Netskope Announces Strong Second Quarter Fiscal 2027 Financial Results
Netskope delivers 27% ARR and 29% revenue growth in Q2 FY27 while improving non-GAAP profitability and raising full-year fiscal 2027 guidance.
Rhea-AI Summary
Netskope (NTSK) reported strong second quarter fiscal 2027 results for the period ended July 31, 2026, with revenue and ARR growth ahead of guidance.
Annual Recurring Revenue (ARR) grew 27% year-over-year to $899 million, while Q2 revenue rose 29% year-over-year to $220.5 million. GAAP gross margin improved to 74% from 72%, and non-GAAP gross margin increased to 77% from 75%. GAAP loss from operations widened to $89.8 million with a (41)% margin, but non-GAAP loss from operations narrowed to $19.3 million with a (9)% margin. GAAP net loss per share improved to $(0.27) from $(0.84), and non-GAAP net loss per share improved to $(0.03) from $(0.32).
Net cash used in operations was $(16.5) million and free cash flow was $(29.8) million. Netskope ended the quarter with $1.1 billion in cash, cash equivalents, and marketable securities. The company raised full-year fiscal 2027 guidance, now expecting 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%.
Positive
- ARR +27% YoY to $899 million as of July 31, 2026
- Q2 revenue +29% YoY to $220.5 million
- Non-GAAP gross margin improved to 77% from 75% year-over-year
- Non-GAAP operating margin improved to (9)% from (20)% year-over-year
- Non-GAAP EPS improved to $(0.03) from $(0.32) year-over-year
- Liquidity remained strong with $1.1 billion in cash, cash equivalents, and marketable securities
Negative
- GAAP loss from operations widened to $(89.8) million from $(46.0) million year-over-year
- GAAP operating margin deteriorated to (41)% from (27)% year-over-year
- Free cash flow was $(29.8) million versus $(19.7) million a year earlier, with margin declining to (14)% from (12)%
- Net loss remained large at $(110.8) million for the quarter despite per-share improvement
Market Reaction – NTSK
Following this news, NTSK has declined 1.42%, reflecting a mild negative market reaction. Argus tracked a peak move of +9.4% during the session. Our momentum scanner has triggered 36 alerts so far, indicating elevated trading interest and price volatility. The stock is currently trading at $13.85. Trading volume is elevated at 2.1x the average, suggesting increased selling activity.
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Key Figures
Previous Earnings Reports
| Date | Event | Sentiment | 24h Move | Catalyst |
|---|---|---|---|---|
| Jun 03 | Q1 earnings report | Positive | -19.1% | ARR and revenue growth exceeded expectations while non-GAAP operating margin improved. |
| Mar 11 | Q4 earnings report | Positive | -21.3% | Strong quarterly and annual growth accompanied the company’s first full year of positive free cash flow. |
| Dec 11 | Q3 earnings report | Positive | -11.8% | ARR and revenue growth continued, with positive operating cash flow and free cash flow reported. |
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
All three tag-matched earnings announcements were followed by negative 24-hour reactions, with an average move of -17.4%.
Key Terms
annual recurring revenue financial
non-gaap financial
free cash flow margin financial
convertible notes financial
sase technical
AI-generated analysis. How Rhea-AI works. Not financial advice.
- 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., Sept. 02, 2026 (GLOBE NEWSWIRE) -- Netskope, Inc. (NASDAQ: NTSK) a leader in modern security and networking for the cloud and AI era, today announced financial results for the second quarter of fiscal year 2027 ended July 31, 2026.
“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,” said 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. With our rapid product innovation, we are well positioned to go after our massive market opportunity.”
