NetScout Systems, Inc. (NASDAQ:NTCT) Q3 2024 Earnings Call Transcript

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Anil Singhal: Yes. Maybe Jean can add to this. But this was not necessarily budget flush. Maybe some of the orders from Q4 went into Q3. And so we didn’t see this traditional budget flush, which we have seen in the past, especially after COVID. Jean, anything you’d like to say?

Jean Bua: No. You are correct. Anil, when we had given our color for Q3, we were not sure whether the – our customers would be using their calendar year 2023 budgets or start using their calendar year 2024 budgets, hence the skew between our Q3 and our Q4. And so what we found was that they did use their 2023 budgets, which is our fiscal calendar – fiscal year Q3 year.

Unidentified Analyst: Fantastic. Appreciate it.

Anil Singhal: Sure, Jim.

Operator: Our next question will come from Kevin Liu with K. Liu & Company.

Kevin Liu: Hi, good morning. Just wanted to ask, about kind of your early expectations for next fiscal year. Specifically on the cybersecurity side, given what you’re seeing in terms of pipeline build for your new products versus some of the growth coming from the Arbor side of the business? How should we think about, what the mix of business on cybersecurity and ultimately, should we expect that to accelerate growth or do you think it’ll stay pretty consistent with what you’ve seen over the past 12 months?

Anil Singhal: Yes. So this one was much higher growth versus in the past and like I mentioned some of the integration of technology, some of the new product resulted in that. I also want to add that we also have a product called Omnis Security, which is in the NDR space. And so when we talk about security revenue, we will include both of them. This year Omnis Security has not picked up, so bulk of the growth is because of Arbor. So we think that security growth will be better – continue to be better than the service assurance next year also. And hence the percentage of security might go higher and but we should be able to provide some guidance on this in the next earnings call.

Kevin Liu: Understood. And then Anil, could you also elaborate a little bit on kind of the opportunities outside of Tier-1 service provider as we move into this current calendar year? Just wondering if you believe there’s enough opportunity there to help offset some of the declines that might be coming from the capital spending side. Yes, if you could just talk about that a little bit?

Anil Singhal: I think, the challenge is, Kevin, is in that there are cheaper price incumbents on the lower end of the market beyond the top 10 or 20 where we already are coverage. So I see in service assurance the bigger opportunities 5G takes off in terms of user plan much faster or, and or doing something with the Mobile Security area or applying some of our solution to AI use cases like heavy user bandwidth, air fiber which is like the fiber over FTTH, which is AT&T recently announced. And so those are the trends which are going to be, but I think going after that below Tier-1 or where we are not incumbent, I see is hard because there are a lot of regional vendors and there is very big price competition.

Kevin Liu: Got it. That’s helpful. Thanks for taking the questions.

Anil Singhal: Sure.

Operator: This does conclude the question-and-answer portion of today’s call. So I’d like to turn the call back over to Tony for any additional or closing remarks.

Tony Piazza: Thank you, operator. That concludes our call for today. Thank you all for joining us and enjoy the rest of the day.

Operator: Thank you. Ladies and gentlemen, this does conclude today’s program and we appreciate your participation. You may disconnect at this time.

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