Netskope Inc (NTSK): Results of Operations and Financial Condition
Netskope Inc (NTSK) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Netskope Announces Strong Second Quarter Fiscal 2027 Financial Results • Annual Recurring Revenue increased 27% year-over-year to $899 million • Q2 revenue increased 29% year-over-year to $221 million • Results exceeded guidance across every metric SANTA CLARA, Calif
How this was made
The 30-second read
Why it matters
The company delivered strong revenue growth, improved margins, and issued its outlook, which may trigger buying interest.
Market read
First‑report earnings release with issued guidance for a mid‑cap cybersecurity player; likely to move the stock and influence sector sentiment.
What to watch
Higher operating losses and negative free cash flow may limit near‑term valuation upside.
Netskope Announces Strong Second Quarter Fiscal 2027 Financial Results
Revenue increased 29% year-over-year to $220.5 million, ARR increased 27% year-over-year to $899 million, and the company stated that results exceeded guidance across every metric. Non-GAAP operating margin improved to (9)% from (20)% and non-GAAP gross margin increased to 77% from 75%, although GAAP loss from operations and free cash flow remained negative.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Annual Recurring Revenue (ARR)other | $899 million | – | 27% |
| RevenueGAAP | $220.5 million | – | 29% |
| GAAP gross profitGAAP | $163.0 million | – | – |
| GAAP gross marginGAAP | 74% | – | – |
| Non-GAAP gross profitnon-GAAP | $169.1 million | – | – |
| Non-GAAP gross marginnon-GAAP | 77% | – | – |
| Sales and marketing expenseGAAP | $ 105,916 (in thousands) | – | – |
| Research and development expenseGAAP | $ 101,787 (in thousands) | – | – |
| General and administrative expenseGAAP | $ 45,114 (in thousands) | – | – |
| Total operating expensesGAAP | $ 252,817 (in thousands) | – | – |
| GAAP loss from operationsGAAP | $(89.8) million | – | – |
| GAAP operating marginGAAP | (41)% | – | – |
| Non-GAAP loss from operationsnon-GAAP | $(19.3) million | – | – |
| Non-GAAP operating marginnon-GAAP | (9)% | – | – |
| Net lossGAAP | $ (110,817 ) (in thousands) | – | – |
| GAAP net loss per shareGAAP | $(0.27) | – | – |
| Non-GAAP net lossnon-GAAP | $ (13,659 ) (in thousands) | – | – |
| Non-GAAP net loss per sharenon-GAAP | $(0.03) | – | – |
| Net cash used in operationsGAAP | $(16.5) million | – | – |
| Operating cash flow marginother | (7)% | – | – |
| Free cash flownon-GAAP | $(29.8) million | – | – |
| Free cash flow marginnon-GAAP | (14)% | – | – |
| Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and dilutedGAAP | 405,045,835 | – | – |
| Total stock-based compensation expenseGAAP | $ 62,972 (in thousands) | – | – |
third quarter of fiscal 2027 and full year fiscal 2027 outlook
- NoteThird quarter of fiscal 2027 revenue of $227 million to $229 million
- NoteThird quarter of fiscal 2027 non-GAAP operating margin of approximately (8)%
- NoteThird quarter of fiscal 2027 non-GAAP net loss per share of $(0.03) to $(0.04), using approximately 415 million weighted average common stock outstanding
- NoteFull year fiscal 2027 total revenue of $888 million to $892 million
- NoteFull year fiscal 2027 non-GAAP gross margin of approximately 77%
- NoteFull year fiscal 2027 non-GAAP operating margin of approximately (9)%
- NoteFull year fiscal 2027 non-GAAP net loss per share of $(0.15), using approximately 415 million weighted average common stock outstanding
- NoteFull year fiscal 2027 free cash flow margin of approximately 2%
What drove it
- The company attributed results to continued differentiating organic innovation and durable customer demand for the Netskope One platform across security, networking, analytics and AI.
- Management cited early traction with AI Security solutions.
- The company announced the Netskope One DataSec Command Center and advancements to NewEdge AI Fast Path.
- Netskope stated that AI Fast Path was shown to reduce latency by as much as 90% to popular AI destinations.
- Netskope was named a Leader in the Gartner Magic Quadrant for Secure Access Service Edge Platforms for the 3rd Year in a Row and the Gartner Magic Quadrant for Security Service Edge for the 5th Year in a Row.
Concerns
- GAAP loss from operations was $(89.8) million, compared to a loss of $(46.0) million for the second quarter of fiscal 2026.
- GAAP operating margin was (41)%, compared to (27)% for the second quarter of fiscal 2026.
- Free cash flow was $(29.8) million, compared to $(19.7) million in the second quarter of fiscal 2026.
- The company identified risks including macroeconomic influences and instability, geopolitical events, scaling the business, execution challenges, customer adoption of new products, sales-cycle length, competition, and risks related to the use of AI in its platform.
What to watch
- Third quarter fiscal 2027 revenue guidance of $227 million to $229 million.
- Third quarter fiscal 2027 non-GAAP operating margin guidance of approximately (8)%.
- Full year fiscal 2027 total revenue guidance of $888 million to $892 million.
- Full year fiscal 2027 non-GAAP gross margin guidance of approximately 77% and non-GAAP operating margin guidance of approximately (9)%.
- Full year fiscal 2027 free cash flow margin guidance of approximately 2%.
- Progress in AI Security solution traction and adoption of the Netskope One DataSec Command Center and NewEdge AI Fast Path.
