Financial Analysis

NOTE 13 COMMITMENTS AND CONTINGENCIES From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. In the opinion of management, none of the Companys current legal proceedings and claims, if determined adversely and based on the information known to the management as of the date of this Quarterly Report, is expected to have a material adverse effect on our financial condition, results of operations or cash flows. …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

"NOTE 4 SHARE-BASED COMPENSATION Equity Incentive Plan On September 12, 2019, the Company's stockholders approved the Company's 2019 Equity Incentive Plan (2019 Plan), which replaced the Company's 2007 Equity Incentive Plan, as amended. The 2019 Plan permits the granting of incentive and non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, and other stock awards, collectively referred to as ""share-based awards"". The 2019 Plan has been amended from time to time to increase the number of shares reserved for issuance and to modify certain other terms. On September 10, 2025, the Company's stockholders approved an amendment and restatement of the 2019 Plan (Amended 2019 Plan) to further increase the number of shares reserved for issuance by 3,500,000 from 27,794,651 shares to 31,294,651 shares. As of December 31, 2025, an aggregate of 8,479,872 shares remained available for grant under the Amended 2019 Plan. Periodically, the Company grants share-based awards to employees, executive officers, and directors of the Company and its subsidiaries. Additionally, the Company periodically grants performance-based restricted stock units to certain executive officers that cliff vest up to 100% of shares granted at target based upon achievement of the Company's established metrics pertaining to total shareholder return as compared to the Russell 2000 Index over a three-year period. The performance-based restricted stock units are va …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

NOTE 6 FAIR VALUE MEASUREMENTS The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets. Level 2 refers to fair values estimated using significant other observable inputs, and Level 3 includes fair values estimated using significant non-observable inputs. The following tables present the Company's financial assets and liabilities measured on a recurring basis using the fair value hierarchy at December 31, 2025 and March 31, 2025 (in thousands): Fair Value Measurements at December 31, 2025 Level 1 Level 2 Level 3 Total ASSETS: Cash and cash equivalents $ 500,574 $ 40,068 $ $ 540,642 U.S. government and municipal obligations 7,044 7,044 Commercial paper 18,786 18,786 Corporate bonds 1,006 1,006 Certificate of deposits 3,538 3,538 Derivative financial instruments 95 95 Agency bonds 15,138 15,138 $ 507,618 $ 78,631 $ $ 586,249 LIABILITIES: Derivative financial instruments $ $ (88) $ $ (88) $ $ (88) $ $ (88) Fair Value Measurements at March 31, 2025 Level 1 Level 2 Level 3 Total ASSETS: Cash and cash equivalents $ 434,121 $ 23,294 $ $ 457,415 U.S. government and municipal obligations 3,008 2,410 5,418 Commercial paper 17,358 17,358 Certificate of deposits 505 505 Equity investment in Napatech 11,781 11,781 Derivative financial instruments 197 197 $ 448,910 $ 43,764 $ $ 492,674 LIABILITIES: Derivative financial instruments $ $ …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

NOTE 8 GOODWILL AND INTANGIBLE ASSETS Goodwill During the first quarter of fiscal year 2025, due to a decrease in the Company's stock price and overall market capitalization, along with other qualitative considerations including the continued impact from the conditions in the macroeconomic environment, it was determined a Triggering Event occurred, indicating goodwill may be impaired. Accordingly, the Company conducted an interim quantitative impairment test of its goodwill at June 30, 2024 using the market approach to estimate the fair value of its reporting unit. As a result of that interim impairment test, the Company recorded a $427.0 million goodwill impairment charge during the three months ended June 30, 2024. At September 30, 2024, December 31, 2024, and March 31, 2025 the Company performed a Triggering Event assessment and concluded no event or circumstances occurred that indicated goodwill was further impaired. During fiscal year 2025, the Company completed its annual goodwill impairment test at January 31, 2025, using the qualitative assessment, and the Company concluded that it was more likely than not that the fair value of the reporting unit exceeded its carrying value. The Company may be required to record additional goodwill impairment charges. While management cannot predict if or when additional goodwill impairments may occur, future goodwill impairments could have material adverse effects on the Company's results of operations and financial condition. At De …

GoodwillAndIntangibleAssetsDisclosureTextBlock · excerpt; the full note is in the filing

