Netskope raises fiscal 2027 revenue outlook on strong Q2 performance

Netskope Inc. has raised its full-year fiscal 2027 revenue guidance to a range of $888 million to $892 million, representing approximately 26% growth. This upward revision follows a second-quarter report in which the company generated $220.5 million in revenue, up 29% year over year, exceeding internal expectations. The stock has gained approximately 24.5% in the month following the earnings release, outperforming the S&P 500 index during the same period.

Management attributed the revenue acceleration to strong demand across all geographic regions. EMEA revenue grew 37% year over year, APJ increased 31%, and the Americas rose 25%. Annual recurring revenue (ARR) reached $899 million, up 27% year over year, while remaining performance obligations (RPO) climbed 36% to $1.35 billion. Customers with more than $100,000 in ARR grew 23% to 1,686, now accounting for 87% of total ARR.

The company highlighted early traction with its AI Security suite as a key driver, noting that approximately one-third of the AI security pipeline is in or entering the proof-of-concept phase. Management expects significant conversion of these opportunities in the second half of the fiscal year, particularly toward fiscal Q4. The AI security portfolio includes the Agentic Broker for shadow AI visibility, AI Guardrails for policy enforcement, and the AI Command Center for governance. Netskope also announced the integration of post-management noted that quantum-ready capabilities are driving win rates above 80% in proof-of-concept engagements.

Profitability metrics improved despite continued investment in growth. Non-GAAP gross margin reached 77%, up approximately 2 percentage points year over year. Non-GAAP operating margin improved to (9)% from (20)% a year earlier, reflecting operating leverage. However, GAAP loss from operations widened to $89.8 million due to IPO-related stock-based compensation and intangible amortization charges. Operating cash flow was negative $16.5 million, an improvement from negative $53.9 million in the first quarter of fiscal 2027.

For the third quarter of fiscal 2027, Netskope guides revenue to $227, $229 million, representing approximately 24% growth. The company projects a non-GAAP operating margin of approximately (8)% and a non-GAAP net loss per share of 3 cents to 4 cents. Management anticipates a material acceleration in the back half of fiscal 2027, driven by sales force maturation and AI Security ramp. Approximately 50% of sales representatives are still ramping or new, positioning the company for increased net new ARR as these roles mature.

Zacks Investment Research assigns Netskope a Zacks Rank #2 (Buy), expecting above-average returns in the coming months. The stock currently holds a subpar Growth Score of D and a Momentum Score of B, but an F on value metrics, resulting in an aggregate VGM Score of F.