Netscout shares surge on robust Q3 results and upbeat guidance

Investing.com -- Netscout Systems (NASDAQ: NASDAQ:NTCT) stock climbed 12% following the company’s announcement of third-quarter earnings that surpassed analyst expectations and the issuance of strong guidance for the fiscal year 2025.

The network security and service assurance provider reported third-quarter earnings per share (EPS) of $0.94, which was $0.21 higher than the consensus estimate of $0.73. Revenue for the quarter also exceeded forecasts, coming in at $252.02 million against the anticipated $220.97 million.

Comparing year-over-year figures, Netscout’s revenue showed a substantial increase from $218.1 million in the third quarter of the previous fiscal year. The company’s product revenue saw a significant jump to $128.2 million from $95.8 million in the same quarter of the prior year, marking a shift in product mix and highlighting increased demand for Netscout’s offerings.

In terms of guidance, Netscout provided an optimistic outlook for the fiscal year 2025, projecting EPS to range between $2.15 and $2.25, versus the consensus of $2.16. Revenue expectations were set between $810 million and $820 million, closely aligned with the consensus estimate of $813.5 million.

Anil Singhal, Netscout’s President & Chief Executive Officer, attributed the strong quarterly performance to robust sales across the company’s cybersecurity and service assurance product lines. He noted that certain customer orders anticipated for the fourth quarter were received earlier, utilizing year-end budgets, which contributed positively to the third-quarter results.

Netscout’s improved financial position was also reflected in its balance sheet, with cash, cash equivalents, and marketable securities totaling $427.9 million as of December 31, 2024.

The company also highlighted its ongoing restructuring efforts, including a Voluntary Separation Program expected to result in a net reduction of approximately 6.2% of its workforce. These measures, along with other cost-saving initiatives, are projected to yield annual run-rate savings of about $25 million, with approximately $19 million realized in fiscal year 2025.

Investors responded favorably to the news of Netscout’s solid quarter and the proactive steps management is taking to streamline operations and reinforce its financial outlook. As the company continues to evolve its ’Visibility Without Borders’ platform and adapt to the dynamic digital landscape, the market’s positive reaction underscores confidence in Netscout’s strategy and growth trajectory.

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