Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NetScout Systems Inc (NTCT, Financial) delivered Q2 fiscal year 2025 revenue and earnings results in line with expectations.
- The company released several products and product enhancements aligned with key technology trends, including AI-ready smart data solutions.
- NetScout Systems Inc (NTCT) had a strong turnout and interest in its recent annual Engaged Technology and User summit.
- The company reaffirmed its full fiscal year 2025 non-GAAP revenue and EPS outlooks.
- NetScout Systems Inc (NTCT) completed the majority of its voluntary separation program, expecting a benefit of approximately $25 million in annualized cost reduction.
Negative Points
- Q2 revenue was approximately $191 million, down 3% compared to the prior year period.
- Earnings per share for the second quarter was down approximately 23 cents from the prior year.
- First half fiscal year 2025 revenue was approximately $366 million, down 10% year over year.
- Service assurance revenue for the first half of fiscal year 2025 was down approximately 13% year over year.
- Cybersecurity revenue decreased by 4% for the first half of fiscal year 2025, primarily due to backlog-related headwinds.
Q & A Highlights
Q: Are you seeing stabilization in the market environment, and could there be a boost from a December budget flush this year?
A: Anil Singhal, Co-founder, President, CEO, and Chairman of the Board, mentioned that the guidance range accounts for potential upsides, including a budget flush. Typically, Q3 is better than Q4 in terms of bookings due to budget flushes from large companies and carriers.
Q: What is driving growth in cybersecurity, and how is it tracking against internal expectations for double-digit growth?
A: Anil Singhal noted a pivot in their cybersecurity positioning to cover market gaps, particularly in analytics. While traction is slow, they expect to see results over the next 6 to 12 months, with new positioning ideas for their Omnis Cyber Intelligence solution.
Q: How does Verizon's move towards standalone 5G impact your opportunities and risks?
A: Anil Singhal explained that while market consolidation affects business, 5G slicing presents a revenue opportunity. Slicing is an optional module in their solution, and they are engaging with initial customers interested in this functionality.
Q: How does the convergence of mobile and fiber broadband affect your solutions?
A: Anil Singhal stated that carriers monitoring user plans will drive more business as fixed wireless initiatives grow. They expect a dramatic uptick in fixed wireless traffic, which could lead to increased investments.
Q: Can you provide an update on your AIOps strategy and expected contributions from partners?
A: Anil Singhal mentioned that while there is significant interest and discussions with customers and partners, they do not expect a major impact from AIOps this year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
