NTCT - Earnings call transcript Q3 2025

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by, and welcome to NetScout's Third Quarter Fiscal Year 2025 Financial Results Conference Call. [Operator Instructions] As a reminder, this call is being recorded. Tony Piazza, NetScout's Deputy CFO and his colleagues at NetScout are on the call with us today.

[Operator Instructions] I would now like to turn the call over to Tony Piazza to begin the company's prepared remarks.

Anthony Piazza

Thank you, operator, and good morning, everyone. Quarter December XXXX XX, Third the Call NetScout's ended period XXXX. to Fiscal Conference Year for Welcome

Joining me Officer; today Financial Chief NetScout's Executive are Vice Officer. Anil Singhal, Michael Executive NetScout's NetScout's Szabados, Chief and Operating President and Bua, Officer; Jean Chief President and

There presentation slide a accompanies our is remarks. prepared that

website multiple the section advance and can remarks Information the in to www.netscout.com, page. areas the Results our Relations webcast at in Investor within can our IR the on webcast You under slides commentary. the follow of prepared Results, be viewer Quarterly Financial Financial the itself landing Both slides including accessed the under and page the

obligation including, as most financial press our which those on this to available law. described no and Exchange but update recent section our statements date except operations, are Relations and call forward-looking from and on the file in not forward-looking well future results the today's include of statements statements other on Examples required XX-K NetScout facts. annual by Investor forward-looking filings company's future Commission. for Slide business These uncertainties, objectives and any report materially or statements. of subsequent that statements. website release, with assumes management regarding differ results forward-looking financial any Actual results SEC on and position, risks in are Form and and the involve strategy, as Securities could as only as operations Today's Moving performance historical not to plans of limited slide information, of conference will to, of today's statements #X. include on speak

involves to Slide #X, now metrics. non-GAAP turn Let's which

information slide on financial measures with solely both non-GAAP results, non-GAAP this GAAP along a providing and measures, call detailed slide information basis the accordance These be as and should GAAP. GAAP will on is website. in of with this release stated, of today's prepared provided relying on limitations appendix press Reconciliations non-GAAP While in be from in the applicable The for those not measures metrics on in release. for and considered only. today's slide isolation in with earnings today's discussed our rationale presentation the conference otherwise or on are measures non-GAAP presentation unless includes press financial a substitute the of all

turn call his the now prepared to will for I remarks. Anil over Anil?

Anil Singhal

instead for the third year were in Thank performance budgets. execution our and strength expectations in our our QX with and and all exceeded quarter product needs morning, It's anticipated cybersecurity both joining addressing of to lines. everyone. that in note service delivered leverage thank initially results Tony, calendar you, across quarter strong today. the XXXX the Welcome, our and of fourth that differentiated fiscal customers results good We as and certain you revenue solution customers. us earnings reflect orders customer These solid evolving the the important received year-end assurance

fiscal early of revenues year have achieving our XXXX reinforced While in accelerated into full QX, timing and certain confidence these our contribution the goals expectations. the orders

As cybersecurity customers' of the meet and now and and value service address remain needs we our on into today's to deliver in to complexity we opportunity confident our the capitalize assurance ability market, future.

first to for X results brief turn XXXX. third of non-GAAP a the Let's #X financial year Slide our of fiscal recap for months and quarter

third year. both approximately from approximately quarter, up quarter, and strong assurance our year up results was revenue $XXX for was prior in earnings service was performance which third to approximately XX% the driven million, product $X.XX cybersecurity the previous XX% lines. This was Diluted per For period. by share compared the

reflecting and the $XXX backlog-related X period the revenue ended included revenue approximately XX, previously X% December of headwinds. of the million, was or For XXXX impact XXXX, year-over-year, disclosed first levels fiscal year the unusually Optimization the down X% months This both comparison. fiscal of The was high approximately affected the $X.XX, an year benefited year-over-year. of share XXXX divestiture corresponding the of results diluted increase first and year's prior for business that approximately months the the X Test earnings per

Now let's business driven approximately of market with move third further and Revenue our expected order service quarter. insights. #X a to in the Slide previously some Starting provider quarter perspective for acceleration service increased our the offering. fourth large assurance X%, on in by

service of against of XG previously business, vertical revenue as they to monetization continue months due down XXXX, investments service a the at assurance was manage opportunities. provider carriers initiatives In For X%, fiscal to the the the primarily backlog divestiture-related our approximately headwinds. assurance service first measured in X customer disclosed year and invest pace

seeking On transformations better capable customers digital of the are their front, advancing the enterprise visibility extending to network. edges and solutions their of

