Netskope Lifts Sales Guidance as Net-New ARR Rebounds to $54 Million

Cloud security vendor Netskope Inc. exceeded revenue projections for its fiscal second quarter and bumped up its full-year outlook, driven by improved operational discipline and a rebound in net-new recurring sales, according to an analysis first reported by SiliconANGLE. Despite demonstrating accelerated growth and expanding margins, the cybersecurity company continues to trade below its $18 initial public offering price. Netskope shares closed at $13.75 prior to the quarterly report before advancing to $15.51 in post-earnings trading.

During the quarter, Netskope generated $220.5 million in revenue, representing a 29% year-over-year increase that beat company guidance. Annual recurring revenue (ARR) reached $899 million, rising 27% from the previous year. Net-new ARR surged to $54 million—a 9% year-over-year gain—reversing a decline experienced in the prior quarter. Rosenblatt Securities analyst Catharine Trebnick characterized the rebound as a critical turning point in a note cited by SiliconANGLE, pointing out that net-new ARR surpassed consensus forecasts by $6.7 million. On the back of these results, management raised its fiscal 2027 revenue guidance to between $888 million and $892 million, up from its previous range of $879 million to $883 million.

Underlying platform adoption and customer expansion reinforced the top-line performance. Net revenue retention climbed to 114%, gross retention hit record levels, and remaining performance obligations expanded 36% year-over-year to $1.35 billion. Product multi-tenancy also widened, with 59% of customers now deploying four or more Netskope tools, up from 51% last year, and 41% utilizing five or more products. Furthermore, the total count of high-value customers contributing over $100,000 in ARR grew 23% to 1,686, representing 87% of total ARR. On the earnings call, Chief Executive Sanjay Beri noted that enterprises typically start with a few initial security controls before expanding their commitment across the platform over time.

Netskope's emerging artificial intelligence security suite is also beginning to build commercial traction, with roughly 13% of its sales pipeline currently in or entering proof-of-concept evaluations. The company highlighted early enterprise wins across manufacturing, technology, and financial services for tools including Agentic Broker, AI Guardrails, AI Gateway, and AI Command Center. However, Beri emphasized that enterprise AI sales operate on standard corporate buying schedules, with evaluation, testing, budget allocation, and procurement typically requiring six to 12 months.

To align with changing technology architecture, Netskope is introducing new monetization strategies for its AI security portfolio. Rather than relying solely on per-user seat licenses, the firm is pricing tools like Agentic Broker on a per-transaction basis, while billing certain AgentSkope capabilities based on outcomes, such as automatically resolving data loss prevention alerts. Beri told SiliconANGLE that the company deliberately bypassed token-based pricing structures to simplify enterprise budgeting, offering customers activity tracking calculators and straightforward top-up mechanisms instead.

Operational efficiency metrics improved alongside top-line growth. Netskope reported a non-GAAP operating margin of negative 9%, an 11-percentage-point year-over-year gain that beat internal targets, while gross margin rose two percentage points to 77%. To streamline execution, the company reduced overall workforce levels by about 5%, redirecting capital into strategic priorities such as AI research, infrastructure, and token management. Free cash flow remained negative at $29.8 million, with capital expenditures projected at 4% to 5% of revenue as the firm continues spending on its NewEdge private cloud infrastructure.

Additionally, Netskope is mid-way through migrating customers toward annual billing arrangements—a transition slated for completion by mid-next fiscal year that temporarily defers cash collections but enhances long-term revenue predictability. With an enterprise value-to-sales multiple of roughly six times, Netskope trades well below the cybersecurity industry average of 13.9 times and the sector median of 8.4 times, even as it positions its converged networking and security architecture to govern rapidly expanding enterprise AI deployments.