Why NetScout Systems Shares Are Diving Today

NetScout Systems Inc NTCT shares are trading lower by 23% after it posted Q2 FY24 preliminary results and lowered its FY24 outlook.

Q2 results: The company sees revenue (GAAP and non-GAAP) of $195 million-$197 million (vs. consensus of $223.56 million). 

Adjusted EPS is projected to be $0.60-$0.62 vs. $0.54 street view.

FY24 Outlook: NTCT lowered guidance for revenue (GAAP and non-GAAP) to $840 million-$860 million (vs. consensus: $926.28 million) from $915 million-$945 million expected earlier.

Also, the company reduced the adjusted EPS outlook to $2.00- $2.20 (from $2.20-$2.32 earlier) vs. the street view of $2.26.

These expectations reflect a slowdown in order conversion rate given the industry and economic headwinds, which is expected to impact the revenue in H2 FY 2024. 

The company is taking several initiatives to manage discretionary costs and align spending with the current environment, expecting to reduce the negative impact on its FY24 adjusted EPS outlook.

"Entering fiscal Q2, we were optimistic that our recently released solutions and our solid pipeline of opportunities would support growth through the balance of the year. However, we recently began to experience a slowing in demand flow-through as customers implemented higher spending scrutiny and delayed project funding," said Anil Singhal, President and Chief Executive Officer.

The company plans to announce its Q2 FY24 financial results on November 2, 2023. 

Price Action: NTCT shares are down 23.12% at $21.21 premarket on the last check Tuesday.