NVDA vs. AMZN vs. MSFT: Which ‘Strong Buy' Mega-Cap Stock Has the Highest Upside Potential?
Elevate Your Investing Strategy:
Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Nvidia Stock (NASDAQ:NVDA)
Nvidia stock has rallied about 33% year-to-date, thanks to solid demand for the company's graphics processing units (GPUs) that are required to train and build AI models. Continued momentum in the company's data center segment, opportunities in Sovereign AI, innovation, and optimism about the resumption of H20 chip sales to China are expected to drive future growth.
All eyes are now on Nvidia's Q2 FY26 earnings on August 27. Wall Street expects the semiconductor giant to report earnings per share (EPS) of $1, reflecting a 47% year-over-year growth. Revenue is projected to rise by 52.3% to $45.7 billion.
Is NVDA Stock a Strong Buy?
Heading into the Q2 FY26 earnings, Bank of America Securities analyst Vivek Arya reiterated a Buy rating on Nvidia stock with a price target of $220. The 5-star analyst expects Nvidia to generate Q2 revenue of $47 billion, higher than the consensus estimate of $45.8 billion, backed by the continued ramp of Blackwell and robust cloud spend. Arya expects mid-teens quarter-over-quarter growth in Q3 revenue to $54 billion (versus the Street's estimate of $52.5 billion), driven by Blackwell Ultra volume ramp. He sees the potential for Q3 FY26 revenue to reach $57 billion to $60 billion if H20 shipment officially resumes.
Overall, Arya sees a healthy beat and raise, driven by continued strength in Blackwell/Ultra ramp, rising and diversifying AI capex, and expanding pipeline and margins. He also expects Nvidia to benefit from the potential H20 resumption in the second half of FY26 ($5 billion-$10 billion incremental revenue). However, Arya cautioned that the H20 sales may be subject to potential security/backdoor probes by Chinese regulators and could also become increasingly uncompetitive over time as local competition emerges.
Nvidia stock earns a Strong Buy consensus rating, backed by 34 Buys, three Holds, and one Sell recommendation. The average NVDA stock price target of $185.79 indicates 4.2% upside potential from current levels.
Amazon Stock (NASDAQ:AMZN)
Last week, e-commerce and cloud computing giant Amazon reported better-than-expected revenue and earnings for the second quarter of 2025. However, AMZN stock fell following the Q2 results, as the company's outlook and the growth in Amazon Web Services (AWS) cloud division failed to impress investors, especially after rivals like Microsoft's Azure delivered stellar performance for the June quarter.
Nonetheless, Amazon is optimistic about the road ahead and is increasing its AI spending. The company is mainly investing in building out the infrastructure needed to support AI demand.
What Is the Price Target for Amazon Stock?
In reaction to the Q2 print, Stifel analyst Mark Kelley slightly lowered the price target for Amazon stock to $260 from $262 and reiterated a Buy rating. The 5-star analyst noted that corporate-level Q2 results were 'very healthy,' with revenue and operating income exceeding the high-end of the guided range. Kelley added that Q3 guidance was mixed, with revenue surpassing expectations and operating income lagging estimates.
Kelley highlighted that AWS' revenue growth was a disappointment, given heightened expectations heading into the print, with Microsoft's Azure and Alphabet's (GOOGL) Google Cloud Platform (GCP) both posting about 400 basis points of acceleration in the June quarter. Looking ahead, Kelley added that record Prime Day performance supports the healthy Q3 top-line outlook, and advertising growth continues to accelerate. The analyst is pleased with the continued strength in Amazon's North America segment and the International margin expansion. Kelley sees a continued runway from here, with AI and robotics improvements presenting a steady tailwind.
Based on 43 Buys and one Hold recommendation, Amazon stock earns a Strong Buy consensus rating on TipRanks. The average AMZN stock price target of $264.21 implies 23.6% upside potential from current levels. AMZN stock is down about 3% year-to-date.
Microsoft Stock (NASDAQ:MSFT)
Tech giant Microsoft impressed investors with its stellar results for the fourth quarter of Fiscal 2025. The company attributed its Q4 FY25 results to cloud services and AI strength. Notably, revenue from Azure and other cloud services grew 39% (at constant currency) in Q4 FY25. In fact, Microsoft highlighted that Azure revenue rose 34% to surpass $75 billion in the full year, fueled by AI-led tailwinds.
With solid momentum in its underlying business and robust demand for cloud computing and AI tools, Microsoft is well-positioned to deliver solid growth and impressive margins.
Is Microsoft Stock a Buy, Hold, or Sell?
Following the Q4 print, UBS analyst Karl Keirstead increased the price target for Microsoft stock to $650 from $600 and reiterated a Buy rating. The 5-star analyst noted that for the second consecutive quarter, the company surprised with a significant 4-point Azure growth rate beat. However, Keirstead contends that MSFT's guidance of 37% Azure growth for the September quarter looks conservative. He stated that the company attributed Azure's upside to core or non-AI demand, especially citing the large enterprise on-premise to Azure workload migrations.
Keirstead added that MSFT's total revenue growth of 17% (at constant currency) was 'extraordinary,' given the company's scale. He also highlighted the company's upbeat margin performance and robust backlog and bookings growth. 'This was as clean as Microsoft quarters get and represents a positive read-through to AWS and several other peers,' said Keirstead.
Overall, Wall Street has a Strong Buy consensus rating on Microsoft stock based on 33 Buys and one Hold recommendation. The average MSFT stock price target of $624.11 indicates 18.3% upside potential. MSFT stock has risen 25% so far in 2025.
