NETSCOUT's Q3 Net Income Soars 186% on Strong Revenue Growth

TL;DR

**NTCT is back in the black with a massive earnings beat, signaling a strong recovery and potential for continued upside.**

AI Summary

NETSCOUT SYSTEMS INC (NTCT) reported a significant increase in net income for the three and six months ended September 30, 2025. For the three months, net income surged to $25.828 million, up from $9.027 million in the prior year, representing a 186% increase. Total revenue for the quarter also grew to $219.017 million, an increase from $191.108 million in the same period of 2024, driven by product revenue rising to $94.712 million from $81.033 million and service revenue increasing to $124.305 million from $110.075 million. For the six months, net income was $22.149 million, a substantial recovery from a net loss of $434.349 million in the prior year, largely due to the absence of the $426.967 million goodwill impairment charge incurred in 2024. Total revenue for the six months reached $405.764 million, up from $365.673 million. The company is focused on product innovation and disciplined cost management, aiming for annual revenue growth and enhanced margins, while navigating macroeconomic uncertainties and constrained customer spending in the service provider market.

Why It Matters

This strong performance, particularly the significant jump in net income and revenue, signals a potential turnaround for NETSCOUT after a challenging prior year marked by a substantial goodwill impairment. For investors, the 186% increase in quarterly net income and the return to profitability for the six-month period are positive indicators of operational efficiency and market demand for their products and services. Employees may see increased job security and potential for growth as the company focuses on product innovation. Customers benefit from continued investment in product development, enhancing NETSCOUT's competitive position against rivals in network performance management and cybersecurity solutions, which could lead to more robust offerings in a rapidly evolving tech landscape.

Risk Assessment

Risk Level: medium — While net income improved significantly, the company explicitly states it is "cognizant of ongoing macroeconomic uncertainty and constrained customer spending in the service provider market." This indicates external pressures could still impact future performance, despite the current positive results. The prior year's $426.967 million goodwill impairment also highlights the potential for significant asset write-downs if market conditions or business performance deteriorate.

Analyst Insight

Investors should consider NTCT's improved profitability and revenue growth as a positive signal, but remain cautious due to stated macroeconomic uncertainties. Monitor future filings for sustained growth in product and service revenue, and any changes in customer spending trends, especially within the service provider segment, to assess the durability of this recovery.

Financial Highlights

debt To Equity

0.38

revenue

$219.017M

operating Margin

35.9%

total Assets

$2,176.184M

total Debt

$602.632M

net Income

$25.828M

eps

$0.36

gross Margin

80.09%

cash Position

$483.380M

revenue Growth

+14.61%

Revenue Breakdown

Key Numbers

• $25.828M — Net Income (Q3 2025) (Increased 186% from $9.027M in Q3 2024)
• $219.017M — Total Revenue (Q3 2025) (Increased from $191.108M in Q3 2024)
• $94.712M — Product Revenue (Q3 2025) (Increased from $81.033M in Q3 2024)
• $124.305M — Service Revenue (Q3 2025) (Increased from $110.075M in Q3 2024)
• $22.149M — Net Income (6 months 2025) (Significant recovery from a $434.349M net loss in 6 months 2024)
• $405.764M — Total Revenue (6 months 2025) (Increased from $365.673M in 6 months 2024)
• $426.967M — Goodwill Impairment (6 months 2024) (Absence of this charge significantly boosted 2025 net income)
• 72,193,673 — Shares Outstanding (As of October 27, 2025)
• $483.380M — Cash and Cash Equivalents (Sept 30, 2025) (Increased from $457.415M at March 31, 2025)
• $600M — Revolving Credit Facility Availability (Available as of September 30, 2025)

Key Players & Entities

• NETSCOUT SYSTEMS INC (company) — Registrant
• NTCT (company) — Ticker symbol
• Securities and Exchange Commission (regulator) — Regulatory body
• $25.828 million (dollar_amount) — Net income for three months ended September 30, 2025
• $9.027 million (dollar_amount) — Net income for three months ended September 30, 2024
• $219.017 million (dollar_amount) — Total revenue for three months ended September 30, 2025
• $191.108 million (dollar_amount) — Total revenue for three months ended September 30, 2024
• $426.967 million (dollar_amount) — Goodwill impairment charge for six months ended September 30, 2024
• $22.149 million (dollar_amount) — Net income for six months ended September 30, 2025
• $434.349 million (dollar_amount) — Net loss for six months ended September 30, 2024

FAQ

Risk Factors

• Constrained Customer Spending [medium — market]: The company notes constrained customer spending, particularly in the service provider market. This could lead to slower sales cycles and reduced order volumes, impacting revenue growth.
• Macroeconomic Uncertainties [medium — market]: Global macroeconomic conditions, including geopolitical tensions, inflation, and interest rates, pose risks. These factors can affect customer investment decisions and the company's supply chain and distribution network.
• Dependence on Product Innovation [medium — operational]: The company's strategy relies on product innovation. Failure to innovate or adapt to evolving market needs could lead to competitive disadvantages and reduced market share.
• Goodwill Impairment Risk [low — financial]: While the prior year's goodwill impairment charge of $426.967M significantly impacted net loss, future impairments could occur if acquired businesses do not perform as expected, affecting profitability.
• International Trade Relations [low — regulatory]: Changes in international trade relations, including tariffs and trade barriers, could adversely affect the company's operations, supply chain, and profitability.

