NetScout Systems Q4 2025 Earnings Call Transcript

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May 8, 2025
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Operator

Ladies and gentlemen, thank you for standing by, and welcome to NETSCOUT's Fourth Quarter and Fiscal Year twenty twenty five Financial Results Conference Call. At this time, all parties are in a listen only mode until the question and answer portion of the call. As a reminder, this call is being recorded. Tony Piazza, Deputy CFO and his colleagues at NETSCOUT are on the line with us today. I would now like to turn the call over to Tony Piazza to begin the company's prepared remarks.

Anthony Piazza
Anthony Piazza
SVP - Finance at NetScout Systems

Thank you, operator, and good morning, everyone. Welcome to Netskope's fourth quarter and full fiscal year twenty twenty five conference call for the period ended 03/31/2025. Joining me today are Anil Sengal, NetScout's President and Chief Executive Officer Michael Zabados, NetScout's Chief Operating Officer and Gene Bua, Netskout's Executive Vice President and Chief Financial Officer. There's a slide presentation that accompanies our prepared remarks. You can advance the slides in the webcast viewer to follow our commentary.

Anthony Piazza
Anthony Piazza
SVP - Finance at NetScout Systems

Both the slides and the prepared remarks can be accessed in multiple areas within the Investor Relations section of our website at www.netscout.com, including the IR landing page under Financial Results, the webcast itself and under Financial Information on the Quarterly Results page. Moving on to Slide number three. Today's conference call will include forward looking statements. Examples of forward looking statements include statements regarding our future financial performance or position, results of operations, business strategy, plans and objectives of management for future operations and other statements that are not historical facts. Actual results could differ materially from any forward looking statements.

Anthony Piazza
Anthony Piazza
SVP - Finance at NetScout Systems

These statements speak only as of today's date and involve risks and uncertainties, including, but not limited to, those described on this slide and in today's financial results press release, which are available on the Investor Relations section of our website as well as in the company's most recent annual report on Form 10 ks and subsequent filings with the Securities and Exchange Commission. NETSCOUT assumes no obligation to update any forward looking information except as required by law. Let's now turn to Slide number four, which involves non GAAP metrics. While this slide presentation includes both GAAP and non GAAP results, unless otherwise stated, financial information discussed on today's conference call will be on a non GAAP basis only. The rationale for providing non GAAP measures along with the limitations of relying solely on those measures is detailed on this slide and in today's financial results press release.

Anthony Piazza
Anthony Piazza
SVP - Finance at NetScout Systems

These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. Reconciliations of all non GAAP metrics with the applicable GAAP measures are provided in the appendix of slide presentation in today's financial results press release and on our website. I will now turn the call over to Anil for his prepared remarks. Anil?

Anil Singhal
Anil Singhal
Co-Founder, Chairman, President & CEO at NetScout Systems

Thank you, Tony, and good morning, everyone. Welcome and thank you all for joining us today. We closed fiscal year twenty twenty five revenue on a strong note with fourth quarter revenue exceeding our expectations, driven by solid performance in our cybersecurity product line. We are pleased with our full year revenue performance, which was in line with our original guidance range provided at the beginning of the fiscal year and consistent with the prior year's revenue after adjusting for the divestiture of the test optimization business. More importantly, we are able to generate approximately $50,000,000 in additional revenue this year and ultimately overcome the challenge of backlog usage from the prior fiscal year.

Anil Singhal
Anil Singhal
Co-Founder, Chairman, President & CEO at NetScout Systems

We delivered non GAAP EPS growth for fiscal year twenty twenty five, driven by our continued focus on prudent cost management initiatives. With a strong financial foundation and a clear strategic direction entering fiscal year twenty twenty six, we believe NetScout is well positioned to navigate the current macroeconomic uncertainty and deliver sustainable long term growth. With that as the backdrop, let's now turn to Slide six for a brief high level recap of our non GAAP financial results for the fourth quarter and full fiscal year 2025. Gene will provide more detail on the results later in the call. For the fourth quarter, revenue increased 1% to approximately $2.00 $5,000,000 and non GAAP diluted earnings per share was $0.52 down approximately 5% on a year over year basis.

