Netscout Systems (NTCT) Prelim. Q2 Revenue Misses Consensus

NETSCOUT SYSTEMS, INC. (NASDAQ: NTCT), a leading provider of enterprise performance management, carrier service assurance, cybersecurity, and DDoS protection, today announced preliminary unaudited financial results for its second fiscal quarter ended September 30, 2023 and updated its outlook for the full fiscal year 2024. The estimates announced today are subject to change based on the completion of the Company’s quarter-end review process.

Preliminary Second Quarter Fiscal Year 2024 Results:

• Revenue (GAAP and non-GAAP) is expected to be in the range of $195 million to $197 million.
• GAAP net income per share (diluted) is expected to be in the range of $0.28 to $0.30 and non-GAAP net income per share (diluted) is expected to be in the range of $0.60 to $0.62.

Updated Full Fiscal Year 2024 Outlook:

• Revenue (GAAP and non-GAAP) is anticipated to be in the range of $840 million to $860 million versus the prior outlook range of $915 million to $945 million.
• GAAP net income per share (diluted) is anticipated to be in the range of $0.69 to $0.89 and non-GAAP net income per share (diluted) is anticipated to be in the range of $2.00 to $2.20, which reflects approximately 1.1 million shares repurchased during the second fiscal quarter. This compares with the prior outlook of GAAP net income per share (diluted) of $0.86 to $0.98 and non-GAAP net income per share (diluted) of $2.20 to $2.32.

(Consensus sees Q2 EPS of $0.54 on revenue of $224 million and FY EPS of $2.26 on revenue of $926 million. )

A GAAP and non-GAAP reconciliation of the preliminary second fiscal quarter results and full fiscal year 2024 outlook is included in the below financial tables.

Remarks by Anil Singhal, NETSCOUT’s President and Chief Executive Officer:

“Today, we are announcing preliminary second fiscal quarter results and updating our full fiscal year 2024 outlook to reflect a recent slowing in order conversion. We believe this is related to industry and economic headwinds facing our customers that began to affect our revenue in the last month of the second fiscal quarter and is expected to impact the second half of fiscal year 2024. In consideration of these recent impacts to revenue, we have begun to take several actions to manage discretionary costs and align spending with the current environment. These actions should allow us to reduce the negative impact to our full fiscal year non-GAAP earnings per share outlook without compromising our longer-term objectives.

“Entering fiscal Q2, we were optimistic that our recently released solutions and our solid pipeline of opportunities would support growth through the balance of the year. However, we recently began to experience a slowing in demand flow-through as customers implemented higher spending scrutiny and delayed project funding. We attribute this primarily to two factors: (1) the widely publicized capital spending pressures facing the service provider industry, which NETSCOUT had been relatively insulated from until recently; and (2) the challenging macroeconomic environment facing our customers that has created sub-pockets of softness across multiple enterprise sectors. We will provide additional insight during our second fiscal quarter financial results call in early November.

“Longer term, we remain confident in our ability to deliver sustainable value to our stakeholders and believe we remain well-positioned with legacy and next-generation solutions across the portfolio that will continue to play a critical role in enabling customers to tackle the performance, availability, and security challenges of the increasingly complex connected digital world.”

Conference Call Date and Instructions:

NETSCOUT plans to announce its second-quarter fiscal year 2024 financial results for the period ended September 30, 2023, on Thursday, November 2, 2023, at approximately 7:30 a.m. ET. NETSCOUT will host a corresponding conference call and live webcast on the same day at 8:30 a.m. ET. This call will be webcast live through NETSCOUT’s website at https://ir.netscout.com/investors/overview/default.aspx. Alternatively, investors can listen to the call by dialing (203) 518-9814. The conference call ID is NTCTQ224. A replay of the call will be available after 12:00 p.m. ET on November 2nd for approximately one week. The number for the replay is (800) 839-2459 for U.S./Canada callers and (402) 220-7218 for international callers.

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