Industry Context

NETSCOUT operates in the cybersecurity and network performance management market, facing competition from established players and emerging technology providers. The industry is characterized by rapid technological advancements, increasing cyber threats, and evolving customer demands for integrated solutions. Service providers, a key customer segment for NETSCOUT, are experiencing capital spending constraints, which can impact demand for network infrastructure and security solutions.

Regulatory Implications

As a publicly traded company, NETSCOUT is subject to SEC regulations and reporting requirements. Compliance with accounting standards (GAAP) and disclosure obligations is critical. Changes in international trade policies or data privacy regulations could also present compliance challenges and impact global operations.

What Investors Should Do

1. Monitor service provider market trends
2. Analyze product vs. service revenue growth
3. Evaluate R&D investment effectiveness
4. Assess impact of macroeconomic factors

Key Dates

• 2025-09-30: End of Q3 2025 — Reported significant net income growth of 186% and total revenue increase of 14.61% year-over-year.
• 2025-03-31: End of Fiscal Year 2025 — Balance sheet data as of this date provides a comparison point for current assets and liabilities.
• 2024-09-30: End of Q3 2024 — Prior year period for comparison, notable for a significant goodwill impairment charge impacting net loss.
• 2025-05-15: Filing of Form 10-K for Fiscal Year Ended March 31, 2025 — Provides audited financial statements and context for the current interim reporting period.

Glossary

Goodwill Impairment Charge

A reduction in the carrying value of goodwill on a company's balance sheet when its fair value is determined to be less than its carrying value, often due to underperformance of an acquired business. (The absence of a $426.967M goodwill impairment charge from the prior year significantly boosted NetScout's net income in the current period.)

Operating Lease Right-of-Use Assets

Assets recognized under accounting standards for leases, representing the right to use an underlying asset for the lease term. (These assets, along with corresponding liabilities, are part of NetScout's long-term asset and liability structure.)

Deferred Revenue

Revenue that has been received by a company for goods or services that have not yet been delivered or rendered. (A significant portion of NetScout's current liabilities consists of deferred revenue and customer deposits, indicating future revenue streams.)

Accumulated Deficit

The cumulative net losses of a company that have not been offset by net income. (NetScout has a small accumulated deficit of $22.294M as of September 30, 2025, a significant improvement from the prior year's net loss.)

Year-Over-Year Comparison

Compared to the prior year's six-month period, which was heavily impacted by a $426.967 million goodwill impairment charge, NETSCOUT has shown a substantial recovery, moving from a net loss to a net income of $22.149 million. Total revenue has also increased to $405.764 million from $365.673 million. While gross profit has improved, operating expenses, particularly R&D, have seen an increase, reflecting continued investment in innovation. The balance sheet shows a slight decrease in total assets and liabilities, with a notable increase in cash and cash equivalents.

Key Financial Figures

• $0.001 — nge on which registered: Common Stock, $0.001 par value per share NTCT Nasdaq Global

Filing Documents

• ntct-20250930.htm (10-Q) — 1615KB
• ntct-ex311_20250930.htm (EX-31.1) — 10KB
• ntct-ex312_2025930.htm (EX-31.2) — 10KB
• ntct-ex321_20250930.htm (EX-32.1) — 5KB
• ntct-ex322_20250930.htm (EX-32.2) — 5KB
• 0001078075-25-000012.txt ( ) — 8019KB
• ntct-20250930.xsd (EX-101.SCH) — 46KB
• ntct-20250930_cal.xml (EX-101.CAL) — 86KB
• ntct-20250930_def.xml (EX-101.DEF) — 215KB
• ntct-20250930_lab.xml (EX-101.LAB) — 657KB
• ntct-20250930_pre.xml (EX-101.PRE) — 451KB
• ntct-20250930_htm.xml (XML) — 1134KB

: FINANCIAL INFORMATION

PART I: FINANCIAL INFORMATION

Unaudited Financial Statements

Item 1. Unaudited Financial Statements: Consolidated Balance Sheets: At September 30, 2025 and March 31, 2025 2 Consolidated Statements of Operations: For the three and six months ended September 30, 2025 and 2024 3 Consolidated Statements of Comprehensive Income ( L oss ) : For the three and six months ended September 30, 2025 and 2024 4 Consolidated Statements of Stockholders' Equity: For the three and six months ended September 30, 2025 and 2024 5 Consolidated Statements of Cash Flows: For the six months ended September 30, 2025 and 2024 7