Second Quarter Fiscal 2027 Financial Highlights
- Annual Recurring Revenue (ARR): ARR grew
27% year-over-year to$899 million as of July 31, 2026. - Revenue: Q2 revenue was
$220.5 million , an increase of29% year-over-year. - Gross Profit and Margin: GAAP gross profit was
$163.0 million , compared to$123.2 million for the second quarter of fiscal 2026, and GAAP gross margin was74% , compared to72% for the second quarter of fiscal 2026. Non-GAAP gross profit was$169.1 million , compared to$127.3 million for the second quarter of fiscal 2026, and non-GAAP gross margin was77% , compared to75% for the second quarter of fiscal 2026. - Loss from Operations and Operating Margin: GAAP loss from operations was
$(89.8) million , compared to a loss of$(46.0) million for the second quarter of fiscal 2026, and GAAP operating margin was (41)%, compared to (27)% for the second quarter of fiscal 2026. Non-GAAP loss from operations was$(19.3) million , compared to a loss of$(34.0) million for the second quarter of fiscal 2026, and non-GAAP operating margin was (9)%, compared to (20)% for the second quarter of fiscal 2026. - Net Loss Per Share: GAAP net loss per share was
$(0.27) , compared to$(0.84) in the second quarter of fiscal 2026. Non-GAAP net loss per share was$(0.03) , compared to$(0.32) in the second quarter of fiscal 2026. - Cash Flow: Net cash used in operations was
$(16.5) million , compared to$(16.9) million used in operations in the second quarter of fiscal 2026 and operating cash flow margin was (7)%, compared to (10)% in 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 and free cash flow margin was (14)%, compared to (12)% in the second quarter of fiscal 2026. - Cash, Cash Equivalents, and Marketable Securities: Total cash, cash equivalents, and marketable securities at the end of the second quarter of fiscal 2027 was
$1.1 billion .
Recent Business Highlights
- Named a Leader in the Gartner® Magic Quadrant™ for Secure Access Service Edge (SASE) Platforms for the 3rd Year in a Row. Netskope was positioned highest in Ability to Execute in Gartner’s report. In the corresponding Critical Capabilities report, Netskope is the only vendor ranked as the highest scoring for three Use Cases, including: Foundational SASE Platform Use Case, Zero Trust SASE Platform Use Case, and the new Sovereign SASE Use Case.
- Named a Leader in the Gartner® Magic Quadrant™ for Security Service Edge for the 5th Year in a Row. Netskope has been named a Leader in every year this report has been published since its inception, consistently recognized both for its vision and its ability to execute.
- Netskope joined NVIDIA’s Open Secure AI Alliance, a coalition of industry leaders committed to building open, frontier AI tools that defenders can inspect, adapt, and trust.
- Continued to lead in innovation with new product releases, including:
- Netskope One DataSec Command Center, a unified control plane that discovers, understands, tracks, and protects sensitive data wherever it lives and moves across AI environments, cloud, the network, on-premises, endpoint, email, and more.
- Advancements to NewEdge AI Fast Path, which optimizes the network path between users, sites, and agents to AI destinations for faster inference results and minimizing time to first token (TTFT), accelerating complex multi-prompt agentic AI workflows, as well as optimizing LLM performance when accessing large volumes of data. AI Fast Path was shown to reduce latency by as much as
90% to popular AI destinations.
Financial Outlook
Netskope is providing the following guidance for the third quarter and full year fiscal 2027:
For the third quarter of fiscal 2027, we expect:
- Revenue of
$227 million to$229 million - Non-GAAP operating margin of approximately (8)%
- Non-GAAP net loss per share of
$(0.03) t o$(0.04) , using approximately 415 million weighted average common stock outstanding
For the full year of fiscal 2027, we now expect:
- 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) , using approximately 415 million weighted average common stock outstanding - Free cash flow margin of approximately
2%
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.
Conference Participation Schedule
Netskope will participate and present at the following upcoming investor conferences. Details of the events are as follows:
- Piper Sandler 2026 Growth Frontiers Conference - Tuesday, September 15, 2026, 1:00 p.m. Pacific Time / 3:00 p.m. Central Time
- J.P. Morgan 2026 Software Forum - Friday, October 2, 2026, 10:00 a.m. Pacific Time
About Netskope
Netskope (NASDAQ: 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 the AI ecosystem inclusive of agents, applications, tools, LLMs, people, devices, and data. 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, netskope.ai, 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 third quarter of fiscal 2027 and full year fiscal 2027, market opportunity and the demand for AI security products. 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, analytics and AI 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 and income 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 restructuring costs. 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, restructuring costs, gain or loss on fair value changes 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, restructuring costs, gain or loss on fair value changes 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 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 they provide 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.
