NETSCOUT SYSTEMS INC Q3 FY2025 earnings call

• Strong Q3 results with revenue and earnings exceeding expectations across Cybersecurity and Service Assurance. - Certain customer orders initially anticipated in Q4 were received in Q3 due to calendar year end budgets. - Service Assurance win: hi-tech eight-figure order from a Tier 1 North American carrier for 5G related solutions; multi-year enterprise license agreement with a leading domestic healthcare provider. - Cybersecurity win: mid-seven figure order from a longstanding North American cable operator for Arbor Distributed Threat Mitigation System. - Go-to-market activities: participation in AWS Reinvent Conference, Mobile World Congress, HIMSS Global Conference, and RSA Conference to promote offerings.

For the third quarter, Service Assurance revenue increased approximately 9%, driven by the acceleration of a large service provider order. Cybersecurity revenue increased approximately 29%. For the first nine months of fiscal year 2025, Service Assurance revenue decreased by 5.5%, while Cybersecurity revenues grew by 7.4%. During the first nine months, Service Assurance product line accounted for approximately 65% of total revenue, and Cybersecurity product line accounted for the remaining 35%.

• Updated fiscal year 2025 outlook narrows ranges for revenue ($810 million to $820 million) and non-GAAP diluted earnings per share ($2.15 to $2.25) while maintaining midpoints. - Full year effective tax rate expected to be approximately 20%. - Weighted average diluted shares outstanding assumed to be approximately 73 million shares.

Q: Mike Richards on for Matt asked about the service provider order pull-in and IT spending environment.

A: Anil Singhal said service provider customers' fiscal year starts in January, so some orders moved from Q4 to Q3 due to more confidence and budget, with activity in 5G cloud area expected to drive spend next fiscal year.

Q: Kevin Liu asked about fixed wireless opportunity and Cybersecurity growth split.

A: Anil Singhal said fixed wireless is early with evaluation ongoing; Jean Bua noted Service Provider grew close to mid-20s and Enterprise grew close to mid-30s in Q3, with hope for better growth next year due to DDoS area and new products like Omnis Cybersecurity.