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 8

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 25

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 41

Controls and Procedures

Item 4. Controls and Procedures 41

: OTHER INFORMATION

PART II: OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 42

Risk Factors

Item 1A. Risk Factors 42

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 43

Defaults Upon Senior Securities 43

Item 3. Defaults Upon Senior Securities 43

Mine Safety Disclosures 43

Item 4. Mine Safety Disclosures 43

Other Information 44

Item 5. Other Information 44

Exhibits

Item 6. Exhibits 45

SIGNATURES

SIGNATURES 46 Unless the context suggests otherwise, references in this Quarterly Report on Form 10-Q, or Quarterly Report, to "NetScout," the "Company," "we," "us," and "our" refer to NetScout Systems, Inc. and, where appropriate, our consolidated subsidiaries. NetScout, the NetScout logo, Adaptive Service Intelligence and other trademarks or service marks of NetScout appearing in this Quarterly Report are the property of NetScout Systems, Inc. and/or its subsidiaries and/or affiliates in the United States and/or other countries. Any third-party trade names, trademarks and service marks appearing in this Quarterly Report are the property of their respective holders. Table of Contents Cautionary Statement Concerning Forward-Looking Statements The following discussion and other parts of this Quarterly Report contain forward-looking statements under Section 21E of the Securities Exchange Act of 1934, as amended, and other federal securities laws. These forward-looking statements involve risks and uncertainties. Examples of forward-looking statements include statements that relate to future events or our future financial performance or liquidity, and other statements that are not historical fact. You can identify forward-looking statements by their use of forward-looking words such as "may," "will," "could," "should," "expects," "plans," "intends," "seeks," "anticipates," "believes," "estimates," "potential," or "continue," or the negative of such terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on these forward-looking statements. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors, including those described in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for our fiscal year ended March 31, 2025, filed with the Securities and Exchange Commission on May 15, 2025, and elsewhere in this Quarterly Report.

: FINANCIAL INFORMATION

PART I: FINANCIAL INFORMATION

Unaudited Financial Statements

Item 1. Unaudited Financial Statements NetScout Systems, Inc. Consolidated Balance Sheets (In thousands, except for per share data) September 30, 2025 March 31, 2025 (Unaudited) Assets Current assets: Cash and cash equivalents $ 483,380 $ 457,415 Marketable securities and investments 33,483 34,058 Accounts receivable and unbilled costs, net of allowance for credit losses of $ 98 and $ 214 a t September 30, 2025 and March 31, 2025, respectively 130,158 163,654 Inventories and deferred costs 12,381 12,891 Prepaid income taxes 14,660 13,380 Prepaid expenses and other current assets 33,969 31,786 Total current assets 708,031 713,184 Fixed assets, net 21,290 21,529 Operating lease right-of-use assets 38,388 37,717 Goodwill 1,069,517 1,076,383 Intangible assets, net 238,389 258,690 Deferred income taxes 78,845 66,294 Long-term marketable securities 10,042 1,004 Other assets 11,682 11,777 Total assets $ 2,176,184 $ 2,186,578 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 14,706 $ 18,208 Accrued compensation 53,461 56,696 Accrued other 21,601 19,397 Income taxes payable 883 883 Deferred revenue and customer deposits 276,768 301,753 Current portion of operating lease liabilities 10,009 10,995 Total current liabilities 377,428 407,932 Other long-term liabilities 7,911 8,210 Deferred tax liability 2,872 2,643 Accrued long-term retirement benefits 29,571 27,379 Long-term deferred revenue and customer deposits 151,311 147,510 Operating lease liabilities, net of current portion 33,539 32,509 Total liabilities 602,632 626,183 Commitments and contingencies (Note 13) Stockholders' equity: Preferred stock, $ 0.001 par value, 5,000,000 authorized; none issued and outstanding — — Common stock, $ 0.001 par value, 300,000,000 authorized; 136,324,349 and 134,038,262 issued and 72,186,052 and 72,060,237 outstanding 136 134 Additional paid-in capital 3,293,220 3,255,333 Accumulated other comprehensive income

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Unaudited) NOTE 1 – BASIS OF PRESENTATION The accompanying unaudited interim consolidated financial statements have been prepared by NetScout Systems, Inc. (NetScout or the Company). Certain information and footnote disclosures normally included in financial statements prepared under United States generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). In the opinion of management, the unaudited interim consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the Company's financial position and stockholders' equity, results of operations and cash flows. The year-end consolidated balance sheet data and statement of stockholders' equity were derived from the Company's audited financial statements, but do not include all disclosures required by GAAP. The results reported in these unaudited interim consolidated financial statements are not necessarily indicative of results that may be expected for the entire year. All significant intercompany accounts and transactions are eliminated in consolidation. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2025 filed with the SEC on May 15, 2025. Global and Macroeconomic Conditions The Company continues to closely monitor the current global and macroeconomic conditions, including the impacts of the ongoing war in Ukraine and hostilities in the Middle East, global geopolitical tension, stock market volatility, industry-specific capital spending trends, exchange rate fluctuations, inflation, interest rates, international trade relations (including trade protection measures, such as tarif

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