NetScout Systems (NTCT) Q3 2026 earnings summary

Executive summary

• Q3 FY26 revenue and earnings exceeded expectations, driven by accelerated product orders and service renewals originally anticipated for Q4, resulting in strong year-to-date growth in both Cybersecurity and Service Assurance segments.

• Year-to-date revenue reached $656.4 million, up 6% year-over-year, with net income of $77.3 million compared to a prior-year loss, reflecting improved margins and the absence of a goodwill impairment charge.

• Gross margin for Q3 was 82.8%, and operating margin increased to 35.9% on a non-GAAP basis.

• The company raised the midpoint of its FY26 revenue and EPS outlook, reflecting confidence in its pipeline and execution.

• Cash, cash equivalents, and investments totaled $586.2 million at quarter end, with no debt outstanding under the $600 million revolving credit facility.

Financial highlights

• Q3 FY26 revenue was $250.7 million, nearly flat year-over-year, but ahead of guidance due to timing of customer orders.

• Q3 diluted EPS was $1.00, up 6.4% year-over-year; for the first nine months, EPS was $1.96, up 15% from $1.70.

• Product revenue for the first nine months was $289.4 million, up 7%; service revenue was $367.0 million, up 6%.

• Free cash flow for Q3 was $59.4 million; cash and investments totaled $586.2 million at quarter end.

• Adjusted EBITDA for the first nine months was $181.7 million, up from $158.2 million in the prior year.

Outlook and guidance

• FY26 revenue guidance raised to $835 million–$870 million, representing 3.6% growth at the midpoint.

• Non-GAAP diluted EPS guidance increased to $2.37–$2.45; GAAP EPS guidance is $1.15–$1.23.

• Full-year effective tax rate expected at 20%; diluted shares outstanding projected at 73–74 million.

• The company expects sufficient liquidity to fund obligations, capital spending, and working capital needs for at least the next twelve months.