NETSCOUT Reports First Quarter Fiscal Year 2027 Financial Results

About this update from Netscout Systems, Inc.

NETSCOUT SYSTEMS, INC. (NASDAQ: NTCT), a leading provider of network observability, AIOps, carrier service assurance, cybersecurity, and DDoS attack protection, announced financial results for its first quarter ended June 30, 2026. Remarks by Anil Singhal, NETSCOUT’s President & Chief Executive Officer: “We delivered strong first quarter results, providing a solid start to our fiscal year 2027. Performance was driven by our Service Assurance offering, which benefited in part from government-related orders, some of which were received earlier than anticipated. Growth also reflected traction in some of our newest innovations, including our Omnis Sensor and Streamer solutions. Our Cybersecurity revenue was consistent with the prior year against a strong comparison. Together, these underscore how enterprises and service providers continue to rely on NETSCOUT for mission-critical, high-fidelity visibility across increasingly complex digital environments and reflect our continued focus on technology advancements across our portfolio. Additionally, in June, we marked a major milestone in NETSCOUT’s 40-year history of innovation with the issuance of our 750th patent. “We are reaffirming our fiscal year 2027 outlook as we continue to execute on our strategy to drive revenue, expand margins, and generate solid free cash flow. As customers accelerate adoption of new AI-enabled applications, we are well positioned to deliver the intelligence that strengthens network resilience, improves operational efficiency, and supports confident, data-driven decision-making.” First Quarter Financial Results: FY2027 compared with FY2026 Total revenue grew 12.7% to $210.4 million, compared with $186.7 million. Product revenue increased 17.8% to $86.0 million, or 41% of total revenue, compared with $73.0 million, or 39%. As of June 30, 2026, total product backlog was $33 million, including $28 million of fulfillable backlog, compared with $31 million and $23 million, respectively, as of June 30, 2025. Service revenue increased 9.4% to $124.4 million, or 59% of total revenue, compared with $113.8 million, or 61%. GAAP income from operations was $14.5 million, or 6.9% of total revenue. This compares with a GAAP loss from operations of $6.6 million, or negative 3.5% of total revenue. Non-GAAP income from operations was $43.7 million, or 20.8% of total revenue, compared with $26.6 million, or 14.2%. GAAP net income was $21.8 million, or $0.29 per diluted share, compared with GAAP net loss of $3.7 million, or a loss of $0.05 per diluted share. Non-GAAP net income was $38.6 million, or $0.52 per diluted share, compared with $24.7 million, or $0.34 per diluted share. Adjusted EBITDA was $46.9 million, or 22.3% of total revenue, compared with $29.3 million, or 15.7%. A reconciliation of GAAP and non-GAAP results is included in the financial tables below. As of June 30, 2026, cash, cash equivalents, and short and long-term marketable securities totaled $668.5 million, compared with $705.1 million as of March 31, 2026, primarily reflecting the impact of the previously disclosed acquisition of DigiCert's DDoS attack protection business assets. Financial Outlook For fiscal year 2027, NETSCOUT is reaffirming its outlook, reflecting anticipated continued growth and margin expansion: Revenue to range from $885.0 million to $915.0 million, implying 4.7% year-over-year growth at the midpoint; GAAP net income per diluted share to range from $1.55 to $1.70; and Non-GAAP net income per diluted share to range from $2.65 to $2.80, implying 9.9% year-over-year growth at the midpoint. A reconciliation between GAAP and non-GAAP fiscal year 2027 outlook is in the financial tables below. Recent Highlights In July, NETSCOUT announced the doubling of Arbor Cloud mitigation capacity to 33 terabits per second, building directly on our May acquisition of DigiCert’s DDoS attack protection business assets. Together, these actions reflect a deliberate strategy to scale Arbor Cloud with greater control, efficiency, and speed by bringing the platform fully in-house, enabling faster and more efficient capacity investment, tighter alignment between infrastructure and threat intelligence, accelerated innovation, and improved margin potential from recurring revenue, while strengthening our ability to deliver resilient, high-performance protection against increasingly complex and large-scale attacks. In June, NETSCOUT was awarded its 750th patent for “Systems and Methods for Performing Computer Network Service Chain Analysis.” The patent portfolio covers a broad spectrum of