NetScout Systems Reports 16% Revenue Growth in Q3 FY2025, Net Loss Improves

NetScout Systems, Inc. reported its financial results for the third quarter of fiscal year 2025, revealing a total revenue of $252.0 million for the three months ended December 31, 2024, a 16% increase from $218.1 million in the same period last year. The company's product revenue surged by 34% to $128.2 million, while service revenue saw a modest increase of 1% to $123.8 million. For the nine months ended December 31, 2024, total revenue decreased slightly by 1% to $617.7 million compared to $626.0 million in the prior year, primarily due to lower revenue from service assurance offerings and cybersecurity services.

The company experienced a significant net loss of $48.8 million for the quarter, a stark contrast to the loss of $132.6 million reported in the same quarter of the previous year. This improvement was attributed to a reduction in operating expenses, which fell by 53% to $143.7 million, largely due to the absence of goodwill impairment charges that had previously impacted results. The gross profit margin remained stable at 82%, reflecting a shift in product mix towards higher-margin offerings.

In terms of strategic developments, NetScout has been actively managing costs and has implemented a voluntary separation program to reduce headcount, resulting in restructuring charges of $19.9 million for the nine months ended December 31, 2024. The company also reported a gain of $3.8 million from the divestiture of its Test Optimization business in the previous fiscal year. As of December 31, 2024, NetScout had cash, cash equivalents, and marketable securities totaling $427.9 million, an increase from $424.1 million at the end of the previous fiscal year.

Operationally, NetScout's customer base remains concentrated, with Verizon accounting for over 10% of total revenue during the quarter. The company continues to focus on expanding its cybersecurity offerings, which have seen increased adoption among enterprise customers. The total backlog at the end of December 2024 was reported at $29.9 million, a significant increase from $6.8 million at the end of March 2024, indicating potential future revenue growth.

Looking ahead, NetScout anticipates continued challenges in the macroeconomic environment, including constrained customer spending and geopolitical tensions. However, the company believes its current liquidity position, combined with cash flow from operations and available credit, will be sufficient to meet its obligations over the next twelve months. The management remains committed to executing its long-term strategic plans while navigating the evolving market landscape.