NetScout Systems, Inc. Q3 FY2026 earnings call

• Service assurance: Revenue up 5% Y/Y in first nine months, driven by enterprise customer vertical growth. Recently released Omnice AI Center and AI Streamer as AI ops solution. Upcoming launch of Ingenious Edge Sensor 795. Service provider customers have measured investment in 5G-related initiatives.
• Cybersecurity: Revenue up 9% Y/Y in first nine months, driven by enterprise and service provider verticals. Omnice Cyber Intelligence with Omni Cyber Stream named 2025 cybersecurity award winner. Frost and Sullivan named NetScout in 2025 Global Company of the Year in network monitoring. Customer wins include mid-7 figure order in service assurance from insurance industry, low 7-figure deal with large electric utility, and mid to high 7-figure deals in Europe in cybersecurity.

For the third quarter, total revenue was approximately $200.151 million. Diluted earnings per share totaled $1, an increase of approximately 6% year over year. For the first nine months ended December 31, 2025, revenue was approximately $656 million, an increase of approximately 6% year over year. Service assurance revenue in the first nine months of the fiscal year increased approximately 5% year over year, accounting for approximately 64% of total revenue. Cybersecurity revenue in the first nine months of the fiscal year increased 9% year over year, accounting for the remaining 36%. Diluted earnings per share for the first nine months was $1.96, up approximately 15% from the year-ago period.

• Raising the midpoint of fiscal year 2026 top and bottom line outlook. Revenue expected to be in the range of $835 million to $870 million (3.6% Y/Y growth at midpoint) compared to prior range of $830 million to $870 million. Non-GAAP earnings per diluted share expected to be within the range of $2.37 to $2.45 compared to previous range of $2.35 to $2.45. Full-year effective tax rate to remain at approximately 20%, assuming approximately 73 to 74 million weighted average diluted shares outstanding.

• Supply chain dynamics, including tariff-related and AI-driven supply chain dynamics, could influence the timing and size of certain customer orders.

Q: Simran Biswal with RBC Capital Markets asked about Q3 performance relative to expectations and if demand signals are improving.

A: Anil Singhal said demand is similar or improving but cautious about supply chain challenges that could delay order timing. Tony Piazza commented demand remains strong with robust pipeline but it's a matter of timing.

Q: Erik Suppiger with B. Riley Securities asked about how budgets work for order pull-ins and AI use cases driving service assurance uptick.

A: Anil Singhal said customers' fiscal years differ, and budget use-up leads to order pull-ins. In service assurance, AI use cases involve using smart data for various purposes, with about $15 million contribution in nine months.

Q: Kevin Liu with K. Liu and Company asked about service provider business competitive dynamics and supply chain impacts.

A: Anil Singhal said service provider business has price pressures from competition. Tony Piazza echoed that supply chain impacts are more about customers' timing and behavior rather than direct cost as majority revenue is services and software.