NetScout Systems (NTCT) Q2 2026 earnings summary

Executive summary

• Q2 FY26 revenue reached $219 million, up 14.6% year-over-year, with first-half revenue at $406 million, up 11%, driven by growth in both Cybersecurity and Service Assurance and accelerated order timing.

• Q2 non-GAAP EPS was $0.62, up 31.9% year-over-year; first-half non-GAAP EPS was $0.95, up 27%.

• Net income for the first half was $22.1 million, a turnaround from a $434.3 million loss last year, mainly due to the absence of a $427 million goodwill impairment charge.

• Focus remains on AI-driven product innovation, cost management, and strategic initiatives amid macroeconomic uncertainty.

Financial highlights

• Q2 product revenue grew 16.9% to $94.7 million; service revenue rose 12.9% to $124.3 million.

• Gross margin for Q2 increased 1.7 points to 81.4%; operating margin reached 26.5%.

• Q2 non-GAAP operating income was $58.1 million; non-GAAP gross profit was $178.2 million.

• Free cash flow for Q2 was $4.3 million; ended Q2 with $526.9 million in cash, equivalents, and investments.

• Q2 non-GAAP EBITDA from operations was $60.7 million (27.7% of revenue), up from $47.5 million (24.9%).

Outlook and guidance

• FY26 revenue guidance raised to $830–$870 million (previously $825–$865 million).

• Non-GAAP diluted EPS guidance increased to $2.35–$2.45 (prior $2.25–$2.40); GAAP EPS expected at $1.13–$1.23.

• Q3 revenue expected at $230–$240 million; Q3 non-GAAP EPS at $0.83–$0.88.

• Effective tax rate expected at 20%; 73 million weighted average diluted shares assumed.

• Management expects sufficient liquidity to fund obligations and capital needs for at least the next twelve months.