NetScout Systems (NTCT) Q1 2027 earnings summary

Executive summary

• Q1 FY27 revenue reached $210.4 million, up 13% year-over-year, driven by strong product and service growth, robust enterprise demand, and early government orders.

• Non-GAAP net income was $38.6 million ($0.52 per diluted share), up from $24.7 million ($0.34 per share) in the prior year; GAAP net income was $21.8 million, reversing a prior-year loss.

• Service assurance outperformed, supported by government demand and new product adoption; cybersecurity revenue remained stable year-over-year.

• Completed the $55 million acquisition of DigiCert's DDoS protection business, doubling mitigation capacity and expanding recurring revenue.

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

Financial highlights

• Total revenue rose 13% year-over-year to $210.4 million in Q1 FY27.

• Product revenue grew 17.8% to $86.0 million; service revenue increased 9.4% to $124.4 million.

• Gross margin expanded to 80.6% (non-GAAP), up 190 basis points year-over-year; GAAP gross margin was 79%.

• Free cash flow was $44.3 million; operating cash flow reached $50.8 million.

• Cash, cash equivalents, and marketable securities totaled $668.5 million at quarter end, down due to the DigiCert acquisition.

Outlook and guidance

• FY27 revenue guidance reaffirmed at $885M–$915M; non-GAAP EPS expected at $2.65–$2.80, GAAP EPS at $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 constrained service provider spending.

• Liquidity is strong, with a $600 million undrawn revolving credit facility to fund obligations and growth.