Annual Recurring Revenue
We define Annual Recurring Revenue (ARR) as the annualized value of our cloud subscription contracts that are active as of the measurement date, assuming any contract that expires during the next 12 months is renewed on its existing terms. Provided that we are actively negotiating a renewal or new agreement with a customer after the expiration of a contract, we continue to include that contract's annualized value in ARR until the customer notifies us of their decision not to renew. ARR excludes non-recurring components of revenue such as professional services, training, sales of hardware, and other non-recurring revenue.
Gartner Disclaimer
Gartner, Magic Quadrant for Security Service Edge, John Watts, Thomas Lintemuth, Theo de Feligonde, Jonathan Forest, 29 July 2026.
Gartner, Magic Quadrant for SASE Platforms, Jonathan Forest, Andrew Lerner, John Watts, 28 July 2026.
Gartner, Critical Capabilities for Security Service Edge, Thomas Lintemuth, Theo de Feligonde, John Watts, Jonathan Forest, 3 August 2026.
Gartner and Magic Quadrant are trademarks of Gartner, Inc. and/or its affiliates.
Gartner does not endorse any company, vendor, product or service depicted in its publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner publications consist of the opinions of Gartner’s business and technology insights organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this publication, including any warranties of merchantability or fitness for a particular purpose.
Investor Relations Contact:
Floris van der Veer
Director of Investor Relations, Netskope
IR@netskope.com
Media Contact:
Tim Whitman
Director of Global Corporate Communications, Netskope
press@netskope.com
| NETSKOPE, INC. | |||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| (in thousands) | |||||||
| (unaudited) | |||||||
| July 31, | January 31, | ||||||
| 2026 | 2026 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 220,854 | $ | 432,583 | |||
| Marketable securities | 846,509 | 725,603 | |||||
| Accounts receivable, net | 187,971 | 158,278 | |||||
| Inventories | 4,841 | 4,902 | |||||
| Deferred contract acquisition costs | 58,387 | 54,048 | |||||
| Prepaid expenses and other current assets | 67,723 | 73,553 | |||||
| Total current assets | 1,386,285 | 1,448,967 | |||||
| Property and equipment, net | 96,814 | 93,876 | |||||
| Operating lease right-of-use assets | 32,262 | 32,096 | |||||
| Intangible assets, net | 18,563 | 21,403 | |||||
| Goodwill | 61,083 | 61,083 | |||||
| Deferred contract acquisition costs, noncurrent | 106,037 | 100,798 | |||||
| Other assets, noncurrent | 11,170 | 14,069 | |||||
| Total assets | $ | 1,712,214 | $ | 1,772,292 | |||
| Liabilities and Stockholders’ Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 25,929 | $ | 14,436 | |||
| Accrued compensation and benefits | 76,646 | 99,880 | |||||
| Deferred revenue | 546,462 | 532,732 | |||||
| Operating lease liabilities, current | 10,229 | 10,769 | |||||
| Accrued expenses and other current liabilities | 30,085 | 23,715 | |||||
| Total current liabilities | 689,351 | 681,532 | |||||
| Deferred revenue, noncurrent | 124,213 | 143,126 | |||||
| Convertible notes | 698,116 | 720,960 | |||||
| Operating lease liabilities, noncurrent | 23,887 | 23,424 | |||||
| Other liabilities, noncurrent | 19,861 | 8,719 | |||||
| Total liabilities | 1,555,428 | 1,577,761 | |||||
| Stockholders’ equity: | |||||||
| Preferred stock | - | - | |||||
| Class A common stock | 6 | 6 | |||||
| Class B common stock | 35 | 34 | |||||
| Additional paid-in capital | 3,021,543 | 2,888,202 | |||||
| Accumulated other comprehensive loss | (8,585 | ) | (64,811 | ) | |||
| Accumulated deficit | (2,856,213 | ) | (2,628,900 | ) | |||
