NetScout Systems (NTCT) investor relations material

Financial performance and outlook

• Achieved 15% revenue growth in Q2, with both service assurance and cybersecurity contributing; first half growth was 11%.

• Growth was driven by federal, product, and carrier maintenance segments, with no significant customer spending delays observed.

• Even excluding deal accelerations, revenue growth was at the high end of outlook.

• Guidance for Q3 reflects some deal accelerations and a cautious view on service provider budgets.

• Strong balance sheet and free cash flow support flexibility for organic and inorganic investments, with share repurchases ongoing.

Industry trends and market dynamics

• Years of headwinds, especially in 5G, are dissipating as network capacity is now being used, driving new investments.

• Carriers are investing in fiber backhaul to address bottlenecks and support growing wireless and AI-driven traffic.

• Satellite deployment is emerging as a cost-effective way to expand coverage, increasing network monitoring needs.

• AI and digital transformation initiatives in enterprises are creating new tailwinds for growth.

Product innovation and AI integration

• Launched AI Sensor and Streamer products, leveraging DPI data for observability and AI use cases.

• Early traction seen for new AI-focused products, with partnerships in observability (e.g., Splunk, ServiceNow).

• DPI data is positioned as a unique asset, enabling integration of observability and cybersecurity through AI.

• Internally, AI is being used to improve operational efficiency, including LLM-based tools for IT.