Conclusion
Wall Street is bullish on all three mega-cap stocks discussed here. Currently, analysts see higher upside potential in Amazon stock than in Microsoft and Nvidia. Despite AWS-related disappointment in Q2, analysts remain bullish on AMZN stock. Their optimism is supported by the company's dominance in e-commerce, AI-led tailwinds in the AWS business, and the lucrative advertising business.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
17 minutes ago
- Yahoo
Datadog forecasts upbeat third-quarter results on increased cloud security adoption
(Reuters) -Cloud security firm Datadog forecast third-quarter revenue above Wall Street estimates on Thursday, signaling growing demand for its services as enterprises ramp up investment in artificial intelligence. Shares of the New York City-based company surged more than 10% in premarket trading. Businesses are accelerating the adoption of AI and cloud technologies, driving increased demand for Datadog's suite of products that monitor and secure cloud-based applications to ensure performance, reliability, and security of these systems. The company benefits from the broader migration to cloud infrastructure, which has created new requirements for real-time monitoring and analytics. Datadog's platform, used by clients including Samsung, NASDAQ and Comcast, enables organizations to monitor and analyze their digital operations, helping them to identify and resolve technical issues. The company said it showcased 125 new innovations to "help customers observe, secure, and act on their complex cloud environments and AI tech stacks." Datadog expects third-quarter revenue between $847 million and $851 million, above analysts' estimates of $819.9 million, according to data compiled by LSEG. The company expects adjusted profit per share between 44 cents and 46 cents, above estimates of 42 cents. For the second quarter, it posted revenue of $827 million, beating estimates of $791.1 million. On an adjusted basis, the company earned 46 cents per share compared with the estimates of 42 cents per share. Sign in to access your portfolio
Business Wire
18 minutes ago
- Business Wire
United Homes Group, Inc. Reports 2025 Second Quarter Results
COLUMBIA, S.C.--(BUSINESS WIRE)--United Homes Group, Inc. (the 'Company') (NASDAQ: UHG) today announced results for the three and six months ended June 30, 2025. Second Quarter 2025 Operating Results For the second quarter 2025, net loss was $6.3 million, or $0.11 per diluted share, which included a loss from the change in fair value of derivative liabilities of $6.2 million, with that change predominantly due to changes in fair value on potential earn-out consideration due to fluctuation in the stock price during the measurement period, representing a non-cash item. The earnout consideration would be paid in common shares upon reaching certain stock price hurdles. The Company is required to record the fair value of this earnout as derivative liabilities on the Condensed Consolidated Balance Sheets and to record changes in fair value of derivative liabilities on the Condensed Consolidated Statements of Operations, in each case until UHG shares reach certain predetermined values or expiration of the five year earnout period. Net income for the second quarter 2024 was $28.6 million, or $0.50 per diluted share, which included income from the change in fair value of derivative liabilities of $32.1 million. Total Stockholders' equity for the second quarter 2025 was $82.2 million. Adjusted book value 1, which excludes the derivative liability and goodwill, was $96.9 million. 'United Homes Group made progress on a number of fronts in the second quarter of 2025,' said Jack Micenko, Chief Executive Officer and President of United Homes Group. 'We continued to reap the benefits of the refreshed product initiative we implemented last year. We also made further strides in our efforts to improve our direct cost efficiency through the systematic rebidding of the materials and labor that go into our homes. We expect these initiatives, as well as several new communities set to be opened, to have a more significant impact on our results as we head into the second half of the year.' Revenue, net of sales discounts, for the second quarter 2025 was $105.5 million, compared to $109.4 million in the second quarter 2024. Home closings during the second quarter 2025 were 303 compared to 337 in the second quarter 2024. Net new home orders during the second quarter 2025 were 304 compared to 323 in the second quarter 2024. ASP of 302 production-built homes (which excludes one percentage of completion home) closed during the second quarter 2025 was approximately $349,000, compared to approximately $341,000 during the second quarter 2024 for 299 production-built homes (which excludes two percentage of completion homes and 36 build to rent homes), representing a 2.5% increase. Gross margin during the second quarter of 2025 was 18.9% compared to 17.9% during the second quarter 2024. Gross margins improved in the second quarter of 2025, driven by closing a healthy mixture of homes featuring redesigned floor plans, direct construction cost savings as a result of the rebid initiative, and less non-recurring expenses compared to the same quarter in 2024. Adjusted gross margin 2 in the second quarter 2025 was 21.3%, compared to 20.9% in the second quarter 2024. The increase in adjusted gross margin was attributable to the closings associated with redesigned floor plans and direct construction cost savings. 'Gross margins came in at 18.9% for the quarter, representing a 270 basis point improvement over the prior quarter,' said Keith Feldman, Chief Financial Officer of United Homes Group. 