A month has gone by since the last earnings report for Netskope (NTSK Quick QuoteNTSK - Free Report) . Shares have added about 24.5% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Netskope due for a pullback? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent catalysts for Netskope Inc. before we dive into how investors and analysts have reacted as of late.

Key Highlights

• Revenue: $220.5 million in Q2 fiscal 2027, up 29% year over year, exceeding guidance.
• Non-GAAP EPS: Loss of 3 cents per share, improved from a loss of 6 cents in Q2 fiscal 2026.
• ARR: $899 million, up 27% year over year.
• Remaining Performance Obligations (RPO): $1.35 billion, up 36% year over year. • Customers with more than $100,000 in ARR: 1,686, up 23% year over year, representing 87% of total ARR.
• Net New ARR: $54 million, up 9% year over year.
• Net Revenue Retention (NRR): 114%, up from 113% in Q1 fiscal 2027.

Growth Drivers and Top-Line Performance

Revenue accelerated to 29% growth in Q2 fiscal 2027, reaching $220.5 million and surpassing guidance. Management highlighted strong demand across all regions, with EMEA up 37%, APJ up 31%, and Americas up 25% year over year. The company noted an early, strong traction with its AI Security suite, with approximately one-third of the AI security pipeline already in or entering the proof-of-concept phase.

Net new ARR of $54 million represented 9% year-over-year growth, with management attributing the sequential sequential growth moderation to typical second-quarter billings patterns and an expected acceleration in the back half of the year. A key driver cited was the ongoing ramp of the sales organization, with roughly 50% of sales representatives still ramping or new, positioning the company for accelerated net new ARR in the second half as these representatives mature. The expanded partnership ecosystem, including strengthened alliances for implementation capacity, aims to further support pipeline expansion and deal velocity.

NRR improved to 114% in fiscal Q2, reflecting continued platform expansion and healthy customer satisfaction. Gross retention remained robust, underscoring strong unit economics and customer stickiness.

AI Security Momentum and Go-to-Market Execution

AI Security represents the fastest pipeline build in company history for a new product category. Management emphasized that approximately one-third of AI security opportunities are in or approaching proof-of-concept phase, with significant conversion expected in the second half of the fiscal year, particularly toward fiscal Q4.

Key AI security product launches and momentum drivers include the Agentic Broker—which provides visibility into shadow AI usage and agentic traffic enforcement—and AI Guardrails, which ensures models adhere to acceptable use policies by examining every prompt and response. The AI Command Center, released in Q1 and gaining traction, serves as the central governance point for all agentic use. Additional products and features include AI Gateway (for east-west traffic management), transaction-based pricing models aligned with usage, and outcome-based pricing for solutions like the DLP SecOps agent.

The company also announced integration of post-quantum cryptography capabilities using lattice-based encryption across its global NewEdge network, providing customers future-proofing against quantum computing threats and supporting regulatory mandates. Management noted this quantum-ready posture is driving win rates above 80% in proof-of-concept engagements.

Indirect channels remain the primary revenue source, with partners representing the vast majority of go-to-market execution. Roughly 50% of the sales force is new or still ramping, which is expected to deliver material acceleration in net new ARR in the second half of the year, particularly as representatives in EMEA and APJ progress through their ramp cycle and leadership investments in North America mature.

Profitability and Operating Trends

Non-GAAP gross margin reached 77%, up approximately 2 percentage points year over year, aided by NewEdge scale and platform efficiency gains. Non-GAAP operating margin improved significantly to (9)% from (20)% a year ago, reflecting meaningful operating leverage despite continued investment in R&D and field capacity expansion. This 11 percentage point improvement demonstrates the company's ability to scale profitably even while investing in growth.

GAAP loss from operations widened to $89.8 million with a (41)% margin, reflecting IPO-related stock-based compensation and intangible amortization charges not present in the non-GAAP measures. GAAP cost of revenue benefited from lower intangible amortization, though higher network and colocation expenses partially offset some gains.

Customer Metrics and Platform Adoption

Enterprise adoption continues to broaden across the Netskope One platform. Customers with more than $100,000 in ARR grew 23% to 1,686, now representing 87% of total ARR. This concentrated base of high-value customers underscores the company's ability to deepen relationships with enterprise accounts and demonstrates the value proposition of its differentiated platform.

