NetScout Systems (NTCT) Q2 Earnings call transcript Oct 24, 2025
2min read In NetScout's second quarter fiscal year 2025 earnings call, the company reported revenue and earnings results in line with expectations, showcasing a confident outlook for the future. The call, led by executives Tony Piazza, Anil Singhal, Michael Szabados, and Jean Bua, provided insights into the company's financial health and strategic initiatives.
Financial Highlights
NetScout reported a revenue of approximately $191 million for the second quarter, which was down by approximately 3% compared to the prior year period. However, when normalizing for certain items that benefited the prior year, such as backlog-related revenue and the divested test optimization business, Q2 revenue would have grown at a mid-single-digit percentage. The company's diluted earnings per share for the second quarter was $0.47, down approximately $0.14 from the prior year. After accounting for certain one-time items, Q2 earnings would have been slightly higher year-over-year.
For the first half of the fiscal year, revenue was approximately $366 million, down by approximately 10% year-over-year. However, when normalizing for the impact of backlog-related revenue and the divested test optimization business, first half revenue would have grown low single digits year-over-year. The corresponding diluted earnings per share for the first half of $0.75 was a decrease of approximately $0.18 year-over-year.
Market Insights and Business Outlook
NetScout's service assurance offerings saw a decline in revenue for the first half of fiscal year 2025, largely due to the backlog-related revenue headwind and the constrained spending environment in the service provider market. Despite this, the company remains optimistic about its positioning in the market, citing carrier investments in 5G initiatives and enterprise digital transformation as key growth drivers.
In the cybersecurity sector, revenue grew by approximately 3% in the second quarter and was down by approximately $0.04 for the first half, primarily due to the backlog-related headwind. Cybersecurity continues to be a strong growth opportunity for NetScout, with customers prioritizing spending to protect themselves from the expanding cyber threat landscape.
Looking ahead, NetScout remains focused on executing against its full fiscal year 2025 non-GAAP expectations, with a reaffirmed revenue and earnings per share outlook. The company is capitalizing on strategic initiatives, including enhancing cybersecurity offerings and prudently managing costs, to navigate the current market environment.
Customer Wins and Product Developments
NetScout highlighted several customer wins and product developments during the call, including a high-single-digit 8-figure combination of orders from a leading global financial institution spanning both service assurance and cybersecurity product lines. The company also announced several product advancements, such as the release of Omnis AI Insights solution and the update of Omnis Cyber Intelligence network detection and response for its NDR platform.
Conclusion
NetScout's second quarter fiscal year 2025 earnings call painted a picture of a company well-positioned to address its customers' cybersecurity and service assurance needs, with a focus on strategic initiatives and market trends. Despite the challenges faced in the current market environment, NetScout remains confident in its ability to navigate these challenges and capitalize on growth opportunities. The company's reaffirmed non-GAAP revenue and earnings per share outlook for the fiscal year underscores its commitment to delivering value to its stakeholders.
