Netscout Systems, Inc. (NASDAQ: NTCT) has reported its financial results for the second quarter of fiscal year 2025, ended September 30, 2024. The company's total revenue for the second quarter of fiscal year 2025 was $191.1 million, compared with $196.8 million in the same period of fiscal year 2024.
Product revenue for the second quarter of fiscal year 2025 was $81.0 million, representing approximately 42% of total revenue, compared with $80.5 million in the same period of fiscal year 2024, which accounted for approximately 41% of total revenue.
Service revenue for the second quarter of fiscal year 2025 was $110.1 million, representing approximately 58% of total revenue, compared with $116.3 million in the second quarter of fiscal year 2024, accounting for approximately 59% of total revenue.
Netscout's income from operations (GAAP) was $14.1 million in the second quarter of fiscal year 2025, including a restructuring charge of $2.4 million, compared with income from operations (GAAP) of $26.3 million in the second quarter of fiscal year 2024. The company's operating margin (GAAP) was 7.4% in the second quarter of fiscal year 2025, versus 13.4% in the same period of fiscal year 2024.
Non-GAAP income from operations was $44.1 million, with a non-GAAP operating margin of 23.1% in the second quarter of fiscal year 2025. This compares to non-GAAP income from operations of $55.2 million and a non-GAAP operating margin of 28.0% in the second quarter of fiscal year 2024.
Non-GAAP EBITDA from operations in the second quarter of fiscal year 2025 was $47.5 million, or 24.9% of non-GAAP quarterly revenue for the period, compared to non-GAAP EBITDA from operations of $59.9 million in the second quarter of fiscal year 2024, representing 30.5% of non-GAAP quarterly revenue for the period.
Net income (GAAP) for the second quarter of fiscal year 2025 was $9.0 million, or $0.13 per share (diluted), which included the restructuring charge mentioned above and an unrealized loss on a foreign investment, versus a net income (GAAP) of $21.5 million, or $0.29 per share (diluted), for the second quarter of fiscal year 2024. On a non-GAAP basis, net income for the second quarter of fiscal year 2025 was $33.6 million, or $0.47 per share (diluted), which includes the unrealized loss on a foreign investment mentioned above. This compares with $44.5 million, or $0.61 per share (diluted), for the second quarter of fiscal year 2024.
For the first half of fiscal year 2025, total revenue (GAAP and non-GAAP) was $365.7 million, versus total revenue (GAAP and non-GAAP) of $407.9 million in the first half of fiscal year 2024. Product revenue for the first half of fiscal year 2025 was $142.2 million, compared with $175.2 million in the first half of fiscal year 2024. Service revenue for the first half of fiscal year 2025 was $223.5 million, compared with $232.7 million in the first half of fiscal year 2024.
Netscout's loss from operations (GAAP) for the first half of fiscal year 2025 was $449.2 million, which includes a non-cash goodwill impairment charge of $427.0 million taken in the first quarter of fiscal year 2025 and restructuring charges of $19.0 million, compared with income from operations (GAAP) of $21.6 million in the first half of fiscal year 2024. The company's operating margin (GAAP) for the first half of fiscal year 2025 was -122.8%, versus 5.3% in the first half of fiscal year 2024. The company's non-GAAP EBITDA from operations for the first half of fiscal year 2025 was $65.3 million, or 17.9% of non-GAAP total revenue, versus non-GAAP EBITDA from operations of $94.6 million, or 23.2% of non-GAAP total revenue, in the first half of fiscal year 2024.
The company's non-GAAP income from operations for the first half of fiscal year 2025 was $58.1 million with a non-GAAP operating margin of 15.9%, compared with non-GAAP income from operations of $84.8 million and a non-GAAP operating margin of 20.8% for the first half of fiscal year 2024.
For the first half of fiscal year 2025, Netscout's net loss (GAAP) was $434.3 million, or ($6.08) per share (diluted), which includes the non-cash goodwill impairment and restructuring charges mentioned above, compared with net income (GAAP) of $17.3 million, or $0.24 per share (diluted), in the first half of fiscal year 2024. Non-GAAP net income for the first half of fiscal year 2025 was $54.1 million, or $0.75 per share (diluted), compared with non-GAAP net income of $67.3 million, or $0.92 per share (diluted), for the first half of fiscal year 2024.
Looking ahead, Netscout's outlook for fiscal year 2025 includes revenue (GAAP and non-GAAP) expectations in the range of $800 million to $830 million. The company expects the GAAP net loss per share (diluted) to be in the range of ($5.22) to ($5.01), primarily attributable to goodwill impairment and restructuring charges taken in the first half of fiscal year 2025, as well as restructuring charges anticipated for the third quarter of fiscal year 2025. The non-GAAP net income per share (diluted) expectations remain in the range of $2.10 to $2.30.
Netscout initiated a voluntary separation program (VSP) as part of its restructuring efforts for fiscal year 2025, expected to result in a net reduction of approximately 145 employees, representing approximately 6.3% of its workforce as of March 31, 2024. The company recorded a restructuring charge of $19.0 million in the first half of fiscal year 2025 and expects to record an additional restructuring charge of approximately $0.6 million in the third quarter of fiscal year 2025.
In terms of recent developments and highlights, Netscout held its annual technology and user summit, Engage 2024, in Arlington, TX, in early October 2024, where event registration and attendance increased year over year. The company also released findings from its 1H2024 DDoS Threat Intelligence Report, citing a significant increase in the number of application-layer attacks and volumetric attacks, especially in Europe and the Middle East. Netscout announced enhancements to its nGenius Enterprise Performance Management solution and updates to its advanced, scalable deep packet inspection-based Omnis Cyber Intelligence Network Detection and Response (NDR) platform.
The market has reacted to these announcements by moving the company's shares -2.5% to a price of $20.38. For more information, read the company's full 8-K submission here.