"NOTE 17 INCOME TAXES Generally, the Company's effective tax rate differs from the U.S. federal statutory income tax rate primarily due to foreign withholding taxes and U.S. taxation on foreign earnings, which are partially offset by research and development tax credits and the foreign derived intangible income deduction. The Company's effective tax rates were 17.2% and 14.9% for the three months ended December 31, 2025 and 2024, respectively. The effective tax rate for the three months ended December 31, 2025 differed from the effective tax rate for the three months ended December 31, 2024, primarily due to a decrease in the research and development tax credit and an increase in foreign derived intangible income deduction. The Company's effective tax rates were 18.8% and 0.4% for the nine months ended December 31, 2025 and 2024, respectively. The effective tax rate for the nine months ended December 31, 2025 differed from the effective tax rate for the nine months ended December 31, 2024 primarily due to a decrease in the research and development tax credit and an increase in foreign derived intangible income deduction. Also contributing to the effective tax rate change was an impact related to stock compensation and goodwill impairment incurred during the nine months ended December 31, 2024, which was not deductible for tax purposes. On July 4, 2025, U.S tax legislation was signed into law (known as the ""One Big Beautiful Bill Act"" or ""OBBBA"") which makes permanent many …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 12 LEASES The Company determines if an arrangement is a lease at inception. Right-of-use (ROU) assets represent the Company's right to use an underlying asset for the duration of the lease term. Lease liabilities represent the Company's contractual obligation to make lease payments over the lease term. The Company's policy is to combine lease and non-lease components and to not recognize ROU assets and lease liabilities for short-term leases. Leases with an initial term of twelve months or less are classified as short-term leases. ROU assets are recorded and recognized at commencement for the lease liability amount, plus initial direct costs incurred less lease incentives received. Lease liabilities are recorded at the present value of future lease payments over the lease term at commencement. The discount rate used is generally the Company's estimated incremental borrowing rate unless the lessor's implicit rate is readily determinable. Incremental borrowing rates are calculated periodically to estimate the rate the Company would pay to borrow the funds necessary to obtain an asset of similar value over a similar term. Lease expenses relating to operating leases are recognized on a straight-line basis over the lease term. The Company has operating leases for administrative, research and development, sales and marketing and manufacturing facilities and equipment under various non-cancelable lease agreements. The Company's leases have remaining lease terms ranging from 1 y …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

NOTE 10 LONG-TERM DEBT On July 27, 2021, the Company amended and extended its existing credit facility (as amended, the Second Amended and Restated Credit Agreement), which provided for a five-year, $800.0 million senior secured revolving credit facility, including a letter of credit sub-facility of up to $75.0 million. The commitments under the Second Amended and Restated Credit Agreement were set to expire on July 27, 2026, and any outstanding loans are due on that date. On May 13, 2024, the Company repaid $25.0 million of borrowings under the Second Amended and Restated Credit Agreement. On October 4, 2024, the Company amended and restated the Second Amended and Restated Credit Agreement (as amended and restated, the Third Amended and Restated Credit Agreement) with a syndicate of lenders by and among: the Company, as borrower; certain subsidiaries of NetScout Systems, Inc., as borrower; JPMorgan Chase Bank, N.A., as administrative agent and collateral agent; JPMorgan Chase Bank, N.A., Bank of America, N.A., RBC Capital Markets, PNC Capital Markets LLC and Mizuho Bank, Ltd, as joint lead arrangers and joint bookrunners; TD Bank, N.A. and Silicon Valley Bank, a division of First-Citizens Bank & Trust Company, as co-documentation agents; and the lenders and issuing banks party thereto. The Third Amended and Restated Credit Agreement provides for a new five-year, $600.0 million senior secured revolving credit facility, including a letter of credit sub-facility of up to $7 …

LongTermDebtTextBlock · excerpt; the full note is in the filing

"Recent Accounting Pronouncements In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (ASU 2024-03). Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. ASU 2024-03 provides guidance to expand disclosures related to the disaggregation of income statement expenses. The standard requires, in the notes to the financial statements, disclosure of specified information about certain costs and expenses which includes purchases of inventory, employee compensation, depreciation, and intangible asset amortization that are included on the face of the statements of income. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. ASU 2024-03 is effective for the Company beginning with its fiscal year ending March 31, 2028. The Company is in the process of evaluating the impact that the adoption of ASU 2024-03 will have on its disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 is intended to enhance the transparency and usefulness of income tax disclosures for decision-making. The amendments address investor reques …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

