Netskope — Second Quarter Fiscal 2027 Earnings Summary

Financial Performance

• Q2 revenue increased 29% year-over-year to $220.5 million.
• Annual Recurring Revenue (ARR) grew 27% year-over-year to $899 million as of July 31, 2026.
• GAAP gross profit was $163.0 million (74% margin) compared to $123.2 million (72% margin) in Q2 fiscal 2026.
• Non-GAAP gross profit was $169.1 million (77% margin) compared to $127.3 million (75% margin) in Q2 fiscal 2026.
• GAAP loss from operations was $(89.8) million with a (41)% operating margin, compared to a $(46.0) million loss (27% margin) in Q2 fiscal 2026.
• Non-GAAP loss from operations was $(19.3) million with a (9)% operating margin, compared to a $(34.0) million loss (20% margin) in Q2 fiscal 2026.
• GAAP net loss per share was $(0.27), compared to $(0.84) in Q2 fiscal 2026.
• Non-GAAP net loss per share was $(0.03), compared to $(0.32) in Q2 fiscal 2026.
• Net cash used in operations was $(16.5) million, compared to $(16.9) million in Q2 fiscal 2026; operating cash flow margin improved to (7)% from (10)%.
• Free cash flow was $(29.8) million, compared to $(19.7) million in Q2 fiscal 2026; free cash flow margin was (14)% compared to (12)%.
• Total cash, cash equivalents, and marketable securities totaled $1.1 billion at the end of Q2 fiscal 2027.
• Deferred revenue increased to $670.7 million ($546.5 million current + $124.2 million noncurrent) from $675.9 million ($532.7 million current + $143.1 million noncurrent) at the end of fiscal 2026.

Guidance and Future Outlook

• Q3 fiscal 2027 revenue guidance is $227 million to $229 million.
• Q3 fiscal 2027 non-GAAP operating margin guidance is approximately (8)%.
• Q3 fiscal 2027 non-GAAP net loss per share guidance is $(0.03) to $(0.04), based on approximately 415 million weighted average shares.
• Full year fiscal 2027 total revenue guidance is $888 million to $892 million.
• Full year fiscal 2027 non-GAAP gross margin guidance is approximately 77%.
• Full year fiscal 2027 non-GAAP operating margin guidance is approximately (9)%.
• Full year fiscal 2027 non-GAAP net loss per share guidance is $(0.15), based on approximately 415 million weighted average shares.
• Full year fiscal 2027 free cash flow margin guidance is approximately 2%.

Business Segments and Product Lines

• Netskope One platform continues to drive demand across security, networking, analytics, and AI.
• Launched Netskope One DataSec Command Center, a unified control plane for discovering, understanding, tracking, and protecting sensitive data across AI environments, cloud, network, on-premises, endpoint, and email.
• Advanced NewEdge AI Fast Path to optimize network paths to AI destinations, reducing latency by up to 90% and accelerating complex multi-prompt agentic AI workflows.
• Early traction reported with AI Security solutions.

Market and Competitive Landscape

• Named a Leader in the Gartner Magic Quadrant for Secure Access Service Edge (SASE) Platforms for the 3rd consecutive year, positioned highest in Ability to Execute.
• Ranked highest scoring for three Use Cases in Gartner's Critical Capabilities report: Foundational SASE Platform, Zero Trust SASE Platform, and Sovereign SASE Use Case.
• Named a Leader in the Gartner Magic Quadrant for Security Service Edge for the 5th consecutive year.
• Joined NVIDIA's Open Secure AI Alliance to build open, frontier AI tools for defenders.
• Over 30% of the Fortune 100 are customers.

Risks and Challenges

• Forward-looking statements note risks including macroeconomic influences, geopolitical events, and general economic instability.
• Risks associated with scaling the business and managing rapid growth.
• Risks related to limited experience with new products, potential adoption challenges, and discovery of software bugs.
• Risks regarding the ability to attract and retain new customers and the length of sales cycles.
• Risks associated with rapidly evolving technological developments in security, networking, analytics, and AI markets.
• Risks related to the use of AI in the platform and the ability to innovate to remain competitive.

Management Commentary and Tone

• CEO Sanjay Beri stated results exceeded guidance across every metric, driven by organic innovation and durable customer demand.
• Management expressed encouragement regarding early traction with AI Security solutions, positioning the company at the intersection of cloud, AI, networking, and security.
• Management indicated confidence in being well-positioned to address a massive market opportunity through rapid product innovation.

Other Key Points

• Conference call scheduled for 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time on September 2, 2026.
• Upcoming investor conference participation includes Piper Sandler 2026 Growth Frontiers Conference (September 15, 2026) and J.P. Morgan 2026 Software Forum (October 2, 2026).
• Supplemental financial information available at investors.netskope.com.
• Non-GAAP measures exclude stock-based compensation, amortization of acquired intangible assets, restructuring costs, and fair value changes in convertible notes.