NetScout Systems (NTCT) Q3 2026 earnings summary

Executive summary

• Q3 FY26 revenue was $250.7M, slightly down year-over-year, but year-to-date revenue rose 6.3% to $656.4M, driven by accelerated product orders and strong service renewals, especially in cybersecurity and service assurance.

• Non-GAAP diluted EPS for Q3 was $1.00, up 6.4% year-over-year; YTD non-GAAP diluted EPS was $1.96, up 15% year-over-year.

• Gross margin for Q3 was 82.8%, consistent with the prior year; YTD non-GAAP gross margin was 81.1%.

• Operating margin improved to 35.9% in Q3 and 26.6% YTD on a non-GAAP basis.

• The company raised the midpoint of its FY26 revenue and EPS guidance, reflecting confidence in its pipeline and execution.

Financial highlights

• Q3 FY26 product revenue was $121.7M, down 5% year-over-year; service revenue grew 4.1% to $129.0M.

• YTD FY26 product revenue increased 7% to $289.4M; service revenue rose 5.7% to $367.0M.

• Q3 non-GAAP net income was $73.7M, up 8% year-over-year; YTD non-GAAP net income was $143.6M, up 17.3%.

• Q3 GAAP net income was $55.1M, up 13% year-over-year; YTD GAAP net income was $77.3M, a turnaround from a prior-year loss.

• Free cash flow for Q3 was $59.4M; cash and investments totaled $586.2M at quarter end, with no debt outstanding.

Outlook and guidance

• FY26 revenue guidance raised to $835M–$870M, representing 3.6% growth at the midpoint.

• FY26 non-GAAP diluted EPS guidance increased to $2.37–$2.45; GAAP EPS expected at $1.15–$1.23.

• Full-year effective tax rate expected at 20%; diluted shares outstanding projected at 73–74 million.

• The company expects sufficient liquidity to fund obligations, capital spending, and working capital needs for at least the next twelve months.