NetScout at Global Technology Conference: Strong Q2 Amid AI and Cybersecurity Growth

On Wednesday, 19 November 2025, NetScout Systems Inc (NASDAQ:NTCT) presented at the Global Technology, Internet, Media & Telecommunications Conference 2025. The company reported a robust second quarter, buoyed by growth in service assurance and cybersecurity. Despite some challenges, NetScout is optimistic about leveraging AI and expanding its market presence.

Key Takeaways

• NetScout reported a 15% revenue growth in Q2, with 11% growth in the first half of the year.
• The company is capitalizing on AI and cybersecurity opportunities with new products.
• NetScout is focusing on organic and inorganic growth investments, with recent share repurchases.
• Management is optimistic about overcoming past challenges and seizing new growth opportunities.

Financial Results

• Revenue Growth:

- Q2 revenue increased by 15%.

- First-half revenue rose by 11%.

• Business Performance:

- Both service assurance and cybersecurity segments contributed to growth.

- Cybersecurity alone grew 13% in the first half of the year.

• Capital Allocation:

- The company executed $35 million in share repurchases, totaling 1.5 million shares.

- Focus is on organic and inorganic investments before returning capital to shareholders.

Operational Updates

• 5G and Network Utilization:

- Previous 5G deployment headwinds are dissipating.

- Increased network capacity utilization is driving new investments.

• AI Initiatives:

- Introduction of AI Sensor and Streamer products.

- Leveraging DPI data in observability sites.

- Exploring internal AI use for operational efficiency.

• Cybersecurity Enhancements:

- Offering adaptive DDoS protection, especially for enterprises.

- Utilizing the Atlas threat intelligence feed.

Future Outlook

• Growth Drivers:

- Anticipated increase in network traffic due to AI.

- Rising demand for network monitoring and security solutions.

- Integration of satellite and fiber technologies.

• Strategic Priorities:

- Continuing growth in service assurance and cybersecurity.

- Expanding into the observability space.

- Leveraging DPI data for competitive advantage.

• Challenges:

- Navigating the complex service provider environment.

- Encouraging enterprise integration of observability and cybersecurity.

Q&A Highlights

• AI and Observability:

- NetScout aims to be the "glue" between observability and cybersecurity.

- Enterprises require comprehensive data to solve AI-related issues.

• Competitive Advantage:

- Strong moat around DPI data with limited competition.

• Enterprise Cyber Spending:

- Enterprises are investing in edge environment protection.

- NetScout adds an additional cybersecurity layer beyond firewalls.

NetScout's management remains confident in their strategic direction and ability to harness emerging trends for sustained growth. For more detailed insights, readers are encouraged to refer to the full transcript below.

Full transcript - Global Technology, Internet, Media & Telecommunications Conference 2025:

Unidentified speaker, RBC: That's the message, right?

This is the appetizer.

Yeah, yeah, yeah, yeah. Okay, all right, all joking aside, you guys have been coming forever, NetScout has been coming and supporting our conference for years. I appreciate you guys. Tony, you've been on us.

Thanks for having us.

What's that? Thanks for having us. Yeah, you've been on multiple sides of the table. I'm pleased to have you up here along with Vikram, who's the Office of the CTO. That's your title?

Yes.

Okay.

Yes.

Let's get started. You guys had a really strong Q2 print, and I guess I'm wondering, maybe from both of your perspectives, relative to the expectations you set, and obviously thinking in terms of years, a lot of times versus quarters. How would you sort of assess the performance of your Q2 numbers relative to your expectations? Vikram, I'm curious, from your perspective, I always like talking to you because you kind of get a little bit of the lens of the customer and kind of what they're saying and sort of what they're interested in. Maybe Tony will start with you.

Tony, NetScout: Yeah, Q2 was a very strong quarter for NetScout. The revenue grew 15% in the quarter, and both the service assurance and the cybersecurity businesses contributed to that. There was a little bit of acceleration from Q3, so that'll have an impact.

On the federal side.

