NetScout Systems (NTCT) Q1 2027 earnings summary

Executive summary

• Q1 FY27 revenue reached $210.4 million, up 13% year-over-year, driven by strong Service Assurance demand, early government orders, and innovation in new products.

• Net income was $38.6 million non-GAAP ($0.52 per diluted share), up from $24.7 million, and GAAP net income was $21.8 million, reversing a prior-year loss.

• Completed the $55 million acquisition of DigiCert's DDoS protection business, doubling mitigation capacity to 33 Tbps and expanding cybersecurity offerings.

• Marked the issuance of the 750th patent, reinforcing technology leadership in Smart Data, AI-enabled applications, and cybersecurity.

• Secured significant new and repeat customer wins across government, service provider, and financial sectors.

Financial highlights

• Total revenue rose 13% year-over-year to $210.4 million; product revenue grew 17.8% to $86 million, service revenue increased 9.4% to $124.4 million.

• Gross margin expanded by 190 basis points to 80.6% non-GAAP; GAAP gross margin was 79%.

• Operating margin improved 660 basis points to 20.8% non-GAAP; GAAP income from operations was $14.5 million (6.9% margin).

• Free cash flow was $44.3 million; operating cash flow $50.8 million; cash and equivalents totaled $668.5 million at quarter end.

• GAAP net income was $21.8 million ($0.29 per diluted share); non-GAAP net income was $38.6 million ($0.52 per diluted share).

Outlook and guidance

• FY27 revenue guidance reaffirmed at $885M–$915M; non-GAAP EPS expected at $2.65–$2.80; GAAP EPS guidance is $1.55–$1.70.

• Q2 revenue expected to be consistent with prior year due to order acceleration into Q1; Q2 EPS projected to grow in high single digits.

• Full-year service revenue expected to grow in low single digits.

• Management remains optimistic but cautious due to macroeconomic uncertainty and disciplined customer spending.

• Liquidity is strong, with $668.5 million in cash and a $600 million undrawn revolving credit facility.