technologies, including packet capture and real-time analysis at carrier and enterprise scale; DDoS attack detection, classification, and automated mitigation; mobile network performance monitoring, 5G service assurance, and radio access network observability; network detection and response; artificial intelligence and machine learning-driven analytics; adaptive threat detection; and smart data that is primed for AI and agentic AI workloads. Conference Call Instructions: NETSCOUT will host a conference call to discuss its first quarter financial results and full fiscal year 2027 financial outlook: August 6, 2026 at 8:30 a.m. ET Webcast live at https://ir.netscout.com/investors/overview/default.aspx Dial-in to (800) 267-6316, or (203) 518-9783 for international callers, code NTCTQ127. To access a replay, call (800) 839-3734, or (402) 220-2976 internationally, available today after 12:00 p.m. ET for approximately one week or listen on NETSCOUT’s website for one year. 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 adjusted EBITDA. Non-GAAP gross profit removes expenses related to the amortization of acquired intangible assets, share-based compensation expense, and acquisition-related depreciation expense from gross profit (GAAP). Non-GAAP income from operations includes the aforementioned adjustments related to non-GAAP gross profit and also removes executive transition costs and restructuring charges from income from operations (GAAP). Non-GAAP operating margin is non-GAAP income from operations expressed as a percentage of revenue. 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 as well as any loss on extinguishment of debt from net income (GAAP). Non-GAAP diluted net income per share is non-GAAP net income divided by total outstanding shares on a diluted basis. Adjusted EBITDA includes the aforementioned adjustments related to non-GAAP net income and also removes interest and other expense, income tax expense, and depreciation from net income (GAAP). Beginning in the third quarter of fiscal year 2026, we have renamed non-GAAP EBITDA from operations to adjusted EBITDA. 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 prepared in accordance with GAAP, should not be considered an alternative for measures prepared in accordance with GAAP (gross profit, income from operations, 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 its unique visibility platform and solutions powered by its pioneering deep packet inspection at scale technology. As a leading provider of network observability, AIOps, carrier service assurance, cybersecurity, and Distributed Denial-of-Service (DDoS) attack protection solutions, 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, 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 continuing to execute on its strategy to drive revenue growth, margin expansion, and solid free cash flow, and believes it is well positioned to deliver the intelligence that strengthens network resilience, improves operational efficiency, and supports confident, data-driven decision making; 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; potential lower than expected demand for the Company’s products and services; and the Company’s ability to recognize the expected gain from its acquisition of the assets of DigiCert, Inc.’s DDoS protection business. The risks included above are not exhaustive. For a more detailed description of the risk factors associated with the Company, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of the Company’s filings with the Securities and Exchange Commission, including but not limited to, our annual report on Form 10-K and quarterly reports on Form 10-Q. 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. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. NETSCOUT’s financial guidance is based on estimates and assumptions that are subject to significant uncertainties. ©2026 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       June 30,       2026     2025   Revenue:             Product   $ 86,006     $ 72,993   Service     124,417       113,754   Total revenue   $ 210,423     $ 186,747   Cost of revenue:             Product   $  9,672     $ 11,925   Service     34,818       31,497   Total cost of revenue   $ 44,490     $ 43,422   Gross profit   $ 165,933     $ 143,325   Operating expenses:             Research and development   $ 42,354     $ 39,789   Sales and marketing     72,751       70,595   General and administrative     25,716       27,857   Amortization of acquired intangible assets     10,610       11,119   Restructuring charges     25       529   Total operating expenses   $ 151,456     $ 149,889   Income (loss) from operations   $ 14,477     $ (6,564 ) Interest and other income, net     4,481       3,736   Income (loss) before income tax (benefit) expense   $ 18,958     $ (2,828 ) Income tax (benefit) expense     (2,877 )     851   Net income (loss)   $ 21,835     $ (3,679 )               Basic net income (loss) per share   $ 0.30     $ (0.05 ) Diluted net income (loss) per share   $ 0.29     $ (0.05 ) Weighted average common shares outstanding used in computing:             Net income (loss) per share - basic     71,812       71,729   Net income (loss) per share - diluted     74,597       71,729     NETSCOUT SYSTEMS, INC. Condensed Consolidated Balance Sheets (In thousands) (Unaudited)                   June 30,     March 31,       2026     2026   Assets             Current assets:             Cash, cash equivalents and marketable securities   $ 629,411     $ 667,957   Accounts receivable and unbilled costs, net     79,966       151,473   Inventories and deferred costs     20,909       13,321   Prepaid expenses and other current assets     41,972       35,131   Total current assets   $ 772,258     $ 867,882   Fixed assets, net     26,158       23,558   Operating lease right-of-use assets     36,026       35,553   Goodwill and intangible assets, net     1,323,326       1,284,887   Long-term marketable securities     39,062       37,188   Other assets     114,008       105,449   Total assets   $ 2,310,838     $ 2,354,517   Liabilities and Stockholders' Equity             Current liabilities:             Accounts payable   $  23,536     $  23,492   Accrued compensation     61,162       84,515   Accrued other     14,256       21,667   Deferred revenue and customer deposits     313,327       330,601   Current portion of operating lease liabilities     10,836       9,874   Total current liabilities   $ 423,117     $ 470,149   Other long-term liabilities     6,430       6,568   Deferred tax liability     2,189       2,225   Accrued long-term retirement benefits     27,938       28,336   Long-term deferred revenue and customer deposits     158,996       168,261   Operating lease liabilities, net of current portion     29,144       29,718   Total liabilities   $ 647,814     $ 705,257   Stockholders' equity:             Common stock     138       136   Additional paid-in capital     3,342,802       3,325,400   Accumulated other comprehensive income     3,893       4,032   Treasury stock, at cost     (1,756,732 )     (1,731,396 ) Retained earnings     72,923       51,088   Total stockholders' equity   $ 1,663,024     $ 1,649,260   Total liabilities and stockholders' equity   $ 2,310,838     $ 2,354,517   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     Three Months Ended       June 30,     March 31,       2026     2025     2026                       Revenue   $ 210,423     $ 186,747     $ 203,035                       Gross profit (GAAP)   $ 165,933     $ 143,325     $ 159,108   Share-based compensation expense (1)     3,117       3,160       2,176   Amortization of acquired intangible assets (2)     642       550       550   Acquisition related depreciation expense (3)     —       2       2   Non-GAAP gross profit   $ 169,692     $ 147,037     $ 161,836                       Income (loss) from operations (GAAP)   $ 14,477     $ (6,564 )   $ 19,588   GAAP operating margin     6.9 %     (3.5 )%     9.6 % Share-based compensation expense (1)     17,965       19,959       12,599   Amortization of acquired intangible assets (2)     11,252       11,669       11,715   Restructuring charges     25       529       25   Acquisition related depreciation expense (3)     —       12       12   Executive transition costs (4)     —       959       —   Non-GAAP income from operations   $ 43,719     $ 26,564     $ 43,939   Non-GAAP operating margin     20.8 %     14.2 %     21.6 %                     Net income (loss) (GAAP)   $ 21,835     $ (3,679 )   $ 18,240   Share-based compensation expense (1)     17,965       19,959       12,599   Amortization of acquired intangible assets (2)     11,252       11,669       11,715   Restructuring charges     25       529       25   Acquisition related depreciation expense (3)     —       12       12   Executive transition costs (4)     —       959       —   Income tax adjustments (5)     (12,517 )     (4,712 )     (4,116 ) Non-GAAP net income   $ 38,560     $ 24,737     $ 38,475                       Diluted net income (loss) per share (GAAP)   $ 0.29     $ (0.05 )   $ 0.25   Share impact of non-GAAP adjustments identified above     0.23       0.39       0.27   Non-GAAP diluted net income per share   $ 0.52     $ 0.34     $ 0.52                       Shares used in computing non-GAAP diluted net income per share     