Q3, primarily two pieces: the federal side and product, and on the carrier side from a maintenance perspective. Like I said, very strong quarter, 15% growth, and for the first half, we grew 11%. Both businesses, again, contributed to that. It is a very strong start to the very strong first half entering the second half of the year. We are very excited about that, right? Especially given the last couple of years, we've struggled with some of the growth. I think that's great. We've been, I think everybody, all companies are dealing with this dynamic and uncertain macro environment. In early stages in the fiscal year, there were questions about how that would impact us and our customers and how their buying patterns.

Fortunately, there'd been a lot of chatter about, "Will customers hold back, wait and see?" We haven't really experienced that yet at this point. From our perspective, it's a very strong first half, and we're very pleased with it.

Even excluding some of the hole-ins, yeah, you feel it.

Yeah, even if you exclude the accelerations, companies' revenue would have grown mid-single digit, which is really in line with the higher end of our outlook. Very pleased with the first half.

Good. Vikram, yeah, what are you kind of, we'll drill down into some specific questions. Yeah.

Unidentified speaker, RBC: No, I think what this quarter proved, I think to us and everybody else, is that the years of headwinds that we had, they are kind of dissipating now. I think a lot of them will turn into tailwinds to push us forward. I think we see this as a turning point because of all the macro things that are going on in the industry. You know, we were frustrated because the main drawback or the headwind was on 5G, and the 5G just kept slowing, not really happening in a big way because they had deployed so much capacity and there was not enough traffic for many, many years. Now that seems to be turning around because there is now that capacity has been used up and their carriers are adding more capacity. Finally, I think we may be turning the corner there.

What do you, I mean, so I guess, yeah, put a finer point on that. What do you think is driving some of that? You called it a turning event. I mean, is it just demand for additional capacity?

I think that going back, right, they had deployed so much capacity in 5G that, you know, and they had to use it all up. All they were doing was rolling over consumers from 4G to 5G phones. That was not using up all the capacity. Fixed wireless was a big driver in using up the capacity in the network. I think we saw both from Nokia and Ericsson that the second round of capacity augmentation is happening because that old capacity they had deployed five years ago is being used up now.

For us, I think anytime there is a growth in the network and the traffic starts to flow, they will use us. In the era where there was too much excess capacity, they do not need to invest a lot in monitoring because there are not that many issues because there is much more capacity than the traffic. You do not run into as many problems, so they do not invest in tools like ourselves. Now that the capacity is used up and incrementally they are adding capacity, they will be running into problems, especially, you know, I mentioned fixed wireless, but also because of growth in AI traffic, right? That is flowing over to the network. Everybody has either Perplexity or some other AI tool on their handset, and they are running AI models and AI questions from their handset. That is going to create more traffic on the network.

Tony, NetScout: I think Vikram's explaining a lot about the dynamic within service provider, within service assurance. That was one of the headwinds, right? We see some tailwinds and opportunities or catalysts around what's happening in the enterprise as they invest in their digital transformation and some AI initiatives, as well as the cyber business has grown very well. It was 13% for the first half of the year, just because of the cyber landscape, continued threats, and companies just having to prioritize that spend in order to ensure they have modern technology to be able to deal with it. Vikram's referring to one part of our universe, and if that stabilizes while the others grow, or if we can get that to grow with some of the capacity they've already used, that's very helpful to the business.

Yeah, that's exciting. There's lots to dig into there. I guess maybe on the carrier side, I mean, what are some of the, for either of you, what do you think from a CapEx perspective? I mean, do you think we could be, because I mean, we've been talking in some form or fashion for, I don't know, 10 years on this. I mean, do we think we're, if you're down, it's probably hard to generalize because they're all different, but what are sort of the expectations for the next several years for carrier spend?

Unidentified speaker, RBC: Yeah, so you know what I've been following in the market and reading, you know, Verizon just got a new CEO, right? Dan Schulman and AT&T. The common theme is they want to invest in wireless and fiber, right? So the CapEx is going to be in drawing fiber from cell sites into the core of the network. Because the bottleneck now for the wireless networks is the copper-based backhaul. And the fiber backhaul is not that well deployed. So most of the CapEx, in order to open up the pipes for all this new traffic, is going to go in changing out the old backhaul infrastructure to all fiber infrastructure. You know, Verizon is saying we are going to focus on Frontier's integration, which is all their fiber footprint. AT&T is drawing a lot of fiber into the network.

I think they're all focused on using fiber capacity, which is the lowest cost per bit, you know, to draw traffic because they need to lower the cost. The best way is using fiber in conjunction with wireless in those places. I think that's the big CapEx focus. I think once they open up the pipes, there will be traffic flowing into the network on the cell sites. They're also talking about deploying satellite now. AT&T is making a deal with AST SpaceMobile, and all of these guys, instead of deploying a lot of landline cell sites, want to use satellite everywhere. They get cheaper coverage more broadly. That's going to create more traffic in the network, right?

It is all going to play in our favor because, you know, satellite channels can be very difficult to monitor because there are variations because of all kinds of external conditions, right? They need to invest in monitoring if they are going to use satellite in a big way to augment their network. I think the addition of satellite, the addition of fiber, and the continued growth in AI traffic, they are all tailwinds for us.

Tony, NetScout: Yeah, and also just to build on what Vikram was talking about with the new CEO at Verizon, he had come out and said he wants to really focus on customer first, the user experience, reduce churn, and also reduce his cost basis. I think they're laying off some people. NetScout fits well into the user experience. That's what we do for them, right? To help reduce churn. I mean, we would fit well into that. If they're going to have less labor, they likely need more automation, right? Those are some potential opportunities.

Okay, yeah, that's great. I guess on the AI front, are there any tea leaves? Because, you know, obviously, it's, you know, like I sort of joked about four o'clock, but like are there any tea leaves that you're seeing from your customers that would imply that there is increased sort of edge demand for AI connectivity?

I'll let Vikram talk a little bit about AI, but it's something that we're very excited about because we see opportunity here in a couple of different areas. One is in our own products to embed AI, but another is some new products that we've just recently launched about our AI Sensor and Streamer. As you know, one of NetScout's core value propositions is its smart data, right? It's DPI data. We have that data, which can now be leveraged in observability sites, and we're starting to move into that kind of realm a bit. We have AI Streamer and Sensor where we can take highly curated data focused on AI needs, and then we can feed it into some partners that we've been talking with around observability like Splunk and ServiceNow and stuff like that.

We're starting to see a lot of interest in that area, and we've seen some revenue in that area around these AI sensors and streamers as people want this data. It kind of moves us a little further into observability and changes the dynamic a bit. We can also use AI to help internally with our costs and everything else. Vikram, you want to talk a little bit about AI? I believe it's an opportunity not only from the things I talked about, the volume of traffic it will create. It's something that's very exciting.

Specific products that are newer too.

Unidentified speaker, RBC: Yeah, yeah. No, I think, you know, once we go beyond this hype phase of AI, I think people are going to really look down on what exact problems can we solve with AI, right? Right now, it looks like from what we are seeing in early traction is the investments that enterprises and service providers made in AI was all around data that was not nearly as complete to solve their real problems. When they were using data from the traditional observability tools, that's not enough to solve the problems. They need data from the RAN, they need data from the core, and they need specifically application layer data. Now, you know, from a carrier perspective, it's becoming obvious that they need our data to solve whether it's customer experience or operations improvement problems, which are where they get real return on investment.

On the enterprise side, it's the coming together of observability and cybersecurity and integrated through AI. I think that's a real benefit because observability has been in its own silo in terms of monitoring cloud infrastructure, cloud applications, right? And cybersecurity has operated in its own environment. This data that we provide can tie together the traditional observability data with cybersecurity data, which we generate through our DPI as well as DDoS applications and put it all together to see how observability data is telling you about security hacks, right? And how security break-ins are telling you about where you're seeing performance problems. I think AI has the unique opportunity to bring together observability and cybersecurity into a single framework to solve this broader range of problems. We can be the glue because, you know, we play both on the observability side and the cybersecurity side.

What does it mean from a new product perspective? I mean, Tony, you alluded to some, but like what should we think about from like a new product or a pipeline perspective?

Yeah, so there are a couple of things we are doing, right? One is what he mentioned on AI Sensor and AI Streamer. Basically, now we have rolled out this product and we are seeing some early traction where we can package our DPI data beyond service assurance into specific customized use cases that they want to solve, right? That is one area where we launch new products and they're seeing some early traction. The other area is we can use the DPI technology to tie together what we are seeing in Adaptive DDoS and try to mitigate the problems between detection and mitigation, try to shrink that interval, use investigative data, forensics data to shrink the time between detection and mitigation, right? Those are the kinds of things that I think we can add value using DPI data.

The good thing for us is, you know, there's no one else in this DPI space left anymore. It is like we have a strong moat with hardly any competition. The competition is fighting for other things in the ecosystem, but nobody else is doing DPI anymore because people gave up on their technology, you know, 20 years ago, right? It is good that we found this new life for expanding the use of DPI data into AI and cybersecurity and with not really any significant competition. Yeah, that becomes a moat for us.

Tony, NetScout: Yeah, and it's a good multiplier for the business itself.

Sure, yeah, from a cross-sell perspective, yeah. I'm going to come back to an AI question for you, Tony, but Vikram, you know, from your perspective, is the, and I use network in a broad sense, but is the network prepared for all of this kind of edge inferencing, edge workloads? You said everybody's got, you know, Perplexity or Anthropic or something on our phone. Like, do you think that, I mean, where are we from like a network buildout and then, you know, how could that impact you guys?

Unidentified speaker, RBC: I think everyone, including the carriers, are building out their data centers, right? There's so much spend in data center buildout. Once they deploy fiber, you know, it'll open up the pipes for all this traffic that's coming into the network. I think there are two problems: the last mile and then the data center itself, right? You can't build data centers if you have the bottleneck in the last mile. If you open up the last mile, then you, you know, then the data center capacity can be more efficiently used. Now you have the edge problem, you know, in a reasonably solvable condition where you can do all this AI traffic, you know, without running into any major bottlenecks.

Gotcha. That's helpful. I guess I was going to ask you this later, but you sort of preempted the question. Internal use of AI, you know, how are you seeing, you know, are you seeing across various functions of OpEx to sort of bend the cost curve down further?

Tony, NetScout: Yeah, so internally we're putting it into our products; we're starting to use AI. On the cost side, we're starting to work with AI as well. We're in the very early stages of that to see where we can leverage it to be more operational.

I mean, are you, I assume like you're using it like from a code suggestion perspective internally, and are you seeing like developer productivity increase with some of the vibe coding tools?

Unidentified speaker, RBC: Yeah, one of the things we did internally is to use a large language model across all of our enterprise data and created sort of like a ChatGPT type interface. That allows our IT folks to look across the enterprise and zoom in into, you know, where the issues are to kind of identify them and take care of them, right, much more quicker and optimize your infrastructure at the same time. LLM is using internally, I think has a lot of power.

Yeah. You know, I wanted to pivot back to those large deals that you talked about that closed a little earlier in Q2. I guess could there be, you know, and I find that interesting because sometimes they're for idiosyncratic reasons why a deal might close early and Fed might have been trying to get in front of a shutdown. Like, do you think there's an opportunity? I mean, could it signal something broader that, you know, some of these broader spending initiatives could be, you know, maybe pulled forward from, you know, next fiscal year to this fiscal year and kind of the second half of the year? I'm just kind of curious on how you think large deals will kind of flow.

Tony, NetScout: Yeah, so most of our large deals are very project-based, right? It depends what our customers are doing and what the timelines for those are. With regard to this particular deal that we talked about, they have a large project going on that we've been participating in. In this case, they were just trying to get in front of the government shutdown and accelerate it there. I mean, again, we're very subject to the customers' timeframes around the project they're doing and stuff like that. The combination of these deals was a relatively large project.

How do you, I guess then said differently, how do you think about when you thought about your second half guidance, how did you sort of contemplate large deals, close rates, things of that nature?