NOTE 14 PENSION BENEFIT PLANS C ertain of the Company's non-U.S. employees participate in noncontributory defined benefit pension plans. No ne of the Company's employees in the U.S. participate in any noncontributory defined benefit pension plans. In general, these plans are funded based on considerations relating to legal requirements, underlying asset returns, the plan's funded status, the anticipated deductibility of the contribution, local practices, market conditions, interest rates and other factors . The following sets forth the components of the Company's net periodic pension cost of the noncontributory defined benefit pension plans recorded in operating expenses in the consolidated statements of operations for the three and nine months ended December 31, 2025 and 2024 (in thousands): Three Months Ended Nine Months Ended December 31, December 31, 2025 2024 2025 2024 Service cost $ 44 $ 46 $ 131 $ 142 Interest cost 280 238 834 739 Amortization of net gain (164) (113) (489) (350) Net periodic pension cost $ 160 $ 171 $ 476 $ 531 Expected Contributions During the nine months ended December 31, 2025, the Company made contributions of $0.6 million to it s d efined benefit pension plans. During the fiscal year ending March 31, 2026, the Company's cash contribution requirements for its defined benefit pension plans are expected to be less than $1.0 million . As a majority of the participants within the Company's plans are all active employees, the benefit payments are not ex …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 11 RESTRUCTURING CHARGES During the fiscal year 2025, the Company implemented a voluntary separation program (VSP) for employees who met certain age and service requirements to reduce overall headcount. As a result of the related workforce reduction, the Company recorded restructuring charges of $19.6 million to one-time termination benefits for one hundred forty-two employees who voluntarily terminated their employment with the Company during the fiscal year ended March 31, 2025. All one-time termination benefits were completed in full during the first quarter of the fiscal year ending March 31, 2026. In addition to the VSP, during the third quarter of fiscal year 2025, the Company entered into transition agreements that provided termination benefits for certain employees to ensure an orderly transition of responsibilities for continuity purposes. As a result of the related workforce changes, during the fiscal year ended March 31, 2025, the Company recorded restructuring charges totaling $0.9 million. During the nine months ended December 31, 2025, the Company recorded restructuring charge s of $0.9 million. The Company estimates approximately $0.1 million in remaining additional restructuring charges that will be recorded through the fiscal year ending March 31, 2027. A majority of the one-time termination benefits were paid in full by the end of the second quarter of fiscal year ending March 31, 2026, with the remaining amounts expected to be paid in full by the end o …

RestructuringAndRelatedActivitiesDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 2 REVENUE Revenue Recognition Policy The Company exercises judgment and uses estimates in connection with determining the amounts of product and service revenues to be recognized in each accounting period. The Company derives revenues primarily from the sale of network management tools and cybersecurity solutions for service provider and enterprise customers, which include hardware, software, and service offerings. The Company's product sales consist primarily of software-only offerings and offerings that include hardware appliances with embedded software each of which are essential to providing customers the intended functionality of the solutions. The Company accounts for revenue once a legally enforceable contract with a customer has been approved by the parties and the related promises to transfer products or services have been identified. A contract is defined by the Company as an arrangement with commercial substance identifying payment terms, each party's rights and obligations regarding the products or services to be transferred and the amount the Company deems probable of collection. Customer contracts may include promises to transfer multiple products and services to a customer. Determining whether the products and services are considered distinct performance obligations that should be accounted for separately or as one combined performance obligation may require significant judgment. Revenue is recognized when control of the products or services are transferre …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

NOTE 18 SEGMENT AND GEOGRAPHIC INFORMATION The Company's operating segments are determined based on the units that constitute a business for which discrete financial information is available and for which operating results are regularly reviewed by the chief operating decision maker (CODM). The Company's President and CEO is the CODM. Operating results are reviewed by the CODM primarily at the consolidated entity level for the purpose of making resource allocation decisions and for evaluating financial performance, primarily by monitoring actual results compared to forecasted results as well as by reviewing year-over-year results. The Company's CODM evaluates company-wide performance and determines allocation of resources based on multiple performance measures, including but not limited to net income (loss). The Company has determined it operates as a single operating segment and has one reportable segment, which includes product and service revenue related to the sale of enterprise performance management, carrier service assurance, cybersecurity, and Distributed Denial-of-Service protection solutions. The Company's results for the one reportable segment are the same as presented in the Company's consolidated statements of operations and there is no expense information that is supplemental to those disclosed in these consolidated financial statements, which are regularly provided to the CODM. The measure of segment assets is reported on the Company's consolidated balance shee …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing