NetScout Systems (NTCT) Q1 2026 earnings summary

Executive summary

• Q1 FY26 revenue rose 7% year-over-year to $186.7 million, driven by strong growth in Cybersecurity and Service Assurance product lines, with notable wins in the U.S. government and Latin American financial sectors.

• Net loss narrowed significantly to $3.7 million from $443.4 million year-over-year, mainly due to the absence of a prior-year $427.0 million goodwill impairment and lower restructuring charges.

• Non-GAAP diluted EPS was $0.34, up 21% year-over-year, reflecting improved profitability and margin expansion.

• Management remains cautiously optimistic amid macroeconomic uncertainty, focusing on innovation, margin improvement, and annual revenue growth.

Financial highlights

• Product revenue increased 19.3% to $73.0 million; service revenue up 0.3% to $113.8 million.

• Gross profit margin improved by 1.6 points to 78.7%; operating profit margin rose to 14.2% from 8% year-over-year.

• Non-GAAP net income was $24.7 million, up 20.2% year-over-year; free cash flow for the quarter was $71.7 million.

• Cash and investments totaled $543.5 million at quarter-end, up $51 million since year-end.

• Repurchased 761,000 shares for $15 million; no outstanding balance on $600 million revolving credit facility.

Outlook and guidance

• FY26 revenue guidance reaffirmed at $825–$865 million; non-GAAP EPS expected at $2.25–$2.40.

• Q2 FY26 revenue growth anticipated at 4–6% year-over-year; non-GAAP EPS expected between $0.43–$0.45.

• Full-year effective tax rate projected at 20%; weighted average diluted shares outstanding assumed at 74 million.

• Sale of a foreign investment for ~$12 million in August 2025 expected to have a neutral impact on FY26 outlook.