-- ARR increased 34% year-over-year to $754 million
-- Q3 revenue increased 33% year-over-year to $184.2 million
-- Surpassed $1 billion in Remaining Performance Obligations, reflecting 41%
year-over-year growth
-- Q3 net cash provided by operating activities was $11.2 million,
representing 6% of revenue
-- Q3 free cash flow was $10.6 million, representing a positive 6% free cash
flow margin
SANTA CLARA, Calif., Dec. 11, 2025 (GLOBE NEWSWIRE) -- Netskope (NASDAQ:NTSK) a leader in modern security and networking for the cloud and AI era, today announced financial results for the third quarter of fiscal year 2026, ended October 31, 2025.
"We delivered an excellent third quarter with accelerating top line growth and incremental improvements to the bottom line," said Sanjay Beri, CEO of Netskope. "Cloud modernization and AI are fueling strong demand for our market-leading Netskope One platform of security, networking, and analytics products. And, the investments we've made in our foundational technology architecture, NewEdge private cloud, and go-to-market engine are driving clear returns as we successfully scale to address our estimated $149 billion market opportunity."
Third Quarter Fiscal Year 2026 Financial Highlights
-- Annual Recurring Revenue $(ARR)$: ARR grew 34% year-over-year to $754 million as of October 31, 2025. -- Revenue: Q3 Revenue was $184.2 million, an increase of 33% year-over-year. -- Gross Profit and Margin: GAAP gross profit was $106.6 million, compared to $91.8 million for the third quarter of fiscal 2025, and GAAP gross margin was 58%, compared to 66% for the third quarter of fiscal 2025. Non-GAAP gross profit was $137.6 million, compared to $97.5 million for the third quarter of fiscal 2025, and non-GAAP gross margin was 75%, compared to 70% for the third quarter of fiscal 2025. Non-GAAP gross profit excludes $28.6 million in stock-based compensation expense and related taxes, compared to $0.6 million in the prior year period, due primarily to the vesting of certain equity awards in conjunction with the initial public offering. -- Loss from Operations and Operating Margin: GAAP loss from operations was ($447.0) million, compared to a loss of ($53.8) million for the third quarter of fiscal 2025, and GAAP operating margin was (243%), compared to (39%) for the third quarter of fiscal 2025. Non-GAAP loss from operations was ($28.2) million, compared to a loss of ($35.5) million for the third quarter of fiscal 2025, and non-GAAP operating margin was (15%), compared to (26%) for the third quarter of fiscal 2025. Non-GAAP loss from operations excludes $416.2 million in stock-based compensation expense and related taxes, compared to $12.3 million in the prior year period, due primarily to the vesting of certain equity awards in conjunction with the initial public offering. -- Net Loss Per Share: GAAP net loss per share was ($1.85), compared to ($0.72) in the third quarter of fiscal 2025. Non-GAAP net loss per share was ($0.10), compared to ($0.37) in the third quarter of fiscal 2025. Non-GAAP net loss per share excludes $0.04 for the loss on the change in fair market value of convertible notes, compared to $0.18 in the year ago period. As of October 31, 2025, the weighted average common stock outstanding was 245 million and the fully-diluted share count under the treasury stock method was approximately 506 million. -- Cash Flow: Net cash generated from operations was $11.2 million, compared to ($10.9) million used in operations in the third quarter of fiscal 2025 and operating cash flow margin was 6%, compared to (8%) in the third quarter of fiscal 2025. Free cash flow was $10.6 million, compared to ($28.6) million in the third quarter of fiscal 2025 and free cash flow margin was positive 6%, compared to (21%) in the third quarter of fiscal 2025. -- Cash, Cash Equivalents, and Marketable Securities: Total cash, cash equivalents and marketable securities at the end of the third quarter was $1.2 billion.
Recent Business Highlights
-- Completed our Initial Public Offering in September, raising $992.2
million in IPO proceeds, net of underwriting discounts and commissions.
