Netscout Systems, Inc. (NASDAQ: NTCT) has reported its financial results for the third quarter ended December 31, 2024, exceeding expectations with total revenue of $252.0 million, compared to $218.1 million in the same period of the previous fiscal year. Notably, product revenue for Q3 FY25 was $128.2 million, representing approximately 51% of total revenue, a significant increase from the $95.8 million reported in the third quarter of fiscal year 2024, which was approximately 44% of the total revenue.
Service revenue for the third quarter of fiscal year 2025 was $123.8 million, accounting for approximately 49% of total revenue, compared to service revenue of $122.2 million in the same period of the previous fiscal year, which represented approximately 56% of total revenue.
The GAAP income from operations for the third quarter of fiscal year 2025 was $61.7 million, a substantial improvement from the GAAP loss from operations of $134.4 million in the third quarter of fiscal year 2024. Non-GAAP income from operations for Q3 FY25 was $89.7 million, with a non-GAAP operating margin of 35.6%, compared to $63.2 million and a non-GAAP operating margin of 29.0% in the third quarter of fiscal year 2024.
Furthermore, the GAAP net income for the third quarter of fiscal year 2025 was $48.8 million, or $0.67 per share (diluted), vastly improved from the GAAP net loss of $132.6 million, or $(1.87) per share (diluted) for the third quarter of fiscal year 2024. On a non-GAAP basis, net income for Q3 FY25 was $68.3 million, or $0.94 per share (diluted), compared to $52.0 million, or $0.73 per share (diluted) for the third quarter of fiscal year 2024.
Looking at the nine-month financial results, total revenue for the first nine months of fiscal year 2025 was $617.7 million, compared to $626.0 million in the first nine months of fiscal year 2024. The company reported a GAAP loss from operations for the first nine months of fiscal year 2025 was $387.5 million, including a non-cash goodwill impairment charge of $427.0 million taken in the first quarter of fiscal year 2025, and restructuring charges of $19.9 million. This compares with a GAAP loss from operations of $112.9 million in the first nine months of fiscal year 2024, which included a non-cash goodwill impairment charge of $167.1 million.
Additionally, Netscout's GAAP net loss for the first nine months of fiscal year 2025 was $385.5 million, or ($5.39) per share (diluted), including the non-cash goodwill impairment and restructuring charges mentioned above, compared to a GAAP net loss of $115.3 million, or $(1.61) per share (diluted), in the first nine months of fiscal year 2024.
The company has narrowed its fiscal year 2025 outlook ranges while maintaining the midpoints from previous guidance for revenue and non-GAAP net income per share. The outlook for fiscal year 2025 includes an expected revenue range of $810 million to $820 million and a non-GAAP net income per share (diluted) range of $2.15 to $2.25.
In light of these financial results and the company's outlook for fiscal year 2025, Netscout has initiated a voluntary separation program as part of its restructuring efforts, which is expected to result in a net reduction of approximately 142 employees, representing approximately 6.2% of its workforce as of March 31, 2024. These actions are anticipated to generate net annual run-rate savings of approximately $25 million, with approximately $19 million of the annual run-rate savings expected to be realized in fiscal year 2025.
Netscout's recent developments and highlights include updates to its Arbor Edge Defense (AED) and Arbor Enterprise Manager (AEM) products to combat AI-enabled DDoS threats and protect critical IT infrastructure, an expanded partnership with Arelion to strengthen internet carrier's DDoS attack mitigation capabilities, and the successful protection of local and provincial elections in Belgium from cyberattacks.
These financial and operational figures demonstrate Netscout's strong performance and strategic initiatives to position the company for sustained growth. The market has reacted to these announcements by moving the company's shares 16.6% to a price of $26.05. For more information, read the company's full 8-K submission here.