Anil Singhal
Anil Singhal
Co-Founder, Chairman, President & CEO at NetScout Systems

For the full fiscal year 2025, we delivered revenue of approximately $823,000,000 essentially flat year over year, down less than 1%. As I mentioned earlier, we are happy with this performance given the divestitures of the test optimization business and the previously mentioned prior year backlog driven revenue gains. When adjusting for the sale of the Test Optimization business, revenue was consistent year over year and adjusting for the prior year's backlog benefit would have resulted in mid single digit revenue growth year over year. From a non GAAP EPS perspective, for the full fiscal year 2025, we delivered $2.22 per diluted share, a $02 or approximately $01 improvement 1% improvement over fiscal year twenty twenty four. We achieved this performance due to our ongoing focus on efficiency, which has contributed to an improved cost structure.

Anil Singhal
Anil Singhal
Co-Founder, Chairman, President & CEO at NetScout Systems

We plan to carry those cost management priorities into fiscal year twenty twenty six. Now let's do turn to slide number seven where we'll be dive deeper into our key business drivers and share some additional market insights. Starting with our service assurance offerings, in in in fiscal year twenty twenty five, service assurance revenue declined approximately 4% year over year. These are this was partially attributable to the divestiture of the test optimizer business business in fiscal year twenty twenty four and the lower level of radio frequency propagation and modeling project revenue compared to last fiscal year. As we consider the demand dynamics for the service assurance offering moving forward, we continue to see service provider customer invest in five gs initiatives at a measured space.

Anil Singhal
Anil Singhal
Co-Founder, Chairman, President & CEO at NetScout Systems

Customers are also making investment in network performance and new services such as fixed wireless access. We believe we remain well positioned to support both domestic and international carriers as customer demand evolve and innovative network technology trends materialize. We are in active discussion with our service provider customers to demonstrate the critical value of our enhanced smart data generated from Deep Packet Inspection or DPI to accelerate service provider efforts in five gs NetOps, AIOps and mobile network security. In the enterprise vertical, we are cautiously optimistic that the growth we experienced in the second half of fiscal year twenty twenty five will continue into fiscal year twenty twenty six as customers evolve their digital transformation and enhance monitoring at the monitoring at the edges of their networks. However, we recognize that ongoing economic uncertainty may influence customer behavior, and we are actively monitoring these trends.

Anil Singhal
Anil Singhal
Co-Founder, Chairman, President & CEO at NetScout Systems

Shifting to our cybersecurity offerings. In fiscal year twenty twenty five, our cybersecurity offering delivered nearly 7% year over year revenue growth driven by strong momentum within our enterprise customer vertical. As I highlighted in our recently released DDoS threat intelligence report, heightened poly geopolitical tensions continue to drive up the number of DDoS attacks. At this time, AIML automation and the abuse of enter enterprise grade infrastructure is enabling more sophisticated and agile attacks. This increases the need for proactive and adaptive defense measures to effectively mitigate evolving threats.

Anil Singhal
Anil Singhal
Co-Founder, Chairman, President & CEO at NetScout Systems

Attacks have been powered by the Mirai malware created botnets, which caused service provider attacks to surge. With this high activity trend landscape, companies are increasingly depending on NetScout's scalable and real time adaptable solutions for their cybersecurity protection methods. As we look to fiscal year twenty twenty six, we believe the value proposition of our solutions should continue to resonate with customers and expect our core portfolio as well as our newer offerings such as adaptive DDoS, mobile security, and distributed threat mitigation system system solutions to fuel continued momentum in this space. Michael will provide more insight regarding customer wins during his remarks. Now let's move to slide number eight regarding our outlook and summary.

