first quarter fiscal year 2027
Filed Aug 6, 2026NETSCOUT Reports First Quarter Fiscal Year 2027 Financial Results - Delivers Strong First Quarter Results Providing Solid Start to the Fiscal Year; Reaffirms Full Year Outlook
Total revenue grew 12.7% to $210.4 million, GAAP income from operations was $14.5 million versus a $6.6 million loss, non-GAAP operating margin expanded to 20.8% from 14.2%, and the company reaffirmed its fiscal year 2027 outlook.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenueGAAP | $210.4M | – | 12.7% |
| Product revenueGAAP | $86M | – | 17.8% |
| Service revenueGAAP | $124.4M | – | 9.4% |
| Total cost of revenueGAAP | $44.49M | – | – |
| Gross profitGAAP | $165.9M | – | – |
| Non-GAAP gross profitnon-GAAP | $169.7M | – | – |
| Research and development expenseGAAP | $42.35M | – | – |
| Sales and marketing expenseGAAP | $72.75M | – | – |
| General and administrative expenseGAAP | $25.72M | – | – |
| Amortization of acquired intangible assetsGAAP | $10.61M | – | – |
| Restructuring chargesGAAP | $25K | – | – |
| Total operating expensesGAAP | $151.5M | – | – |
| Income from operationsGAAP | $14.5M | – | – |
| GAAP operating marginGAAP | 6.9% | – | – |
| Non-GAAP income from operationsnon-GAAP | $43.7M | – | – |
| Non-GAAP operating marginnon-GAAP | 20.8% | – | – |
| Interest and other income, netGAAP | $4.48M | – | – |
| Income before income tax (benefit) expenseGAAP | $18.96M | – | – |
| Income tax (benefit) expenseGAAP | −$2.88M | – | – |
| Net incomeGAAP | $21.8M | – | – |
| Diluted net income per shareGAAP | $0.29 per diluted share | – | – |
| Basic net income per shareGAAP | $ 0.30 | – | – |
| Non-GAAP net incomenon-GAAP | $38.6M | – | – |
| Non-GAAP diluted net income per sharenon-GAAP | $0.52 per diluted share | – | – |
| Adjusted EBITDAnon-GAAP | $46.9M | – | – |
| Adjusted EBITDA as a % of revenuenon-GAAP | 22.3 % | – | – |
| Total product backlogother | $33M | – | – |
| Fulfillable product backlogother | $28M | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| ProductProduct revenue increased to $86.0 million, while management cited traction in Omnis Sensor and Streamer solutions. | $86.0 million, or 41% of total revenue | – | 17.8% |
| ServiceManagement said performance was driven by its Service Assurance offering, which benefited in part from government-related orders, some received earlier than anticipated. | $124.4 million, or 59% of total revenue | – | 9.4% |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
fiscal year 2027 outlook
- Revenue$885.0 million to $915.0 million
- NoteRevenue implying 4.7% year-over-year growth at the midpoint
- NoteGAAP net income per diluted share of $1.55 to $1.70
- NoteNon-GAAP net income per diluted share of $2.65 to $2.80
- NoteNon-GAAP net income per diluted share implying 9.9% year-over-year growth at the midpoint
- NoteGAAP net income of ~$115 million to ~$126 million
- NoteAmortization of intangible assets of ~$46 million
- NoteShare-based compensation expenses of ~$55 million
- NoteBusiness development & integration expenses of ~Less than $1 million
- NoteTotal adjustments of ~$102 million
- NoteRelated impact of adjustments on income tax of (~$20 million)
- NoteNon-GAAP net income of ~$197 million to ~$208 million
- NoteAverage weighted shares outstanding, diluted GAAP, of ~74 million to ~75 million
- NoteAverage weighted shares outstanding, diluted non-GAAP, of ~74 million to ~75 million
What drove it
- Service Assurance benefited in part from government-related orders, some of which were received earlier than anticipated.
- Management cited traction in Omnis Sensor and Streamer solutions.
- Cybersecurity revenue was consistent with the prior year against a strong comparison.
- Product revenue represented 41% of total revenue, compared with 39%, while service revenue represented 59%, compared with 61%.
- In July, the company announced a doubling of Arbor Cloud mitigation capacity to 33 terabits per second following its May acquisition of DigiCert's DDoS attack protection business assets.
Concerns
- Management said some government-related orders were received earlier than anticipated.
- Cybersecurity revenue was consistent with the prior year.
- Cash, cash equivalents, and short and long-term marketable securities declined to $668.5 million from $705.1 million, primarily reflecting the DigiCert DDoS attack protection business assets acquisition.
- The company identified potential lower-than-expected demand for its products and services and its ability to recognize the expected gain from the DigiCert asset acquisition among risks to forward-looking statements.
What to watch
- Whether Service Assurance demand continues after government-related orders that management said were received earlier than anticipated.
- Execution against fiscal year 2027 revenue guidance of $885.0 million to $915.0 million and GAAP net income per diluted share guidance of $1.55 to $1.70.