| Total stockholders’ equity | 156,786 | 194,531 | |||||
| Total liabilities and stockholders’ equity | $ | 1,712,214 | $ | 1,772,292 | |||
| NETSKOPE, INC. | |||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
| (in thousands, except share and per share data) | |||||||||||||||
| (unaudited) | |||||||||||||||
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Revenue | $ | 220,541 | $ | 170,758 | $ | 422,133 | $ | 328,494 | |||||||
| Cost of revenue(1) | 57,523 | 47,514 | 110,860 | 95,737 | |||||||||||
| Gross profit | 163,018 | 123,244 | 311,273 | 232,757 | |||||||||||
| Operating expenses: | |||||||||||||||
| Sales and marketing(1) | 105,916 | 78,050 | 211,598 | 147,426 | |||||||||||
| Research and development(1) | 101,787 | 72,856 | 207,501 | 140,737 | |||||||||||
| General and administrative(1) | 45,114 | 18,303 | 90,710 | 35,917 | |||||||||||
| Total operating expenses | 252,817 | 169,209 | 509,809 | 324,080 | |||||||||||
| Loss from operations | (89,799 | ) | (45,965 | ) | (198,536 | ) | (91,323 | ) | |||||||
| Other income (expense), net: | |||||||||||||||
| Loss on changes in fair value of convertible notes | (26,528 | ) | (43,973 | ) | (38,753 | ) | (77,402 | ) | |||||||
| Other income, net | 8,630 | 2,123 | 16,152 | 4,122 | |||||||||||
| Loss before provision for income taxes | (107,697 | ) | (87,815 | ) | (221,137 | ) | (164,603 | ) | |||||||
| Provision for income taxes | 3,120 | 2,486 | 6,176 | 4,940 | |||||||||||
| Net loss | $ | (110,817 | ) | $ | (90,301 | ) | $ | (227,313 | ) | $ | (169,543 | ) | |||
| Net loss per share attributable to common stockholders, basic and diluted | $ | (0.27 | ) | $ | (0.84 | ) | $ | (0.56 | ) | $ | (1.59 | ) | |||
| Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted | 405,045,835 | 108,096,178 | 402,802,925 | 106,429,655 | |||||||||||
| (1)Includes stock-based compensation expense as follows: | |||||||||||||||
| Cost of revenue | $ | 3,445 | $ | 421 | $ | 7,442 | $ | 927 | |||||||
| Sales and marketing | 10,846 | 3,086 | 25,210 | 6,459 | |||||||||||
| Research and development | 25,160 | 3,491 | 56,395 | 8,799 | |||||||||||
| General and administrative | 23,521 | 553 | 49,953 | 1,457 | |||||||||||
| Total stock-based compensation expense | $ | 62,972 | $ | 7,551 | $ | 139,000 | $ | 17,642 | |||||||
| NETSKOPE, INC. | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| (in thousands) | |||||||
| (unaudited) | |||||||
| Six Months Ended July 31, | |||||||
| 2026 | 2025 | ||||||
| Cash flows from operating activities | |||||||
| Net loss | $ | (227,313 | ) | $ | (169,543 | ) | |
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||||||
| Stock-based compensation expense | 139,000 | 17,642 | |||||
| Depreciation and amortization | 20,647 | 25,497 | |||||
| Amortization of deferred contract acquisition costs | 31,944 | 25,347 | |||||
| Non-cash operating lease expenses | 7,499 | 6,532 | |||||
| (Accretion of discount) amortization of premium on investments | (4,737 | ) | (454 | ) | |||
| Loss on change in fair value of convertible notes | 38,753 | 77,402 | |||||
| Other | (13 | ) | 210 | ||||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable | (29,693 | ) | 47,793 | ||||
| Inventories | 60 | 113 | |||||
| Deferred contract acquisition costs | (41,522 | ) | (34,320 | ) | |||
| Prepaid expenses and other current assets | 587 | (6,831 | ) | ||||
| Other non-current assets | 2,009 | 1,769 | |||||
| Accounts payable | 10,110 | 4,535 | |||||
| Accrued compensation and benefits | (23,338 | ) | (7,194 | ) | |||
| Operating lease liabilities | (7,742 | ) | (5,917 | ) | |||
| Accrued expenses and other current liabilities | 7,338 | 8,939 | |||||
| Deferred revenue | (5,183 | ) | 16,070 | ||||
| Other non-current liabilities | 11,142 | 1,124 | |||||