Anil Singhal
Anil Singhal
Co-Founder, Chairman, President & CEO at NetScout Systems

As we look ahead to fiscal year twenty twenty six, we remain encouraged by the momentum in our cybersecurity offerings. While we remain cautious given the broader economic uncertainty, we are committed to continuing our investments in product related AI and cybersecurity solution. We also plan to maintain our disciplined approach to cost management and preserve our strong financial position. Based on our current view, in fiscal year twenty twenty six, we expect to achieve year over revenue growth, improve our operating margin and diluted EPS performance and continue to generate solid free cash flow. Gene will provide more specifics on the outlook in her remarks.

Anil Singhal
Anil Singhal
Co-Founder, Chairman, President & CEO at NetScout Systems

Our long term strategy remains unchanged. We will continue to invest in innovation, deepen relationship with our customers, and leverage our mission critical solution to support the evolving performance, availability, and security need of today's complex digital environment. With a strong foundation and clear strategic direction, we believe NetScout is well positioned for sustainable long term success. We look forward to keeping you updated on our progress as we move through the new fiscal year. Now let's move to slide number nine regarding our leadership transition.

Anil Singhal
Anil Singhal
Co-Founder, Chairman, President & CEO at NetScout Systems

Before I turn the call over to CEO, Michael Sabatos, I want to take a moment to address the announcement we made earlier today. As shared, both Michael and our CEO CFO, Jean Bua, will be retiring and stepping down from their roles effective 05/31/2025. We appreciate their continued commitment to the company as they transition into advisory roles through June 2026, ensuring a smooth leadership transition. As part of our succession plan, Sanjay Moshi, the company's deputy CEO, and Tony Piazza, Nextdoor deputy c CFO, will become COO and CFO, respectively, and will join the executive team effective 06/01/2025. On behalf of our board and executive team, I want to thank Jean and Michael for their many contributions in support of NETSCOUT over the years and wish them well in their retirement.

Anil Singhal
Anil Singhal
Co-Founder, Chairman, President & CEO at NetScout Systems

We are fortunate to have capable and experienced experienced leaders like Sanjay and Tony ready to take on the roles of CEO and CFO, and look I look forward to working closely with each of them. With that, I'll turn the call over to Michael.

Michael Szabados
Michael Szabados
Chief Operating Officer at NetScout Systems

Good morning, everyone, and thank you, Anil, for the kind words. It has been a true pleasure working with you and the outstanding team over these many years. I'm confident that the organization is in great hands with Sanjay stepping stepping in as our new COO. Moving

Michael Szabados
Michael Szabados
Chief Operating Officer at NetScout Systems

on

Michael Szabados
Michael Szabados
Chief Operating Officer at NetScout Systems

to our quarterly update, slide 11 outlines the areas that I will be covering starting the q four customer win highlights. Starting with our service assurance offering, one notable win this quarter was a competitive low 7 figure deal with a new customer, which is a leading financial services company. They were utilizing a competitor solution that was not satisfying their requirements. During our proof of concept, we demonstrated our solution delivers end to end network visibility from the customer's core network to their external trading partners. This significantly reduced issue resolution times from days to mere minutes, highlighting our clear operational advantage over their existing solution.

Michael Szabados
Michael Szabados
Chief Operating Officer at NetScout Systems

The part of our service assurance offerings to address issues quickly and accurately at scale was the clear catalyst to this win. In our cybersecurity offering, we expanded our relationship with a leading cloud service provider with a mid 7 figure deal that included our pipeline detection and TMS mitigation solutions to enhance their security posture at their network edge as well as inside their data centers. The customer recognizes the value of our industry leading scalability, advanced detection, and surgical mitigation, and it is critical to supporting the growth of their cloud and AI services businesses and it increasingly larger and sophisticated TDoS attacks. Turning briefly to our go to market activities. We continue to actively promote our offerings to both existing and prospective customers.