'We believe that this margin expansion is a testament to the appeal of our refreshed product and our rebid initiative, and we feel that we are well positioned as we head into the second half of 2025.' Selling, general and administrative expenses ("SG&A") as a percentage of revenues was 17.1% in the second quarter 2025, which included $1.4 million of stock-based compensation, $0.7 million of transaction-related expenses, and $0.1 million related to severance costs. Excluding stock-based compensation, transaction-related expense, and severance expense, Adjusted SG&A 3 for the second quarter 2025 was 14.9% of revenues. Adjusted EBITDA 4 during the second quarter 2025 was $7.2 million compared to $7.7 million during the second quarter 2024. Six Months Ended June 30, 2025 Operating Results For the six months ended June 30, 2025, net income was $11.8 million, or $0.20 per diluted share, which included income from the change in fair value of derivative liabilities of $15.0 million, with that change predominantly due to changes in fair value on potential earn-out consideration due to fluctuation in the stock price during the measurement period, representing a non-cash item. Net income for the six months ended June 30, 2024 was $53.6 million, or $0.93 per diluted share, which included income from the change in fair value of derivative liabilities of $58.4 million. Revenue, net of sales discounts, for the six months ended June 30, 2025 was $192.5 million, compared to $210.3 million for the six months ended June 30, 2024. Home closings during the six months ended June 30, 2025 were 555 compared to 648 in the six months ended June 30, 2024. Net new home orders during the six months ended June 30, 2025 were 600 compared to 707 for the six months ended June 30, 2024. ASP of 553 production-built homes (which excludes two percentage of completion homes) closed during the six months ended June 30, 2025 was approximately $347,000, compared to approximately $338,000 during the six months ended June 30, 2024 for 585 production-built homes (which excludes three percentage of completion home and 60 build to rent homes), representing an increase of 2.7%. Gross margin during the six months ended June 30, 2025 was 17.7% compared to 17.0% during the six months ended June 30, 2024. Gross margin increased slightly, primarily due to the large number of home closings constructed with redesigned floor plans, which carry higher margins, coupled with lower interest expense as a percentage of revenue within cost of sales, partially offset by higher incentive-related costs. Adjusted gross margin during the six months ended June 30, 2025 was 20.2%, compared to 20.7% for the six months ended June 30, 2024. Adjusted gross margin declined, primarily due to higher incentives partially offset by homes closed with redesigned floor plans in 2025. Selling, general and administrative expenses ("SG&A") as a percentage of revenues was 17.8% in the six months ended June 30, 2025, which included $3.4 million of stock-based compensation, $0.7 million of transaction-related expenses, and $0.1 million related to severance costs. Excluding stock-based compensation, transaction-related expense, and severance expense, Adjusted SG&A for the six months ended June 30, 2025 was 15.6% of revenues. Adjusted EBITDA during the six months ended June 30, 2025 was $10.1 million compared to $14.9 million during the six months ended June 30, 2024. Recent Developments On May 19, 2025, the Company announced that its Board of Directors initiated a process to explore strategic alternatives, including a sale of the Company, a sale of assets, and a refinancing of existing indebtedness, among others, to maximize shareholder value. This process remains ongoing. No assurances can be given as to the outcome or timing of the Board's process. The Company does not intend to make any further comment regarding the process until the Board of Directors has approved a specific course of action or the Company has otherwise determined that disclosure is appropriate. Earnings Conference Call The Company will host a conference call via live webcast for investors and other interested parties beginning at 8:30 a.m. Eastern Time on Thursday, August 7, 2025. Interested parties can listen to the call live on the Internet under the Events & Presentations heading in the Investors section of the Company's website at Listeners should log into the website at least fifteen minutes prior to the call to download and install any necessary audio software. The call can also be accessed toll free at 800-715-9871, or 646-307-1963 for international participants, Conference ID: 3108794. Those dialing in should do so at least ten minutes prior to the start of the call. An archive of the webcast will also be available on the Company's website. About United Homes Group, Inc. The Company is a publicly traded residential builder headquartered near Columbia, SC. The Company focuses on southeastern markets with active communities in South Carolina, North Carolina and Georgia. The Company employs a land-light operating strategy with a focus on the design, construction and sale of entry-level, first, second and third move-up single-family houses. The Company principally builds detached single-family houses, and, to a lesser extent, attached single-family houses, including duplex houses and town houses. The Company seeks to operate its homebuilding business in high-growth markets, with substantial in-migrations and employment growth. Under its land-light lot operating strategy, the Company controls its supply of finished building lots through lot option contracts with third parties, related parties, and land bank partners, which provide the Company with the right to purchase finished lots after they have been developed. This land-light operating strategy provides the Company with the ability to amass a pipeline of lots without the risks associated with acquiring and developing raw land. Forward-Looking Statements Certain statements contained in this earnings release, other than historical facts, may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the 'Securities Act') and Section 21E of the Securities Exchange Act of 1934, as amended (the 'Exchange Act'). We intend for all such forward-looking statements to be covered by the applicable safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as 'may,' 'will,' 'expect,' 'intend,' 'anticipate,' 'estimate,' 'believe,' 'seek,' 'continue,' or other similar words. Any such forward-looking statements are based on current expectations, estimates and projections about the industry and markets in which we operate, and beliefs of, and assumptions made by, our management and involve uncertainties that could significantly affect our financial results. Such statements include, but are not limited to, statements about our future financial performance, strategy, expansion plans, future operations, future operating results, estimated revenues, losses, projected costs, prospects, plans and objectives of management. Such statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those projected or anticipated, including, without limitation: disruption in the terms or availability of mortgage financing or an increase in the number of foreclosures in our markets; volatility and uncertainty in the credit markets and broader financial markets; a