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Netscout Systems (NTCT) Q1 Earnings call transcript Jul 25, 2025

AInvestThursday, Jul 25, 2024 9:11 pm ET
2min read

NetScout, a leading technology company, recently reported its financial results for the first quarter of its fiscal year 2025. The call was led by Tony Piazza, Deputy CFO, with contributions from Anil Singhal, NetScout's President and CEO, Michael Szabados, COO, and Jean Bua, CFO. The call provided valuable insights into NetScout's performance and future outlook, highlighting several key themes and trends.

Financial Performance and Outlook

NetScout reported revenue of approximately $175 million for the first quarter of fiscal year 2025, which is at the higher end of their expectations. However, this represents a 17% year-over-year decline due to approximately $37 million of backlog-related revenue in the prior year's quarter. The company's diluted earnings per share for the quarter were $0.28, exceeding their expectations due to continued cost management initiatives and an unrealized gain on a foreign investment. Despite the decline in revenue, NetScout remains confident in its future prospects, particularly in the areas of cybersecurity and service assurance.

Service Assurance and Cybersecurity

NetScout's Service Assurance offering experienced a 20% year-over-year decline in revenue due to the higher level of backlog-related revenue recorded in the prior year. However, the company remains optimistic about the market, with carriers investing in their 5G initiatives and customers advancing their digital transformations. In the Cybersecurity division, revenue was down approximately 11% year-over-year due to backlog-related usage in the prior year. Despite this, cybersecurity remains a strong growth opportunity for NetScout as customers prioritize spending to protect themselves from the expanding cyber threat landscape.

Investment Opportunities and Strategic Initiatives

NetScout is focusing on enhancing its Cybersecurity offerings to meet customer needs in the face of the expanding cyber threat landscape. The company also plans to leverage its Visibility Without Borders platform to help customers address the performance, availability, and security challenges of the complex digital world. NetScout is committed to cost management initiatives, including a voluntary separation program that is expected to generate annualized cost savings of approximately $25 million to $27 million.

Customer Wins and Strategic Partnerships

NetScout reported several notable customer wins during the quarter, including a multi-year enterprise license agreement with a Tier-1 North American carrier and a multi-year deal extension with a European carrier. These deals underscore NetScout's industry leadership, trusted brand, and strong relationships with key customers. The company also highlighted its strategic partnerships with Palo Alto Networks and AWS, showcasing its integration capabilities and commitment to enhancing the security posture of financial services institutions.

Conclusion

NetScout's first quarter fiscal year 2025 results and outlook provide a mixed picture of challenges and opportunities. The company faced a decline in revenue due to backlog-related factors, but remains confident in its ability to drive growth in the cybersecurity and service assurance sectors. NetScout's strategic initiatives, including cost management and investment in new technologies, position the company well for future growth. The company's customer wins and strategic partnerships demonstrate its market leadership and ability to innovate in a rapidly evolving technological landscape. As NetScout moves forward, it will be important to monitor its progress in navigating the competitive landscape and capitalizing on emerging opportunities in cybersecurity and service assurance.

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