Michael Szabados
Michael Szabados
Chief Operating Officer at NetScout Systems

For example, in March, we participated in the Mobile World Congress in Barcelona where we held a series of productive meetings with both existing and prospective customers. Discussion centered around our latest innovations for enhancing our smart data to accelerate service provider efforts in five gs, NetOps, AIOps and mobile network security. More recently in May, we participated in the RSA Security Conference in San Francisco where we demonstrated our visibility without order solutions, deliver next generation performance management, network security, and DDoS protection to ensure security performance and availability for the most complex mission critical network. In June, we will head San Diego for Cisco Live where we will showcase our visibility of security solutions, which are designed to ensure organizations are operationally resilient by ensuring every interaction is safer, faster, and flawless from the edge to the cloud. In early August, we will be in Las Vegas participating in the Black Hat USA conference where we will demonstrate our DDoS protection and on this network security solutions to ensure performance, security, and availability for the world's most powerful digital ecosystems.

Michael Szabados
Michael Szabados
Chief Operating Officer at NetScout Systems

That concludes my final update. Thank you for your support over the years. I will now turn the call over to Jean.

Jean Bua
Jean Bua
CFO at NetScout Systems

Thank you, Michael, and good morning, everyone. I will review key metrics for our fourth quarter and the full fiscal year 2025 and provide some additional commentary on our fiscal year twenty twenty six outlook. As a reminder, this review focuses on our non GAAP results unless otherwise stated, and all reconciliations with our GAAP results appear in the presentation appendix. Regardless, I will note the nature of any such comparisons. Additionally, all comparisons are on a year over year basis unless otherwise noted.

Jean Bua
Jean Bua
CFO at NetScout Systems

Slide number 13 details the results for the fourth quarter and full fiscal year 2025. Focusing on our quarterly performance first, total revenue for the fourth quarter of fiscal year twenty twenty five was $205,000,000, up point 8%. Product revenue was $89,500,000, an increase of point 1%, and service revenue was $115,500,000, an increase of 1.3%. At the end of the fourth quarter, our total combined product backlog was $33,100,000 consisting of the fillable backlog of $25,100,000, point 9 million dollars of radio frequency propagation modeling projects, and $7,100,000 related to one multiyear customer enterprise license commitment. Additionally, at the end of the fourth quarter, there was $8,300,000 of radio frequency modeling projects and deferred revenue.

Jean Bua
Jean Bua
CFO at NetScout Systems

Gross profit margin was 79.2% in the fourth quarter, up two percentage points. Quarterly operating expenses decreased 2.5% primarily due to the previously announced cost reduction actions and lower variable compensation expense. Accordingly, we reported an operating profit margin of 23.1% compared with 19.2% in the same quarter last year. Diluted earnings per share was $0.52 which included an unrealized loss on a foreign investment of approximately $03 This was down 5.5% from $0.55 in the same quarter last year. For the full fiscal year twenty twenty five, revenue was $822,700,000, which was a decrease of point eight percentage points year over year.

Jean Bua
Jean Bua
CFO at NetScout Systems

Normalizing for the test optimization business that we disposed of in fiscal year twenty four, total revenue would have been consistent year over year. Product revenue was $359,900,000 a decline of point two percent, and service revenue was 460 and $62,800,000, a decline of 1.3%. Our gross profit margin was 80%, an increase of point six percentage points. Annual operating expenses decreased 1.9% from the prior year, primarily due to previously announced cost reduction actions. We reported an operating profit margin of 23.7%, up 1.1 percentage points compared to the prior year.

Jean Bua
Jean Bua
CFO at NetScout Systems

Diluted earnings per share was $2.22 a 0.9% increase. Our annual tax rate was 19% compared to 17.2% in the prior year. As a reminder, the prior year tax rate was impacted by a valuation gain in a foreign investment with favorable tax treatment. Turning to slide 14, I will review key revenue trends by product lines and customer verticals. Please note that all comparisons here are on a year over year basis consistent with our other remarks.

Jean Bua
Jean Bua
CFO at NetScout Systems

For the fiscal year twenty twenty five, our service assurance revenue decreased by 4.4%, while our cybersecurity revenues grew by 6.6%. During the same period, our service assurance product line accounted for approximately 65% of our total revenue, while our cybersecurity product line accounted for the remaining 35%. Turning to our customer verticals. For the first fiscal year twenty twenty five, our enterprise customer vertical grew 7.5%, while our service provider customer vertical revenue decreased 10.1%. During the same period, our enterprise customer vertical accounted for approximately 57% of our total revenue, while our service provider customer vertical accounted for the remaining 43%.

Jean Bua
Jean Bua
CFO at NetScout Systems

Turning to slide 15, this shows our geographic revenue mix. For the fiscal year twenty twenty five, '50 '7 percent of our revenue was derived from The United States with the remaining 43% provided by international markets, which is consistent with the prior year. Also, no customer represented 10% or more of our total revenue in either the fourth quarter or full fiscal year 2025. Slide 16 details certain balance sheet and free cash flow items. We ended fiscal year twenty twenty five with $492,500,000 in cash, cash equivalents, short and long term marketable securities and investments, representing an increase of $68,400,000 since the end of fiscal year twenty twenty four.

Jean Bua
Jean Bua
CFO at NetScout Systems

Free cash flow for the fourth quarter was $140,000,000 and $211,000,000 for the full fiscal year 2025. From a debt perspective, during the fourth quarter, we repaid the $75,000,000 that was outstanding on our $600,000,000 revolving credit facility. We did not repurchase any of our common stock during the fourth quarter. We currently have capacity in our share repurchase authorization and subject to market conditions intend to be active in the market during fiscal year twenty twenty six. To briefly recap other balance sheet items, accounts receivable net was $163,700,000 representing a decrease of $28,400,000 since 03/31/2024.

Jean Bua
Jean Bua
CFO at NetScout Systems

The DSO metric at the end of the fourth quarter of fiscal year twenty twenty five was sixty eight days versus eighty one days at the end of fiscal year twenty twenty four. The lower DSO metric in the fourth quarter of this fiscal year was due to the timing and composition of bookings. Let's move to slide 17 for commentary on our outlook. I will refocus my review on our non GAAP target for fiscal year twenty twenty six. I would like to first address the current macro environment and the impact of the proposed tariff policies.

Jean Bua
Jean Bua
CFO at NetScout Systems

As it stands, current global tariff regulations and negotiations are not expected to have a material impact on our business from a direct cost perspective. More than 80% of our revenue comes from services and software, which are largely unaffected by these tariffs. On the hardware side, most components for our appliances are sourced either domestically from Canada or from Mexico and are currently exempt exempt under the USMCA arrangements. As such, our direct cost exposure is currently minimal and could be addressed through pricing adjustments or efficiency initiatives if required. That said, broader tariff related activity is contributing to some uncertainty in the global macroeconomic landscape.

Jean Bua
Jean Bua
CFO at NetScout Systems

While we haven't seen a meaningful impact on customer demand or revenue so far, we are closely monitoring the situation for any potential shifts in customer behavior or market dynamics that could influence our outlook. Moving on to our fiscal year twenty twenty six outlook, we anticipate our fiscal year twenty twenty six revenue to be in the range of approximately 825,000,000 to $865,000,000. Additionally, we anticipate non GAAP diluted earnings per share within the range of $2.25 to $2.40. The full year effective tax rate is expected to be approximately 20%. Our weighted average diluted shares outstanding is assumed to be approximately 74 to 75,000,000 shares.

Jean Bua
Jean Bua
CFO at NetScout Systems

Finally, I would like to provide some color for the first quarter of fiscal year twenty twenty six. In comparison to the first quarter of last year, we anticipate our first quarter fiscal year twenty twenty six revenue to grow by approximately 3% to 5% with approximately the same growth rate for earnings per share. That concludes my formal review of our financial results. I'd like to quickly note that our upcoming IR conference participation is listed on slide 18. As this is my final earnings call, I would like to note that the company is in strong position thanks to the dedication of our team and the strategic vision that has been built over the years.

Jean Bua
Jean Bua
CFO at NetScout Systems

I would also like to take a moment to express my gratitude to all of my financial team members and company colleagues. It has been an honor to serve alongside you. Thank you again for your trust and support. With that, I'll now turn the call over to the operator for questions.

Operator

We'll take our first question from Matthew Hedberg with RBC Capital Markets. Please go ahead.