-- In addition to being recognized as a Leader in both the 2025 Gartner
Magic Quadrant for Secure Services Edge (SSE), for four consecutive years
and a Leader in the 2025 Magic Quadrant for SASE platforms for two
consecutive years, during Q3 Fiscal 2026, Netskope was also recognized
as:
-- A leader in The Forrester Wave$(TM)$: Secure Access Service Edge
Solutions, Q3 2025 report. Netskope was the highest scoring vendor
in the report overall and also the highest scoring vendor in
Forrester's "Strength of Offering" category.
-- A Leader in GigaOMs DLP Radar report and SD-WAN Platforms Radar
report.
-- Expanded our NewEdge private cloud network with new data centers in
Malaysia, Toronto, Hawaii, and Oman to meet growing customer demand.
NewEdge now covers close to 80 major metropolitan areas, with over 120
data centers globally, all of which are available to every customer, have
full edge compute, and run all services.
-- Announced updates to our Netskope One platform, including:
-- Universal Zero Trust Network Access (UZTNA) enhancements to extend
to IoT and OT use cases. Netskope's UZTNA solution helps customers
modernize their networks by enabling the consolidation of legacy
technologies beyond just Virtual Private Networking $(VPN)$, to also
include Network Access Control $(NAC)$ and Virtual Desktop
Infrastructure $(VDI)$.
-- New AI-powered innovations which improve efficiency and
effectiveness of security teams. This includes an integrated AI
agent for Netskope One Private Access, which provides insight into
an organization's existing ZTNA network topologies and private
application configurations.
-- Deepened our collaboration with Microsoft through enterprise security and
AI integrations, including Netskope One integration with Microsoft
Purview. In addition, we released Netskope One Advanced SSE for Microsoft
Entra Global Secure Access (GSA), and new protections for Microsoft 365
Copilot conversations - including GenAI queries, responses, and
AI-generated content - using our market-leading data and threat
protection delivered through our new CASB API for Microsoft 365 Copilot.
Financial Outlook
Netskope is providing the following guidance for the fourth quarter of 2026 and fiscal year 2026:
For the fourth quarter of fiscal 2026, we expect:
-- Q4 revenue of $188 million to $190 million
-- Non-GAAP operating margin of (14.0%) to (13.0%)
-- Non-GAAP net loss per share of ($0.07) to ($0.05), using approximately
400 million weighted average common stock outstanding
For the full year of fiscal 2026, we expect:
-- Total revenue of $701 million to $703 million
-- Non-GAAP gross margin of approximately 75%
-- Non-GAAP operating margin of (17.0%) to (16.5%)
-- Non-GAAP net loss per share of ($0.53) to ($0.51), using approximately
215 million weighted average common stock outstanding
-- Free cash flow of $5 million to $8 million
These statements are forward-looking, and actual results may differ materially. Refer to the Forward-Looking Statements safe harbor below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.
A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, reconciling items that may be incurred in the future, such as stock-based compensation and related employer payroll taxes, the effect of which may be significant.
Conference Call
Netskope will host a conference call at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time today to discuss its financial results and outlook. The conference call will be available via live webcast and replay at the Investor Relations section of Netskope's website at investors.netskope.com.
Supplemental Financial and Other Information:
Supplemental financial information can be accessed through Netskope's investor relations website at investors.netskope.com.
About Netskope
Netskope $(NTSK)$, a leader in modern security and networking for the cloud and AI era, addresses the needs of both security and networking teams by providing optimized access and real-time, context-based security for people, devices, and data anywhere they go. Thousands of customers, including more than 30 of the Fortune 100, trust the Netskope One platform, its Zero Trust Engine, and its powerful NewEdge network to reduce risk and gain full visibility and control over cloud, AI, SaaS, web, and private applications--providing security and accelerating performance without trade-offs. Learn more at netskope.com, on LinkedIn, and Instagram.
Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties, including, but not limited to, statements regarding our future financial and operating performance, including our GAAP and non-GAAP guidance and financial outlook for the fourth quarter of fiscal 2026 and full year fiscal 2026. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including but not limited to: macroeconomic influences and instability, geopolitical events, operations and financial results and the economy in general; risks associated with scaling our business and managing our rapid growth; our ability to expand our partner relationships; our ability to identify and effectively implement the necessary changes to address execution challenges; our limited experience with new products and the risks associated with new product offerings, including adoption by customers and the discovery of software bugs; our ability to attract and retain new customers; the failure to timely develop and achieve market acceptance of new products as well as existing products; rapidly evolving technological developments in the market for security, networking and analytics products and our ability to innovate and remain competitive; length of sales cycles; risks related to the use of AI in our platform; and general market, political, economic and business conditions, as well as those risks and uncertainties included in filings we make with the Securities and Exchange Commission from time to time.
All forward-looking statements in this press release are based on information available to Netskope as of the date hereof, and we undertake no obligation to update these forward-looking statements, to review or confirm analysts' expectations, or to provide interim reports or updates on the progress of the current financial quarter.
Non-GAAP Financial Measures
In addition to GAAP financial measures, this press release includes non-GAAP financial measures that we use to evaluate our business performance, identify trends affecting our business, formulate business plans and make strategic decisions. These non-GAAP financial measures include non-GAAP gross profit, non-GAAP gross margin, non-GAAP loss from operations, non-GAAP operating margin, non-GAAP net loss, non-GAAP net loss per share, free cash flow and free cash flow margin, and their respective definitions are presented below.
There are limitations to the non-GAAP financial measures included in this press release, and they may not be comparable to similarly titled measures of other companies. The non-GAAP financial measures included in this press release should not be considered in isolation from or as a substitute for their most directly comparable GAAP financial measures. Our management believes that our non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses that may not be indicative of our ongoing core operating performance. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when analyzing historical performance and liquidity and when planning, forecasting and analyzing future periods.
For a reconciliation of the non-GAAP financial measures presented for historical periods to their most directly comparable GAAP financial measures, please see the tables captioned "Reconciliation of GAAP to Non-GAAP Financial Information" included at the end of this press release. We encourage you to review the reconciliation in conjunction with the presentation of the non-GAAP financial measures for each of the periods presented. In future periods, we may exclude similar items, may incur income and expenses similar to these excluded items and may include other expenses, costs and non-recurring items.
Non-GAAP Gross Profit and Non-GAAP Gross Margin
We define non-GAAP gross profit as GAAP gross profit excluding stock-based compensation expense and related taxes, and amortization of acquired intangible assets. We define non-GAAP gross margin as non-GAAP gross profit as a percentage of revenue.
Non-GAAP Loss from Operations and Non-GAAP Operating Margin
We define non-GAAP loss from operations as GAAP loss from operations excluding stock-based compensation expense and related taxes, amortization of acquired intangible assets, and acquisition-related expense We define non-GAAP operating margin as non-GAAP loss from operations as a percentage of revenue.
Non-GAAP Net Loss
We define non-GAAP net loss as GAAP net loss adjusted to exclude stock-based compensation expense and related taxes, amortization of acquired intangible assets, acquisition-related expense, gain/loss on fair value change in convertible notes, and non-GAAP provision for (benefit from) income taxes.
Non-GAAP Net Loss Per Share
We define non-GAAP net loss per share as GAAP net loss per share, adjusted to exclude stock-based compensation expense and related taxes, amortization of acquired intangible assets, acquisition-related expense, gain/loss on fair value change in convertible notes, and non-GAAP provision for (benefit from) income taxes.
Free Cash Flow and Free Cash Flow Margin
We define free cash flow as net cash provided by (used in) operating activities less purchase of property and equipment and intangible assets and capitalized internal-use software. Free cash flow margin is determined by dividing free cash flow by revenue. We believe free cash flow and free cash flow margin serve as valuable indicators of liquidity, as it provides our management, board of directors, and investors with insight into our ability to generate cash from our operations, strategic initiatives, and strengthening our balance sheet.
