NetScout Systems Inc delivered a solid start to fiscal year 2026, with Q1 revenue of approximately $186.7 million, up 7% year over year, led by robust cybersecurity growth and favorable order timing. Management highlighted ongoing margin expansion, with non-GAAP gross margins around 78% and non-GAAP operating margins in the mid-teens, supported by cost-management actions from the prior year. Diluted non-GAAP EPS reached $0.34, up ~21% year over year, while GAAP results showed a small quarterly loss driven by non-cash and restructuring effects. The company reaffirmed its FY2026 guidance of $825â$865 million in revenue and $2.25â$2.40 in non-GAAP EPS, signaling confidence in the trajectory aided by AI-enabled product enhancements, expanded DDoS protections, and growing federal and enterprise wins.
Key remarks from management emphasize: (1) acceleration in cybersecurity revenue, (2) cross-sell opportunities from integratedArbor and Omnis platforms, including AI-driven insights and post-incident response capabilities, (3) ongoing improvement in working capital with a 41-day DSO and a strong cash position, and (4) a cautious yet constructive view on macro conditions and 5G-related service provider investments. The pipeline appears solid, with notable multi-solution wins and a high-value U.S. government opportunity cited. investors should monitor the timing of large deals (particularly in the service provider and federal spaces) and the pace of AI-enabled product adoption across both service assurance and cybersecurity platforms.