Michael Richards
Michael Richards
Equity Research Senior Associate at RBC Capital Markets

Hey, guys. This is Mike Richards on for Matt. Thanks for taking the questions and congrats on the retirement and promotions. It's great to see the continuity in team.

Anil Singhal
Anil Singhal
Co-Founder, Chairman, President & CEO at NetScout Systems

Thank you.

Michael Richards
Michael Richards
Equity Research Senior Associate at RBC Capital Markets

Yeah. Thanks. And on tariffs, you know, it was great to hear that you guys haven't seen anything yet and you're relatively insulated from a cost perspective. Maybe you could just double click on what you're hearing from customers? And does guidance assume any deterioration in the macro or provide any room for some uncertainty or deal pushes or things like that?

Michael Richards
Michael Richards
Equity Research Senior Associate at RBC Capital Markets

Just any color there would be great. Thanks.

Anil Singhal
Anil Singhal
Co-Founder, Chairman, President & CEO at NetScout Systems

Well, at this point, Matt so right now, we see some delayed sales cycles. And so it's maybe quarter to quarter. There might be some issues. We are having broader conferences in Europe, 1 in Barcelona in June, and then in Asia later in the year. And we'll hear directly sentiment from hundreds of customers.

Anil Singhal
Anil Singhal
Co-Founder, Chairman, President & CEO at NetScout Systems

But that's where we see, and I I think our as Jean said, our guidance range covers some of those uncertainties, but it is little bit wait and see with some customers about timing of the orders.

Michael Richards
Michael Richards
Equity Research Senior Associate at RBC Capital Markets

Great. That's, that's super helpful. And I guess just maybe my second one would be, you know, the cyber momentum has been pretty strong, you know, throughout this year. So looking into next year, as we see that momentum continue, are you expecting a step up in any of those newer products that you highlighted? And what are customers most excited about beyond core DDoS there?

Michael Richards
Michael Richards
Equity Research Senior Associate at RBC Capital Markets

Thanks.

Anil Singhal
Anil Singhal
Co-Founder, Chairman, President & CEO at NetScout Systems

So I I think I like to say maybe a little bit broader than that. I think, you know, our service assurance have been our business has been tough. But over time, because of AI and other things, we are becoming that business is becoming part of a broader observability market and which is really allows us to shine our smart data to a larger set of customers, broader budgets, and all those. So we we announced a couple of products in that area also. The DDoS area, we have more automation through our adaptive DDoS announcement, but also we are becoming part of a broader cybersecurity market.

Anil Singhal
Anil Singhal
Co-Founder, Chairman, President & CEO at NetScout Systems

So I look at for the next two or three years, our market size in both the service assurance area becoming part of the observability and AI market, as well as DDoS expanding to broader cybersecurity market is a real opportunity. And, I think we have a very solid, and loyal customer base, and this will be relevant to the same set of people or or other departments in the same accounts.

Michael Richards
Michael Richards
Equity Research Senior Associate at RBC Capital Markets

Thanks for that and congrats again guys.

Anil Singhal
Anil Singhal
Co-Founder, Chairman, President & CEO at NetScout Systems

Thank you.

Operator

Thank you. And your next question comes from the line of Kevin Liu with K. Liu and Company. Please go ahead.

Kevin Liu
Founder & CEO at K. Liu & Company LLC

Hi, Good morning, everyone. Gina, Michael, certainly wanted to wish you well in your retirement and also congrats in order for Tony and Sanjay, of course. On the topic of tariffs, I know you guys haven't seen much impact yet, but I was wondering if you felt there was any sort of pull forward in in terms of folks perhaps wanting to get ahead of any potential increases, and if that was reflected in in kind of the product backlog exiting the quarter.

Jean Bua
Jean Bua
CFO at NetScout Systems

Hi, Kevin. Thank you for the, congratulations. I would say that we did not see any pull forward from the tariffs. If you think about what happened to us during post COVID when the hardware components were hard to get, and so people focus towards software, you you have the potential through f y twenty six and the future years of the tariffs to have a similar effect where the software, companies could be able to see some growth due to the componentry not being affected by the tariffs.

