NetScout Systems reported second‑quarter fiscal 2026 results that surpassed expectations, with total revenue of $219.0 million—an increase of roughly 15% from the $191.1 million earned in the same quarter a year earlier. Product revenue grew 16.9% to $147.5 million, while service revenue rose 12.9% to $71.5 million, reflecting robust demand for the company’s cybersecurity and service‑assurance solutions and the acceleration of orders originally slated for the second half of the fiscal year.
GAAP income from operations climbed to $32.5 million, a 93% jump from $14.1 million in Q2 FY25, and net income rose to $25.8 million, an 188% increase over the $9.0 million reported a year earlier. Operating margin expanded to 14.8% from 7.4% year‑over‑year, while non‑GAAP operating margin reached 26.5%, up 3.4 percentage points. The margin gains stem from a higher mix of high‑margin service contracts, disciplined cost management, and the scaling of software‑related sales that carry lower variable costs.
Cash and cash equivalents stood at $526.9 million, and the product backlog grew to $39.8 million, indicating a healthy pipeline of future revenue. The company’s balance sheet strength supports continued investment in AI‑driven product innovation and the expansion of its cybersecurity portfolio.
Management raised its full‑year 2026 revenue outlook to $830 million–$870 million, an upward revision from the prior $825 million–$865 million range, and lifted its non‑GAAP diluted EPS guidance to $2.35–$2.45 from $2.25–$2.40. CEO Anil Singhal said the revisions reflect “continued demand for our cybersecurity and service‑assurance product lines, accelerated order flow, and confidence in the macro environment despite uncertainties.” The guidance lift signals management’s belief that the company’s pricing power and operational efficiencies will sustain growth.
Investors responded positively to the results, citing the strong revenue and earnings beats, margin expansion, and the upward guidance as evidence of NetScout’s resilient business model and the growing importance of its AI‑enhanced security solutions.
Anil Singhal added, “Our strong top‑and‑bottom‑line performance also benefited from the acceleration of some orders originally anticipated in the second half of the fiscal year. We remain focused on delivering differentiated solutions that help customers achieve better outcomes while navigating macroeconomic uncertainties.”
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