74,597       73,376       74,171   NETSCOUT SYSTEMS, INC. Reconciliation of Current GAAP to Current and Historical Non-GAAP Financial Measures - Continued (In thousands) (Unaudited)       Three Months Ended     Three Months Ended         June 30,     March 31,         2026     2025     2026   (1) Share-based compensation expense included in these amounts is as follows:                     Cost of product revenue   $ 403     $ 413     $ 275     Cost of service revenue     2,714       2,747       1,901     Research and development     5,310       5,532       3,843     Sales and marketing     6,242       6,889       4,412     General and administrative     3,296       4,378       2,168     Total share-based compensation expense   $ 17,965     $ 19,959     $ 12,599                         (2) Amortization expense related to acquired software and product technology, tradenames, customer relationships included in these amounts is as follows:                     Cost of product revenue   $ 372     $ 550     $ 550     Cost of service revenue     270       —       —     Operating expenses     10,610       11,119       11,165     Total amortization expense   $ 11,252     $ 11,669     $ 11,715                         (3) Acquisition related depreciation expense included in these amounts is as follows:                     Cost of product revenue   $ —     $ 2     $ 2     Research and development     —       8       8     Sales and marketing     —       2       2     Total acquisition related depreciation expense   $ —     $ 12     $ 12                         (4) Executive transition costs included in these amounts is as follows:                     General and administrative   $ —     $ 959     $ —     Total executive transition costs   $ —     $ 959     $ —                         (5) Total income tax adjustment included in this amount is as follows:                     Tax effect of non-GAAP adjustments above   $ (12,517 )   $ (4,712 )   $ (4,116 )   Total income tax adjustments   $ (12,517 )   $ (4,712 )   $ (4,116 ) NETSCOUT SYSTEMS, INC. Reconciliation of Current GAAP to Current and Historical Non-GAAP Financial Measures - Adjusted EBITDA (In thousands) (Unaudited)     Three Months     Three Months Ended       June 30,     March 31,       2026     2025     2026                       Net income (loss) (GAAP)   $ 21,835     $ (3,679 )   $ 18,240   Net income (loss) (GAAP) as a % of revenue     10.4 %     (2.0 )%     9.0 % Share-based compensation expense (1)     17,965       19,959       12,599   Amortization of acquired intangible assets (2)     11,252       11,669       11,715   Restructuring charges     25       529       25   Acquisition related depreciation expense (3)     —       12       12   Executive transition costs (4)     —       959       —   Income tax adjustments (5)     (12,517 )     (4,712 )     (4,116 ) Net income non-GAAP   $ 38,560     $ 24,737     $ 38,475   Interest and other income, net GAAP     (4,481 )     (3,736 )     (3,758 ) Depreciation and amortization excluding amortization of acquired intangible assets and acquisition related-depreciation expense     3,186       2,776       2,496   Income tax expense non-GAAP     9,640       5,563       9,222   Adjusted EBITDA   $ 46,905     $ 29,340     $ 46,435                       Adjusted EBITDA as a % of revenue     22.3 %     15.7 %     22.9 % NETSCOUT SYSTEMS, INC. Reconciliation of GAAP Financial Outlook to Non-GAAP Financial Outlook (Unaudited) (In millions, except net income per share - diluted)     FY'26     FY'27 Revenue   $ 859.5     ~$885 million to ~$915 million                 FY'26     FY'27 GAAP net income (loss)   $ 95.5     ~$115 million to ~$126 million Amortization of intangible assets     46.8     ~$46 million Share-based compensation expenses     59.9     ~$55 million Business development & integration expenses     —     ~Less than $1 million Restructuring charges     0.9     — Executive transition costs     1.0     — Total adjustments   $ 108.6     ~$102 million Related impact of adjustments on income tax     (22.1 )   (~$20 million) Non-GAAP net income   $ 182.0     ~$197 million to ~$208 million             GAAP net income per share (diluted)   $ 1.30     ~$1.55 to ~$1.70 Non-GAAP net income per share (diluted)   $ 2.48     ~$2.65 to ~$2.80             Average weighted shares outstanding (diluted GAAP)     73.4     ~74 million to ~75 million Average weighted shares outstanding (diluted non-GAAP)     73.4     ~74 million to ~75 million **Figures in table may not total due to rounding   View source version on businesswire.com: https://www.businesswire.com/news/home/20260806214859/en/

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