slowdown in the homebuilding industry or changes in population growth rates in our markets; shortages of, or increased prices for, labor, land or raw materials used in land development and housing construction, including due to changes in trade policies; increases in interest rates or inflationary pressures, including potential tariffs; our ability to execute our business model, including the success of our operations in new markets and our ability to expand into additional new markets; our ability to identify and successfully execute on potential strategic alternatives; the potential for disruption to our business resulting from the process of reviewing strategic alternatives, and suspension or consummation of the strategic alternatives review process; our ability to successfully integrate homebuilding operations that we acquire; our ability to realize the expected results of strategic initiatives; delays in land development, community openings, or home construction, including delays resulting from natural disasters, adverse weather conditions or other events outside our control; changes in applicable laws or regulations; the outcome of any legal proceedings; our ability to continue to leverage our land-light operating strategy; the ability to maintain the listing of our securities on Nasdaq or any other exchange; and the possibility that we may be adversely affected by other economic, business or competitive factors. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release and are not intended to be a guarantee of our performance in future periods. We cannot guarantee the accuracy of any such forward-looking statements contained in this release, and we do not intend to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. For further information regarding other risks and uncertainties associated with our business, and important factors that could cause our actual results to vary materially from those expressed or implied in such forward-looking statements, please refer to the factors listed and described under 'Management's Discussion and Analysis of Financial Condition and Results of Operations' and the 'Risk Factors' sections of the documents we file from time to time with the U.S. Securities and Exchange Commission, including, but not limited to, our Annual Report on Form 10-K and our quarterly reports on Form 10-Q, copies of which may be obtained from our website at UNITED HOMES GROUP, INC GAAP TO NON-GAAP RECONCILIATIONS (Unaudited) Adjusted gross profit is a non-GAAP financial measure used by management of the Company as a supplemental measure in evaluating operating performance. The Company defines adjusted gross profit as gross profit excluding the effects of capitalized interest expensed in cost of sales, amortization included in homebuilding cost of sales, abandoned project costs, severance expense in cost of sales, and non-recurring remediation costs. The Company's management believes this information is meaningful because it separates the impact that capitalized interest and non-recurring costs directly expensed in cost of sales have on gross profit to provide a more specific measurement of the Company's gross profits. However, because adjusted gross profit information excludes certain balances expensed in cost of sales, which have real economic effects and could impact the Company's results of operations, the utility of adjusted gross profit information as a measure of the Company's operating performance may be limited. Other companies may not calculate adjusted gross profit information in the same manner that the Company does. Accordingly, adjusted gross profit information should be considered only as a supplement to gross profit information as a measure of the Company's performance. The following table presents a reconciliation of adjusted gross profit to the GAAP financial measure of gross profit for each of the periods indicated (in thousands, except percentages). ____________________ Expand (a) Represents expense recognized resulting from purchase accounting adjustments (b) Calculated as a percentage of revenue Expand UNITED HOMES GROUP, INC GAAP TO NON-GAAP RECONCILIATIONS (Unaudited) Earnings before interest, taxes, depreciation and amortization, or EBITDA, and adjusted EBITDA are supplemental non-GAAP financial measures used by management of the Company. The Company defines EBITDA as net income before (i) capitalized interest expensed in cost of sales, (ii) interest expensed in other (expense) income, net, (iii) depreciation and amortization, and (iv) taxes. The Company defines adjusted EBITDA as EBITDA before stock-based compensation expense, transaction cost expense, amortization included in homebuilding cost of sales, severance expense, abandoned project costs, change in fair value of derivative liabilities, non-recurring remediation costs, and loss on extinguishment of Convertible Notes. Management of the Company believes EBITDA and adjusted EBITDA are useful because they provide a more effective evaluation of UHG's operating performance and allow comparison of UHG's results of operations from period to period without regard to UHG's financing methods or capital structure or other items that impact comparability of financial results from period to period such as fluctuations in interest expense or effective tax rates, levels of depreciation or amortization, or unusual items. EBITDA and adjusted EBITDA should not be considered as alternatives to, or more meaningful than, net income or any other measure as determined in accordance with GAAP. UHG's computations of EBITDA and adjusted EBITDA may not be comparable to EBITDA or adjusted EBITDA of other companies. The following table presents a reconciliation of EBITDA and adjusted EBITDA to the GAAP financial measure of net income for each of the periods indicated (in thousands, except percentages). Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net (loss) income $ (6,341 ) $ 28,640 $ 11,839 $ 53,578 Interest expense in cost of sales 1,632 1,659 3,133 5,172 Interest expense in other expense, net 2,383 3,578 4,844 5,720 Depreciation and amortization 515 476 1,007 926 Taxes (251 ) 218 (1,496 ) (903 ) EBITDA $ (2,062 ) $ 34,571 $ 19,327 $ 64,493 Stock-based compensation expense 1,411 1,840 3,368 3,350 Transaction cost expense 707 517 707 1,742 Amortization in homebuilding cost of sales (b) 882 913 1,563 1,861 Severance expense 125 1,504 125 1,504 Abandoned project costs 3 320 58 320 Change in fair value of derivative liabilities 6,171 (32,055 ) (15,038 ) (58,435 ) Non-recurring remediation costs — 50 — 109 Adjusted EBITDA $ 7,237 $ 7,660 $ 10,110 $ 14,944 EBITDA margin (a) (2.0 )% 31.6 % 10.0 % 30.7 % Adjusted EBITDA margin (a) 6.9 % 7.0 % 5.3 % 7.1 % Expand ____________________ Expand (a) Calculated as a percentage of revenue (b) Represents expense recognized resulting from purchase accounting adjustments Expand UNITED HOMES GROUP, INC GAAP TO NON-GAAP RECONCILIATIONS (Unaudited) Adjusted selling, general and administrative expense, or adjusted SG&A, is a supplemental non-GAAP financial measure used by management of the Company. UHG defines adjusted SG&A as SG&A, excluding the effects of stock-based compensation expense, transaction cost expense, and severance expense included in SG&A. Management of UHG believes adjusted SG&A provides useful information to investors because it enables an alternative assessment of the Company's operating results in a manner that is focused on its operating performance. The following table presents a reconciliation of Adjusted SG&A to the GAAP financial measure of SG&A for the three and six months ended June 30, 2025 (in thousands, except percentages). ____________________ Expand (a) Calculated as a percentage of revenue Expand UNITED HOMES GROUP, INC GAAP TO NON-GAAP RECONCILIATIONS (Unaudited) Adjusted book value is a supplemental non-GAAP financial measure used by management of the Company. UHG defines adjusted book value as total stockholders' equity (book value), excluding the effect of goodwill and derivative instruments. Management of UHG believes adjusted book value is useful to investors because it excludes the impact of purchase accounting and fair value adjustments on derivative instruments which are not expected to result in economic gain or loss. The following table presents a reconciliation of adjusted book value to the GAAP financial measure of total stockholders' equity for the period indicated (in thousands). UNITED HOMES GROUP, INC OPERATIONAL METRICS BY MARKET $'s in millions Six Months Ended June 30, 2025 2024 Period Over Period % Change Market Net New Orders Closings Net New Orders Closings Net New Orders Closings Coastal 97 94 130 93 -25 % 1 % Midlands 281 269 378 325 -26 % -17 % Upstate 164 139 168 196 -2 % -29 % Rosewood 33 29 17 22 94 % 32 % Raleigh 25 24 14 12 79 % 100 % Total 600 555 707 648 -15 % -14 % Expand As of June 30, 2025 As of June 30, 2024 Period Over Period % Change Market Backlog Inventory 5 Backlog Value 6 Backlog Inventory 5 Backlog Value 6 Backlog Inventory Backlog Value Coastal 52 $ 19.1 52 $ 18.1 — % 6 % Midlands 83 29.4 125 42.4 -34 % -31 % Upstate 49 16.0 55 15.4 -11 % 4 % Rosewood 14 8.7 11 7.9 27 % 10 % Raleigh 4 1.7 5 1.9 -20 % -11 % Total 202 $ 74.9 248 $ 85.7 -19 % -13 % Expand 1 Adjusted book value is a non-GAAP financial measure. See 'Reconciliation of Non-GAAP Financial Measures.' 2 Adjusted gross margin is a non-GAAP financial measure. See 'Reconciliation of Non-GAAP Financial Measures.' 3 Adjusted SG&A is a non-GAAP financial measure. See 'Reconciliation of Non-GAAP Financial Measures.' 4 Adjusted EBITDA is a non-GAAP financial measure. See 'Reconciliation of Non-GAAP Financial Measures.' 5 Backlog inventory consists of homes that are under a sales contract but have not closed. Backlog may be impacted by customer cancellations. 6 Backlog value is calculated as the total contract value of homes in backlog. Expand
Business Wire
18 minutes ago
- Business Wire
NETSCOUT Reports First Quarter Fiscal Year 2026 Financial Results
WESTFORD, Mass.--(BUSINESS WIRE)--NETSCOUT SYSTEMS, INC. (NASDAQ: NTCT), a leading provider of enterprise performance management, carrier service assurance, cybersecurity, and DDoS protection solutions, today announced financial results for its first quarter ended June 30, 2025. Remarks by Anil Singhal, NETSCOUT's President & Chief Executive Officer: 'We delivered a solid start to fiscal year 2026, with Q1 performance reflecting strong execution and positive momentum across both our top- and bottom-lines. Growth in our Cybersecurity and Service Assurance product lines supported these results as we continue to position NETSCOUT for long-term success in the market. 'Looking ahead, we remain cautiously optimistic amid ongoing macroeconomic uncertainty. Our focus remains firmly on driving product innovation, returning to annual revenue growth and enhancing margins through disciplined cost management. Over the long term, we are committed to empowering our customers to meet the demands of today's connected, complex digital landscape by delivering mission-critical solutions that address performance, ensure availability and safeguard security.' Q1 FY26 Financial Results Total revenue for the first quarter of fiscal year 2026 increased to $186.7 million, compared with $174.6 million in the first quarter of fiscal year 2025. Product revenue for the first quarter of fiscal year 2026 was $73.0 million, or approximately 39% of total revenue in the period. This compares with product revenue of $61.2 million, or approximately 35% of total revenue in the first quarter of fiscal year 2025. As of June 30, 2025, NETSCOUT had a total product backlog of $30.9 million, which includes $23.3 million of fulfillable backlog, $7.1 million related to a multi-year enterprise license commitment, and $0.5 million of radio frequency propagation modeling projects. This compares to $15.3 million on June 30, 2024, consisting of $10.9 million of fulfillable backlog and $4.4 million of radio frequency propagation modeling projects. Service revenue for the first quarter of fiscal year 2026 was $113.8 million, or approximately 61% of total revenue in the period. This compares with service revenue of $113.4 million, or approximately 65% in the first quarter of fiscal year 2025. NETSCOUT's GAAP loss from operations was $6.6 million in the first quarter of fiscal year 2026, which included an executive transition charge of $1.0 million and a restructuring charge of $0.5 million. This compares with a GAAP loss from operations of $463.3 million in the first quarter of fiscal year 2025, which included a non-cash goodwill impairment charge of $427.0 million and a restructuring charge of $16.6 million. The Company's GAAP operating margin was negative 3.5% in the first quarter of fiscal year 2026, versus negative 265.4% in the same period of fiscal year 2025. Non-GAAP income from operations was $26.6 million with a non-GAAP operating margin of 14.2% in the first quarter of fiscal year 2026. This compares to non-GAAP income from operations of $14.0 million