The company is seeing accelerating cross-sell momentum as customers expand their use of multiple Netskope products. Fifty-nine percent of customers now use four or more Netskope One products, up from 51% a year earlier—a notable expansion from the base. Furthermore, 41% of customers use five or more products, up from 35% a year earlier. This trend of broadening product adoption across the customer base reflects both the robustness of the Netskope One platform and customers' growing recognition of the value in consolidating multiple security functions within a single vendor.

These customer metrics, combined with 114% NRR and the strong traction of new AI Security offerings, support management's narrative of platform stickiness and the significant remaining upsell opportunity across a more-than-25-product portfolio. As enterprises continue to evaluate and adopt additional modules within Netskope's suite, particularly as AI Security capabilities mature and move from proof-of-concept to production deployment, the company remains well-positioned to capture additional wallet share from its installed base.

Balance Sheet and Cash Flow

Q2 fiscal 2027 operating cash flow was negative $16.5 million compared with negative $53.9 million in Q1 fiscal 2027, reflecting improvement in cash collection patterns. Negative free cash flow was $29.8 million with approximately a (13)% margin, compared with negative $57.2 million and (28)% margin in Q1 fiscal 2027.

Management characterized the Q1 result as the low watermark of the transition to annual billings, which defers collections but increases visibility into future revenue and cash flows. The company expects to be through the billing transition by mid-fiscal 2028.

Cash, cash equivalents, and marketable securities totaled approximately $1.1 billion. Deferred revenues totaled approximately $659 million, while remaining performance obligations (RPO) exceeded $1.35 billion, with approximately 54% expected to be recognized within the next 12 months. Capital expenditures as a percentage of revenue are expected to be in the range of 4-5%, consistent with infrastructure investment in the NewEdge network to support demand.

Guidance and Management Commentary

For the third quarter of fiscal 2027, management provided guidance for revenue in the range of $227–$229 million, representing approximately 24% growth year over year. The company projects a non-GAAP operating margin of approximately (8)% and non-GAAP net loss per share of 3 cents to 4 cents on approximately 415 million weighted average shares outstanding.

For the full fiscal year 2027, the company has raised its guidance, reflecting strong momentum and confidence in the durability of demand. Netskope now expects revenue in the range of $888–$892 million, representing approximately 26% growth, compared with prior guidance of $879–$883 million for 24%-25% growth. The company affirmed non-GAAP gross margin of approximately 77% and guided to non-GAAP operating margin of approximately (9)%. Non-GAAP net loss per share is expected at 15 cents per share on approximately 415 million weighted average shares outstanding, with free cash flow margin projected at approximately 2%. Management raised its full-year revenue guidance by more than the fiscal Q2 revenue beat, demonstrating elevated confidence in the trajectory ahead.

Management expects ARR growth to remain within approximately one point of revenue growth throughout the fiscal year. The company continues to call for a material acceleration in the back half of fiscal 2027, driven primarily by sales force maturation, particularly as representatives in EMEA and APJ complete their ramp cycles and newer leadership investments in North America gain full traction. AI Security ramp and the conversion of the company's strongest historical pipeline into closed business is expected to be a significant contributor to second-half performance, with meaningful closings anticipated in Q4 as prospects advance through their evaluation cycles.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a flat trend in estimates review.

VGM Scores

At this time, Netskope has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a score of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Netskope has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Netskope belongs to the Zacks Internet - Software industry. Another stock from the same industry, Rubrik, Inc. (RBRK Quick QuoteRBRK - Free Report) , has gained 25.2% over the past month. More than a month has passed since the company reported results for the quarter ended July 2026.

Rubrik, Inc. reported revenues of $427.26 million in the last reported quarter, representing a year-over-year change of +37.9%. EPS of $0.20 for the same period compares with -$0.03 a year ago.

Rubrik, Inc. is expected to post earnings of $0.09 per share for the current quarter, representing a year-over-year change of -10%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.4%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Rubrik, Inc.. Also, the stock has a VGM Score of C.