Earnings Recap — Q1 FY2027
CY Q3 2026 · Reported August 6, 2026 · Beat 6 of last 6 quarters
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NetScout's strong quarter underscores the growing demand for high-fidelity, AI-ready network data as enterprises and service providers invest in observability and AIOps. The company's expansion of Arbor Cloud capacity to 33 Tbps and vertical integration of DDoS infrastructure positions it to benefit from the escalating scale of cyber threats accompanying AI infrastructure buildouts. However, management noted supply chain challenges related to AI data center buildouts, which could impact hardware availability and costs.
NetScout delivered strong Q1 FY2027 results with total revenue of $210.4M, up 12.7% YoY, and non-GAAP EPS of $0.52, up from $0.34. Service Assurance grew 19.7% YoY, benefiting from government-related orders pulled into the quarter, while Cybersecurity grew only 0.6% against a tough prior-year comparison. The company completed the acquisition of DigiCert's DDoS business and doubled Arbor Cloud mitigation capacity to 33 Tbps. Management noted that normalized revenue growth would have been mid-single-digits, consistent with the full-year outlook.
Management reaffirmed full-year FY2027 guidance: revenue of $885M–$915M and non-GAAP EPS of $2.65–$2.80. They expect Q2 revenue to be broadly consistent with the prior-year period due to the pull-forward of government orders into Q1 and a strong prior-year comparison, with first-half revenue growth in the mid-single-digits. Q2 EPS is expected to grow in the high-single-digits, helped by the shift of the ENGAGE conference from Q2 to Q3. The company remains focused on investing in AI-ready smart data, adaptive DDoS protection, and observability, while maintaining disciplined cost management and a balanced capital allocation approach.
“We delivered strong top and bottom-line results, as enterprises and service providers continued to rely on NETSCOUT for mission-critical, high-fidelity visibility across increasingly complex digital environments.”
on Quarterly performance
“By bringing the platform's back-end infrastructure fully in-house, we have created the operational and architectural foundation to invest more quickly and efficiently in capacity.”
on Arbor Cloud vertical integration
“Customers want to move beyond monitoring. They want to detect issues earlier, predict outcomes faster and more accurately, explain what's happening, and automate more decisions.”
on Shift to predictive operations
Could you quantify or give more color on how much got pulled in and how we should think about that impacting linearity for Q2?
Orders pulled in were $10M–$15M, primarily government-related. Normalized growth would have been mid-single-digits, consistent with the first half and full-year outlook.
Can you comment on what you're expecting for Federal as we enter Q2? And does Rest of World weakness reflect slowing in the Middle East?
Federal ran in the mid-teens as a percentage of revenue in Q1, with a solid pipeline. Rest of World weakness is just timing of deals, no underlying trend.
On the Cybersecurity side, have you seen any impact from AI model introductions on deal cycles?
AI-enabled adaptive DDoS protection is early but going well. Focus is on Service Assurance AI use cases; security use cases for Omnis Sensor/Streamer will come later.