Our area. new gaining edge solutions in are this traction

related their spending not Accordingly, offering. months for cybersecurity Revenue center, cyber for as threat to to networks increased to Cybersecurity prioritize only from continued year our the customers expanding approximately first solid opportunity but well. data in DDoS. the X growth to we represent fiscal to solutions continue at adaptive the for offering protect Moving increased as our approximately the the X% a XX% third NetScout XXXX. quarter the cybersecurity like landscape, and enhance themselves with edge of

Arbor DDoS as artificial Enterprise recently provide in with combat regarding Defense more AI-enabled updated during threats. and Arbor customers will are areas our machine insight solution to and of Manager protection example, part remarks. DDoS we intelligence operating Adaptive now learning products announced our For Michael Edge that our technology our

outlook. #X Slide Now let's move our to review to

third confidence fiscal and our financial XXXX year certain increased performance have we achieving in the now of objectives. Given with the visibility in orders, quarter, acceleration our full strong along

in over midpoint the quarter ranges for color additional year X and per are As revenue we outlook Jean will income non-GAAP such, fiscal narrowing fiscal year, in guidance our our remaining maintaining -- the her in with the remarks. XXXX previous the from share. while provide net outlook, the updating

security position to effectively At to customers the ahead, on conclusion beyond. performance, in address fiscal our Looking enable landscape. fiscal to to year as we complex platform digital challenges for look leverage of our of the today's visibility the company and sharing strength at we XXXX same time, the we our remain availability with our continue focused the the and everyone Borders progress year. forward with We inherent executing

over With that, the I'll turn to call Michael.

Michael Szabados

I highlights. Anil, good XX QX win morning, and you, Thank with everyone. area outlines the Slide today, customer be starting covering will

Tier quarter expand network Starting their in notable customer segment service a they was with high provider our for X-figure long-standing win XG-related North assurance American high-teen further tech offerings. this service carrier a capacity. a as the order X solutions from customer -- One

XG pointed than focused solutions. year. in carrier order on earlier received As further this our out, was they our Anil fiscal advance their supporting anticipated as We network customers remain

In our assurance over offices customer of One our to with solutions. acquisition phases we a ELA leading at have roll the range customers' remote to attempted challenges was the the This domestic multiyear out grown deal with health to mid-teen value additional in edges it's plans through and amounts from service networks. thousands a was win homegrown the enterprise vertical of provider years seeing need growing license multiple and offering, customer during the The aggregate ELA, user its at X-figure in agreement using an solutions are address period. experience and range. notable for with order, enterprise our low physician visibility customer success network clinics called, care limited of who and locations visibility competitor X-figure a

purchased them This long-standing that Shifting customer allocate American new from allows cybersecurity their order our to new System We the Mitigation dynamically solution Threat to edges a offering. to cable DDoS North or our capacity won network. protect operator. mid-X-figure mitigation Arbor Distributed the a emerging of DTMS

ecosystem. to Networks unlock detection take the to AWS experience power Palo and Vegas, level offerings both data key to partnered existing industry December, next hybrid and NetScout's response multi-cloud exceptional with threat secure activities, terms the visibility, resiliency of promote demonstrate the where cloud we how and In user solutions, NetScout's demonstrated AWS we and with actively protect re:Invent in smart we our of power the participated In events. and value prospective at We data to smart to the of in security our cloud Conference in our to of combined early go-to-market the Alto continue environments. customers Las

to latest network the innovations our plan in Mobile in Congress to active smart efforts for participant the present organizations. time, care XG, the availability World H-I-M-S-S, networks, mobile we an in team same for visibility NetScout in XXXX accelerate security will a Las We enhancing data performance Vegas, applications have the AIOps provider be Barcelona and at solutions At leading the world's health some HIMSS, security. our where services our we we of March, early service are NetScout's of will Conference Global essential demonstrate where the protecting will health and care and and NetOps, in

in in provide we finally, network management, will XXXX end-to-end our availability late we And Borders solutions performance NetScout's the Arbor digital how San Conference performance ecosystem. April, Francisco, to powerful security, world's attending RSA security and and where combines DDoS for will Omnis with be platform our visibility engineers showcase protection the most

to I concludes turn everyone. Jean. That my the remarks. call you, will over Thank now

