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- **Revenue Beat with Order Acceleration**: Q2 $219M (+14.6% YoY) driven by federal orders pulled forward and DDoS subscription growth.
- **AI-Driven Product Success**: Omnis KlearSight Kubernetes sensor and Adaptive DDoS subscription model deliver 10%+ Service Assurance and Cybersecurity growth.
- **Guidance Uptick**: FY26 revenue raised to $830-870M, EPS to $2.35-2.45, reflecting strong H1 momentum.
- **Risks**: Federal shutdown uncertainty, enterprise budget constraints from tariffs, and customer concentration.

**【CEO Summary Section】**
- Q2 revenue of $219 million, up 14.6% YoY, driven by acceleration of orders originally expected in H2 and strong federal government demand.
- Service Assurance revenue grew 10.1% YoY (65% of total), with federal government and enterprise AIOps adoption key drivers.
- Cybersecurity revenue increased 12.7% YoY (35% of total), supported by DDoS subscription growth and new AI-driven solutions.
- Launched Omnis KlearSight Sensor for Kubernetes and Adaptive DDoS subscription model, enabling real-time observability and adaptive threat defense.
- Raised FY26 guidance to $830-870 million revenue (vs. prior $825-865M) and $2.35-2.45 EPS (vs. $2.25-2.40).

**【CFO Financial Commentary】**
- Product revenue up 16.9% YoY to $94.7M, service revenue +12.9% to $124.3M, with 81.4% gross margin (vs. 79.7% prior).
- Operating expenses +11% YoY due to Engage Summit timing, but expect low-single-digit growth for FY26.
- Free cash flow $4.3M, ending cash of $526.9M, with $16.6M share buybacks in Q2.
- Q3 guidance: $230-240M revenue, $0.83-0.88 EPS.

**【Q&A Key Highlights】**
- **Order Acceleration**: Federal government orders pulled forward due to shutdown fears, contributing to Q2 strength. Service Provider maintenance renewals also shifted timing.
- **DDoS Threat Evolution**: Carpet-bombing attacks using botnets target multiple targets simultaneously. Adaptive DDoS subscription model (released Q4 2024) provides 6-month updates to counter evolving threats.
- **Tariff Impact**: No direct impact on margins, but potential budget constraints for enterprise customers could affect long-cycle sales.
- **Gross Margin Sustainability**: High software sales mix (81.4% GM) in Q2; expect continued software focus to sustain margins.
- **Customer Concentration**: 10%+ revenue from single federal government customer in Q2, no single customer >10% in H1.

NetScout Systems, Inc. (NTCT) Q2 2026 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

NTCT

NTCT fundamentals

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