- The trajectory of Cybersecurity revenue following a quarter described as consistent with the prior year.
- Integration of DigiCert's DDoS attack protection business assets and the stated recurring-revenue margin potential from bringing Arbor Cloud fully in-house.
- Product backlog of $33 million, including $28 million of fulfillable backlog, as of June 30, 2026.
Balance sheet and cash flow
- Cash, cash equivalents, and short and long-term marketable securities totaled $668.5 million as of June 30, 2026, compared with $705.1 million as of March 31, 2026.
- Current assets were $ 772,258 (In thousands) as of June 30, 2026, compared with $ 867,882 (In thousands) as of March 31, 2026.
- Accounts receivable and unbilled costs, net were $ 79,966 (In thousands), compared with $ 151,473 (In thousands).
- Current cash, cash equivalents and marketable securities were $ 629,411 (In thousands), compared with $ 667,957 (In thousands).
- Long-term marketable securities were $ 39,062 (In thousands), compared with $ 37,188 (In thousands).
- Total liabilities were $ 647,814 (In thousands), compared with $ 705,257 (In thousands).
- Total stockholders' equity was $ 1,663,024 (In thousands), compared with $ 1,649,260 (In thousands).
- The company said the decline in cash, cash equivalents, and short and long-term marketable securities primarily reflected the impact of the previously disclosed acquisition of DigiCert's DDoS attack protection business assets.
Analysis
NETSCOUT began fiscal year 2027 with total revenue of $210.4 million, up 12.7% from $186.7 million. Product revenue increased 17.8% to $86.0 million and represented 41% of total revenue, compared with 39% in the prior-year period. Service revenue increased 9.4% to $124.4 million and represented 59% of total revenue, compared with 61%. Management attributed performance to Service Assurance, including government-related orders received earlier than anticipated, and cited traction in Omnis Sensor and Streamer solutions.
Profitability improved substantially from the prior-year period. GAAP income from operations was $14.5 million, or 6.9% of revenue, versus a GAAP loss from operations of $6.6 million, or negative 3.5% of revenue. Non-GAAP income from operations was $43.7 million and non-GAAP operating margin was 20.8%, compared with $26.6 million and 14.2%. GAAP net income was $21.8 million, or $0.29 per diluted share, compared with a GAAP net loss of $3.7 million, or a loss of $0.05 per diluted share. Non-GAAP net income was $38.6 million, or $0.52 per diluted share, versus $24.7 million, or $0.34 per diluted share.
Adjusted EBITDA was $46.9 million, or 22.3% of revenue, compared with $29.3 million, or 15.7%. Total product backlog was $33 million as of June 30, 2026, including $28 million of fulfillable backlog, compared with $31 million and $23 million, respectively, a year earlier. The company said Cybersecurity revenue was consistent with the prior year against a strong comparison. The first-quarter revenue mix moved toward products, while Service remained the larger revenue source.
Liquidity remained substantial, with cash, cash equivalents, and short and long-term marketable securities of $668.5 million as of June 30, 2026, compared with $705.1 million as of March 31, 2026. NETSCOUT attributed the decline primarily to the previously disclosed acquisition of DigiCert's DDoS attack protection business assets. In July, the company announced that Arbor Cloud mitigation capacity had doubled to 33 terabits per second and described the acquisition and in-house platform strategy as supportive of efficiency, innovation, and recurring-revenue margin potential.
NETSCOUT reaffirmed fiscal year 2027 guidance for revenue of $885.0 million to $915.0 million, GAAP net income per diluted share of $1.55 to $1.70, and non-GAAP net income per diluted share of $2.65 to $2.80. The reported first-quarter results show revenue growth and operating-margin expansion, but management specifically noted that some government-related orders arrived earlier than anticipated. Subsequent quarters will show whether Service Assurance demand, cybersecurity performance, and the acquired DDoS assets support delivery of the reaffirmed full-year outlook.
Management, verbatim
We delivered strong first quarter results, providing a solid start to our fiscal year 2027. Performance was driven by our Service Assurance offering, which benefited in part from government-related orders, some of which were received earlier than anticipated.
Anil Singhal, President & Chief Executive Officer
We are reaffirming our fiscal year 2027 outlook as we continue to execute on our strategy to drive revenue, expand margins, and generate solid free cash flow.
Anil Singhal, President & Chief Executive Officer
Not in the filing
stated, not guessed- GAAP gross margin
- Non-GAAP gross margin
- Operating cash flow
- Free cash flow
- Capital expenditures
- Share repurchases
- Dividends
- Debt and net debt
- Quarterly revenue guidance
- Fiscal year 2027 gross-margin guidance
- Fiscal year 2027 operating-expense guidance
- Fiscal year 2027 tax-rate guidance
- Prior guidance comparison, as no previous outlook section was provided
- Product revenue prior-quarter comparison
- Service revenue prior-quarter comparison
- Segment-specific Cybersecurity revenue figure
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was checked against the filing text, and a metric whose value, prior period and change do not add up is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.