Investor Relations Contact:
Michelle Spolver
IR@netskope.com
Media Contact:
Tim Whitman
press@netskope.com
NETSKOPE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
October 31, January 31,
2025 2025
Assets
Current assets:
Cash and cash equivalents $ 984,652 $ 166,012
Marketable securities 168,251 80,679
Accounts receivable, net 131,534 195,100
Inventories 5,377 5,763
Deferred contract acquisition costs 48,813 42,860
Prepaid expenses and other current
assets 63,213 37,991
---------- ----------
Total current assets 1,401,840 528,405
Property and equipment, net 89,544 99,480
Operating lease right-of-use assets 32,816 34,571
Intangible assets, net 23,895 37,242
Goodwill 61,083 61,083
Deferred contract acquisition costs,
noncurrent 89,188 78,805
Other assets, noncurrent 16,670 18,920
Total assets $ 1,715,036 $ 858,506
========== ==========
Liabilities and stockholders' equity
(deficit)
Current liabilities:
Accounts payable $ 16,430 $ 2,652
Accrued compensation and benefits 77,471 62,781
Deferred revenue 471,455 430,156
Operating lease liabilities, current 10,124 10,267
Accrued expenses and other current
liabilities 27,505 20,852
---------- ----------
Total current liabilities 602,985 526,708
Deferred revenue, noncurrent 148,426 160,151
Convertible notes 780,365 626,622
Operating lease liabilities, noncurrent 24,492 25,808
Other liabilities, noncurrent 7,737 4,806
---------- ----------
Total liabilities 1,564,005 1,344,095
---------- ----------
Stockholders' equity (deficit):
Convertible preferred stock - 1,050,561
Common stock - 10
Class A common stock 5 -
Class B common stock 34 -
Additional paid-in capital 2,796,530 418,791
Accumulated other comprehensive loss (73,408) (5,439)
Accumulated deficit (2,572,130) (1,949,512)
---------- ----------
Total stockholders' equity
(deficit) 151,031 (485,589)
Total liabilities and stockholders'
equity (deficit) $ 1,715,036 $ 858,506
========== ==========
NETSKOPE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
Three Months Ended October
31, Nine Months Ended October 31,
--------------------------- -----------------------------
2025 2024 2025 2024
----------- ---------- ----------- ----------
Revenue $ 184,173 $ 138,532 $ 512,667 $ 389,782
Cost of revenue(1) 77,530 46,765 173,267 141,209
----------- ---------- ----------- ----------
Gross profit 106,643 91,767 339,400 248,573
----------- ---------- ----------- ----------
Operating expenses:
Sales and
marketing(1) 149,869 65,765 297,295 217,391
Research and
development(1) 262,702 62,402 403,439 192,758
General and
administrative(1) 141,042 17,434 176,959 52,989
----------
Total operating
expenses 553,613 145,601 877,693 463,138
Loss from operations (446,970) (53,834) (538,293) (214,565)
Other income
(expense), net:
Loss on changes in
fair value of
convertible
notes (8,439) (18,125) (85,841) (63,249)
Other income, net 5,407 711 9,529 3,469
----------
Loss before
provision for
income taxes (450,002) (71,248) (614,605) (274,345)
Provision for
(benefit from)
income taxes 3,073 (505) 8,013 3,127
----------
Net loss $ (453,075) $ (70,743) $ (622,618) $ (277,472)
=========== ========== =========== ==========
Net loss per share
attributable to
common
stockholders, basic
and diluted $ (1.85) $ (0.72) $ (4.07) $ (2.89)
=========== =========== ==========
Weighted-average
shares used in
computing net loss
per share
attributable to
common
stockholders, basic
and diluted 244,659,095 98,265,450 153,012,468 95,875,697
=========== ========== =========== ==========
(1) Includes
stock-based
compensation expense
as follows:
Cost of revenue $ 28,018 $ 589 $ 28,945 $ 1,930
Sales and
marketing 71,845 4,135 78,304 14,667
Research and
development 190,082 5,878 198,881 18,738
General and
administrative 120,527 1,711 121,984 4,318
Total
stock-based
compensation
expense $ 410,472 $ 12,313 $ 428,114 $ 39,653
=========== ========== =========== ==========
NETSKOPE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended October 31,
-------------------------------------
