What happened
NetScout Systems (NASDAQ: NTCT) shareholders had a good day on Thursday as the stock jumped 12% by 1 p.m. ET compared with a 0.5% increase in the S&P 500. That surge put the cybersecurity specialist's stock back in positive territory for the year to date and pushed shares up 18% in the past 12 months.
It was powered by a warm reception to the company's fiscal third-quarter earnings report.
So what
NetScout said before the market opened that sales landed at $270 million for the selling period that ended in late December, translating into a 3% increase year over year. Those results were in line with management's prior outlook, which Wall Street saw as a win given the volatile selling environment in IT spending today.
The company again generated nearly half of its revenue from services, with about 55% of sales coming from product sales. That balance is encouraging, as it gives NetScout a good chance at more stable revenue and profits over time. "We advanced our strategic objectives and delivered solid financial results in the third quarter," CEO Anil Singhal said in a press release.
Now what
Management affirmed its sales outlook, indicating no major negative demand shift underway today. Yet executives warned that they "continue to monitor the dynamic macro environment."
NetScout says it has better visibility into the rest of its fiscal 2023, which ends in March. Earnings will reach between $0.71 per share and $0.75 per share, the company estimated, compared with the prior forecast range of between $0.62 per share and $0.68 per share.
Given the steady sales growth trend and that improving profit outlook, it's no surprise that investors sent the stock higher on Thursday.
The cybersecurity sector is more resistant to declining tech spending than more discretionary niches like digital advertising. NetScout's latest results help confirm that its platform remains in high demand even as enterprises look to cut expenses in other areas of the tech world.
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Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
