NETSCOUT SYSTEMS reported a significant drop in sales for the second quarter of fiscal year 2025. The company recorded total revenue of $174.6 million, down from $211.1 million year-over-year. Product revenue fell to $61.2 million from $94.7 million, while service revenue slightly decreased to $113.4 million from $116.5 million. The company also recently initiated a major restructuring effort, including a voluntary separation program (VSP) expected to reduce its workforce by 6.5%, or approximately 150 employees.
NETSCOUT’s GAAP operating margin plummeted to negative 265.4%, primarily due to a non-cash goodwill impairment charge of $427 million and a restructuring charge of $16.6 million. This resulted in a GAAP net loss of $443.4 million, or $6.20 per share, compared to a net loss of $4.2 million, or $(0.06) per share, in the same period last year. The company remains focused on enhancing its cybersecurity offerings and managing costs prudently. Despite the challenges, NETSCOUT extended a multi-year enterprise license agreement with a leading North American Tier-1 service provider during the quarter.
Key Financial Highlights:
• Total Revenue: $174.6 million, down from $211.1 million YoY
• Product Revenue: $61.2 million, down from $94.7 million YoY
• Service Revenue: $113.4 million, down from $116.5 million YoY
• GAAP Operating Margin: Negative 265.4% due to goodwill impairment and restructuring charges
• GAAP Net Loss: $443.4 million, or $6.20 per share, compared to $4.2 million, or $(0.06) per share YoY
• Non-GAAP Net Income: $20.6 million, or $0.28 per share, compared to $22.7 million, or $0.31 per share YoY
• Cash and Investments: $407.2 million as of June 30, 2024
• Restructuring Charges: $16.6 million in Q2, with an additional $3 million to $5 million expected in Q3
• Layoffs: Approximately 150 employees, representing 6.5% of the workforce, expected to save $25 million to $27 million annually
