

0.75

Shares used in computing non-GAAP diluted net income per share

72,917

71,837

73,376

73,130

72,197

NETSCOUT SYSTEMS, INC.

Reconciliation of Current GAAP to Current and Historical Non-GAAP Financial Measures - Continued

(In thousands)

(Unaudited)

Three Months Ended

Six Months Ended

September 30,

June 30,

September 30,

2025

2024

2025

2024

)

Share-based compensation expense included in these amounts is as follows:

Cost of product revenue

297

295

413

710

726

Cost of service revenue

1,930

1,905

2,747

4,677

4,794

Research and development

3,990

3,934

5,532

9,522

9,820

Sales and marketing

4,672

5,275

6,889

11,562

12,779

General and administrative

2,668

3,477

4,378

7,045

7,965

Total share-based compensation expense

13,557

14,886

19,959

33,516

36,084

)

Amortization expense related to acquired software and product technology, tradenames, customer relationships included in these amounts is as follows:

Cost of product revenue

551

996

550

1,101

1,991

Operating expenses

11,162

11,642

11,119

22,281

23,256

Total amortization expense

11,713

12,638

11,669

23,382

25,247

)

Acquisition related depreciation expense included in these amounts is as follows:

Cost of product revenue

Cost of service revenue

—

Research and development

Sales and marketing

General and administrative

—

Total acquisition related depreciation expense

)

Executive transition costs included in these amounts is as follows:

General and administrative

—

959

—

959

—

)

Total income tax adjustment included in this amount is as follows:

Tax effect of non-GAAP adjustments above

(6,336

)

(5,409

)

(4,712

)

(11,048

)

(18,804

)

Total income tax adjustments

(6,336

)

(5,409

)

(4,712

)

(11,048

)

(18,804

)

NETSCOUT SYSTEMS, INC.

Reconciliation of Current GAAP to Current and Historical Non-GAAP Financial Measures -

Non-GAAP EBITDA from Operations

(Dollars in thousands)

(Unaudited)

Three Months Ended

Six Months Ended

September 30,

June 30,

September 30,

2025

2024

2025

2024

Income (loss) from operations (GAAP)

32,486

14,123

(6,564

)

25,922

(449,201

)

Income (loss) from operations (GAAP) as a % of revenue

14.8

7.4

(3.5

6.4

(122.8

Previous adjustments to determine non-GAAP income from operations

25,585

29,944

33,128

58,713

507,293

Non-GAAP Income from operations

58,071

44,067

26,564

84,635

58,092

Depreciation excluding acquisition related-depreciation expense

2,630

3,451

2,776

5,406

7,235

Non-GAAP EBITDA from operations

60,701

47,518

29,340

90,041

65,327

Non-GAAP EBITDA from operations as a % of revenue

27.7

24.9

15.7

22.2

17.9

NETSCOUT SYSTEMS, INC.

Reconciliation of GAAP Financial Outlook to Non-GAAP Financial Outlook

(Unaudited)

(In millions, except for net income per share - diluted)

FY'25

FY'26

Revenue

822.7

~ $830 to ~$870

FY'25

FY'26

GAAP net income (loss)

(366.9

)

~$83 to ~$90

Amortization of intangible assets

50.4

~$47

Share-based compensation expenses

64.8

~$62

Acquisition related depreciation expense

—

Executive transition costs

—

~ $1

Restructuring charges

20.5

~$1

Loss on Debt Extinguishment

1.1

—

Goodwill impairment

427.0

—

Total adjustments

563.8

~$111

Related impact of adjustments on income tax

(36.5

)

(~$23)

Non-GAAP net income

160.4

~$171 to ~$178

GAAP net income (loss) per share (diluted)

(5.12

)

~$1.13 to ~$1.23

Non-GAAP net income per share (diluted)

2.22

~$2.35 to ~$2.45

Average weighted shares outstanding (diluted GAAP)

71.6

~73

Average weighted shares outstanding (diluted Non-GAAP)

72.2

~73

*Figures in table may not total due to rounding