Jean A. Bua

will commentary and everyone. year year outlook. X XXXX first Thank on morning, and provide fiscal for some key of I our Michael, third months additional review quarter good and metrics fiscal you, XXXX our

appear stated, in and results all review presentation the appendix. any this will reminder, the Regardless, non-GAAP results reconciliations a with note As focuses nature otherwise GAAP comparisons. such on of I our our unless

year-over-year noted. all on unless basis a comparisons are otherwise Additionally,

details X the first fiscal #XX year XXXX. Slide and quarter for months third the results of

year X.X%. revenue $XXX an margin million, share compared on $X.XX, XX.X%, X.X%. third total performance, up we last Diluted profit from while of quarter, X fiscal same year. quarter quarter Product up the of increased in quarterly with $X.XX. in expenses $XXX.X XX.X% XX.X% percentage Gross an was last Quarterly operating our an included million, point. the was $XXX.X year. of an earnings on a loss for Focusing approximately XX% was was foreign the $X.XX quarter service up unrealized This profit XXXX increase increase per was third XX.X% operating of Accordingly, XX.X%. which revenue the was margin of million, same in investment revenue reported

remarks. XX. trends here are note to on lines year-over-year comparisons consistent other customer Please that our with will I revenue Slide Turning all review verticals. by and key basis, a product

revenue assurance revenues year cybersecurity For service decreased fiscal by our by the XXXX, first months grew our while X.X%, X.X%. X of

which did fiscal As a this fiscal not $XX benefit reminder, of with the approximately of prior year. get the million entered year we backlog, we

period, same During for for product approximately the accounted line lines service the our total product our cybersecurity accounted remaining of XX%. while our revenue, assurance XX%

Turning our customer to verticals.

our revenue decreased vertical service customer months revenue X.X%, grew fiscal provider first the our customer X.X%. enterprise vertical XXXX, For X year of while

customer provider vertical our During for XX%. the XX% of for same period, the enterprise vertical remaining total accounted accounted service approximately while revenue, customer our our

Turning to our Slide XX. revenue geographic shows mix. This

represented X months international the for XX% For the of Also, fiscal well United the months the States derived the provided or revenue of from XXXX, year of year markets. X of total one by customer first first XX% was XX% in our XXXX. remaining as revenue more fiscal our quarter third as with

a the Slide in $XXX capacity quarter year From credit facility, marketable ended an securities October active debt and XX in flow We market was the details cash, during flow year free with million million to market in revolving and authorization million. currently cash XXXX. repurchase to of end million be year $XXX.X conditions, on of ended have perspective, fiscal XXXX short- $X.X $XX expires Free with in We we our for items. investments, outstanding cash quarter and XXXX. fiscal intend the third representing million sheet of certain the subject our XXXX. long-term cash quarter increase equivalents, since which share balance $XX.X the fiscal third and

of Accounts year the In of balance DSO days of was fully the days XX was year increase lower XX the outstanding metric at of XXXX. days XXXX, same year at other $XXX.X quarter net debt. million due for $XX.X year the the of intend year repay end the timing million, March items. Briefly the of in fourth XX since receivable quarter composition The quarter The to end fiscal was XXXX. $XX million fiscal of in the we third recap of XXXX period representing prior XX, third the versus an this to and bookings. metric sheet and DSO fiscal fiscal

year for commentary non-GAAP Slide focus I outlook. for review my to fiscal on XX move will on our Let's our targets XXXX.

during As our were ranges midpoint year remaining non-GAAP fiscal X year XXXX Anil that October we the for narrowing our fiscal fiscal quarter share per year, second with noted in presented are while XXXX diluted earlier, earnings call the in revenue maintaining quarter outlook and earnings XXXX.

in $XXX million XXXX, of range revenue $XXX fiscal to we For million. year anticipate the now

we to earnings $X.XX. share of within the per range now anticipate diluted Additionally, non-GAAP $X.XX

full The tax year to approximately expected is be rate XX%. effective

shares be diluted to repurchase but our is incorporates shares, assumed does Our million activity, any weighted share assume year-to-date not activity. average outstanding approximately XX further which repurchase

financial my our concludes turn the now to for formal of questions. results. Thank the and review That call you, operator over I'll

Operator

[Operator from Hedberg with Markets. will Matthew Instructions] Capital our we first And question take RBC

Michael Steven Richards

in. Richards strength guidance flush expected was teens X-figure from and in to it This kind Yes, pull-in. out for think you the it pulled or $XX the a on Matt. is Yes, implies another we coming But into budget Mike muted looks that million the kind great provider, service called quarter, quarter. like high see so of of I