| Net cash (used in) provided by operating activities | (70,452 | ) | 8,714 | ||||
| Cash flows from investing activities | |||||||
| Purchases of property and equipment | (15,162 | ) | (9,038 | ) | |||
| Capitalized internal-use software | (1,349 | ) | (1,873 | ) | |||
| Purchases of intangible assets | (2,300 | ) | - | ||||
| Purchases of marketable securities | (689,633 | ) | (22,386 | ) | |||
| Proceeds from maturities of marketable securities | 568,090 | 52,901 | |||||
| Net cash (used in) provided by investing activities | (140,354 | ) | 19,604 | ||||
| Cash flows from financing activities | |||||||
| Proceeds from issuance of common stock under employee stock purchase plan | 12,272 | - | |||||
| Proceeds from issuance of common stock upon exercise of stock options | 15,299 | 21,257 | |||||
| Payments for taxes upon net share settlement of equity awards | (28,403 | ) | - | ||||
| Payments for holdback consideration on business combination | (981 | ) | (1,197 | ) | |||
| Payments for deferred offering costs | - | (3,579 | ) | ||||
| Net cash (used in) provided by financing activities | (1,813 | ) | 16,481 | ||||
| Net (decrease) increase in cash, cash equivalents, and restricted cash | (212,619 | ) | 44,799 | ||||
| Cash, cash equivalents, and restricted cash, beginning of year | 433,769 | 167,197 | |||||
| Cash, cash equivalents, and restricted cash, end of year | $ | 221,150 | $ | 211,996 | |||
| NETSKOPE, INC. | |||||||||||||||
| RECONCILIATION OF GAAP To NON-GAAP FINANCIAL INFORMATION | |||||||||||||||
| (in thousands, except percentages and per share data) | |||||||||||||||
| (unaudited) | |||||||||||||||
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Gross profit reconciliation: | |||||||||||||||
| Gross profit | 163,018 | 123,244 | 311,273 | 232,757 | |||||||||||
| Stock-based compensation expense and related taxes | 3,581 | 421 | 7,648 | 941 | |||||||||||
| Amortization of acquired intangible assets | 2,534 | 3,593 | 4,843 | 9,675 | |||||||||||
| Non-GAAP gross profit | 169,133 | 127,258 | 323,764 | 243,373 | |||||||||||
| Gross margin | 74 | % | 72 | % | 74 | % | 71 | % | |||||||
| Non-GAAP gross margin | 77 | % | 75 | % | 77 | % | 74 | % | |||||||
| Sales and marketing expense reconciliation: | |||||||||||||||
| Sales and marketing expense | 105,916 | 78,050 | 211,598 | 147,426 | |||||||||||
| Stock-based compensation expense and related taxes | (11,348 | ) | (3,378 | ) | (26,076 | ) | (6,781 | ) | |||||||
| Amortization of acquired intangible assets | (151 | ) | (534 | ) | (297 | ) | (1,050 | ) | |||||||
| Restructuring costs | (382 | ) | - | (382 | ) | - | |||||||||
| Non-GAAP sales and marketing expense | 94,035 | 74,138 | 184,843 | 139,595 | |||||||||||
| Sales and marketing expense as a percentage of revenue | 48 | % | 46 | % | 50 | % | 45 | % | |||||||
| Non-GAAP sales and marketing expense as a percentage of revenue | 43 | % | 43 | % | 44 | % | 42 | % | |||||||
| Research and development expense reconciliation: | |||||||||||||||
| Research and development expense | 101,787 | 72,856 | 207,501 | 140,737 | |||||||||||
| Stock-based compensation expense and related taxes | (25,587 | ) | (3,517 | ) | (57,230 | ) | (8,862 | ) | |||||||
| Restructuring costs | (2,334 | ) | - | (2,334 | ) | - | |||||||||
| Non-GAAP research and development expense | 73,866 | 69,339 | 147,937 | 131,875 | |||||||||||
| Research and development expense as a percentage of revenue | 46 | % | 43 | % | 49 | % | 43 | % | |||||||
| Non-GAAP research and development expense as a percentage of revenue | 33 | % | 41 | % | 35 | % | 40 | % | |||||||
| General and administrative expense reconciliation: | |||||||||||||||
| General and administrative expense | 45,114 | 18,303 | 90,710 | 35,917 | |||||||||||