Kevin Liu
Founder & CEO at K. Liu & Company LLC

That certainly makes sense. And, actually, just along those lines, within your own pipelines, or maybe customer conversations, are you seeing even more interest from customers today to go to more kind of software only solutions, or is it still fairly consistent in terms of demand for kind of the traditional systems and appliances?

Anil Singhal
Anil Singhal
Co-Founder, Chairman, President & CEO at NetScout Systems

Yeah. So we have I mean, our our solution does require hardware, but we have unbundled that. And we have been pushing the software solution, and that's one of the reason we have been able to maintain high margins during the when we face growth challenges. So, yeah, overall, I think there's I don't see any change, especially there's no change because of tariffs. And most people buy our software version solution.

Anil Singhal
Anil Singhal
Co-Founder, Chairman, President & CEO at NetScout Systems

We do offer a bundled solution, but very few customers are interested because they get us better and user pricing at and we can offer higher discounts on software.

Kevin Liu
Founder & CEO at K. Liu & Company LLC

Yeah. Makes sense. And then if I could squeeze one more in. Just as it relates to your government and defense business, I'm wondering if there was any impact from all the Doge related headlines on on sales cycles within the quarter and just kind of how you're thinking about contribution from federal in in your fiscal twenty six guidance.

Anil Singhal
Anil Singhal
Co-Founder, Chairman, President & CEO at NetScout Systems

So that was a big there was some refresh cycle in our product line, and it was contributed to some of the numbers last year. And we are expecting some more. But so far, we have not seen any effect, but we'll see as six months left in the final quarter to close whether our pipeline really delivered. So, yeah, that's a big question mark going forward. But so far, we have not seen anything.

Kevin Liu
Founder & CEO at K. Liu & Company LLC

Understood. Well, appreciate you taking the questions, and congrats on the the strong outlook here for '26.

Anil Singhal
Anil Singhal
Co-Founder, Chairman, President & CEO at NetScout Systems

K. Thank you.

Operator

Thank you. And there are no further questions at this time. I will now turn the call back to Tony for any additional or closing remarks.

Anthony Piazza
Anthony Piazza
SVP - Finance at NetScout Systems

Great. Thank you, operator. That concludes our call for today. Thank you all for joining us. Enjoy the rest of the day.

Operator

Thank you. This does conclude today's presentation. Thank you for your participation. You may disconnect at any time.

Executives
    • Anthony Piazza
      Anthony Piazza
      SVP - Finance
    • Anil Singhal
      Anil Singhal
      Co-Founder, Chairman, President & CEO
    • Michael Szabados
      Michael Szabados
      Chief Operating Officer
    • Jean Bua
      Jean Bua
      CFO
Analysts
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Key Takeaways

  • Revenue and EPS: Q4 revenue was $205 M (+1% YoY) with non-GAAP EPS of $0.52 (–5%), while FY25 revenue was ~$823 M (flat after divestiture) and non-GAAP EPS grew to $2.22 (+1%).
  • Service Assurance: Revenue declined ~4% in FY25 due to the test optimization divestiture and lower RF project activity, but NetScout sees growth potential in 5G, fixed wireless access and expanded network observability/AI opportunities.
  • Cybersecurity Momentum: Offerings grew nearly 7% driven by heightened DDoS threats and enterprise demand, and management expects Adaptive DDoS, Mobile Security and Distributed Threat Mitigation solutions to sustain this momentum.
  • FY26 Outlook: Revenue is guided to $825 M–$865 M with non-GAAP EPS of $2.25–$2.40 and Q1 growth of 3–5%, supported by disciplined cost management, continued AI and cybersecurity investments and strong free cash flow.
  • Leadership Transition: CEO Michael Sabatos and CFO Gene Bua will retire May 31, 2025, with Sanjay Moshi and Tony Piazza stepping into COO (future CEO) and CFO roles, respectively, and serving as advisors through June 2026.
A.I. generated. May contain errors.
Earnings Conference Call
NetScout Systems Q4 2025
00:00 / 00:00

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