Netskope Reports Robust Q4 and Fiscal Year 2026 Results; Lock-Up Expiration to Free Up 390 Million Shares

Key Financial Highlights

• Annual Recurring Revenue (ARR): Grew 31% year-over-year to \$811 million, reflecting continued strong demand for Netskope’s cloud and AI security solutions.
• Revenue: Q4 revenue surged 32% year-over-year to \$196.3 million. Full-year revenue reached \$709.0 million, also up 32% year-over-year.
• Gross Profit and Margin:
  • Q4 GAAP gross profit: \$143.3 million (73% margin, up from 67% in Q4 FY25).
  • Full year GAAP gross profit: \$482.7 million (68% margin, up from 65% FY25).
  • Non-GAAP gross margins were even stronger: 76% for Q4 and 75% for the full year.
• Operating Losses and Margins:
  • Q4 GAAP loss from operations: \$(114.3) million (operating margin: -58%).
  • Full year GAAP loss from operations: \$(652.6) million (operating margin: -92%).
  • Non-GAAP loss from operations for Q4 improved to \$(20.4) million, margin at -10%.
  • Full year non-GAAP loss from operations improved to \$(111.1) million, margin at -16%.
• Net Loss Per Share:
  • Q4 GAAP: \$(0.14) vs. \$(0.75) in Q4 FY25.
  • Full year GAAP: \$(3.18) vs. \$(3.64) in FY25.
  • Non-GAAP Q4: \$(0.04) vs. \$(0.23) in prior year.
  • Non-GAAP full year: \$(0.48) vs. \$(1.89) in FY25.
• Cash Flow:
  • Q4 net cash from operations: \$18.1 million (operating cash flow margin: 9%).
  • Full year net cash from operations: \$38.1 million (margin: 5%), compared to \$(110.7) million used in FY25.
  • Free cash flow for the year: \$12.4 million, a dramatic turnaround from \$(151.1) million last year.
  • Total cash, cash equivalents, and marketable securities at quarter end: \$1.2 billion.

Product & Business Developments

• AI Security Innovation: Netskope introduced the Netskope One AI Security suite, expanding their unified platform to streamline and derisk enterprise AI adoption. New features include:
  • Agentic Broker: Extended AI visibility and controls to sanctioned/unsanctioned MCP-based communications.
  • AI Gateway: Access and control over agentic traffic in private AI deployments, including private LLMs and apps.
  • AI Guardrails: Advanced real-time LLM content moderation and threat protection for AI use cases.
  • AI Red Teaming: Stress-testing for privately hosted AI models to ensure production-readiness.
• Network Optimization: Launch of NewEdge AI Fast Path to optimize network paths for critical AI destinations, prioritizing and accelerating AI traffic for public, private, and “neo-clouds.”
• Enterprise Browser Expansion: Support extended to iOS and Android, enhancing secure access to private applications on unmanaged devices.
• Strategic Partnerships: New partnership with Telefónica Tech UK&I to deliver fully managed Netskope AI-driven security products in the region.
• Recognition: Achieved AWS Security Competency status for AI Security, highlighting technical excellence in securing AI workloads on AWS.

Financial Outlook for Fiscal 2027

• Q1 FY27 Guidance:
  • Revenue: \$197 million to \$199 million.
  • Non-GAAP operating margin: approx. -16%.
  • Non-GAAP net loss per share: \$(0.06) to \$(0.07), based on approximately 405 million shares outstanding.
• Full Year FY27 Guidance:
  • Total revenue: \$870 million to \$876 million.
  • Non-GAAP gross margin: approx. 77%.
  • Non-GAAP operating margin: approx. -10%.
  • Non-GAAP net loss per share: \$(0.19), based on approx. 415 million shares outstanding.
  • Free cash flow margin: 2% to 4%.

Major Shareholder Event: Lock-Up Expiry

• Lock-Up Expiration: In connection with Netskope’s IPO, executive officers, directors, and major holders were subject to lock-up agreements restricting share sales. This period ends at the market open on March 13, 2026, the second trading day after this earnings release.
• Share Supply Impact: At lock-up expiration, approximately 390 million shares of Class A common stock (including conversion of 244 million Class B shares and 48 million shares from vested options) will become eligible for public sale, subject to Rule 144 restrictions for affiliates.
• Current Share Structure: As of March 5, 2026:
  • 156 million Class A shares outstanding
  • 244 million Class B shares outstanding

Implications for Shareholders

• Unlock of Significant Share Supply: The lock-up expiration could introduce significant volatility as a large number of shares become eligible for sale. Shareholders should be prepared for potential changes in trading volumes and price dynamics as early investors and insiders gain the ability to sell.
• Strong Fundamental Momentum: Netskope’s improved margins, cash flow positivity, and robust top-line growth signal operational improvements and increasing scale, which could be supportive for long-term valuation.
• AI Leadership and Product Expansion: Strategic product launches and recognition by AWS position Netskope as a leader in AI security, potentially attracting further enterprise adoption and investor interest.
• Forward-Looking Risk: Despite improving metrics, Netskope remains unprofitable on a GAAP basis and faces risks from macroeconomic instability, rapid technology shifts, and execution on new AI products.

Conference Call and Additional Information

Netskope will host a conference call today at 2:00 p.m. PT / 5:00 p.m. ET to discuss results and guidance. Supplemental materials are available on the company’s investor relations website.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult financial professionals before making investment decisions. The information herein is based on company disclosures and may be subject to change. Forward-looking statements are subject to risks and uncertainties as detailed in Netskope’s filings with the SEC.

View Netskope Inc Historical chart here