and a non-GAAP operating margin of 8.0% in the first quarter of fiscal year 2025. Non-GAAP EBITDA from operations in the first quarter of fiscal year 2026 was $29.3 million, or 15.7% of quarterly revenue for the period. This compares to non-GAAP EBITDA from operations of $17.8 million in the first quarter of fiscal year 2025, or 10.2% of quarterly revenue for the period. Net loss (GAAP) for the first quarter of fiscal year 2026 was $3.7 million, or $0.05 per share (diluted), which included the executive transition and restructuring charges mentioned above and an unrealized gain on a foreign investment, versus a GAAP net loss of $443.4 million, or $6.20 per share (diluted), for the first quarter of fiscal year 2025, which included the previously mentioned non-cash goodwill impairment and restructuring charges as well as an unrealized gain on foreign investment. Non-GAAP net income was $24.7 million or $0.34 per share (diluted) for the first quarter of fiscal year 2026, compared with $20.6 million, or $0.28 per share (diluted), for the first quarter of fiscal year 2025. Both periods included the impact of an unrealized gain on a foreign investment referenced previously. As of June 30, 2025, cash, cash equivalents, short and long-term marketable securities and investments were $543.5 million, compared with $492.5 million as of March 31, 2025. During the first quarter of fiscal year 2026, NETSCOUT repurchased a total of 761,249 shares of its common stock at an average price of $19.72 per share for an aggregate purchase price of approximately $15.0 million. As of June 30, 2025, the Company had no debt outstanding under its $600 million revolving credit facility, which expires in October 2029. Financial Outlook Reaffirmed The Company's outlook for fiscal year 2026 remains as follows: Revenue expectations remain in the range of $825 million to $865 million. GAAP net income per share (diluted) remains in the range of $1.07 to $1.22. Non-GAAP net income per share (diluted) remains in the range of $2.25 to $2.40. A reconciliation between GAAP and non-GAAP numbers for NETSCOUT's fiscal year 2026 outlook is included in the financial tables below. On August 4, 2025, NETSCOUT completed the sale of its entire previously disclosed foreign investment for the equivalent of approximately $12 million. The transaction is expected to have a relatively neutral impact on the Company's fiscal year 2026 financial outlook. Recent Developments and Highlights In late July, NetScout announced new AI-backed enhancements to its NETSCOUT Arbor Edge Defense and NETSCOUT Arbor Enterprise Manager Adaptive Distributed Denial of Services (DDoS) solutions to help customers further automate operations, enhance defense, and improve reporting. These powerful enhancements leverage AI and the ATLAS Intelligence Feed to intelligently automate defenses against an expanding array of attack vectors, enabling customers to mitigate up to 80% of all DDoS attacks without the need for further analysis. In late July, NETSCOUT announced how its Omnis Cyber Intelligence solutions align with National Institute of Standards and Technology (NIST) initiatives designed to help U.S. federal agencies adopt standards and best practices tied to zero-trust security frameworks that aim to protect data and resources across hybrid environments. NETSCOUT's Omnis Cyber Intelligence helps government agencies achieve zero-trust maturity through a highly scalable and cost-effective network detection and response (NDR) solution. The solution provides comprehensive network visibility into north-south and east-west traffic, enhances threat detection and investigation workflows, improves collaboration between NetOps and SecOps, and enables faster incident detection and response. In mid-July, NETSCOUT announced Adaptive Threat Analytics, a new enhancement to its Omnis Cyber Intelligence Network Detection and Response (NDR) solution, designed to improve incident response and reduce risk. Utilizing continuous network packet capture and local storage of metadata, Adaptive Threat Analytics enables more rapid threat investigation and proactive hunting providing SOC analysts with the specific knowledge needed to determine and execute the proper response more efficiently. In early July, NETSCOUT announced its recent participation in TM Forum's NeuroNOC Catalyst event that explored how AI agents, closed-loop automation, and high-quality network data can enable self-healing operations across telecom environments. NETSCOUT deployed its Omnis AI Insights Solution at the event, consisting of Omnis AI Sensor and Omnis AI Streamer, to deliver 5G Standalone Radio Access Network (SA RAN) and Packet Core high-fidelity telemetry essential for effective AI-driven operations. The solution enabled network operations center engineers to identify subscriber registration issues, pinpoint the root cause via a curated large language model, and execute remediation steps with minimal manual effort. The key takeaway was strong empirical validation of the need for high-quality curated data to drive effective AI solutions. Conference Call Instructions: NETSCOUT will host a conference call to discuss its first-quarter fiscal year 2026 financial results and financial outlook today at 8:30 a.m. ET. This call will be webcast live through NETSCOUT's website at Alternatively, investors can listen to the call by dialing (203) 518-9783. The conference call ID is NTCTQ126. A replay of the call will be available after 12:00 p.m. ET today, for approximately one week. The number for the replay is (800) 839-4992 for U.S./Canada and (402) 220-2686 for international callers. Use of Non-GAAP Financial Information: To supplement the financial measures presented in NETSCOUT's press release in accordance with accounting principles generally accepted in the United States (GAAP), NETSCOUT also reports the following non-GAAP measures: non-GAAP gross profit, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income, non-GAAP diluted net income per share, and non-GAAP earnings before interest and other expense, income taxes, depreciation, and amortization (Non-GAAP EBITDA) from operations. Non-GAAP gross profit removes expenses related to the amortization of acquired intangible assets, share-based compensation expense, and acquisition-related depreciation expense. Non-GAAP income from operations includes the aforementioned adjustments related to non-GAAP gross profit and also removes goodwill impairment charges, executive transition costs, and restructuring charges. Non-GAAP operating margin includes the foregoing adjustments related to non-GAAP income from operations. Non-GAAP net income includes the foregoing adjustments related to non-GAAP income from operations, and also removes the income tax effects of such adjustments. Non-GAAP diluted net income per share includes the foregoing adjustments related to non-GAAP net income. Non-GAAP EBITDA from operations includes the aforementioned adjustments related to non-GAAP income from operations and also removes non-acquisition related depreciation expense. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures included in the attached tables within this press release. These non-GAAP measures are not in accordance with GAAP, should not be considered an alternative for measures prepared in accordance with GAAP (gross profit, operating margin, net income, and diluted net income per share), and may have limitations because they do not reflect all NETSCOUT's results of operations as determined in accordance with GAAP. These non-GAAP measures should only be used to evaluate NETSCOUT's results of operations in conjunction with the corresponding GAAP measures. The presentation of non-GAAP information is not meant to be considered superior to, in isolation from, or as a substitute for results prepared in accordance with GAAP. NETSCOUT believes these non-GAAP financial measures will enhance the reader's overall understanding of NETSCOUT's current financial performance and NETSCOUT's prospects for the future by providing a higher degree of transparency for certain financial measures and providing a level of disclosure that helps investors understand how the Company plans and measures its own business. NETSCOUT believes that providing these non-GAAP measures affords investors a view of NETSCOUT's operating results that may be more easily compared to peer companies and also enables investors to consider NETSCOUT's operating results on both a GAAP and non-GAAP basis during and following the integration period of NETSCOUT's acquisitions. Presenting the GAAP measures on their own, without the supplemental non-GAAP disclosures, might not be indicative of NETSCOUT's core operating results. Furthermore, NETSCOUT believes that the presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures provides useful information to management and investors regarding present and future business trends relating to its financial condition and results of operations. NETSCOUT management regularly uses supplemental non-GAAP financial measures internally to understand, manage and evaluate its business and to make operating decisions. These non-GAAP measures are among the primary factors that management uses in planning and forecasting. About NETSCOUT SYSTEMS, INC. NETSCOUT SYSTEMS, INC. (NASDAQ: NTCT) protects the connected world from cyberattacks and performance and availability disruptions through the company's unique visibility platform and solutions powered by its pioneering deep packet inspection at scale technology. NETSCOUT serves the world's largest enterprises, service providers, and public sector organizations. Learn more at or follow @NETSCOUT on LinkedIn, Twitter, or Facebook. Safe Harbor Certain information provided in this press release includes forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Examples of forward-looking statements include statements regarding our future financial performance or position, results of operations, business strategy, plans and objectives of management for future operations, and other statements that are not historical fact. You can identify forward-looking statements by their use of forward-looking words such as 'may,' 'will,' 'anticipate,' 'expect,' 'believe,' 'estimate,' 'intend,' 'plan,' 'should,' 'seek,' or other comparable terms. Investors are cautioned that such forward-looking statements in this press release include, without limitation, statements regarding NETSCOUT's financial results, its financial outlook and expectations, that it continues to position the Company for long-term success in the market, that it remains cautiously optimistic amid ongoing macroeconomic uncertainty, that its focus remains firmly on driving product innovation, returning to annual revenue growth and enhancing margins through disciplined cost management, that over the long term, it is committed to empowering its customers to meet the demands of today's connected, complex digital landscape by delivering mission-critical solutions that address performance, ensure availability and safeguard security, and statements relating to the potential benefit of a market for the Company's products and regarding product releases, updates, and functionality all constitute forward looking statements that involve risks and uncertainties. Actual results could differ materially from the forward-looking statements due to known and unknown risks, uncertainties, assumptions, and other factors. Such factors include, but are not limited to, macroeconomic factors and slowdowns or downturns in economic conditions generally and in the market for advanced networks, service assurance and cybersecurity solutions specifically; the volatile foreign exchange environment; liquidity concerns at, and failures of, banks and other financial institutions; the Company's relationships with strategic partners and resellers; dependence upon broad-based acceptance of the Company's network performance management solutions; the presence of competitors with greater financial resources than the Company has, and their strategic response to the Company's products; the Company's ability to retain key executives and employees; the Company's ability to realize the anticipated savings from recent restructuring actions and other expense management programs; lower than expected demand for the Company's products and services; and the timing and magnitude of stock buyback activity based on market conditions, corporate considerations, debt agreements, and regulatory requirements. The risks included above are not exhaustive. We caution readers not to place undue reliance on any forward-looking statements included in this press release which speak only as to the date of this press release. We undertake no responsibility to update or revise any forward-looking statements, except as required by law. For a more detailed description of the risk factors associated with the Company, please refer to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2025, filed with the Securities and Exchange Commission on May 15, 2025. NETSCOUT