Balance sheet and cash flow
- Total cash, cash equivalents, and marketable securities was $1.1 billion at the end of the second quarter of fiscal 2027.
- Cash and cash equivalents were $ 220,854 (in thousands) as of July 31, 2026, compared with $ 432,583 (in thousands) as of January 31, 2026.
- Marketable securities were $ 846,509 (in thousands) as of July 31, 2026, compared with $ 725,603 (in thousands) as of January 31, 2026.
- Convertible notes were $ 698,116 (in thousands) as of July 31, 2026, compared with $ 720,960 (in thousands) as of January 31, 2026.
- Deferred revenue was $ 546,462 (in thousands) current and $ 124,213 (in thousands) noncurrent as of July 31, 2026.
- Net cash (used in) provided by operating activities was $ (70,452 ) (in thousands) for the six months ended July 31, 2026, compared with $ 8,714 (in thousands) for the six months ended July 31, 2025.
- Free cash flow was $ (86,963 ) (in thousands) for the six months ended July 31, 2026, compared with $ (2,197 ) (in thousands) for the six months ended July 31, 2025.
- Net cash (used in) provided by investing activities was $ (140,354 ) (in thousands) for the six months ended July 31, 2026.
- Net cash (used in) provided by financing activities was $ (1,813 ) (in thousands) for the six months ended July 31, 2026.
Analysis
Netskope reported a strong second quarter of fiscal 2027, led by 29% year-over-year revenue growth to $220.5 million and 27% ARR growth to $899 million. The company said that it exceeded guidance across every metric. Management attributed the result to organic innovation and durable customer demand for the Netskope One platform across security, networking, analytics and AI.
Gross profitability improved on both reported bases. GAAP gross profit was $163.0 million and GAAP gross margin was 74%, compared with $123.2 million and 72% in the second quarter of fiscal 2026. Non-GAAP gross profit was $169.1 million, while non-GAAP gross margin increased to 77% from 75%. This margin movement is an important feature of the quarter alongside the continued revenue and ARR growth.
Operating results show a material difference between GAAP and non-GAAP performance. GAAP loss from operations was $(89.8) million and GAAP operating margin was (41)%, versus a $(46.0) million loss and a (27)% margin in the prior-year quarter. Non-GAAP loss from operations narrowed to $(19.3) million from $(34.0) million, and non-GAAP operating margin improved to (9)% from (20)%. The reconciliation identifies stock-based compensation expense and related taxes, amortization of acquired intangible assets, and restructuring costs as adjustments to GAAP loss from operations.
Cash generation remained negative. Net cash used in operations was $(16.5) million, compared with $(16.9) million used in the prior-year quarter, while free cash flow was $(29.8) million compared with $(19.7) million. The company ended the quarter with total cash, cash equivalents, and marketable securities of $1.1 billion, and its balance sheet listed $ 698,116 (in thousands) of convertible notes.
For the third quarter, Netskope guided to revenue of $227 million to $229 million, non-GAAP operating margin of approximately (8)%, and non-GAAP net loss per share of $(0.03) to $(0.04). For full year fiscal 2027, it guided to total revenue of $888 million to $892 million, non-GAAP gross margin of approximately 77%, non-GAAP operating margin of approximately (9)%, non-GAAP net loss per share of $(0.15), and free cash flow margin of approximately 2%. The guide places continued focus on sustaining growth while improving non-GAAP operating and cash-flow margins.
Management, verbatim
We are pleased with our strong second quarter performance, exceeding our guidance across every metric. Our results were driven by continued differentiating organic innovation, and durable customer demand for our Netskope One platform across security, networking, analytics and AI.
Sanjay Beri, CEO of Netskope
We are encouraged by early traction with our AI Security solutions, validating that Netskope sits right at the intersection of cloud, AI, networking and security and is becoming part of the essential, adaptive fabric for the modern enterprise to adopt AI safely.
Sanjay Beri, CEO of Netskope
Not in the filing
stated, not guessed- Revenue by reportable segment was not provided.
- Prior-quarter comparisons for reported quarterly metrics were not provided.
- Prior outlook guidance was not provided, so no comparison of actual results with prior guidance is available.
- Share repurchases were not provided.
- Dividend declarations or payments were not provided.
- Third quarter fiscal 2027 gross-margin guidance was not provided.
- Third quarter fiscal 2027 operating-expense guidance was not provided.
- Third quarter fiscal 2027 tax-rate guidance was not provided.
- Full year fiscal 2027 operating-expense guidance was not provided.
- Full year fiscal 2027 tax-rate guidance was not provided.
- Forward-looking GAAP reconciliations were not available.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Netskope filed a Form 8‑K announcing Q2 FY2027 results and forward guidance.
Ticker impact
Netskope reported Q2 FY2027 results and issued guidance for Q3 and full‑year FY2027, including revenue of $227‑$229M and full‑year revenue of $888‑$892M.
potential price appreciation as investors digest better‑than‑expected growth and outlook
Quarterly revenue jumped 29% YoY, ARR grew 27%, and guidance was issued versus prior expectations, indicating momentum that could attract buying.
Market effects
Boosts confidence in cloud security and SASE markets, supporting peers in the cybersecurity sector.
Positive for US tech equities, especially Nasdaq‑listed security firms.
Reinforces demand for AI‑enabled security solutions worldwide.
Counterpoint
If guidance falls short of analyst consensus, the stock could face disappointment despite headline growth.
Key entities
- ExecutiveSanjay Beri
CEO of Netskope who commented on the results.