Yeah, so again, Q3, the guidance showed a reduction from the prior year because of these accelerations, right? I think we were, you know, there's certain projects that we're aware of and the timing. I believe that we were also just cognizant of the service provider environment because Q3, sometimes you'll see budget flushing in essence, right? We're cognizant that that environment's a little bit challenged right now.

Which part?

The service provider.

Okay, okay.

I mean, I think Vikram talked a little bit about what's going on there, but they're very focused on, they've made their initial investments, and now they're trying to ensure that they balance investment with monetization opportunity.

Yeah.

On that front, I don't think that we expected a lot of budget flush associated with.

Do you normally see that? Like on a December quarter?

Yeah. For instance, last year, I think we called out about $20 million worth of acceleration due to the, right? Because clearly most companies' quarter ends are December 31. Ours is not. It is 3/31. What we will have with some of our customers, especially the large carriers, because those are the ones that can move the dial a bit, is, you know, they will see if they have anything extra to use in this budget. If not, then in our Q4, they will use their next year's budget.

Yeah, yeah. Okay.

Like I said, that environment, as we've said all year, is a bit challenged as they try to balance investment and monetization.

Yeah. You mentioned earlier cybersecurity go through 13%, which is great. And Vikram, you talked about some of the cross-sell stuff of bridging observability, cyber. What are you most excited about from a cyber perspective? From like a, like, you know, is there a new product initiative that you're focused on? I guess both of you could certainly ask about or think through it, but is there anything that we should be cognizant of on the product side that could be incremental from a cyber perspective?

Unidentified speaker, RBC: Yeah, I mean, the adaptive DDoS is in very early stages. I think especially in the enterprise segment where we do not have a large footprint, right? Our main customers are on the service provider side.

From a cyber perspective.

Yeah, from a cyber perspective. I think the enterprise growth on cybersecurity, especially because of adaptive DDoS, which creates challenges that the enterprises cannot completely rely on service providers to protect themselves. They are going to go with solutions that they can manage directly on-prem and in combination with, you know, what we can provide in the network. Like, you know, we have the Atlas feed, which is capturing the cyber threats from across the internet. We have the largest database on that. We can use it to protect enterprises on-prem through our AED product against these dynamic threats that are being created by botnets. You know, botnets are multiplying all the time.

You know, it is a highly distributed set of attacks that gets very difficult to manage unless you have a handle on where they are coming from and what is the nature of those attacks and can dynamically adjust your on-prem device to be able to stop those attacks in real time. I think the enterprise market on DDoS is wide open for us to go capture. Service providers will continue to augment because they will have to keep up with the changes in the DDoS environment. We should see continuous growth in the service provider segment. I am hoping that the enterprise segment can take a big lift off of that. If you do get that, then I think our DPI product, CyberStream, can add additional value within the enterprise because we built it for the enterprise.

We built it on creating forensics data to mitigate the gap between detection and mitigation. You know, enterprises can take advantage of that once we combine it with our AED product. There are opportunities and new products that can, you know, keep the growth going on the enterprise side.

Tony, NetScout: Also because things are moving so fast, the fact that we see basically a third to half of the internet traffic given what we're in the majority of the service providers and that we can use that information to help adapt the tools to protect companies. I don't know too many companies that have that.

That are able to do that. Yeah. Maybe just to put a finer point, like Vikram, you ended your comment saying there's a lot of things that we could do to improve the enterprise cyber performance. What are some of the, like, the top two or three things that you think could drive incremental enterprise cyber spending?

Unidentified speaker, RBC: From our perspective, the reason why our solution becomes very important is there are many cyber attacks within enterprises that are able to get through the firewall because the only defense they have at the edge is a firewall. If they get through the firewall, then the only other protection they have is, you know, on the endpoints themselves, like the servers and applications of CrowdStrike and, you know, those kinds of companies. Once they make it through, then they can, you know, just hide there in these applications and try to get in at the right time, right? I think what we are doing is in addition to the firewall, we are adding another layer of protection, which is specifically focused on cybersecurity attacks, not just filtering on the firewall side, right?