2025 2024
Cash flows from operating
activities
Net loss $ (622,618) $ (277,472)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Stock-based compensation
expense 428,114 39,653
Depreciation and amortization 35,791 39,861
Amortization of deferred
contract acquisition costs 39,419 33,198
Non-cash operating lease
expenses 10,032 8,886
(Accretion of discount)
amortization of premium on
investments, net (552) (1,547)
Change in fair value of
convertible notes 85,841 63,249
Deferred income tax benefit - (2,254)
Other 230 777
Changes in operating assets and
liabilities:
Accounts receivable, net 63,566 (12,481)
Inventories 149 29
Deferred contract acquisition
costs (55,755) (43,503)
Prepaid expenses and other
current assets (20,164) 927
Other non-current assets 2,251 (675)
Accounts payable 13,359 4,746
Accrued compensation and
benefits 8,121 4,969
Operating lease liabilities (9,736) (9,515)
Accrued expenses and other
current liabilities 9,397 (4,467)
Deferred revenue 29,574 37,753
Other non-current liabilities 2,931 1,068
------------ -----------
Net cash provided by (used
in) operating activities 19,950 (116,798)
------------ -----------
Cash flows from investing
activities
Purchases of property and
equipment (9,563) (32,437)
Capitalized internal-use software (1,990) (2,579)
Purchases of intangible assets - (3,337)
Payments for business
combination, net of cash
acquired - (2,508)
Purchases of marketable
securities (197,145) (40,636)
Proceeds from maturities of
marketable securities 63,601 120,514
Proceeds from sales of marketable
securities 46,454 -
------------ -----------
Net cash (used in) provided
by investing activities (98,643) 39,017
------------ -----------
Cash flows from financing
activities
Proceeds from issuance of common
stock upon initial public
offering, net of underwriting
discount and commissions 992,209 -
Payments for deferred offering
costs (6,320) -
Proceeds from issuance of common
stock upon exercise of stock
options 31,174 22,743
Proceeds from issuance of
convertible senior notes, net of
issuance cost - 74,355
Payments for taxes upon net share
settlement of equity awards (117,205) -
Payments for holdback on business
combination (2,524) -
Net cash provided by
financing activities 897,334 97,098
------------ -----------
Net increase in cash, cash
equivalents, and restricted cash 818,641 19,317
Cash, cash equivalents, and
restricted cash, beginning of
period 167,197 165,770
Cash, cash equivalents, and
restricted cash, end of period $ 985,838 $ 185,087
============ ===========
NETSKOPE, INC.
RECONCILIATION OF GAAP to NON-GAAP FINANCIAL INFORMATION
(in thousands, except percentages and per share data)
(unaudited)
Three Months Ended October Nine Months Ended October
31, 31,
--------------------------- ----------------------------
2025 2024 2025 2024
-------- ------- -------- --------
Gross profit
reconciliation:
Gross profit $ 106,643 $ 91,767 $ 339,400 $ 248,573
Stock-based
compensation
expense and
related taxes 28,602 589 29,543 1,930
Amortization of
acquired
intangible
assets 2,341 5,174 12,016 14,645
Non-GAAP gross
profit $ 137,586 $ 97,530 $ 380,959 $ 265,148
======== ======= ======== ========
Gross margin 58% 66% 66% 64%
Non-GAAP gross
margin 75% 70% 74% 68%
Sales and
marketing expense
reconciliation:
Sales and
marketing
expense $ 149,869 $ 65,765 $ 297,295 $ 217,391
Stock-based
compensation
expense and
related taxes (73,680) (4,143) (80,461) (14,757)
Amortization of
acquired
intangible
assets (280) (421) (1,330) (1,178)
Non-GAAP sales
and marketing
expense $ 75,909 $ 61,201 $ 215,504 $ 201,456
======== ======= ======== ========
Sales and
marketing
expense as a
percentage of
revenue 81% 47% 58% 56%
Non-GAAP sales
and marketing
expense as a
percentage of
revenue 41% 44% 42% 52%
Research and
development
expense
reconciliation:
Research and
development
expense $ 262,702 $ 62,402 $ 403,439 $ 192,758
Stock-based
compensation
expense and
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