assumes no obligation to update any forward-looking information contained in this press release or with respect to the announcements described herein. ©2025 NETSCOUT SYSTEMS, INC. All rights reserved. NETSCOUT and the NETSCOUT logo are registered trademarks or trademarks of NETSCOUT SYSTEMS, INC. and/or its subsidiaries and/or affiliates in the USA and/or other countries. NETSCOUT SYSTEMS, INC. Consolidated Balance Sheets (In thousands) June 30, March 31, 2025 2025 (Unaudited) Assets Current assets: Cash, cash equivalents, marketable securities and investments $ 532,509 $ 491,473 Accounts receivable and unbilled costs, net 92,200 163,654 Inventories and deferred costs 13,047 12,891 Prepaid expenses and other current assets 46,159 45,166 Total current assets 683,915 713,184 Fixed assets, net 21,494 21,529 Operating lease right-of-use assets 36,226 37,717 Goodwill and intangible assets, net 1,320,057 1,335,073 Long-term marketable securities 10,997 1,004 Other assets 84,737 78,071 Total assets $ 2,157,426 $ 2,186,578 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 14,016 $ 18,208 Accrued compensation 46,978 56,696 Accrued other 21,194 20,280 Deferred revenue and customer deposits 293,911 301,753 Current portion of operating lease liabilities 10,883 10,995 Total current liabilities 386,982 407,932 Other long-term liabilities 8,132 8,210 Deferred tax liability 2,851 2,643 Accrued long-term retirement benefits 29,418 27,379 Long-term deferred revenue and customer deposits 151,842 147,510 Operating lease liabilities, net of current portion 30,650 32,509 Long-term debt — — Total liabilities 609,875 626,183 Stockholders' equity: Common stock 135 134 Additional paid-in capital 3,274,682 3,255,333 Accumulated other comprehensive income 4,337 4,073 Treasury stock, at cost (1,683,481 ) (1,654,702 ) (Accumulated deficit) (48,122 ) (44,443 ) Total stockholders' equity 1,547,551 1,560,395 Total liabilities and stockholders' equity $ 2,157,426 $ 2,186,578 Expand NETSCOUT SYSTEMS, INC. (In thousands, except for per share data) (Unaudited) Three Months Ended Three Months Ended June 30, March 31, 2025 2024 2025 Revenue $ 186,747 $ 174,565 $ 204,987 Gross Profit (GAAP) $ 143,325 $ 130,196 $ 159,290 Share-based compensation expense (1) 3,160 3,320 2,090 Amortization of acquired intangible assets (2) 550 995 993 Acquisition related depreciation expense (3) 2 2 1 Non-GAAP Gross Profit $ 147,037 $ 134,513 $ 162,374 Income (Loss) from Operations (GAAP) $ (6,564 ) $ (463,324 ) $ 19,886 GAAP Operating Margin (3.5 )% (265.4 )% 9.7 % Share-based compensation expense (1) 19,959 21,198 14,199 Amortization of acquired intangible assets (2) 11,669 12,609 12,576 Restructuring charges 529 16,563 605 Goodwill impairment — 426,967 — Acquisition related depreciation expense (3) 12 12 11 Executive Transition Costs (4) 959 — — Non-GAAP Income from Operations $ 26,564 $ 14,025 $ 47,277 Non-GAAP Operating Margin 14.2 % 8.0 % 23.1 % Net Income (Loss) (GAAP) $ (3,679 ) $ (443,376 ) $ 18,617 Share-based compensation expense (1) 19,959 21,198 14,199 Amortization of acquired intangible assets (2) 11,669 12,609 12,576 Restructuring charges 529 16,563 605 Goodwill impairment — 426,967 — Acquisition related depreciation expense (3) 12 12 11 Executive Transition Costs (4) 959 — — Income tax adjustments (5) (4,712 ) (13,395 ) (8,004 ) Non-GAAP Net Income $ 24,737 $ 20,578 $ 38,004 Diluted Net Income (Loss) Per Share (GAAP) $ (0.05 ) $ (6.20 ) $ 0.25 Share impact of non-GAAP adjustments identified above 0.39 6.48 0.27 $ 0.34 $ 0.28 $ 0.52 Expand NETSCOUT SYSTEMS, INC. (In thousands) (Unaudited) Three Months Ended Three Months Ended June 30, March 31, 2025 2024 2025 (1 ) Share-based compensation expense included in these amounts is as follows: Cost of product revenue $ 413 $ 431 $ 283 Cost of service revenue 2,747 2,889 1,807 Research and development 5,532 5,886 4,062 Sales and marketing 6,889 7,504 4,915 General and administrative 4,378 4,488 3,132 Total share-based compensation expense $ 19,959 $ 21,198 $ 14,199 (2 ) Amortization expense related to acquired software and product technology, tradenames, customer relationships included in these amounts is as follows: Cost of product revenue $ 550 $ 995 $ 993 Operating expenses 11,119 11,614 11,583 Total amortization expense $ 11,669 $ 12,609 $ 12,576 (3 ) Acquisition related depreciation expense included in these amounts is as follows: Cost of product revenue $ 2 $ 2 $ 1 Cost of service revenue — — — Research and development 8 8 8 Sales and marketing 2 2 2 General and administrative — — — Total acquisition related depreciation expense $ 12 $ 12 $ 11 (4 ) Executive transition costs included in these amounts is as follows: General and administrative $ 959 $ — $ — $ 959 $ — $ — (5 ) Total income tax adjustment included in this amount is as follows: Tax effect of non-GAAP adjustments above $ (4,712 ) $ (13,395 ) $ (8,004 ) Total income tax adjustments $ (4,712 ) $ (13,395 ) $ (8,004 ) Expand NETSCOUT SYSTEMS, INC. Non-GAAP EBITDA from Operations (Dollars in thousands) (Unaudited) Three Months Ended Three Months Ended June 30, March 31, (Loss) income from operations (GAAP) $ (6,564 ) $ (463,324 ) $ 19,886 (Loss) income from operations (GAAP) as a % of revenue (3.5 )% (265.4 )% 9.7 % Previous adjustments to determine non-GAAP income from operations 33,128 477,349 27,391 Non-GAAP Income from operations $ 26,564 $ 14,025 $ 47,277 Depreciation excluding acquisition related-depreciation expense 2,776 3,784 3,009 Non-GAAP EBITDA from operations $ 29,340 $ 17,809 $ 50,286 Non-GAAP EBITDA from operations as a % of revenue 15.7 % 10.2 % 24.5 % Expand NETSCOUT SYSTEMS, INC. (Unaudited) (In millions, except for net income per share - diluted) FY'25 FY'26 Revenue $ 822.7 ~ $825 to ~$865 FY'25 FY'26 GAAP net income (loss) $ (366.9 ) ~$79 to ~$90 Amortization of intangible assets $ 50.4 ~$47 Share-based compensation expenses $ 64.8 ~$62 Acquisition related depreciation expense $ — — Executive transition costs $ — ~ $1 Restructuring charges $ 20.5 ~$1 Loss on Debt Extinguishment $ 1.1 — Goodwill impairment $ 427.0 — Total adjustments $ 563.8 ~$111 Related impact of adjustments on income tax $ (36.5 ) (~$23) Non-GAAP net income $ 160.4 ~$167 to ~$178 GAAP net income (loss) per share (diluted) $ (5.12 ) ~$1.07 to ~$1.22 Non-GAAP net income per share (diluted) $ 2.22 ~$2.25 to ~$2.40 Average weighted shares outstanding (diluted GAAP) 71.6 ~74 Average weighted shares outstanding (diluted Non-GAAP) 72.2 ~74 *Figures in table may not total due to rounding Expand