I think it bolsters the perimeter of the enterprise to have a DDoS protection as well as a firewall protection, which is the exciting part because they're so focused on protecting their sensitive data that they would be willing to invest in strengthening their edge environment.

That's great. Yeah, that certainly seems like an incremental element of the story, especially from a cross-sell perspective that you touched on earlier. Tony, from a capital allocation perspective, you guys have always, you know, been thoughtful on how you think about deploying, whether it's M&A or buyback and just internal investments in the business. How are you with some of these exciting things that you've got going on right now and you guys are seeing better growth now? How do you think about that balancing act of, you know, maybe trying to like lean a little bit more into reinvesting in the business, maybe a little bit less? You know, how do you kind of weigh, you know, the?

Tony, NetScout: Yeah, we have a very strong balance sheet, as you know, significant amount of cash and full availability to our $600 million revolving credit facility. We are free cash flow positive, right? We generate good free cash flow. It is a strategic asset for us that can give us a lot of deployment flexibility. The way we've thought about it in the past is we first look at, is there something we can invest in for organic growth? We'll invest against those opportunities. You know, inorganic, is there any acquisition opportunity? You know, recently it's been more focused on tuck-in technologies or expertise, but we continue to look there. After that, again, we have a strong balance sheet. I think that that's taken care of. If we've satisfied those, we'll look to returning capital back to shareholders.

Historically, what we've done is share repurchase. Over the last few years, we've done significant share repurchase. Just on our last earnings call, we talked about, we did about a million and a half shares, about $35 million of share repurchase. That's kind of how we think about it. We have the wherewithal to do a number of different things. We'll invest in growth where it makes sense.

I guess, yeah, you know, if you are starting to see some green shoots, whether it's AI or whether it's edge usage or, you know, increasing, I mean, how do you, then effectively in your answer, you're saying, because you talked about share buyback last, effectively implying that you're thinking about kind of the organic investments into the business or inorganic elements.

It's always the first priority.

That's the first priority. Yeah. I guess, Vikram, if that's the case, from your perspective, your seat, how do you think about, like what are some of the most exciting areas that you could see further investments in as we look to, you know, the back half this year, but even more so next year?

Unidentified speaker, RBC: Yeah, look, I think what excites me is that we seem to have turned the corner up with all the headwinds. I think there are a number of tailwinds that we can take advantage of in both service assurance and cybersecurity with our expansion into the observability space, overlaying the AI techniques and having a moat around our DPI data that makes us pretty much a, you know, a straight run into this ecosystem. I think those are all the things that are exciting for me in terms of, you know, turning us onto a different trajectory.

Yeah, that's great. Maybe just to wrap, you know, if you're talking to a potential shareholder, you know, what would you tell them if you hadn't looked at the company in a while? Like why now? Like why invest now?

Tony, NetScout: Yeah, I think Vikram hit on it as well as over the last few years, there've been a number of headwinds against us, especially in the service provider space. What we're seeing now is a lot of those headwinds are behind us. We think service providers kind of moderated at this point. Now you have the opportunity for growth, and we've shown growth in the first half, pretty strong growth, right? We have the opportunities for, you know, stabilize in service provider and potentially some growth in that area. Enterprise on the service assurance is growing. Service assurance, that could grow. Cybersecurity has been growing very well. Like I said, the headwinds are behind us. We believe we have a number of catalysts in front of us. I also believe AI can be a very potential opportunity for us across multiple areas.

We are seeing good interest and traction there. Not only in the new products that we have and areas that can propel us further into observability, but also just the traffic that it will generate. More traffic is always good for us, right? Finally, it can help from an operational excellence perspective. Like I said, I think we have kind of made a pivot from the past and we see opportunity for the future. We have demonstrated growth in the first half.

Yeah, and I've known you guys for a long time. It does feel like something feels a little different right now. Yeah, yeah, yeah. That was very evident in the conversation. That's awesome. I really appreciate it. We are out of time. That's a wrap on this conference. I appreciate everybody sticking through to the very end. From all of us at RBC, best of luck, guys, on this transition. We'll talk soon.

All right. Appreciate it. Thanks, Matt.

All right. Yeah.

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