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NetScout news and analysis covering network monitoring, cybersecurity, earnings, cash flow and acquisitions.
NetScout sells software and equipment that help businesses and communications providers monitor networks and protect them against attacks that disrupt service. Product revenue comes from its technology offerings; service revenue includes maintenance, support and cloud services. It trades on Nasdaq as NTCT and ends its fiscal year on March 31.
Service revenue grew while product revenue declined in the second quarter of fiscal 2027. Operating profit improved mainly through lower operating expenses. The expense comparison includes more software-development capitalization and lower event costs due to timing, alongside lower legal and professional-service spending.
| Quarter ended September 30 | 2026 | 2025 |
|---|---|---|
| Revenue | $222.2 million | $219.0 million |
| Service revenue | $132.3 million | $124.3 million |
| Operating profit | $37.6 million | $32.5 million |
| Adjusted earnings per share | $0.71 | $0.62 |
Revenue and operating profit follow U.S. accounting rules. Adjusted earnings exclude stock compensation, acquired-intangible amortization, executive-transition and restructuring costs, with related tax effects.
The original May forecast, the August update and November results all put fiscal 2027 revenue at $885 million to $915 million and adjusted earnings at $2.65 to $2.80 a share. The fiscal year ends March 31, 2027.
NetScout completed its $55 million cash purchase of DigiCert's denial-of-service protection business on May 1, 2026. When issuing the May outlook, management expected the acquired operation to generate about $20 million of annualized revenue. The acquisition was already part of the original forecast.
The December-quarter forecast is $240 million to $250 million of revenue and adjusted earnings of $0.90 to $0.95 a share. The ENGAGE summit expense falls in that quarter, after helping the prior quarter's expense comparison.
The September quarter used $15.1 million of operating cash. Company-defined free cash flow, after fixed and intangible assets and capitalized software, was negative $17.8 million.
Operating cash flow in the six months ended September 30 was $35.6 million, down from $80.2 million. Working capital absorbed cash, including lower deferred revenue, compensation payments and additional inventories and deferred costs.
September cash and cash equivalents were $438.4 million. Short-term marketable securities were $78.4 million and long-term securities were $54.5 million, bringing the combined balance to $571.3 million. Its $600 million revolving credit facility was undrawn and fully available, with maturity in October 2029.
During the half, NetScout paid $77 million for program share repurchases and a separate $27.7 million for employee equity-award tax withholding. Cash investment included $4.1 million for fixed assets and $5 million for capitalized software development. Current and noncurrent operating lease liabilities were $10.8 million and $25.3 million, respectively.
Read our analysis of NetScout's margin and cash flow for the expense details behind the latest profit improvement.
Lower expenses lifted quarterly operating profit despite modest sales growth. Software capitalization and event timing explain part of the improvement, while first-half cash flow weakened.