NetScout Systems, Inc.

Total revenue was $210.4 million, up 12.7% year over year from $187 million. Product revenue was $86 million, up 17.8%, and service revenue was $124.4 million, up 9.4%. Gross margin increased 190 basis points to 80.6%, operating margin improved 660 basis points to 20.8%, and diluted EPS was $0.52 versus $0.34 a year ago. Net income was $38.6 million versus $24.7 million last year, free cash flow was $44.3 million, and the company ended the quarter with $668.5 million in cash, cash equivalents, and short- and long-term marketable securities. For FY2027, management reaffirmed revenue guidance of $885 million to $915 million and non-GAAP EPS guidance of $2.65 to $2.80, with a non-GAAP tax rate of about 20% and diluted shares of approximately 74 million to 75 million. For Q2, revenue is expected to be broadly consistent with the prior-year period, with first-half revenue growth in the mid-single-digits and Q2 EPS growth in the high-single-digits.

Anil Singhal said NETSCOUT is benefiting from customers' need for high-fidelity visibility in increasingly complex digital environments and framed the quarter as evidence of disciplined execution. He emphasized the company’s strategic priorities: innovation, profitable growth, margin expansion, and free cash flow. He also highlighted the 750th patent, the AI-ready Smart Data platform, and the company’s push into AI-enabled workflows, observability, and cybersecurity.

Anthony Piazza detailed the quarter’s financial performance and said results were boosted by government-related orders that were pulled into Q1 by $10 million to $15 million. He cited gross margin of 80.6%, operating margin of 20.8%, product revenue of $86 million, service revenue of $124.4 million, and free cash flow of $44.3 million. He also noted cash and marketable securities of $668.5 million, no share repurchases in the quarter, and a continued commitment to capital return through buybacks over time.

Analysts focused on how much Q1 benefited from pulled-forward government orders, with management saying the quarter would have grown in the mid-single-digits if normalized. Questions also centered on the adoption of Omnis Sensor/Streamer and AI-related offerings; management said demand is strong but still early, with customers experimenting and sales cycles to watch. On cybersecurity, management said AI-enabled DDoS protection is gaining traction, while inventory buildup was described as a proactive move to secure supply amid data-center-related equipment constraints.