Is more trends? And then to broader views bigger the update provide maybe just a IT your us on providers there here? like what spending So on? could And a are service changed detail looking on in what shift environment? spend you in some

Anil Singhal

Yes.

in I stabilized, but think provider year think their business side, it many overall, the starts fiscal January. customers, the I the on service service has of was -- the provider

business this always battle our get we have so QX. we in And sometime QX

plus about we're that X of instead plus basically quarter, Y talking it of got order was X think So Y. in we big both X getting

other right strategic activity invested lot, a now. it's available and of But there's has lot spend lot now, and not just that this a the more which area had XG mainly reason. spend And revenue basically is the not more was the but And budget big that so confidence -- not there cloud in It's the reason. slicing activity backed things, they year. by NetScout and of stream no hit a in it's right has that's but they had

for fiscal So be reason spend the next year. we expect the that in will

Michael Steven Richards

an opportunity And fixed you in then Great. about excited guys wireless. emerging seemed

in was I maybe and where So wondering are if update there could we you just provide an journey. that

Anil Singhal

still think early. it's I

amount We going solution have X of customers it the be now, our money on huge is on of the spent of traffic. X because with amount and or evaluation but -- right this could ready,

looking as situation. at a So this of traffic way to at creative some we looking VIP way other are manage

all customers And don't report any X so there we NetScout. to or top that continue in to in area, point, at this X but have success interest of the be

Operator

Kevin Company. our we And take with Liu & will next from question K. Lu

Kevin Liu

Congrats as Maybe performance might the we there. side spending just upswing and of in strong budgets quarter. here new to like in have kind well the sounds the the back third to be of go on start provider service things. of It at stabilized a certainly

you in the large them of monetization? some of invest kind order, just projects more look of this something newer you seeing the And Or you're are hearing for spending guys that legacy and from areas out to of are your some you year, this on of as maybe had on, customers then calendar As in particular, rest is that they've going touch is on? tied well? seeing actually areas that these new

Anil Singhal

Yes.

are I I assurance opportunities because but growing some has and sort So that of the but think I service we next of customers, quarter-to-quarter. traditional But counting at, order will you stabilized, our from Kevin, -- is the business year, mobile see large we cybersecurity. there area, in mean, necessarily not swings are on existing look in

have interest private other XG. product area calls. talked earlier XG slicing And utilities on have about area, There in fixed indicated, in there could in and We spend the is the a areas in the question which area. as previous a of AI be and some we the wireless

and but area in traditional in in about. XG growth investment So our if the areas, delivering as in look not just other necessarily the area, the in service we XG, provider at I talked

Kevin Liu

moving past at rate overall forward, you to the you've look can here And specifically? kind growth you as maybe in X products, enterprise what you quarter. it. growth third split months? cybersecurity for on pipelines shown How out service just your between QX relative to did your think Got very that accelerate the And versus then your of continue strong provider do over

Anil Singhal

Yes.

So Tony But -- I is right the checking Jean. on have now breakdown overall go ahead, don't that. this.

Jean A. Bua

in close and question quarter-over-quarter they provider provider your the On in to is mid-XXs and service service grow? quarter, -- enterprise Kevin, grew security to how for grew percentage-wise. close So did a service basis, mid-XXs the provider in enterprise the

Anil Singhal

ahead. Go

Kevin Liu

near whether I was levels you that? future outlook sustain and Sorry, there, anywhere to kind growth you going how rates elaborate just thinking have you're the on of or that these can about

Anil Singhal

was that one. quarterly Well, the

or in year-to-date we lot X% the can the but the better the do know, in hope aggregate. in we area. of -- you that As And DDoS so A is overall growth range is this area. much

product we this know, a interest. area, lot there's you announced As Omnis And of a in new cybersecurity.

that lot going year's of big this We not contributor a on, have a is evaluation but to growth.

that So from next share And in the for highlight year, quarter growth area. guidance year, as we'll next we that. expect we fiscal the next our

Operator

further appears questions for closing now program I at or have that turn it And the no this time. we remarks. to Tony additional any back will

Anthony Piazza

operator. Excellent. conclude call will us, day. today. This Thank our and rest of Thank you, the for enjoy for you the joining

Operator

participation. presentation. Thank you. for Thank conclude This you today's does your

disconnect may any at time. You

NetScout Systems (NTCT) 30 Jan 252025 Q3 Earnings call transcript