| Stock-based compensation expense and related taxes | (23,779 | ) | (553 | ) | (50,421 | ) | (1,458 | ) | |||||||
| Restructuring costs | (784 | ) | - | (784 | ) | - | |||||||||
| Non-GAAP general and administrative expense | 20,551 | 17,750 | 39,505 | 34,459 | |||||||||||
| General and administrative expense as a percentage of revenue | 20 | % | 11 | % | 21 | % | 11 | % | |||||||
| Non-GAAP general and administrative expense as a percentage of revenue | 9 | % | 10 | % | 9 | % | 10 | % | |||||||
| Loss from operations reconciliation: | |||||||||||||||
| Loss from operations | (89,799 | ) | (45,965 | ) | (198,536 | ) | (91,323 | ) | |||||||
| Stock-based compensation expense and related taxes | 64,295 | 7,869 | 141,375 | 18,042 | |||||||||||
| Amortization of acquired intangible assets | 2,685 | 4,127 | 5,140 | 10,725 | |||||||||||
| Restructuring costs | 3,500 | - | 3,500 | - | |||||||||||
| Non-GAAP loss from operations | (19,319 | ) | (33,969 | ) | (48,521 | ) | (62,556 | ) | |||||||
| Operating margin | (41 | )% | (27 | )% | (47 | )% | (28 | )% | |||||||
| Non-GAAP operating margin | (9 | )% | (20 | )% | (11 | )% | (19 | )% | |||||||
| Net loss reconciliation: | |||||||||||||||
| Net loss | (110,817 | ) | (90,301 | ) | (227,313 | ) | (169,543 | ) | |||||||
| Stock-based compensation expense and related taxes | 64,295 | 7,869 | 141,375 | 18,042 | |||||||||||
| Amortization of acquired intangible assets | 2,685 | 4,127 | 5,140 | 10,725 | |||||||||||
| Restructuring costs | 3,500 | - | 3,500 | - | |||||||||||
| Loss on fair value changes in convertible notes | 26,528 | 43,973 | 38,753 | 77,402 | |||||||||||
| Provision for income taxes | 150 | - | 447 | - | |||||||||||
| Non-GAAP net loss | (13,659 | ) | (34,332 | ) | (38,098 | ) | (63,374 | ) | |||||||
| Basic and diluted EPS reconciliation: | |||||||||||||||
| Net loss per share, basic and diluted | $ | (0.27 | ) | $ | (0.84 | ) | $ | (0.56 | ) | $ | (1.59 | ) | |||
| Stock-based compensation expense and related taxes | 0.16 | 0.07 | 0.35 | 0.17 | |||||||||||
| Amortization of acquired intangible assets | 0.01 | 0.04 | 0.01 | 0.10 | |||||||||||
| Restructuring costs | 0.01 | - | 0.01 | - | |||||||||||
| Loss on fair value changes in convertible notes | 0.07 | 0.41 | 0.10 | 0.73 | |||||||||||
| Provision for income taxes | - | - | - | - | |||||||||||
| Non-GAAP net loss per share, basic and diluted | $ | (0.03 | ) | $ | (0.32 | ) | $ | (0.09 | ) | $ | (0.60 | ) | |||
| Note: Certain figures may not sum due to rounding. | |||||||||||||||
| NETSKOPE, INC. | |||||||||||||||
| SELECTED CASH FLOW INFORMATION | |||||||||||||||
| (in thousands, except percentages) | |||||||||||||||
| (unaudited) | |||||||||||||||
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Reconciliation of cash (used in) provided by operating activities to free cash flow | |||||||||||||||
| Net cash (used in) provided by operating activities | $ | (16,539 | ) | $ | (16,878 | ) | $ | (70,452 | ) | $ | 8,714 | ||||
| Purchases of property and equipment | (13,003 | ) | (1,628 | ) | (15,162 | ) | (9,038 | ) | |||||||
| Capitalized internal-use software | (255 | ) | (1,147 | ) | (1,349 | ) | (1,873 | ) | |||||||
| Free cash flow | $ | (29,797 | ) | $ | (19,653 | ) | $ | (86,963 | ) | $ | (2,197 | ) | |||
| Net cash provided by (used in) investing activities | $ | 36,825 | $ | (1,911 | ) | $ | (140,354 | ) | $ | 19,604 | |||||
| Net cash (used in) provided by financing activities | $ | (5,282 | ) | $ | 11,740 | $ | (1,813 | ) | $ | 16,481 | |||||
| Operating cash flow margin | (7 | )% | (10 | )% | (17 | )% | 3 | % | |||||||
| Free cash flow margin | (14 | )% | (12 | )% | (21 | )% | (1 | )% | |||||||
| Note: Certain figures may not sum due to rounding. | |||||||||||||||
